10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2008

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-13865

SKYTERRA COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

Delaware	23-2368845
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10802 Parkridge Boulevard, Reston, VA 20191	20191
(Address of principal executive offices)	(Zip Code)

(703) 390-1899

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o	Non-accelerated filer  o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).   Yes  o   No  x

As of July 31, 2008 there were 35,302,663 shares of the Company’s voting common stock and 72,612,414 shares of the Company’s non-voting common stock outstanding.

SKYTERRA COMMUNICATIONS, INC.

INDEX

PART I – Financial Information		1
Item1.	Financial Statements	1
	Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007	1
	Unaudited Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Six Months Ended June 30, 2008	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item4.	Controls and Procedures	45
PART II – Other Information		46
Item1.	Legal Proceedings	46
Item1A.	Risk Factors	46
Item2.	Unregistered Sales of Equity Securities and Use of Proceeds	47
Item3.	Defaults Upon Senior Securities	47
Item4.	Submission of Matters to a Vote of Security Holders	47
Item5.	Other Information	47
Item6.	Exhibits	48
	Signatures	49

PART I FINANCIAL INFORMATION

Item1. Financial Statements

SkyTerra Communications, Inc.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three months ended June30,						Six months ended June30,
	2008			2007			2008			2007
Revenues:
Services and related revenues	$	7,427		$	6,799		$	14,542		$	13,492
Equipment sales		1,162			1,097			2,384			2,284
Other revenues		219			274			475			496
Total revenues		8,808			8,170			17,401			16,272
Operating expenses:
Cost of equipment sold		928			892			1,902			1,873
Operations and cost of services (exclusive of depreciation and amortization)		6,945			5,850			13,608			11,303
Sales and marketing		2,100			2,070			4,743			3,087
Research and development (exclusive of depreciation and amortization)		3,147			2,132			7,254			4,207
General and administrative		8,318			6,773			15,895			14,463
Depreciation and amortization		8,196			7,588			16,278			13,934
Total operating expenses		29,634			25,305			59,680			48,867
Operating loss		(20,826	)		(17,135	)		(42,279	)		(32,595	)
Other income (expense):
Interest income		1,726			4,984			4,948			10,832
Interest expense		(9,632	)		(10,557	)		(21,347	)		(22,685	)
Impairment of investment in TerreStar Networks		(8,441	)		—			(16,794	)		—
Other income, net		199			237			862			369
Loss before income taxes		(36,974	)		(22,471	)		(74,610	)		(44,079	)
Income tax benefit (provision) for income taxes		185			(99	)		460			(108	)
Minority interest		135			766			286			2,566
Net loss	$	(36,654	)	$	(21,804	)	$	(73,864	)	$	(41,621	)
Basic and diluted loss per common share	$	(0.35	)	$	(0.21	)	$	(0.70	)	$	(0.43	)
Basic and diluted weighted average common shares outstanding		106,048,484			101,563,156			106,039,281			97,681,212

See accompanying notes.

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SkyTerra Communications, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

	June30, 2008			December31, 2007
Assets
Current assets:
Cash and cash equivalents	$	56,303		$	127,905
Investments		139,670			97,764
Accounts receivable, net of allowance of $85 and $86, respectively		5,166			4,957
Inventory		1,857			2,531
Other current assets		4,446			3,811
Total current assets		207,442			236,968
Property and equipment, net		579,366			417,052
Intangible assets, net		524,284			539,057
Goodwill		12,135			12,435
Investment in TerreStar Networks		61,306			78,100
Other assets		13,304			11,423
Total assets	$	1,397,837		$	1,295,035
Liabilities and stockholders’ equity
Current liabilities:
Notes payable, current portion	$	816		$	15,745
Accrued interest on senior unsecured notes		1,106			—
Accounts payable		3,073			4,189
Accrued expenses		16,547			48,185
Deferred revenue, current portion		3,069			3,319
Taxes payable		—			1,070
Other current liabilities		196			190
Total current liabilities		24,807			72,698
Senior secured discount notes, net		591,361			552,719
Senior unsecured notes, net		134,000			—
Notes payable, net of current portion		54,240			36,302
Deferred revenue, net of current portion		15,736			16,333
Other long term liabilities		762			257
Total liabilities		820,906			678,309
Commitments and contingencies
Minority interest		287			508
Stockholders’ equity (deficit):
Common stock, $0.01 par value. Authorized 200,000,000 shares; 35,302,663 and 34,265,663 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		353			343
Non-voting common stock, $0.01 par value. Authorized 100,000,000 shares; 72,612,414 and 72,614,414 shares issued and outstanding at June 30, 2008 and December 31, 2007, respectively		726			726
Additional paid-in capital		986,748			952,520
Accumulated other comprehensive loss		(1,803	)		(1,855	)
Accumulated deficit		(409,380	)		(335,516	)
Total stockholders’ equity		576,644			616,218
Total liabilities and stockholders’ equity	$	1,397,837		$	1,295,035

See accompanying notes.

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SkyTerra Communications, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

	Common Stock				Non-voting Common Stock					Additional Paid-in		Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares			Amount		Capital		Loss			Deficit			Equity
Balance, December 31, 2007		34,265,663	$	343		72,614,414		$	726	$	952,520	$	(1,855	)	$	(335,516	)	$	616,218
Issuance of warrants		—		—		—					27,216		—			—			27,216
Equity-based compensation		1,035,000		10		—			—		7,012		—			—			7,022
Conversion of non-voting to voting common stock		2,000		—		(2,000	)		—		—		—			—			—
Net loss		—		—		—			—		—		—			(73,864	)		(73,864	)
Foreign currency translation adjustment		—		—		—			—		—		52			—			52
Balance, June30, 2008		35,302,663	$	353		72,612,414		$	726	$	986,748	$	(1,803	)	$	(409,380	)	$	576,644

See accompanying notes.

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SkyTerra Communications, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

			Six Months Ended June 30,
			2008			2007
Operating activities
Net loss	$	(73,864		)	$	$       (41,621	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash and working capital items		52,646				30,613
Net cash used in operating activities		(21,218		)		(11,008	)
Investing activities
Purchase of property and equipment		(129,437		)		(142,414	)
Restricted cash		(15		)		742
Purchase of investments		(171,684		)		(202,318	)
Maturity of investments		130,804				250,230
Cash acquired in BCE Exchange Transaction		—				37,000
Tax payments related to BCE Exchange Transaction		(29,594		)		—
Net cash used in investing activities		(199,926		)		(56,760	)
Financing activities
Proceeds from issuance of Senior Unsecured Notes and Warrants		150,000				—
Principal payments on notes payable		(466		)		(121	)
Proceeds from issuance of notes payable		—				1,386
Proceeds from exercise of stock options		—				588
Proceeds from exercise of MSV unit options		65				564
Net cash provided by financing activities		149,599				2,417
Effect of exchange rates on cash and cash equivalents		(57		)		(70	)
Net decrease in cash and cash equivalents		(71,602		)		(65,421	)
Cash and cash equivalents, beginning of period		127,905				195,017
Cash and cash equivalents, end of period	$	56,303			$	129,596
Supplemental information
Cash paid for interest	$	1,078			$	44
Cash paid for income taxes	$	1,027			$	891

See accompanying notes.

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SkyTerra Communications, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Basis of Presentation

All SkyTerra Communications, Inc. (SkyTerra or the Company) operating and development activity is performed through its 99.3% owned consolidated subsidiary Mobile Satellite Ventures LP (MSV). The Company currently offers a range of mobile satellite services using two geostationary satellites that support the delivery of data, voice, fax and dispatch radio services. The Company is developing an integrated satellite and terrestrial communications network to provide ubiquitous wireless broadband services, including internet access and voice services, in the United States and Canada. The Company plans to launch two new satellites, MSV-1 and MSV-2, that will serve as the core of this next generation network. The launch window for MSV-1 is expected to open in the fourth quarter of 2009, and continue through the first quarter of 2010.  The launch of MSV-1 is currently expected to occur in the first quarter of 2010.  The launch of MSV-2 is currently expected to occur in the second half of 2010.MSV and Mobile Satellite Ventures (Canada) Inc. (MSV Canada), a consolidated variable interest entity, are licensed by the United States and Canadian governments, respectively, to operate both current and next generation satellite systems in the L-band spectrum which MSV and MSV Canada have coordinated for their use. MSV holds an ancillary terrestrial component (ATC) authorization that will allow operation of a satellite/terrestrial hybrid network in the United States. Deployment of an ATC network has not yet begun, and development is in process. The Company’s spectrum footprint covers a total population of nearly 330 million.

The Company’s operations are subject to significant risks and uncertainties, including technological, competitive, financial, operational, and regulatory risks associated with the wireless communications business. The Company will require substantial additional capital resources to construct its next generation network.

The Company’s current operating assumptions and projections, which include the committed funding discussed below, and reflect management’s best estimate of future revenue, operating expenses, and capital commitments, indicate that the Company’s current sources of liquidity should be sufficient to fund operations through the third quarter of 2010. The Company’s ability to meet its projections, however, is subject to uncertainties, and there can be no assurance that the Company’s current projections will be accurate. Although the Company secured committed financing in July 2008, pursuant to an agreement with Harbinger, additional funds will be needed to complete the construction of the next generation network and fund operations. Harbinger may not be required to fund the committed financing under certain circumstances, including upon the occurrence of an event that could be deemed a material adverse change. Pursuant to the terms of the agreement with Harbinger (see Note 10), committed funding of $500 million in total is expected to occur on the following dates:

• $150 million – January 2009

• $175 million – April 2009

• $75 million – July 2009

• $100 million – January 2010

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, MSV, all wholly owned subsidiaries of the Company and MSV, and all variable interest entities for which the Company or MSV is the primary beneficiary. All intercompany accounts are eliminated upon consolidation. These unaudited condensed financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying condensed consolidated financial statements contain adjustments consisting only of those of a normal recurring nature, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows at the dates and for the periods indicated. While the Company believes that the disclosures presented are adequate to make the information not misleading, these condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and related notes for the year ended December 31, 2007.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, equity, and disclosure of contingencies and the reported amounts of revenues and expenses during the reporting period. These estimates, particularly estimates relating to the valuation

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of the investment in TerreStar Networks, valuation of intangible assets, the useful lives of long-lived assets, and the valuation of debt and warrants, among others, have a material impact on the financial statements. Actual results and outcomes could differ from these estimates and assumptions.

Investments

Investments include commercial paper, certificates of deposit, municipal bonds and securities issued by government agencies. All of the Company’s investments are considered held-to-maturity with original maturities of less than one year and are reported at amortized cost. The classification of investments is determined at the time of purchase and re-evaluated at each balance sheet date. Interest income is recognized when earned. Realized gains and losses for marketable securities are derived using the specific identification method.

In the event that the amortized cost of an investment exceeds its fair value, the Company evaluates, among other factors, the duration and extent to which the fair value is less than cost, the financial health and business outlook for the investee, and the Company’s intent and ability to hold the investment. If a decline in fair value is considered to be other-than-temporary, the cost basis of the individual security is written down to fair value and included in results of operations.

Fair Value Measurements

In September 2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. In February 2008, the FASB released FASB Staff Position, (FSP) SFAS 157-2—Effective Date of FASB Statement No.157, which delays the effective date of SFAS No. 157 for all non-financial assets and non-financial liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually) to fiscal years beginning after November 15, 2008. The Company adopted SFAS No. 157 during the first quarter of 2008, effective January 1, 2008.

SFAS No. 157 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, SFAS No. 157 establishes a three-tier value hierarchy, which prioritizes the inputs used in measuring fair value as follows: Level 1 are observable inputs such as quoted prices in active markets; Level 2 are inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3 are unobservable inputs in which there is little or no market data, which require the Company to develop its own assumptions. This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company measures certain assets and liabilities at fair value, including certain of the Company’s money market funds and foreign currency contracts. On a non-recurring basis, the Company measures other assets and liabilities at fair value, including the investment in TerreStar Networks, the senior unsecured notes, and the warrants associated with the senior unsecured notes.

6

The Company’s fair value measurements in connection with the Company’s adoption of SFAS No. 157 were as follows (in thousands):

	Fair Value Measurements at Reporting
							Date using
							Quoted Prices in Active Markets for Identical Assets (Level 1)						Significant other Observable Inputs (Level 2)
																	Significant Unobservable Inputs (Level 3)
				Balance as of June 30, 2008
																							Gains (losses)
Assets:
Cash equivalents	$	56,061				$		56,061			$	—				$		—			$	—
Investment in TerreStar Networks		61,306						—				61,306						—				(16,794				)
Foreign currency contracts		4						4				—						—				4
	$	117,371				$		56,065			$	61,306				$		—			$	(16,790				)
										Fair Value Measurements Recorded during the six months ended June 30, 2008
									Quoted Prices in Active Markets for Identical Assets (Level 1)					Significant other Observable Inputs (Level 2)
																			Significant Unobservable Inputs (Level 3)
			Fair Value at Measurement Date
																								Gains (losses)
Liabilities:
Senior unsecured notes			$		127,500				$	—				$	127,500				$	—				$	—
Warrants					28,261					—					28,261					—					—
			$		155,761				$	—				$	155,761				$	—				$	—

The Company accounted for the issuance of warrants, which were associated with the senior unsecured notes, in accordance with Accounting Principles Board Opinion (APB) No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants, whereby the Company separately measured the fair value of the senior unsecured notes and the warrants and allocated the total proceeds of $150 million on a pro-rata basis to each. Based on these fair value determinations the allocation of the proceeds to the senior unsecured notes and warrants was $122.8 million and $27.2 million, respectively, on the date of close of January 7, 2008 (see Note 4).

Investment in TerreStar Networks

The Company owns 11.1% of TerreStar Networks (a consolidated subsidiary of TerreStar Corporation) that it accounts for under the cost method. The Company evaluates impairment of such investments in accordance with Emerging Issues Task Force 03-01, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. Accordingly, the Company considers both triggering events and tangible evidence that investments are recoverable within a reasonable period of time, as well as its intent and ability to hold investments that may have become temporarily or otherwise impaired. During the three and six months ended June 30, 2008, the observable quoted market price of TerreStar Corporation common stock decreased. The decline in TerreStar Corporation’s stock price indicated there may have been a decline in the fair value of the Company’s investment in TerreStar Networks.

Upon the adoption of SFAS No. 157, the Company evaluated the various methods under which it had previously estimated the fair value of its investment in TerreStar Networks. Based on this assessment, the Company determined that its market based valuation approach (TerreStar Corporation Market Method) that utilizes observable quoted market inputs (Level 1 inputs under SFAS No. 157) and observable other than quoted market inputs (Level 2 inputs under SFAS No. 157), was at a higher level of the fair value hierarchy than other methods it had previously utilized. Accordingly, the Company used the TerreStar Corporation Market Method to perform its assessment of impairment of the investment in TerreStar Networks at both March 31, 2008 and June 30, 2008.

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At June 30, 2008, and March 31, 2008, the investment in TerreStar Networks valued under the TerreStar Corporation Market Method was $61.3 million and $69.7 million, respectively. Based on this valuation, the Company determined that the TerreStar Networks investment had become other than temporarily impaired at each balance sheet date. The investment was written down to $69.7 million and $61.3 million at March 31, and June 30, 2008, respectively, resulting in a charge of $8.4 million and $16.8 million during the three and six months ended June 30, 2008, respectively. There is no assurance that the proceeds from the ultimate disposition of this asset, if any, will be equal to or greater than the $61.3 million carrying amount recorded as of June 30, 2008.

The trading value of TerreStar Corporation common stock has continued to decline subsequent to June 30, 2008. The Company will evaluate the effect of the decline on the value of its investment in TerreStar Networks to determine if such decline is other-than-temporary in the third quarter of 2008.

Revenue Recognition

The Company generates revenue through the sale of the following satellite based services: capacity, telephony, data, and dispatch. The Company also sells equipment for use by end users. The Company recognizes revenue when services are performed or delivery has occurred, evidence of an arrangement exists, the fee is fixed or determinable, and collection is probable.

Capacity is the supply of bandwidth and power to customers who implement and operate their own networks. Capacity revenue is recognized as the service is provided.

Telephony is the supply of voice service to end users. Telephony customers are acquired through retail dealers or resellers. Retail dealers receive activation fees and earn commissions on monthly end user access and usage revenues. Resellers are under contractual arrangements with the Company for their purchase of monthly access and usage, and they manage the arrangements with the end user. Telephony customers are charged activation fees, fixed monthly access fees and variable usage charges, generally charged by minute of usage, depending on voice plan chosen. Monthly network access revenue is recognized in the month of service to the end-user. Variable usage revenue is recognized during the period of end-user usage. Activation fees are deferred and recognized ratably over the customer’s contractual service term, generally one year.

Data service provides transmission in an “always-on” fashion. Common applications for data customers include fleet and load management, credit card verification, e-mail, vehicle position reporting, mobile computing, and data message broadcasting. Customers are acquired through resellers. Resellers are under contractual arrangements for their purchase of monthly access and usage from the Company, and manage the arrangements with the end-user. Data service revenue is recognized in the month of service.

Dispatch service provides the wide-area equivalent of “push-to-talk” two-way radio service among users in customer defined groups. Dispatch service facilitates team-based group operations and is highly suited for emergency communications. Customers are acquired through dealers and resellers. Resellers are under contractual arrangements for their purchase of monthly access from the Company, and manage the arrangements with the end-user. Dispatch users pay a fixed monthly access fee for virtually unlimited monthly usage; however, the fee varies with the coverage available. Dispatch service revenue is recognized in the month of service.

New and existing subscribers to the Company’s network can purchase from the Company a range of satellite handset configurations. Hardware generally includes handsets, antennas, and cables, and can be purchased in “kits” that include the hardware a customer would typically need to utilize the satellite services. Resellers may purchase equipment in advance for purposes of resale to their end-users. Equipment generally does not carry a right of return, and revenue is recognized upon transfer of title, which occurs at the time of shipment to the customer.

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Capitalized Interest

Interest associated with the construction of the Company’s next generation satellites, launch rockets, and ground stations has been capitalized. Total and capitalized interest are as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2008		2007		2008		2007
Capitalized interest	$	16,498	$	6,829	$	30,681		$	11,294
Interest expense		9,632		10,557		21,347			22,685
Total interest	$	26,130	$	17,386	$	52,028		$	33,979

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded against deferred tax assets when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning in evaluating whether it is more likely than not that deferred tax assets will be realized. A valuation allowance has been recorded against substantially all of the Company’s deferred tax assets. The Company has recorded a deferred tax asset for MSV Canada. MSV Canada intends to carryback losses expected in the current and in future years to obtain refunds of taxes paid in prior years.

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes (FIN 48) on January 1, 2007. The adoption of FIN 48 did not impact the Company’s financial position or results of operations. The Company has concluded that there are no uncertain tax positions requiring recognition in its consolidated financial statements for any period through June 30, 2008. The Company’s policy is to recognize interest and penalties on its income tax matters in the income tax provision.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction and in various states and in foreign jurisdictions, primarily Canada and its provinces. Because the Company’s 2006 U.S. federal income tax return used net operating loss carryforwards dating, in part, back to 1993, some elements of income tax returns back to 1993 are subject to examination. The Company is currently under audit for income taxes by the U.S. federal government and by one U.S. state. The Company does not expect the results of those audits to have a material impact on the Company’s financial position or results of operations.

Other Comprehensive Loss

Comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For the three months ended June 30, 2008 and 2007, comprehensive loss was $36.6 million and $19.7 million, respectively. For the six months ended June 30, 2008 and 2007, comprehensive loss was $73.8 million and $41.9 million, respectively. The difference between net loss and comprehensive loss is due to foreign currency translation adjustments.

Loss Per Common Share

Basic loss per common share is computed by dividing net loss attributable to the common shareholders by the weighted average number of common shares outstanding for the period, excluding unvested restricted stock. Diluted loss per common share reflects the potential dilution for the exercise or conversion of securities into common stock. For the three and six months ended June 30, 2008 and 2007, options, warrants, and unvested restricted stock of 15,960,395, and 5,145,821, respectively were excluded from the computation of diluted net loss per common shares as the effect would have been anti-dilutive.

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Recent Pronouncements

In December 2007, the FASB issued Statement No. 141 (revised 2007), Business Combinations (SFAS No. 141R). SFAS No. 141R establishes principles and requirements for how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in a business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141R will be applied prospectively to business combinations that have an acquisition date on or after January 1, 2009. The impact of SFAS No. 141R on the Company’s consolidated financial statements will depend on the nature and size of acquisitions, if any, subsequent to the effective date.

Reclassifications

Certain prior-year amounts related to next generation expenditures have been reclassified within operating expenses to conform to the current-year presentation.

3. Acquisition of Minority Interests

On January 5, 2007, the Company acquired additional equity interests in MSV from BCE Inc. (BCE) (the BCE Exchange Transaction). On February 12, 2007 and November 30, 2007 the Company acquired additional equity interests in MSV from TerreStar Corporation. These transactions were accounted for under the purchase method of accounting and are described more fully in the Company’s annual report on Form 10-K for the year ended December 31, 2007. The following unaudited pro forma information is presented as if the Company had completed all the above transactions as of January 1, 2007. The pro forma information is not necessarily indicative of what the results of operations would have been had the transactions taken place at such date or of the future results of operations (in thousands except per share information):

	Three months ended June 30, 2007			Six months ended June 30, 2007
Pro forma revenues, unaudited	$	8,170		$	16,272
Pro forma depreciation and amortization, unaudited		7,834			15,788
Pro forma operating loss, unaudited		(17,381	)		(34,449	)
Pro forma net loss, unaudited		(22,754	)		(45,895	)
Pro forma net loss per share – basic and diluted, unaudited	$	(0.21	)	$	(0.43	)

4. Debt

Debt consisted of the following (in thousands):

	June 30, 2008			December 31, 2007
Senior secured discount notes, net	$	591,361		$	552,719
Senior unsecured notes, net		134,000			—
Vendor note payable		54,240			50,765
Note payable		725			1,058
Note payable due to Telesat Canada		91			224
		780,417			604,766
Less: Current portion		(816	)		(15,745	)
Total debt	$	779,601		$	589,021

Senior Secured Discount Notes

In March 2006, MSV issued Senior Secured Discount Notes in an aggregate principal amount of $750 million due at maturity, generating gross proceeds of $436.2 million. Interest on the notes accretes from the issue date at a rate of 14% per annum, until they reach full principal amount at April 1, 2010. Following April 1, 2010, interest will be payable semi-annually in arrears in cash at a rate of 14% per annum, with the first such payment being due on October 1, 2010. The Senior Secured Discount Notes will mature on April 1, 2013.

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The Senior Secured Discount Notes are secured by substantially all of MSV’s assets. Upon the occurrence of certain change of control events, each holder of Senior Secured Discount Notes may require the Issuers to repurchase all or a portion of its Senior Secured Discount Notes at a price of 101% of the accreted value, plus, after April 1, 2010, accrued interest. In April 2008, the beneficial owners of a majority in aggregate principal amount at maturity of the Senior Secured Discount Notes irrevocably waived compliance with any and all provisions of the Senior Secured Discount Notes that would, but for such waivers, require MSV to offer to repurchase or to repurchase any of the Senior Secured Discount Notes as the result of a change of control caused by the acquisition of beneficial ownership of voting or nonvoting common stock of SkyTerra by Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund L.P., Harbinger Capital Partners Fund I, L.P. (together Harbinger), or any of their affiliates (see Note 10). Such waivers do not apply to any change of control other than a change of control involving Harbinger or its affiliates.

The terms of the Senior Secured Discount Notes require MSV to comply with certain covenants that restrict some of the Company’s corporate activities, including MSV’s ability to incur additional debt, pay dividends, create liens, make investments, sell assets, make capital expenditures, repurchase equity or subordinated debt, and engage in specified transactions with affiliates. MSV may incur indebtedness beyond the specific baskets allowed under the Senior Secured Discount Notes, provided it maintains a leverage ratio (as defined) of 6 to 1. Noncompliance with any of the covenants without cure or waiver would constitute an event of default under the Senior Secured Discount Notes. An event of default resulting from a breach of a covenant may result, at the option of the note holders, in an acceleration of the principal and interest outstanding. The Senior Secured Discount Notes also contain other customary events of default (subject to specified grace periods), including defaults based on events of bankruptcy and insolvency, and nonpayment of principal, interest or fees when due. MSV was in compliance with the covenants of the Senior Secured Discount Notes as of June 30, 2008.

Senior Unsecured Notes

On January 7, 2008, Harbinger purchased $150 million of MSV’s Senior Unsecured Notes due 2013 (the Senior Unsecured Notes) and ten year warrants to purchase 9.1 million shares of the Company’s common stock, with an exercise price of $10 per share. The Senior Unsecured Notes bear interest at a rate of 16.5%, payable in cash or in-kind, at MSV’s option, until December 15, 2011, and thereafter payable in cash. The Senior Unsecured Notes mature on May 1, 2013. 

The Company accounted for the issuance of the warrants in accordance with APB No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants, whereby the Company separately measured the fair value of the Senior Unsecured Notes and the warrants and allocated the total proceeds of $150 million on a pro-rata basis to each. The proceeds allocated to the warrants were credited to paid-in capital and the resulting discount from the face value of the Senior Unsecured Notes is amortized using the effective interest rate method over the term of the Senior Unsecured Notes. The fair value of the Senior Unsecured Notes of $127.5 million was estimated based on then-current yields of comparable securities (Level 2 inputs under SFAS No. 157). The fair value of the warrants of $28.3 million was estimated using the Black-Scholes option pricing model and the following assumptions: expected volatility of 58.4%, term of 10 years, risk free interest rate of 4.2%, and no dividend yield. Based on these fair value determinations, the allocation of the proceeds to the Senior Unsecured Notes and the warrants was $122.8 million and $27.2 million, respectively.

In June 2008, the Company made its scheduled interest payment on the Senior Unsecured Notes through the issuance of $10.9 million of additional Senior Unsecured Notes, which are included in the balance of Senior Unsecured Notes in the balance sheet as of June 30, 2008.

The Securities Purchase Agreement governing the Senior Unsecured Notes grants to Harbinger the right of first negotiation to discuss the issuance of additional equity securities by the Company in private placement financing transactions. Should the Company and Harbinger not agree on the terms for such a transaction, Harbinger has the right to maintain their percentage ownership interest through pro rata purchases of shares of common stock in issuances to third parties, subject to a number of exceptions. The Senior Unsecured Notes have subsidiary guarantees and covenants similar to those contained in the Senior Secured Discount Notes, with such modifications as appropriate to reflect the financial terms of the Senior Unsecured Notes. The Securities Purchase Agreement also contains more restrictive covenants regarding mergers, consolidation and transfer of assets and restricted payments. The more restrictive covenants, the right of first negotiation and the pre-emptive rights expire once Harbinger and their affiliates beneficially own less than 5% of the outstanding common stock of the Company or, if earlier, on December 31, 2011.

The terms of the Senior Unsecured Notes require MSV to comply with certain covenants that restrict some of MSV’s corporate activities, including MSV’s ability to incur additional debt, pay dividends, create liens, make

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investments, sell assets, make capital expenditures, repurchase equity or subordinated debt, and engage in specified transactions with affiliates. Noncompliance with any of the covenants without cure or waiver would constitute an event of default under the Senior Unsecured Notes. An event of default resulting from a breach of a covenant may result, at the option of the note holders, in an acceleration of the principal and interest outstanding. The Senior Unsecured Notes also contain other customary events of default (subject to specified grace periods), including defaults based on events of bankruptcy and insolvency, and nonpayment of principal, interest or fees when due. MSV was in compliance with the covenants of the Senior Unsecured Notes as of June 30, 2008.

Notes Payable – Vendor

MSV has financed $54.2 million of satellite vendor payments with secured vendor notes payable (Notes Payable - Vendor) that bear interest of LIBOR plus 400 basis points plus a 2% administrative fee. The Notes Payable - Vendor are secured by the satellites under construction. On July 3, 2008, MSV and Boeing entered into an agreement that amended the terms of the Notes Payable - Vendor along with other terms of the related satellite system procurement contract (See Note 6 “Boeing Contract”). The amendment provides that existing Notes Payable – Vendor will be due and payable upon the earlier of December 20, 2010 or ten days prior to shipment of the MSV-2 satellite, currently planned for the second half of 2010.

Prior to the amendment, MSV was to have begun repayment of the Notes Payable - Vendor within one month of reaching the maximum available deferrals, previously estimated to occur in the fourth quarter of 2008, with final payment in the first quarter of 2010. As the contract amendment was consummated prior to the issuance of the Company’s June 30, 2008 financial statements, all Notes Payable - Vendor that previously had been expected to be repaid within one year of June 30, 2008, prior to the amendment, have been classified as long-term pursuant to Statement of Financial Accounting Standards No. 6, Classification of Short-Term Obligations Expected to Be Refinanced, in the accompanying balance sheet as of June 30, 2008.

Note Payable

In June 2007, MSV entered into an agreement with a third party to finance the purchase of software. Total payments under the agreement are $1.6 million, including all principal and interest. The quarterly payments are fixed and are paid quarterly over the two year term, ending in April, 2009. The imputed interest rate is 11%. The note is secured by an interest in the related software license.

Remaining future minimum payments as of June 30, 2008 related to the Company’s debt agreements, described above, are as follows for the years ended December 31 (in thousands):

2008	$	15,729
2009		34,416
2010		146,108
2011		146,380
2012		151,251
Thereafter		980,084
Total future payments		1,473,968
Less: interest		(507,980	)
Principal portion	$	965,988

5. Equity Based Compensation Plans

SkyTerra Equity-Based Compensation Plans

SkyTerra maintains a long-term incentive plan, a nonqualified stock option plan, and an equity incentive plan, that allows for the granting of options and other equity-based awards. The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model. The expected term of option awards has been calculated as the midpoint between the vesting date and the end of the contractual term of the option as historical data for SkyTerra is not sufficient for purposes of estimating the expected term of new grants. The risk-free rate is based on U.S. Treasury yields for securities with similar terms. Volatility is calculated based on the trading prices of SkyTerra common stock.

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Assumptions used in determining the fair value of SkyTerra options:

	Six months ended June 30, 2008
Expected volatility	58%-60%
Expected term (years)	6
Expected dividends	0%
Risk free rate	2.6%-3.3%

As of June 30, 2008, the Company has outstanding awards of 1,860,000 restricted shares of common stock to executives and board members. Certain of those restricted shares contain vesting based on market conditions. The fair value of the restricted stock grants containing market conditions and deemed service periods were estimated using a Monte Carlo simulation model. The total equity-based compensation expense related to the SkyTerra equity awards recognized during the six months ended June 30, 2008 and 2007 was $3.0 million and $2.5 million, respectively, and $1.9 million and $1.3 million for the three months ended June 30, 2008 and 2007, respectively. As of June 30, 2008, the total unrecognized compensation related to SkyTerra equity-based compensation is $11.8 million, which is expected to be recognized over a weighted-average period of 2.0 years.

On February 22, 2008 the Boards of Directors of the Company and MSV GP approved a modification of certain outstanding options to purchase the Company’s common stock and MSV’s Limited Investor Units, respectively, that decreased the exercise prices of certain options to an exercise price equal to the current fair market value of the underlying common stock and Limited Investor Units, respectively. As a result of this modification the Company recorded $0.2 and $2.2 million of additional compensation expense in the three and six months ended June 30, 2008, respectively, of which $0.2 million and $2.1 million, respectively, related to the modification of options to purchase Limited Investor Units. This modification will result in the recognition of additional compensation expense in future periods totaling $1.0 million related to unvested options, of which $0.9 million relates to the modification of options to purchase Limited Investor Units, and $0.1 million relates to SkyTerra options.

During the three months ended June 30, 2008 the Company made grants of equity based compensation in the form of restricted shares and options to certain executives and members of the Board of Directors. On May 5, 2008, the Company and MSV entered into new employment agreements with its Alexander H. Good, Chief Executive Officer and President and Scott Macleod, Executive Vice President and Chief Financial Officer. In connection with the new employment agreements Messrs. Good and Macleod were granted 600,000 and 400,000 shares of restricted stock of the Company, respectively. During the three months ended June 30, 2008 the Company recognized $0.5 million in compensation expense related to these awards.

During the three months ended June 30, 2008 the Company made grants of 120,000 options and 135,000 restricted shares to certain members of the Board of Directors. During the three months ended June 30, 2008 the Company recognized $0.4 million in compensation expense related to these awards.

On March 14, 2008, the Company commenced an exchange offer (the Exchange Offer) to all current MSV option holders to grant them new options under the Company’s Stock Option Plan in exchange for surrender and termination of their MSV options. In accordance with the terms of the Exchange Offer, all participating option holders would receive options in the Company’s plan at a ratio of 2.82 SkyTerra options for each MSV option terminated, with an exercise price equal to the exercise price of the MSV options terminated divided by 2.82. Sale of all shares subject to the options received upon exchange is subject to restrictions until May 1, 2010, with certain exceptions described in the Exchange Offer that could result in earlier termination of the restrictions. The Exchange Offer is currently scheduled to close on August 6, 2008. While the Company intends to complete the Exchange Offer, there is no guarantee that it will be completed, it is uncertain what percentage of the MSV option holders will elect to participate, and what the final terms of the Exchange Offer may be.

MSV Unit Option Incentive Plan

MSV maintains a unit option incentive plan (MSV Unit Option Incentive Plan), that allows for the granting of options and other unit based awards to employees and directors upon approval by MSV’s Board of Directors. The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model. The expected term of option awards has been calculated as the midpoint between the vesting date and the end of the contractual term of the option as historical data for MSV is not sufficient for purposes of estimating the expected term of new grants. The risk-free rate is based on U.S. Treasury yields for securities with similar terms. Volatility is calculated based on the trading prices of SkyTerra common stock.

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The fair value of Limited Investor Units underlying the equity-based awards is an input to the determination of the fair value of equity-based awards. The Company utilized a market approach to estimate the fair value of Limited Investor Units at each date on which equity-based awards were granted, based on the observable trading stock price of SkyTerra common stock, adjusted to account for differences in volatility and liquidity. Beginning in 2008, MSV used a 2.82 exchange ratio between the observable market trading price of SkyTerra and MSV, to value a Limited Investor Unit.

Assumptions used in determining the fair value of MSV unit options:

	Six months ended June 30,
	2008	2007
Expected volatility	58%-59%	53%-56%
Expected term (years)	6	6
Expected dividends	0%	0%
Risk free rate	2.1%-3.3%	4.1%-5.2%

The Company recognizes compensation expense on a straight-line basis over the requisite service period. The total equity-based compensation expense related to the MSV Unit Option Incentive Plan recognized during the six months ended June 30, 2008 and 2007 was $4.3 million and $1.3 million, respectively, and $1.1 million and $0.7 million for the three months ended June 30, 2008 and 2007, respectively. The total equity-based compensation capitalized as system under construction related to the MSV Unit Option Incentive Plan during the six months ended June 30, 2008 and 2007 was $0.3 million and $0.2 million, respectively. As of June 30, 2008, the total unrecognized compensation related to MSV equity-based compensation was $4.6 million, which will be recognized over a weighted-average period of 1.1 years.

6. Commitments and Contingencies

Boeing Contract

MSV has a fixed price contract with Boeing Satellite Systems, Inc. (Boeing) for the comprehensive design, development, construction, manufacturing, testing, and installation of a space-based next generation network, providing satellite launch support and other services related to mission operations and system training. The Company is constructing two satellites under this contract: MSV-1 and MSV-2. Each satellite is contracted to have a mission life of 15 years with performance incentives to be paid, if earned, upon reaching milestones during their operating life. Boeing has a first lien on each satellite and related work until title and risk of loss transfers to the Company upon launch.

On July 3, 2008, MSV entered into an agreement with Boeing to amend its existing contract with respect to its satellite system procurement. The amendment provides MSV with an additional $40 million of construction payment deferrals on the second satellite under the contract, with an interest rate of LIBOR plus 400 basis points. The original construction payment deferral was in the amount of $76 million. The amendment provides that the original deferrals and the additional deferrals associated with the construction payments will be due and payable upon the earlier of December 20, 2010 or ten days prior to shipment of the MSV-2 satellite, currently planned for the second half of 2010. Prior to the amendment, MSV was to have begun repayment of the original $76 million construction deferrals within one month of reaching the maximum available deferrals, previously estimated to occur in the fourth quarter of 2008, with final payment in the first quarter of 2010.

In exchange for the additional deferrals and deferral extension date, SkyTerra will issue Boeing warrants exercisable for 626,002 shares of SkyTerra voting common stock with an exercise price of $10 per share, subject to certain anti-dilution adjustments, with an exercise period of 10 years, vesting on a proportional basis consistent with the drawdown against the additional deferral amounts. In addition, the delivery date for the MSV-2 satellite was extended by four months, to July 11, 2010, which is within the regulatory license milestone requirements. Finally, MSV agreed that in the event any liquidated damages would be due and payable by Boeing for late delivery of either satellite system, $19 million of any such liquidated damages that would have been earned back by Boeing over a more extended period, would be accelerated and able to be earned back by Boeing over a period of two and one-half years.

If MSV were to elect to terminate the Boeing contract, the Company would be subject to termination charges, including repayment of outstanding payment deferrals, ranging from $190 million to $250 million,

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declining in mid-2009. Partial termination charges would range from $93 million to $117 million. Future minimum contractual payments exclude all potential performance incentives (which could total a maximum of $96.7 million), interest payments on performance incentives, deferred construction payments, and options.

Launch Contracts

In May 2007, MSV entered into fixed price contracts with ILS International Launch Services, Inc. and Sea Launch Company, LLC to launch the next generation satellites. The launch window for MSV-1 is expected to open in the fourth quarter of 2009, and continue through the first quarter of 2010.  The launch of MSV-1 is currently expected to occur in the first quarter of 2010.  The launch of MSV-2 is currently expected to occur in the second half of 2010. The aggregate cost for these services is $174.8 million. MSV may incur liquidated damages if the contracts are terminated by the Company. If MSV were to terminate the contracts prior to September 2008, the maximum damages would be $8.9 million, in addition to amounts paid to date. If MSV were to terminate the contracts after March 2009 it would not be obligated to make additional payments, and would receive back only a portion of its previously made payments. Through June 30, 2008, the Company has made payments totaling $17.8 million related to these contracts.

HNS Contract

MSV entered into an agreement with Hughes Network Systems, LLC (HNS), a related party of the Apollo stockholders, which at the time owned a substantial percentage of the Company’s outstanding voting common stock, and currently a related party to Harbinger, to purchase four base transceiver subsystems and air interface technology for a fixed price of $43.0 million. The transceiver subsystems integrate the satellites into the next generation network.

Inmarsat Cooperation Agreement

In December 2007, to further organize large blocks of contiguous spectrum for the use of MSV, SkyTerra, and MSV Canada (together the MSV Parties), the MSV Parties and Inmarsat Global Limited (Inmarsat) entered into a Cooperation Agreement relating to the use of L-band spectrum for mobile satellite and ATC services in North America. The Cooperation Agreement addresses a number of regulatory, technology and spectrum coordination matters involving L-band spectrum.

Upon receipt of an investment of $100 million in MSV by a third party for general corporate purposes and election by the MSV Parties to trigger certain provisions, the MSV Parties will be able to expand their trials and deployments to a broadband ATC trial using wider spectrum bandwidths, on a specific designation of combined Inmarsat and MSV spectrum in a pre-agreed market. Simultaneously upon the election by the MSV Parties regarding such an investment, the Company is required to issue to Inmarsat $31.3 million of the Company’s common stock, valued in accordance with terms of the agreement.

Upon the occurrence of certain events, including regulatory approvals and coordination among other L-band operators, MSV and MSV Canada, would, over time, have the potential for coordinated access for up to 2 x 23 MHz (including large blocks of contiguous channels) through several phases.

Upon the occurrence of certain events, until September 1, 2011, the MSV Parties have the option (the Phase 1 Option), subject to certain conditions, to effect a transition to a modified band plan within an 18 to 30 month period. Such transition will include modification of certain of Inmarsat’s network and end user devises and a shift in frequencies between the MSV Parties and Inmarsat which would lead to additional spectrum contiguity and more relaxed operating rules for the Company. Over the transition period, the MSV Parties will be required to make payments to Inmarsat of $250 million in cash. Upon the commencement of Phase 1, the Company will issue to Inmarsat a number of shares of the Company’s common stock having a value of $31.3 million, valued in accordance with terms of the agreement. In accordance with the terms of the agreement, Inmarsat and the MSV Parties are in discussions as to whether the closing of the Senior Unsecured Notes will be designated by the MSV Parties as a triggering investment and, if so, what the valuation of the Company’s common stock would be in connection with the required stock issuance. Upon the completion of the transition of the spectrum in Phase 1, the Company will issue to Inmarsat a number of shares of the Company’s common stock having a value of $56.3 million based on the average closing price of the Company’s common stock for the prior forty five (45)-trading day period. The MSV Parties have the option to accelerate the transition timing by accelerating payment to Inmarsat of $50 million that would be credited towards the $250 million in cash payments.

Subsequent to the exercise of the Phase 1 Option, between January 1, 2010 and January 1, 2013, the MSV Parties have the option (the Phase 2 Option) for Inmarsat to modify its North American operations in a manner that

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will make significant additional spectrum available to MSV at a cost of $115 million per year. If the MSV Parties do not exercise the Phase 2 Option, then between January 1, 2013 and January 1, 2015, Inmarsat would have the option to require the MSV Parties to exercise the Phase 2 Option on the same terms.

In consideration for the operational transition of spectrum to one or more of the band plans described above, the MSV Parties have agreed to allow Inmarsat continued use of loaned spectrum under dispute (subject to a potential dispute resolution process) and an additional loan of a lesser amount of spectrum.

Certain provisions in the Cooperation Agreement are subject to regulatory approvals. On March 26, 2008, the Administrations of Canada, the United Kingdom, and the United States of America exchanged letters accepting in part the Cooperation Agreement and effectively coordinating the current and next-generation satellite networks of the MSV Parties and Inmarsat, and have notified the ITU accordingly. Additional approvals are required, however, before coordination of the satellite networks, under all phases specified in the Cooperation Agreement, will be complete. There can be no assurance that such approvals or other necessary approvals will be received, or that the conditions necessary for the operation of certain other provisions of the Cooperation Agreement will be met.

During the three months ended June 30, 2008 the Company and Inmarsat exchanged certain spectrum rights. The Company has determined that the non-monetary transactions did not result in significant changes to the expected cash flows to the Company, and therefore lack commercial substance as defined in APB No. 29, Accounting for Nonmonetary Transactions.

Leases

Office facility leases may provide for escalations of rent or rent abatements and payment of pro rata portions of building operating expenses. The Company records rent expense using the straight-line method over the term of the lease agreement. MSV has non-cancelable operating leases that expire starting in December 2008.

Other Agreements

In September 2006, a minority stakeholder in SkyTerra’s MSV Investors, LLC subsidiary distributed to its shareholders all of its assets other than its interest in MSV Investors. Such shareholders indemnified the Company for any taxes imposed on the minority stakeholder for any taxable period or portion thereof ending on or prior to September 26, 2006, including all liabilities for taxes relating to the distribution of its assets as described above. On September 26, 2006, such shareholders paid the Company $7.5 million of cash to pay such taxes. To the extent that the tax liability is less than $7.5 million, the Company will refund the difference. If the former shareholders are unable to pay taxes that exceed the $7.5 million, the Company will be required to make such payments. During the third quarter of 2008, the Company is expected to make a refund to the former shareholders.

Prior to the BCE Exchange Transaction, TMI Delaware distributed to BCE and its affiliates all of the assets of TMI Delaware other than its limited partnership interests in MSV and its common stock of MSV GP. Under the terms of the exchange agreement between the Company and BCE, BCE has indemnified the Company for any taxes imposed on TMI Delaware for any taxable period or portion thereof ending on or prior to the closing of the BCE Exchange Transaction, including all liabilities for taxes relating to the distribution of its assets. At closing, BCE transferred $37.0 million of cash to TMI Delaware that the Company will use to pay such taxes. To the extent that the tax liability is less than $37.0 million, the Company will refund to BCE the difference. During the third quarter of 2008, TMI Delaware will file its income tax returns reflecting the BCE Exchange Transaction and it is expected to make a refund to BCE.

In March 2008, MSV entered into an agreement with Telesat Canada for joint operational services for the MSV-1 and MSV-2 satellites, the development of operation and control software, and the provision of telemetry, tracking and control services once the satellites are in designated orbital positions.  Telesat Canada will provide these services through 2025 assuming the satellites reach full mission life. MSV is entitled to delay the start of services for up to one year due to launch delays without any impact to pricing. The Company has a contract with Telesat Canada for the provision of telemetry, tracking and control services to the Company for its existing satellites. Future minimum payments related to these agreements, reflected in the table below as satellite operational services, assume MSV-1 and MSV-2 reach their full mission life.

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Future minimum payments related to the Company’s commitments are as follows as of June 30, 2008 for the years ending December 31 (in thousands):

	Leases		Boeing (a)		HNS		Launch Services		Satellite Operational Services		Other		Total
2008	$	1,274	$	36,104	$	8,829	$	20,210	$	1,667	$	5,908	$	73,992
2009		2,008		66,380		10,946		98,316		2,884		3,924		184,458
2010		2,194		79,426		—		38,589		1,884		300		122,393
2011		615		—		—		—		1,434		158		2,207
2012		336		—		—		—		1,434		158		1,928
Thereafter		4,661		—		—		—		17,447		1,895		24,003
	$	11,088	$	181,910	$	19,775	$	157,115	$	26,750	$	12,343	$	408,981

(a)  Amounts exclude in-orbit incentives, and associated interest. Amounts also exclude payments to Boeing under vendor notes payable, as such amounts are included in the future payments related to debt.

Litigation and Claims

The Company is periodically a party to lawsuits and claims in the normal course of business. While the outcome of the lawsuits and claims against the Company cannot be predicted with certainty, management believes that the ultimate resolution of the matters will not have a material adverse effect on the financial position or results of operations of the Company.

Contingencies

From time to time, contingencies may arise in the ordinary course of business activities. The Company recognizes a liability for contingencies when it is probable that future expenditures will be made and expenditures can be reasonably estimated.

7. Income Taxes

SkyTerra and its eligible subsidiaries file a consolidated United States federal income tax return. As a limited partnership, MSV is not subject to income tax. SkyTerra is subject to income tax based on its share of MSV’s income or loss (99.3%). MSV’s Canadian subsidiary and MSV Canada are taxed as corporations in Canada. The Company’s effective tax rate differs from the Federal statutory rate of 34.0%, due primarily to operating losses for which a valuation allowance has been recognized.

As of December 31, 2007, SkyTerra and the consolidated subsidiaries had unused net operating loss (NOL) carryforwards of $112.7 million expiring from 2020 through 2027. Utilization of U.S. NOL carryforwards may be subject to an annual limitation if the Company experiences an ownership change as defined by Section 382 of the Internal Revenue Code. On or about April 9, 2008, the Company is likely to have had such an ownership change. The Company is in the process of evaluating whether or not a change occurred and what the impact, if any, would be. Due to the Company’s full valuation allowance on its U.S. NOL carryforwards and other deferred tax assets, a limitation would not materially change the Company’s net deferred tax assets. Despite NOL carryforwards, the Company may have a future income tax liability due to alternative minimum tax or state or foreign tax requirements.

8. Related Party Transactions

Prior to their spin-off in October 2007 by BCE (which holds a significant interest in the Company), Telesat and Infosat Communications were related parties through common ownership by BCE. Through common ownership by the Apollo Stockholders, the Company’s related parties also included HNS and Hughes Telematics, Inc. In April 2008, Harbinger acquired substantially all of Apollo’s interests in the Company.

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Through common ownership by Harbinger, the Company’s related parties include Inmarsat, TerreStar Corporation, TerreStar Networks and HNS. The Company’s related parties also include LCC International Inc., which is controlled by a former limited partner and former member of MSV GP’s Board of Directors. Certain of MSV’s intellectual property was acquired by assignment from entities controlled by such former limited partner. In certain circumstances where the Company may generate royalties from licensing its ATC intellectual property to third parties, the Company may be required to share a portion of such royalty payments with such former limited partner and related entities. The following tables summarize related party transactions (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2008		2007		2008		2007
Income, including management fees	$	162	$	566	$	335		$	1,134
Expenses		—		1,257		1,010			1,952
Costs related to system under construction		4,398		4,300		10,913			4,300

	As of June30, 2008		As of December 31, 2007
Due from related parties	$	104	$	617
Due to related parties		7,226		247

9. Segment Information

Operating segments are defined as components of an enterprise for which separate financial information is available and is evaluated on a regular basis by the chief operating decision makers in deciding how to allocate resources to an individual segment and in assessing performance of the segment.

The Company has three reporting segments: MSV next generation, MSV MSS, and SkyTerra corporate. The MSV next generation segment relates to activities to deploy a next generation satellite system. The MSV MSS segment relates to MSV’s provision of mobile satellite services that support the delivery of data, voice, fax and dispatch radio services using its existing in-orbit satellites. The SkyTerra Corporate segment relates to activities related to the publicly traded holding company. Substantially all of the Company’s recent capital expenditures relate to MSV next generation. Management reviews the assets and financial position of MSV next generation and MSV MSS on a combined basis as a significant portion of the Company’s assets are shared between these segments. Assets are not segregated between these segments, and management does not use asset information by these segments to evaluate segment performance.

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The following tables present certain financial information on the Company’s reportable segments for the three and six months ended June 30, 2008 and 2007 (in thousands):

	Three months ended June 30, 2008 In Thousands
	MSV Next Generation			MSV MSS		Total MSV			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	7,427	$	7,427		$	—		$	—	$	7,427
Equipment sales		—			1,162		1,162			—			—		1,162
Other revenues		—			219		219			—			—		219
Total revenues		—			8,808		8,808			—			—		8,808
Operating expenses:
Cost of equipment sold		—			928		928			—			—		928
Operations and cost of services (exclusive of depreciation and amortization)		3,022			3,923		6,945			—			—		6,945
Sales and marketing		1,142			958		2,100			—			—		2,100
Research and development (exclusive of depreciation and amortization)		3,147			—		3,147			—			—		3,147
General and administrative		3,807			1,721		5,528			2,790			—		8,318
Depreciation and amortization		7,546			650		8,196			—			—		8,196
Total operating expenses		18,664			8,180		26,844			2,790			—		29,634
Operating profit (loss)	$	(18,664	)	$	628	$	(18,036	)	$	(2,790	)	$	—	$	(20,826	)

	Three months ended June 30, 2007 In Thousands
	MSV Next Generation			MSV MSS		Total MSV			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	6,799	$	6,799		$	—		$	—	$	6,799
Equipment sales		—			1,097		1,097			—			—		1,097
Other revenues		—			274		274			—			—		274
Total revenues		—			8,170		8,170			—			—		8,170
Operating expenses:
Cost of equipment sold		—			892		892			—			—		892
Operations and cost of services (exclusive of depreciation and amortization)		1,887			3,963		5,850			—			—		5,850
Sales and marketing		1,123			947		2,070			—			—		2,070
Research and development (exclusive of depreciation and amortization)		2,132			—		2,132			—			—		2,132
General and administrative		3,227			1,518		4,745			2,028			—		6,773
Depreciation and amortization		6,990			598		7,588			—			—		7,588
Total operating expenses		15,359			7,918		23,277			2,028			—		25,305
Operating profit (loss)	$	(15,359	)	$	252	$	(15,107	)	$	(2,028	)	$	—	$	(17,135	)

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	Six months ended June 30, 2008 In Thousands
	MSV Next Generation			MSV MSS		Total MSV			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	14,542	$	14,542		$	—		$	—	$	14,542
Equipment sales		—			2,384		2,384			—			—		2,384
Other revenues		—			475		475			—			—		475
Total revenues		—			17,401		17,401			—			—		17,401
Operating expenses:
Cost of equipment sold		—			1,902		1,902			—			—		1,902
Operations and cost of services (exclusive of depreciation and amortization)		5,622			7,986		13,608			—			—		13,608
Sales and marketing		2,698			2,045		4,743			—			—		4,743
Research and development (exclusive of depreciation and amortization)		7,254			—		7,254			—			—		7,254
General and administrative		7,760			3,927		11,687			4,208			—		15,895
Depreciation and amortization		14,985			1,293		16,278			—			—		16,278
Total operating expenses		38,319			17,153		55,472			4,208			—		59,680
Operating profit (loss)	$	(38,319	)	$	248	$	(38,071	)	$	(4,208	)	$	—	$	(42,279	)

	Six months ended June 30, 2007 In Thousands
	MSV Next Generation			MSV MSS		Total MSV			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	13,492	$	13,492		$	—		$	—	$	13,492
Equipment sales		—			2,284		2,284			—			—		2,284
Other revenues		—			496		496			—			—		49
Total revenues		—			16,272		16,272			—			—		16,272
Operating expenses:
Cost of equipment sold		—			1,873		1,873			—			—		1,873
Operations and cost of services (exclusive of depreciation and amortization)		3,528			7,775		11,303			—			—		11,303
Sales and marketing		1,469			1,618		3,087			—			—		3,087
Research and development (exclusive of depreciation and amortization)		4,207			—		4,207			—			—		4,207
General and administrative		6,917			3,474		10,391			4,072			—		14,463
Depreciation and amortization		12,758			1,176		13,934			—			—		13,934
Total operating expenses		28,879			15,916		44,795			4,072			—		48,867
Operating profit (loss)	$	(28,879	)	$	356	$	(28,523	)	$	(4,072	)	$	—	$	(32,595	)

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The following tables present balance sheet information for the Company’s reportable segments as of June 30, 2008 and December 31, 2007 (in thousands):

	As of June 30, 2008
	Total MSV		SkyTerra		Eliminations			SkyTerra Consolidated
Total assets	$	1,332,221	$	98,133	$	(32,517	)	$	1,397,837
Senior secured discount notes, net		591,361		—		—			591,361
Senior unsecured notes, net		134,000		—		—			134,000
Notes payable		55,056		5,125		(5,125	)		55,056
Total liabilities		811,541		14,666		(5,301	)		820,906
Total equity		520,679		83,402		(27,437	)		576,644
	As of December 31, 2007
	Total MSV		SkyTerra		Eliminations			SkyTerra Consolidated
Total assets	$	1,180,248	$	119,960	$	(5,173	)	$	1,295,035
Senior secured discount notes, net		552,719		—		—			552,719
Notes payable		52,047		5,125		(5,125	)		52,047
Total liabilities		637,602		45,880		(5,173	)		678,309
Total equity		542,646		74,080		(508	)		616,218

10. Subsequent Events

On July 25, 2008, SkyTerra, MSV, and MSV Finance Co. entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which MSV and MSV Finance Co. will issue to Harbinger up to $500,000,000 aggregate principal amount of 16.0% Senior Unsecured Notes due July 1, 2013 (the “Notes”) in four tranches, with the first tranche available on January 6, 2009. In conjunction with the issuance of Notes pursuant to the Securities Purchase Agreement, SkyTerra will issue to Harbinger warrants to purchase up to an aggregate of 25,000,000 shares of non-voting common stock of SkyTerra at an exercise price of $0.01 per share of non-voting common stock. Harbinger’s purchase of these Notes is not conditioned upon the commencement or consummation of a business combination with Inmarsat, as described below. Harbinger may not be required to fund the committed financing under certain circumstances, including upon the occurrence of an event that could be deemed a material adverse change.

On the same date, the Company, MSV and Mobile Satellite Ventures Subsidiary LLC entered into a Master Contribution and Support Agreement (the “Master Agreement”) and certain other agreements with Harbinger and certain of its affiliates. The Master Agreement provides for the possible combination of SkyTerra and Inmarsat, subject to the receipt of required regulatory and antitrust clearances. SkyTerra and Harbinger expect the regulatory approval process, which includes approval from the U.S. Federal Communications Commission, other telecommunications approvals, and antitrust clearances to take approximately 12 to 18 months. Assuming an acceptable conclusion to the regulatory and competition approval process, the proposed business combination with Inmarsat would be structured as an offer by SkyTerra to acquire all issued and to be issued shares of Inmarsat not owned by Harbinger (the "Offer"), on terms to be determined by Harbinger and in accordance with the Master Agreement. As a result of the timing of the regulatory approvals, it is not the intention of SkyTerra and Harbinger to announce the formal terms or structure of a possible Offer at this stage.

If Harbinger decides to proceed with the Offer following the receipt of required regulatory approvals, Harbinger would arrange for committed equity and debt financing to fund the Offer. SkyTerra would undertake to use its best efforts to assist Harbinger in obtaining debt financing. To provide equity financing for the Offer, Harbinger may purchase newly issued shares of SkyTerra voting common stock for $2.4 billion in cash or such other amount as Harbinger may determine. The per share purchase price for the newly issued shares will be $10.00 per share subject to an adjustment ratchet relating to the successful Offer price paid for each Inmarsat share. If the Offer price for each Inmarsat share is greater or lower than 535 British Pence Sterling then the purchase price for the newly issued SkyTerra shares will increase or decrease proportionately (adjustment ratchet). The 535 British Pence Sterling per share and $10.00 per share prices are reference prices for the purposes of the Master Agreement and the arrangements between Harbinger and SkyTerra. The 535 British Pence Sterling per share does not constitute a term or reference price for the Offer. No Offer pricing discussion has taken place with the board of Inmarsat and no determination has been made by SkyTerra or Harbinger as to any appropriate Offer price. SkyTerra shareholders

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other than Harbinger may participate in the equity financing for the Offer through a rights offering of voting common stock up to $100 million.

If the Offer is completed Harbinger would contribute to SkyTerra 132 million ordinary shares in Inmarsat and $37.6 million in aggregate principal value of 1.75% convertible bonds issued by Inmarsat and due in 2017, in each case currently owned by Harbinger and its affiliates. Harbinger would also contribute to SkyTerra equity interests that Harbinger has relating to an option to acquire in TVCC Holding Company, LLC, which has a lease that provides it the exclusive right to use 5 MHz of nationwide spectrum from 1670-1675 MHz. In exchange for such contributions, SkyTerra would issue to Harbinger new shares of voting common stock at $10.00 per share subject to the adjustment ratchet. The issuance of new voting and non-voting shares of SkyTerra common stock will be subject to SkyTerra shareholder approval.

As of July 31, 2008 Harbinger owns approximately 28.8% of the issued and outstanding ordinary shares of Inmarsat, and approximately 48.4% of the issued and outstanding shares of voting stock of SkyTerra. Upon completion of the proposed business combination of SkyTerra and Inmarsat, it is expected that Harbinger will own in excess of 85.0% of the outstanding voting stock of the combined entity.

Effective August 4, 2008, the Company entered into a retention bonus arrangement with Mr. Drew Caplan (see Item 5. Other Information for further details).

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Item2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy, expectations and intentions. The Company urges you to consider that statements that use the terms “believe,” “do not believe,” “anticipate,” “expect,” “plan,” “estimate,” “intend” and similar expressions are intended to identify forward-looking statements. These statements reflect the Company’s current views with respect to future events. Because the Company’s business is subject to numerous risks, uncertainties and risk factors, the Company’s actual results could differ materially from those anticipated in the forward-looking statements, including those set forth below under this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Actual results will most likely differ from those reflected in these statements, and the differences could be substantial. The Company disclaims any obligation to publicly update these statements, or disclose any difference between the Company’s actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Overview

The Company’s operating and development activity is performed through its 99.3% owned consolidated subsidiary MSV. The Company currently offers a range of mobile satellite services using two geostationary satellites that support the delivery of data, voice, fax and dispatch radio services. MSV and Mobile Satellite Ventures (Canada) Inc. (MSV Canada), a consolidated variable interest entity, are licensed by the United States and Canadian governments, respectively, to operate both current and next generation satellite systems in the L-band spectrum which MSV and MSV Canada have coordinated for their use. MSV holds an ancillary terrestrial component (ATC) authorization, that will allow operation of a satellite/terrestrial hybrid network in the United States. Deployment of an ATC network has not yet begun, and development is in process. The Company’s spectrum footprint covers a total population of nearly 330 million.

The Company is developing a next generation integrated satellite and terrestrial communications network to provide ubiquitous wireless broadband services, including internet access and voice services, in the United States and Canada. As part of this network, the Company plans to allocate spectrum between satellite and terrestrial service. Using an all-IP, open architecture, the Company believes its network will provide significant advantages over existing wireless networks. Such potential advantages include higher data speeds, lower costs per bit and flexibility to support a range of custom IP applications and services. The Company was the first MSS provider to receive a license to operate an ATC network from the FCC. The ATC licenses permit the use of the Company’s L-band satellite frequencies, in a complementary tower based network, in the operation of an advanced, integrated network capable of providing wireless broadband on a fixed, portable and fully mobile basis. The Company plans to launch two new satellites that will serve as the core of this new network. The launch window for MSV-1 is expected to open in the fourth quarter of 2009, and continue through the first quarter of 2010.  The launch of MSV-1 is currently expected to occur in the first quarter of 2010.  The launch of MSV-2 is currently expected to occur in the second half of 2010.

The Company's satellite development efforts are at a stage where delays against construction plans can reasonably be expected to occur, generally as a result of delays in the construction of satellite components and integration of those components into the spacecrafts. In particular, delays experienced in the construction, integration, and testing of the reflector component of the satellites could result in a delay of the delivery of the satellites to the launch site, as compared to the Company’s current expectations. Presently, such a delay is not anticipated to affect the launch date of the satellites as some amount of flexibility is provided for in the Company’s construction and launch plans. There are no assurances that delays will not occur in this and other component construction, integration, and testing. If delays were to occur, such delays could affect the planned launch date of the satellites. In the event of delays, certain liquidated damages may become due from Boeing. However, such amounts may not be adequate to compensate the Company for losses sustained by delays of satellite launch.

As part of the agreement to amend the satellite contract (see Note 6 to the Condensed Consolidated Financial Statements) MSV agreed to extend the delivery date of the MSV-2 satellite network by four months, to July 11, 2010. MSV also agreed that in the event any liquidated damages would be due and payable by Boeing for late delivery of either satellite system, $19 million of any such liquidated damages that would have been earned back by Boeing over a more extended period, would be accelerated and able to be earned back by Boeing over a period of two and one-half years.

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The Company currently expects to offer a range of three broad services on its next generation network.  First, the Company will facilitate the transition of its current customers to the next generation services platform and will continue to support current generation communications ground segments and mobile data system network terminals, which it expects will generate revenue through at least the end of 2012.  Second, the Company plans to provide bandwidth and power to customers of the next generation system who will implement and operate their own networks, generating revenue after the launch of the next generation satellites which could continue until end of next generation system life.  No such customers currently exist for the next generation system. Finally, the Company plans to provide next generation wireless coverage that will be accessible on conventional handsets that enable interoperable, feature-rich voice and high-speed data services.  Based on the integrated chipset development and production schedule required for such services, the Company does not currently expect to generate next generation wireless coverage revenues until some time after the next generation satellites have been launched and placed into service. The Company has made significant investments in technology to support its next generation network. To the extent that the Company changes its strategic direction, or otherwise changes its technology platform, material amounts of assets capitalized to date could become impaired if they no longer have expected future use.

The Company’s current business plan for the next generation network is a wholesale model whereby the Company’s strategic partners and other wholesale customers can use the network to provide differentiated broadband services to their subscribers. The Company believes its planned open network, in contrast to legacy networks currently operated by incumbent providers, will allow distribution and other strategic partners to have open network access and create a wide variety of custom applications and services for consumers. To address the opportunities and challenges inherent in the development of the Company’s next generation network, the Company continues to focus on initiatives related to:

• Monitoring of satellite construction by the Company’s satellite manufacturer.

• Development of the infrastructure and technologies required to operate MSS services upon launch.

• Continued coordination of L-band spectrum with other operators.

• Arrangement of technology and distribution partnerships for both the MSS and ATC components of the next generation network, perhaps resulting in decisions on chipsets, air-interface technologies, satellite-interface technologies and terrestrial deployment plans.

• Evaluating strategic and operational courses of action and direction.  In light of the Company’s recent change of ownership, the Company’s strategy, operations, and activity in the future could be materially different than those currently in operation, underway, or planned for the future.

• Development and evaluation of funding alternatives.

On July 3, 2008, MSV entered into an agreement with Boeing to amend its existing contract with respect to its satellite system procurement. The amendment provides for an additional $40 million of construction payment deferrals. The original construction payment deferral was in the amount of $76 million. The amendment provides that the original deferrals and the additional deferrals associated with the construction payments will be due and payable upon the earlier of December 20, 2010 or ten days prior to shipment of the MSV-2 satellite, currently planned for the second half of 2010.

Corporate Activity

Change in Control of SkyTerra

On April 9, 2008, Harbinger purchased from Apollo Investment Fund IV, L.P., Apollo Overseas Partners IV, L.P., AIF IV/RRRR LLC, AP/RM Acquisition LLC and ST/RRRR LLC (collectively, the Apollo Stockholders), for an aggregate purchase price of $164 million:

• 10,224,532 shares of voting common stock of the Company,

• 6,173,597 shares of non-voting common stock of the Company,

• 234,633 Series 1-A Warrants of the Company (the Series 1-A Warrants) entitling the holders to purchase a maximum aggregate of 652,711 shares of voting common stock of the Company at an exercise price of $20.39 per share, subject to adjustment, and

• 9,810,033 Series 2-A Warrants of the Company entitling the holders thereof to purchase a maximum aggregate of 2,560,182 shares of voting common stock of the Company at an exercise price of $25.85 per share, subject to adjustment (the Series 2-A Warrants and, together with the Series 1-A Warrants, the Warrants).

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The purchase price paid by Harbinger represents $10 per share for the voting common stock and non-voting common stock and $100,000 in the aggregate for the Warrants. Following the transaction, Harbinger Capital Partners Master Fund I, Ltd. reported that it beneficially owned 47.5% of the outstanding shares of the Company’s voting common stock, and that certain of its affiliates owned additional shares of the Company’s voting and non-voting common stock.

On July 25, 2008, SkyTerra, MSV, and MSV Finance Co. entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which MSV and MSV Finance Co. will issue to Harbinger up to $500,000,000 aggregate principal amount of 16.0% Senior Unsecured Notes due July 1, 2013 (the “Notes”) in four tranches, with the first tranche available on January 6, 2009. In conjunction with the issuance of Notes pursuant to the Securities Purchase Agreement, SkyTerra will issue to Harbinger warrants to purchase up to an aggregate of 25,000,000 shares of non-voting common stock of SkyTerra at an exercise price of $0.01 per share of non-voting common stock. Harbinger’s purchase of these Notes is not conditioned upon the commencement or consummation of a business combination with Inmarsat.  Harbinger may not be required to fund the committed financing under certain circumstances, including upon the occurrence of an event that could be deemed a material adverse change.

On the same date, the Company, MSV and Mobile Satellite Ventures Subsidiary LLC entered into a Master Contribution and Support Agreement (the “Master Agreement”) and certain other agreements with Harbinger and certain of its affiliates. The Master Agreement provides for the possible combination of SkyTerra and Inmarsat, subject to the receipt of required regulatory and antitrust clearances. SkyTerra and Harbinger expect the regulatory approval process, which includes approval from the U.S. Federal Communications Commission, other telecommunications approvals, and antitrust clearances to take approximately 12 to 18 months. Assuming an acceptable conclusion to the regulatory and competition approval process, the proposed business combination with Inmarsat would be structured as an offer by SkyTerra to acquire all issued and to be issued shares of Inmarsat not owned by Harbinger (the "Offer"), on terms to be determined by Harbinger and in accordance with the Master Agreement. As a result of the timing of the regulatory approvals, it is not the intention of SkyTerra and Harbinger to announce the formal terms or structure of a possible Offer.

If Harbinger decides to proceed with the Offer following the receipt of required regulatory approvals, Harbinger would arrange for committed equity and debt financing to fund the Offer. SkyTerra would undertake to use its best efforts to assist Harbinger in obtaining debt financing. To provide equity financing for the Offer, Harbinger may purchase newly issued shares of SkyTerra voting common stock for $2.4 billion in cash or such other amount as Harbinger may determine. The per share purchase price for the newly issued shares will be $10.00 per share subject to an adjustment ratchet relating to the successful Offer price paid for each Inmarsat share. If the Offer price for each Inmarsat share is greater or lower than 535 British Pence Sterling then the purchase price for the newly issued SkyTerra shares will increase or decrease proportionately. The 535 British Pence Sterling per share and $10.00 per share prices are reference prices for the purposes of the Master Agreement and the arrangements between Harbinger and SkyTerra. The 535 British Pence Sterling per share does not constitute a term or reference price for the Offer. No Offer pricing discussion has taken place with the board of Inmarsat and no determination has been made by SkyTerra or Harbinger as to any appropriate Offer price. SkyTerra shareholders other than Harbinger may participate in the equity financing for the Offer through a rights offering of voting common stock up to $100 million.

If the Offer is completed Harbinger would contribute to SkyTerra 132 million ordinary shares in Inmarsat and $37.6 million in aggregate principal value of 1.75% convertible bonds issued by Inmarsat and due in 2017, in each case currently owned by Harbinger and its affiliates. Harbinger would also contribute to SkyTerra equity interests that Harbinger has relating to an option to acquire in TVCC Holding Company, LLC, which has a lease that provides it the exclusive right to use 5 MHz of nationwide spectrum from 1670-1675 MHz. In exchange for such contributions, SkyTerra would issue to Harbinger new shares of voting common stock at $10.00 per share subject to the adjustment ratchet. The issuance of new voting and non-voting shares of SkyTerra common stock will be subject to SkyTerra shareholder approval.

As of July 31, 2008, Harbinger owns approximately 28.8% of the issued and outstanding ordinary shares of Inmarsat, and approximately 48.4% of the issued and outstanding shares of voting stock of SkyTerra. Upon completion of the proposed business combination of SkyTerra and Inmarsat, it is expected that Harbinger will own in excess of 85% of the outstanding voting stock of the combined entity.

MSV Option Exchange Offer

On March 14, 2008, the Company commenced an exchange offer (the Exchange Offer) to all current MSV option holders to grant them new options under the Company’s Stock Option Plan in exchange for surrender and termination of their MSV options. In accordance with the terms of the Exchange Offer, all participating option

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holders would receive options in the Company’s plan at a ratio of 2.82 SkyTerra options for each MSV option terminated, with an exercise price equal to the exercise price of the MSV options terminated divided by 2.82. Sale of all shares subject to the options received upon exchange is subject to restrictions until May 1, 2010, with certain exceptions described in the Exchange Offer that could result in earlier termination of the restrictions. The Exchange Offer is currently scheduled to expire on August 6, 2008. While the Company intends to complete the Exchange Offer, there is no guarantee that it will be completed, it is uncertain what percentage of the MSV option holders will elect to participate, and what the final terms of the Exchange Offer may be.

Option Modification

On February 22, 2008 the Boards of Directors of the Company and MSV approved a modification of certain outstanding options to purchase the Company’s common stock and MSV’s Limited Investor Units, respectively, to lower the exercise prices of out-of-the-money unexercised options to an exercise price equal to the current fair market value of the underlying common stock and Limited Investor Units, respectively. As a result of this modification the Company recorded $0.2 million and $2.2 million of additional compensation expense in the three and six months ended June 30, 2008, respectively. This modification will result in the recognition of additional compensation expense in future periods totaling $1.0 million, related to unvested options.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of the Company’s consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates, particularly estimates relating to the valuation of the Company’s investment in TerreStar Networks, valuation of intangible assets, the useful lives of long-lived assets, the valuation of the Senior Unsecured Notes and warrants, valuations relating to equity-based compensation, and judgments involved in evaluating impairment, among others, have a material impact on the Company’s financial statements. Actual results and outcomes could differ from these estimates and assumptions.

For a more detailed explanation of the judgments made in these areas and a discussion of the Company’s accounting estimates and policies, refer to “Critical Accounting Policies” included in Item 7 and “Summary of Significant Accounting Policies” (Note 2) to the Company’s consolidated financial statements beginning on page F-26 of the Annual Report on Form 10-K for the year ended December 31, 2007.

Fair Value Inputs

The Company adopted SFAS No. 157, Fair Value Measurements, as of January 1, 2008. See Note 2 to the Condensed Consolidated Financial Statements. Fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. 

Investment in TerreStar Networks

The Company owns 11.1% of TerreStar Networks (a consolidated subsidiary of TerreStar Corporation) that it accounts for under the cost method. The Company evaluates impairment of such investments in accordance with Emerging Issues Task Force 03-01, The Meaning of Other-Than-Temporary Impairment and its Application to Certain Investments. Accordingly, the Company considers both triggering events and tangible evidence that investments are recoverable within a reasonable period of time, as well as its intent and ability to hold investments that may have become temporarily or otherwise impaired. During the three and six months ended June 30, 2008, the observable quoted price of TerreStar Corporation common stock decreased. The decline in TerreStar Corporation’s stock price indicated that there may have been a decline in the fair value of the Company’s investment in TerreStar Networks.

Upon the adoption of SFAS No. 157, the Company evaluated the various methods under which it had previously estimated the fair value of its investment in TerreStar Networks. Based on this assessment, the Company determined that its market based valuation approach (TerreStar Corporation Market Method) that utilizes observable quoted market inputs (Level 1 inputs under SFAS No. 157) and observable other than quoted market inputs (Level 2 inputs under SFAS No. 157), was at a higher level of the fair value hierarchy than the other methods it had previously utilized. Accordingly, the Company used the TerreStar Corporation Market Method to perform its assessment of impairment of the investment in TerreStar Networks at both March 31, 2008 and June 30, 2008.

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At June 30, and March 31, 2008, the investment in TerreStar Networks valued under the TerreStar Corporation Market Method was $61.3 and $69.7 million, respectively. Based on this valuation, the Company determined that the TerreStar Networks investment had become other than temporarily impaired at each date. The investment was written down to $69.7 and $61.3 million at March 31, and June 30, 2008, respectively, resulting in a charge of $8.4 million and $16.8 million during the three and six months ended June 30, 2008, respectively. There is no assurance that the proceeds from the ultimate disposition of this asset, if any, will be equal to or greater than the $61.3 million carrying amount recorded as of June 30, 2008.

The trading value of TerreStar Corporation common stock has continued to decline subsequent to June 30, 2008. The Company will evaluate the effect of the decline on the value of its investment in TerreStar Networks to determine if such decline is other-than-temporary in the third quarter of 2008.

Current Business

The Company’s significant operating activity, providing mobile satellite communication services, is performed through its consolidated subsidiary MSV. MSV provides service in the United States and Canada using two nearly identical satellites. End users of the MSV’s mobile satellite services operate at sea, on land and in the air, and customers use various services including satellite bandwidth and power capacity, telephony, data, and dispatch services. MSV sells equipment for use on the network.

Comparison of the three and six months ended June 30, 2008 and 2007

The following tables detail the Company’s consolidated financial results for the three and six months ended June 30, 2008 and June 30, 2007 in the following segments: MSV Next Generation (research, development, and implementation of a next generation network), MSV MSS (current satellite services), and SkyTerra corporate activities.

27

	Three months ended June 30, 2008 In Thousands
		MSV Next Generation			MSV MSS		Total MSV			SkyTerra Corporate			Elimination			SkyTerra Consolidated
Revenues:
Services and related revenues		$	—		$	7,427	$	7,427		$	—		$	—		$	7,427
Equipment sales			—			1,162		1,162			—			—			1,162
Other revenues			—			219		219			—			—			219
Total revenues			—			8,808		8,808			—			—			8,808
Operating expenses:
Cost of equipment sold			—			928		928			—			—			928
Operations and cost of services (exclusive of depreciation and amortization)			3,022			3,923		6,945			—			—			6,945
Sales and marketing			1,142			958		2,100			—			—			2,100
Research and development (exclusive of depreciation and amortization)			3,147			—		3,147			—			—			3,147
General and administrative			3,807			1,721		5,528			2,790			—			8,318
Depreciation and amortization			7,546			650		8,196			—			—			8,196
Total operating expenses			18,664			8,180		26,844			2,790			—			29,634
Operating profit (loss)			(18,664	)		628		(18,036	)		(2,790	)		—			(20,826	)
Other income (expense):
Interest income			1,715			—		1,715			75			(64	)		1,726
Interest expense			(9,632	)		—		(9,632	)		(64	)		64			(9,632	)
Impairment of investment in TerreStar Networks			—			—		—			(8,441	)		—			(8,441	)
Other income, net			162			37		199			—			—			199
Loss before provision for income taxes and minority interest			(26,419	)		665		(25,754	)		(11,220	)		—			(36,974	)
Benefit for income taxes			—			185		185			—			—			185
Minority interest			—			—		—			—			135			135
Net income (loss)		$	(26,419	)	$	850	$	(25,569	)	$	(11,220	)	$	135		$	(36,654	)

	Three months ended June 30, 2007 In Thousands
		MSV Next Generation			MSV MSS			Total MSV			SkyTerra Corporate			Elimination			SkyTerra Consolidated
Revenues:
Services and related revenues		$	—		$	6,799		$	6,799		$	—		$	—		$	6,799
Equipment sales			—			1,097			1,097			—			—			1,097
Other revenues			—			274			274			—			—			274
Total revenues			—			8,170			8,170			—			—			8,170
Operating expenses:
Cost of equipment sold			—			892			892			—			—			892
Operations and cost of services (exclusive of depreciation and amortization)			1,887			3,963			5,850			—			—			5,850
Sales and marketing			1,123			947			2,070			—			—			2,070
Research and development (exclusive of depreciation and amortization)			2,132			—			2,132			—			—			2,132
General and administrative			3,227			1,518			4,745			2,028			—			6,773
Depreciation and amortization			6,990			598			7,588			—			—			7,588
Total operating expenses			15,359			7,918			23,277			2,028			—			25,305
Operating profit (loss)			(15,359	)		252			(15,107	)		(2,028	)		—			(17,135	)
Other income (expense):
Interest income			4,496			—			4,496			519			(31	)		4,984
Interest expense			(10,548	)		—			(10,548	)		(40	)		31			(10,557	)
Impairment of investment in TerreStar Networks			—			—			—			—			—			—
Other income, net			130			107			237			—			—			237
Loss before provision for income taxes and minority interest			(21,281	)		359			(20,922	)		(1,549	)		—			(22,471	)
Provision for income taxes			—			(99	)		(99	)		—			—			(99	)
Minority interest			—			—			—			—			766			766
Net income (loss)		$	(21,281	)	$	260		$	(21,021	)	$	(1,549	)	$	766		$	(21,804	)

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	Six months ended June 30, 2008 In Thousands
		MSV Next Generation			MSV MSS		Total MSV			SkyTerra Corporate			Elimination			SkyTerra Consolidated
Revenues:
Services and related revenues		$	—		$	14,542	$	14,542		$	—		$	—		$	14,542
Equipment sales			—			2,384		2,384			—			—			2,384
Other revenues			—			475		475			—			—			475
Total revenues			—			17,401		17,401			—			—			17,401
Operating expenses:
Cost of equipment sold			—			1,902		1,902			—			—			1,902
Operations and cost of services (exclusive of depreciation and amortization)			5,622			7,986		13,608			—			—			13,608
Sales and marketing			2,698			2,045		4,743			—			—			4,743
Research and development (exclusive of depreciation and amortization)			7,254			—		7,254			—			—			7,254
General and administrative			7,760			3,927		11,687			4,208			—			15,895
Depreciation and amortization			14,985			1,293		16,278			—			—			16,278
Total operating expenses			38,319			17,153		55,472			4,208			—			59,680
Operating profit (loss)			(38,319	)		248		(38,071	)		(4,208	)		—			(42,279	)
Other income (expense):
Interest income			4,641			—		4,641			434			(127	)		4,948
Interest expense			(21,347	)		—		(21,347	)		(127	)		127			(21,347	)
Impairment of investment in TerreStar Networks			—			—		—			(16,794	)		—			(16,794	)
Other income, net			335			23		358			504			—			862
Loss before provision for income taxes and minority interest			(54,690	)		271		(54,419	)		(20,191	)		—			(74,610	)
Benefit for income taxes			—			460		460			—			—			460
Minority interest			—			—		—			—			286			286
Net income (loss)		$	(54,690	)	$	731	$	(53,959	)	$	(20,191	)	$	286		$	(73,864	)

	Six months ended June 30, 2007 In Thousands
		MSV Next Generation			MSV MSS			Total MSV			SkyTerra Corporate			Elimination			SkyTerra Consolidated
Revenues:
Services and related revenues		$	—		$	13,492		$	13,492		$	—		$	—		$	13,492
Equipment sales			—			2,284			2,284			—			—			2,284
Other revenues			—			496			496			—			—			496
Total revenues			—			16,272			16,272			—			—			16,272
Operating expenses:
Cost of equipment sold			—			1,873			1,873			—			—			1,873
Operations and cost of services (exclusive of depreciation and amortization)			3,528			7,775			11,303			—			—			11,303
Sales and marketing			1,469			1,618			3,087			—			—			3,087
Research and development (exclusive of depreciation and amortization)			4,207			—			4,207			—			—			4,207
General and administrative			6,917			3,474			10,391			4,072			—			14,463
Depreciation and amortization			12,758			1,176			13,934			—			—			13,934
Total operating expenses			28,879			15,916			44,795			4,072			—			48,867
Operating profit (loss)			(28,879	)		356			(28,523	)		(4,072	)		—			(32,595	)
Other income (expense):
Interest income			9,893			—			9,893			1,002			(63	)		10,832
Interest expense			(22,664	)		—			(22,664	)		(84	)		63			(22,685	)
Impairment of investment in TerreStar Networks			—			—			—			—			—			—
Other income, net			289			78			367			2			—			369
Loss before provision for income taxes and minority interest			(41,361	)		434			(40,927	)		(3,152	)		—			(44,079	)
Provision for income taxes			—			(108	)		(108	)		—			—			(108	)
Minority interest			—			—			—			—			2,566			2,566
Net income (loss)		$	(41,361	)	$	326		$	(41,035	)	$	(3,152	)	$	2,566		$	(41,621	)

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Consolidated Results - Comparison of the three and six months ended June 30, 2008 and 2007

Revenues and Cost of Equipment Sold

All revenues and cost of equipment sold are generated by the Company’s MSV MSS segment. See “MSV MSS - Comparison of the three and six months ended June 30, 2008 and 2007”.

Operating Expenses

The table below sets forth the Company’s operating expenses (excluding cost of equipment sold) and percentage changes for the periods indicated (in thousands).

	Three months ended June 30,						Six months ended June 30,
	2008		2007		% Change		2008		2007		% Change
Operations and cost of services (exclusive of depreciation and amortization)	$	6,945	$	5,850	18.7	%	$	13,608	$	11,303	20.4	%
Sales and marketing		2,100		2,070	1.4	%		4,743		3,087	53.6	%
Research and development (exclusive of depreciation and amortization)		3,147		2,132	47.6	%		7,254		4,207	72.4	%
General and administrative		8,318		6,773	22.8	%		15,895		14,463	9.9	%
Depreciation and amortization		8,196		7,588	8.0	%		16,278		13,934	16.8	%
Total operating expenses	$	28,706	$	24,413	17.6	%	$	57,778	$	46,994	22.9	%

Operations and Cost of Services

Operations and cost of services expenses include compensation costs of MSS operations employees and expenses related to the operation of the Company’s satellite network, new product development relating to next generation services, costs of telemetry, tracking, and control, and facility costs.

Operations and cost of services expenses increased during the three months ended June 30, 2008, as compared to the same period in 2007, with 71% of the increase due to increased staffing levels, resulting in higher employee related costs, and 25% of the increase due to increases in equity-based compensation primarily related to the February 2008 modifications to outstanding options.

Operations and cost of services expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007, with 56% of the increase due to increased staffing levels, resulting in higher employee related costs, and 34% of the increase due to increases in equity-based compensation related to the February 2008 modifications to outstanding options.

Sales and Marketing

Sales and marketing expenses include the compensation of sales and marketing employees, and the cost of advertising, marketing and promotion.

Sales and marketing expenses did not fluctuate significantly during the three months ended June 30, 2008, as compared to the same period in 2007. Compensation cost increases of $0.3 million, were offset by a reduction in consulting and professional fees of $0.4 million related to market analysis costs incurred in the first quarter of 2007.

Sales and marketing expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007, due to increased compensation costs and staffing levels during the first quarter of 2008, increased compensation costs in the second quarter of 2008, increases in equity-based compensation related to the February 2008 modifications to outstanding options, and costs related to the development of a prototype device (shell for purposes of look and feel design) for the next generation network. Those increases were offset by a reduction in consulting and professional fees related to market analysis costs incurred in the first quarter of 2007.

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Research and Development

Research and development expenses include the compensation costs of employees working on next generation products and services, and other development costs of the next generation network. Research and development expenses increased during the three and six months ended June 30, 2008, as compared to the same period in 2007, due primarily to increased third-party consulting expenses related to the development of operational and business support systems for the next generation network, and compensation costs and staffing levels.

General and Administrative

General and administrative expenses include the compensation costs of finance, legal, human resources employees and other corporate costs.

General and administrative expenses increased during the three months ended June 30, 2008, as compared to the same period in 2007, with 65% of the increase attributable to an increase in equity-based compensation due to the grant of restricted shares and options to certain executives and members of the Board of Directors and additional equity-based compensation related to the February 2008 modifications to outstanding options, and 26% of the increase due to other employee compensation related costs increased due to increased staffing levels.

General and administrative expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007. The increase was primarily attributable to increased equity-based compensation due to the granting of restricted shares and options to certain executives and members of the Board of Directors, and the February 2008 modifications to outstanding options. Additionally, other employee compensation costs increased due to increased staffing levels. Offsetting those increases were reductions in banking fees, operating taxes, and consulting and professional fees.

Depreciation and Amortization

Depreciation and amortization expenses consist of the depreciation of property and equipment and the amortization of intangible assets. Depreciation and amortization expenses increased during the three and six months ended June 30, 2008, as compared to the same periods in 2007, due to an increase in intangible assets resulting from the TerreStar Corporation Exchange Transactions that occurred in February and November 2007.

Other Income and Expenses

The following table sets forth other income and expenses for the periods indicated (in thousands):

	Three months ended June 30,								Six months ended June 30,
	2008			2007			% Change		2008			2007			% Change
Interest income	$	1,726		$	4,984		(65.4	)%	$	4,948		$	10,832		(54.3	)%
Interest expense		(9,632	)		(10,557	)	(8.8	)%		(21,347	)		(22,685	)	(5.9	)%
Impairment of investment in TerreStar Networks		(8,441	)		—		(100.0	)%		(16,794	)		—		(100.0	)%
Other income		199			237		(16.0	)%		862			369		133.6	%
Benefit (provision) for income taxes		185			(99	)	100.0	%		460			(108	)	100.0	%
Minority interest		135			766		(82.4	)%		286			2,566		(88.9	)%
Total other expenses	$	(15,828	)	$	(4,669	)	239.0	%	$	(31,585	)	$	(9,026	)	249.9	%

Interest Income

Interest income is interest earned on cash, cash equivalents, restricted cash and short-term investments. Interest income decreased during the three and six months ended June 30, 2008, as compared to the same periods in 2007 due to the decrease of cash, cash equivalents, and short-term investments, and a significant decrease in yields.

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Interest Expense

Interest expense is comprised of the amortization of the discount and debt issuance costs on Senior Secured Discount Notes, interest and amortization of the discount on the Senior Unsecured Notes, and interest incurred on Notes Payable - Vendor, offset by capitalized interest on the system under construction. Total and capitalized interest are as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2008		2007		2008		2007
Capitalized interest	$	16,498	$	6,829	$	30,681		$	11,294
Interest expense		9,632		10,557		21,347			22,685
Total interest	$	26,130	$	17,386	$	52,028		$	33,979

Interest expense decreased during the three months ended June 30, 2008, as compared to the same period in 2007. Increased interest expense related to the Senior Unsecured Notes, Senior Secured Notes, and Notes Payable – Vendor of $5.7 million, $2.7 million, and $0.3 million, respectively, was offset by an increase in capitalized interest on the system under construction.

Total interest increased during the three months ended June 30, 2008, as compared to the same period in 2007, due to increased interest related to the Senior Unsecured Notes, Senior Secured Notes, and Notes Payable – Vendor of $5.7 million, $2.7 million, and $0.3 million, respectively.

Interest expense decreased during the six months ended June 30, 2008, as compared to the same period in 2007. Increased interest expense related to the Senior Unsecured Notes, Senior Secured Notes, and Notes Payable – Vendor of $12.3 million, $5.3 million, and $0.5 million, respectively, was offset by an increase in capitalized interest on the system under construction.

Total interest increased during the six months ended June 30, 2008, as compared to the same period in 2007, due to increased interest related to the Senior Unsecured Notes, Senior Secured Notes, and Notes Payable – Vendor of $12.3 million, $5.3 million, and $0.5 million, respectively.

Impairment of investment in TerreStar Networks

During the three and six months ended June 30, 2008, the Company recorded a write-down of its investment in TerreStar Networks in the amount of $8.4 million and $16.8 million, respectively as the Company determined the TerreStar Networks investment had become other-than-temporarily impaired.

Benefit (Provision) for Income Taxes

The Company’s effective tax rate differs from the Federal statutory rate of 34%, due primarily to a full valuation allowance recorded against NOLs generated by pre-tax losses.

Minority Interest

Minority interest represents the portion of MSV net losses attributable to minority interest holders. Minority interest decreased during the three and six months ended June 30, 2008, as compared to the same periods in 2007 due to the Company’s acquisition of MSV interests resulting from the TerreStar Exchange Transactions that occurred in February and November 2007.

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Segment Results

MSV Next Generation - Comparison of the three and six months ended June 30, 2008 and 2007

Operating Expenses

MSV Next Generation operations relate to the planning, development, and building of a next generation satellite system. ATC development has not yet begun. The table below sets forth MSV Next Generation operating expenses and percentage change for the following periods indicated (in thousands).

	Three months ended June 30,						Six months ended June 30,
	2008		2007		% Change		2008		2007		% Change
Operations and cost of services (exclusive of depreciation and amortization)	$	3,022	$	1,887	60.1	%	$	5,622	$	3,528	59.4	%
Sales and marketing		1,142		1,123	1.7	%		2,698		1,469	83.7	%
Research and development (exclusive of depreciation and amortization)		3,147		2,132	47.6	%		7,254		4,207	72.4	%
General and administrative		3,807		3,227	18.0	%		7,760		6,917	12.2	%
Depreciation and amortization		7,546		6,990	8.0	%		14,985		12,758	17.5	%
Total operating expenses	$	18,664	$	15,359	21.5	%	$	38,319	$	28,879	32.7	%

Although many of the costs incurred are fixed in the short-term, other costs fluctuate based on underlying business or development activity. Operations expenses are dependent upon employee-related costs. Sales and marketing expenses are dependent on employee-related costs and the nature and extent of marketing and promotional activities. General and administrative expenses consist of employee-related and other costs related to corporate services, including finance, legal, and human resources.

Operations and Cost of Services

Operations and cost of services expenses include compensation costs of satellite operations employees related to activities to deploy a next generation satellite system, facility costs, and costs of new product and service development relating to next generation product offerings. Operations expenses increased during the three months ended June 30, 2008, as compared to the same period in 2007, with 44% of the increase due to increased staffing levels, 23% of the increase due to increases in equity-based compensation primarily related to the February 2008 modifications to outstanding options, and 22% related to engineering fees associated with the development of software for the telemetry, tracking and control of the next generation satellites.

Operations expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007, with 51% of the increase due to increased staffing levels, 33% of the increase due to increases in equity-based compensation primarily related to the February 2008 modifications to outstanding options, and 12% related to engineering fees associated with the development of software for the telemetry, tracking and control of the next generation satellites.

Sales and Marketing

Sales and marketing expenses include the compensation of sales and marketing employees, and the cost of advertising, marketing and promotion. Sales and marketing expenses did not fluctuate significantly during the three months ended June 30, 2008, as compared to the same period in 2007. Compensation cost increases were offset by a reduction in consulting and professional fees as a result of market analysis costs in the first quarter of 2007 that did not recur.

Sales and marketing expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007, due to increased compensation costs and staffing levels during the first quarter of 2008, increased compensation costs in the second quarter of 2008, increases in equity-based compensation related to the February 2008 modifications to outstanding options, and costs related to the development of a prototype device (shell for purposes of look and feel design) for the next generation network. Those increases were offset by a reduction in consulting and professional fees as a result of market analysis costs in the first quarter of 2007 that did not recur.

33

Research and Development

Research and development expenses include the compensation costs of employees working on next generation products and services, and other development costs of the next generation network. Research and development expenses increased during the three and six months ended June 30, 2008, as compared to the same period in 2007, due primarily to increased third-party consulting expenses related to the development of operational and business support systems for the next generation network, and increased compensation costs and staffing levels.

General and Administrative

General and administrative expenses include the compensation costs of finance, legal, and human resources employees allocable to MSV Next Generation development. General and administrative expenses increased during the three months ended June 30, 2008, as compared to the same period in 2007, with 47% of the increase due to increased staffing levels and 39% attributable to an increase in equity-based compensation due to the grant of restricted shares to certain executives.

General and administrative expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007. The increase was primarily attributable to increased equity-based compensation due to the granting of restricted shares to certain executives and the February 2008 modifications to outstanding options.

Depreciation and Amortization

Depreciation and amortization expenses consist of the depreciation of property and equipment and the amortization of intangible assets. Depreciation and amortization expenses increased during the three and six months ended June 30, 2008, as compared to the same periods in 2007, due to an increase in intangible assets resulting from the TerreStar Corporation Exchange Transactions that occurred in February and November 2007.

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MSV MSS - Comparison of the three and six months ended June 30, 2008 and 2007

MSV MSS relate to the provision of mobile satellite services that support the delivery of data, voice, fax and dispatch radio services using its existing in-orbit satellites.

Revenues

The following table sets forth MSV MSS revenues and percentage changes for the periods indicated (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2008		2007		% Change		2008		2007		% Change
Revenues
Capacity	$	3,271	$	3,027	8.1	%	$	6,392	$	6,073	5.3	%
Telephony		2,496		2,468	1.1	%		4,960		4,800	3.3	%
Data		962		680	41.5	%		1,799		1,351	33.2	%
Dispatch		698		624	11.9	%		1,391		1,268	9.7	%
Equipment		1,162		1,097	5.9	%		2,384		2,284	4.4	%
Other		219		274	(20.1	)%		475		496	(4.2	)%
Total revenues	$	8,808	$	8,170	7.8	%	$	17,401	$	16,272	6.9	%

Capacity

The Company provides bandwidth and power to certain customers who implement and operate their own networks. The specified bandwidth and power is generally customer dedicated once purchased and is not subject to other sale or preemption by MSV except for emergency purposes. Capacity customers generally operate under contractual arrangements ranging from short-term (month-to-month) to end of current satellite life in length. These contracts do not generally provide for annual increases or variable revenues. As such, capacity revenues for the three and six months ended June 30, 2008, as compared to the same periods in 2007 have not fluctuated significantly.

Telephony

The Company provides voice service to end-users. Telephony customers are acquired through retail dealers or resellers. Retail dealers receive activation fees and earn commissions on monthly end user fixed access revenues and variable usage revenues. Resellers are under contractual arrangements for their purchase of monthly access and usage, and they manage the arrangements with the end user. Telephony customers are charged fixed monthly access fees and variable usage charges, generally charged by minute of usage, depending on voice plan chosen. A typical customer telephony plan requires monthly access fees that range from $25 to $175 that includes from zero to 2000 included airtime minutes. Each additional minute used is charged at a rate of $0.89 to $1.19. Monthly network access revenue is recognized in the month of service to the end-user. Variable usage revenue is recognized during the period of end-user usage. Activation fees are deferred and recognized ratably over the customer’s contractual service term, generally one year.

The following table sets forth telephony subscribers, quarterly subscriber changes, and average monthly revenue per subscriber unit (“ARPU”):

	Three and Six Months ended June 30,
	2008		ARPU		2007		ARPU		Change Subscribers		Change ARPU
Total subscribers, January 1	19,866				19,133				3.8	%
Additions	548				760				(27.9	)%
Deletions	(443	)			(444	)			(0.2	)%
Total subscribers, March 31	19,971		$	42.03	19,449		$	41.12	2.7	%	(0.2	)%
Additions	597				827				(27.8	)%
Deletions	(1,421	)			(711	)			99.9	%
Total subscribers, June 30	19,147		$	42.60	19,565		$	42.11	(2.1	)%	1.2	%

35

Telephony revenues for the three months ended June 30, 2008, as compared to the same period in 2007, increased slightly due to an increase in ARPU. Telephony revenues for the six months ended June 30, 2008, as compared to the same period in 2007, increased slightly due to an increase in the average number of subscribers and ARPU.

Data

Data service provides transmission in an “always-on” fashion. Common applications for data customers include fleet and load management, credit card verification, e-mail, vehicle position reporting, mobile computing, and data message broadcasting. Customers are acquired through resellers. Resellers are under contractual arrangements for their purchase of monthly access and usage and manage the arrangements with the end user.

Data revenues for the three months ended June 30, 2008, as compared to the same period in 2007, increased due to an increase of 10.6% in the average number of subscribers and an increase of 28.7% in average monthly revenue per subscriber unit. Data revenues for the six months ended June 30, 2008, as compared to the same period in 2007, increased due to an increase of 9.8% in the average number of subscribers and an increase of 20.0% in average monthly revenue per subscriber unit.

Dispatch

Dispatch service provides the wide-area equivalent of “push-to-talk” two-way radio service among users in customer defined groups. Dispatch service facilitates team-based group operations and is highly suited for emergency communications. Customers are acquired through dealers and resellers. Resellers are under contractual arrangements for their purchase of monthly access from the Company, and manage the arrangements with the end user. Dispatch users pay a fixed monthly access fee for virtually unlimited monthly usage; however, the fee varies with the coverage available.

Dispatch revenues for the three and six months ended June 30, 2008, as compared to the same periods in 2007 increased primarily due to an increase in the average number of subscribers.

Equipment

New and existing subscribers to the network can purchase a range of satellite handset configurations. Hardware generally includes handsets, antennas, and cables and can be purchased in “kits” that include all the hardware a customer would typically need to utilize the network. Resellers may purchase equipment in advance for purposes of resale to their end users. User equipment can be portable or be installed on trucks, ships, and airplanes or at a fixed location. Handsets are capable of standard voice and dispatch communication, and services such as call forwarding, call waiting, and conference calling. Other equipment is capable of file transfers, faxes and e-mail. Users must acquire equipment from the Company or its resellers to access its network. Capacity customers provide their own equipment to the end users of their networks.

The Company’s ability to generate equipment revenues is a function of the number of new and existing subscribers who purchase handsets and other accessories and the prices at which equipment is sold. Historically, equipment promotion and pricing has not been used to increase customer activations or improve retention.

Equipment sales during the three and six months ended June 30, 2008, as compared to the same periods in 2007 did not fluctuate significantly.

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Operating Expenses

The table below sets forth MSV MSS operating expenses and percentage changes for the periods indicated (in thousands).

	Three months ended June 30,						Six months ended June 30,
	2008		2007		% Change		2008		2007		% Change
Operations and cost of services (exclusive of depreciation and amortization)	$	928	$	892	4.0	%	$	1,902	$	1,873	1.5	%
Sales and marketing		3,923		3,963	(1.0	)%		7,986		7,775	2.7	%
Research and development (exclusive of depreciation and amortization)		958		947	1.2	%		2,045		1,618	26.4	%
General and administrative		1,721		1,518	13.4	%		3,927		3,474	13.0	%
Depreciation and amortization		650		598	8.7	%		1,293		1,176	9.9	%
Total operating expenses	$	8,180	$	7,918	3.3	%	$	17,153	$	15,916	7.8	%

Although many of the costs incurred in the operation of the current network are fixed in the short-term, other costs will fluctuate based on underlying business activity. Operations expenses are dependent upon employee costs and the costs of monitoring the satellite, including telemetry, tracking, and control. Sales and marketing expenses are dependent on employee costs and the nature and extent of any marketing and promotional activities. General and administrative expenses consist of employee and other costs related to finance, legal, and human resources.

Cost of Equipment Sold

The cost of equipment sold is comprised of the cost of equipment purchased for resale. The Company does not manufacture any of its own equipment. Also included in cost of equipment sold are the costs of warehousing and warehousing services. Cost of equipment sold during the three and six months ended June 30, 2008, as compared to the same periods in 2007 did not fluctuate significantly.

Operations and Cost of Service

Operations and costs of service expenses include compensation costs of satellite operations employees, and other expenses related to the operation of the satellite wireless network, costs of telemetry, tracking, and control and facility costs. Operations and costs of service expenses during the three and six months ended June 30, 2008, as compared to the same periods in 2007 did not fluctuate significantly.

Sales and Marketing

Sales and marketing costs include the compensation costs of sales and marketing employees, and the cost of advertising, marketing and promotion. Sales and marketing expenses did not fluctuate significantly during the three months ended June 30, 2008, as compared to the same period in 2007. Increased employee related costs were offset by a reduction of consulting and professional fees.

Sales and marketing expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007, due to increased compensation costs and staffing levels during the first quarter of 2008, and increases in equity-based compensation related to the February 2008 modifications to outstanding options. Those increases were offset by a reduction in consulting and professional fees.

General and Administrative Expense

General and administrative expense includes the compensation costs of finance, legal, human resources and other corporate costs allocable to MSV MSS. General and administrative expenses increased during the three months ended June 30, 2008, as compared to the same period in 2007, due primarily to increased legal costs.

General and administrative expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007. The increase was primarily attributable to increased legal costs and increased equity-based compensation due to the granting of restricted shares to certain executives, and the February 2008 modifications to outstanding options. Offsetting those increases were reductions in banking fees, operating taxes, and consulting and professional fees.

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Depreciation and Amortization Expense

Depreciation and amortization expense consists of the depreciation of property and equipment and the amortization of intangible assets. Depreciation and amortization expenses increased during the three and six months ended June 30, 2008, as compared to the same periods in 2007, due to the increase in intangible assets resulting from the TerreStar Corporation Exchange Transactions, that occurred in February and November 2007.

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SkyTerra Corporate - Comparison of the three and six months ended June 30, 2008, and 2007

Operating Expenses

The table below sets forth SkyTerra Corporate operating expenses and percentage change for the periods indicated (in thousands).

	Three months ended June 30,						Six months ended June 30,
	2008		2007		% Change		2008		2007		% Change
General and administrative	$	2,790	$	2,028	37.6	%	$	4,208	$	4,072	3.3	%

General and administrative expense includes the Company’s corporate costs, including legal, audit, tax, insurance, and compensation costs. General and administrative expenses increased during the three months ended June 30, 2008, as compared to the same period in 2007, primarily due to a $0.7 million increase in equity-based compensation costs as a result of the issuance of stock options to certain members of the Board of Directors, and the issuance of restricted stock to certain executives and members of the Board of Directors in the three months ended June 30, 2008.

General and administrative expenses increased during the six months ended June 30, 2008, as compared to the same period in 2007. Non-equity based compensation costs increased $0.2 million. Equity-based compensation costs increased $0.4 million as result of the issuance of stock options to certain members of the Board of Directors, and the issuance of restricted stock to certain executives and members of the Board of Directors. Offsetting those increases were a decline in insurance and business taxes of $0.3 million, and a decline in legal and regulatory costs of $0.3 million.

Liquidity and Capital Resources

The Company’s principal sources of liquidity are cash, cash equivalents, short-term investments and accounts receivable. The Company’s primary cash needs are for working capital, capital expenditures and debt service. The Company’s ability to generate cash in the future is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond the Company’s control.

The Company has financed its operations to date through the private placement of debt, equity securities and vendor financing. As of June 30, 2008, the Company has $196.0 million of cash and short-term investments. The outstanding discounted amount of MSV’s Senior Secured Discount Notes as of June 30, 2008 was $591.4 million ($750 million face amount at maturity). The outstanding discounted amount of MSV’s Senior Unsecured Notes as of June 30, 2008 was $134.0 million ($150 million face amount at maturity). Cash payment of interest on the Senior Secured Discount Notes will begin in April 2010, and cash payment of principal will be due in full in April 2013 (see “Senior Secured Discount Notes” below). The Senior Unsecured Notes bear interest at a rate of 16.5%, payable in cash or in-kind, at MSV’s option until December 15, 2011, and thereafter payable in cash (see “Senior Unsecured Notes” below).

The Company’s current operating assumptions and projections, which include the committed funding discussed below, and reflect management’s best estimate of future revenue, operating expenses, and capital commitments, indicate that the Company’s current sources of liquidity should be sufficient to fund operations through the third quarter of 2010. The Company’s ability to meet its projections, however, is subject to uncertainties, and there can be no assurance that the Company’s current projections will be accurate. Although the Company secured additional committed financing in July 2008, pursuant to an agreement with Harbinger (described above under “Corporate Activity”), additional funds will be needed to complete the construction of the next generation network and fund operations. Harbinger may not be required to fund the committed financing under certain circumstances, including upon the occurrence of an event that could be deemed a material adverse change. Pursuant to the terms of the agreement with Harbinger, committed funding of $500 million in total is expected to occur on the following dates:

• $150 million – January 2009

• $175 million – April 2009

• $75 million – July 2009

• $100 million – January 2010

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Capital Required for Next Generation Network

The Company estimates the remaining cost to develop and construct the satellite component of its next generation network, including the costs of the two satellites, their launch, launch insurance, and associated ground segment will be significant. The majority of these expenditures are governed by contractual commitments.

The Company will require significant additional funds to construct a terrestrial component of the network. The Company estimates the deployment of the terrestrial portion of the network could be a multi-billion dollar undertaking depending on the choice of air interface technology, the number of markets deployed, the scope of the terrestrial build within each market and the service offering. Significant additional funding will be required to fund operations after the launch of the satellites.

The cost of building and deploying the satellites and terrestrial components of the next generation network could exceed current estimates. For example, if the Company elects to further defer payments under the satellite construction contract, modify design, and/or exercise certain options to buy additional satellites or other equipment or services, the costs for the satellite component of the network will increase, possibly significantly. The cost to develop devices could be greater, perhaps significantly, than current estimates, depending on the ability to attract distribution partners for both the satellite and terrestrial services. In addition, the magnitude of the terrestrial network capital requirement depends upon a number of factors including: choice of wireless technology; desired applications; the general pace of construction; and in the profits, or losses in the initially deployed markets. The Company may not have control over these factors as it works with various strategic and distribution partners who may have varying degrees of influence on these decisions in exchange for capital contributions and other commitments. In all scenarios, the Company will require significant additional capital beyond its current resources.

Other Significant Contractual Obligations

In May 2007, MSV entered into fixed price contracts with ILS International Launch Services, Inc. and Sea Launch Company, LLC to launch the next generation satellites. The launch window for MSV-1 is expected to open in the fourth quarter of 2009, and continue through the first quarter of 2010.  The launch of MSV-1 is currently expected to occur in the first quarter of 2010.  The launch of MSV-2 is currently expected to occur in the second half of 2010. The aggregate base cost for these services is $174.8 million. If MSV were to terminate the contracts prior to September 2008, the maximum damages would be $8.9 million, in addition to amounts paid to date. If MSV were to terminate the contracts after March 2009 it would not be obligated to make additional payments, and would receive back only a portion of its previously made payments.

In October 2006, MSV entered into an agreement with Hughes Network Systems, LLC (HNS), then a related party of the Apollo stockholders, and currently a related party of Harbinger, to purchase four base transceiver subsystems and air interface technology for a fixed price of $43.0 million. The transceiver subsystems will integrate the satellite component of the next generation network.

In March 2008, MSV entered into an agreement with Telesat Canada for joint operational services for the MSV-1 and MSV-2 satellites including the development of software for operation and control, and the provision of telemetry, tracking and control services once in designated orbital positions.  Telesat Canada will provide these services through 2025 assuming the satellites reach full mission life. MSV is entitled to delay the start of services due to certain launch delays without any impact to pricing. The Company has a contract with Telesat Canada for the provision of telemetry, tracking and control services to the Company for its existing satellites. Future minimum payments related to these agreements, reflected in the table below as satellite operational services, assume MSV-1 and MSV-2 reach their full mission life.

Vendor Financing

MSV has financed $54.2 million of satellite vendor payments with secured vendor notes payable (Notes Payable - Vendor) that bear interest of LIBOR plus 400 basis points combined with a 2% administrative fee. The Notes Payable - Vendor are secured by the satellites. On July 3, 2008, MSV and Boeing entered into an agreement which amended the terms of the Notes Payable - Vendor along with other terms of the related satellite system procurement contract (See Note 6 to the Condensed Consolidated Financial Statements). The amendment provides that existing Notes Payable – Vendor will be due and payable upon the earlier of December 20, 2010 or ten days before shipment of the MSV-2 satellite, currently planned for the second half of 2010. Prior to the amendment, MSV was to have begun repayment of the Notes Payable - Vendor within one month of reaching the maximum available amount of deferrals, previously estimated to occur in the fourth quarter of 2008, with final payment of such original construction deferrals expected to have been completed in the first quarter of 2010.

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As the contract amendment agreement was reached prior to the issuance of the June 30, 2008 financial statements, all Notes Payable - Vendor that previously had been expected to be repaid within one year of June 30, 2008, prior to the amendment, have been classified as long-term pursuant to Statement of Financial Accounting Standards No. 6, Classification of Short-Term Obligations Expected to Be Refinanced, in the accompanying balance sheets as of June 30, 2008.

Senior Secured Discount Notes

In March 2006, MSV issued Senior Secured Discount Notes that generated proceeds of $436.2 million, with an aggregate principal amount of $750 million due at maturity. Interest on the notes accretes from the issue date at an annual rate of 14.0%, until they reach full principal amount at April 1, 2010 (the Senior Secured Discount Notes). All of MSV’s domestic subsidiaries jointly and severally guarantee the Senior Secured Discount Notes. MSV will be required to accrue and pay cash interest on the notes for all periods after April 1, 2010 at an annual rate of 14.0%, and cash interest payments will be payable in arrears semiannually on April 1 and October 1, commencing on October 1, 2010. The Senior Secured Discount Notes will mature on April 1, 2013. The Senior Secured Discount Notes are secured by substantially all of MSV’s assets.

The terms of the Senior Secured Discount Notes require MSV to comply with certain covenants that restrict some of MSV’s corporate activities, including MSV’s ability to incur additional debt, pay dividends, create liens, make investments, sell assets, make capital expenditures, repurchase equity or subordinated debt, and engage in specified transactions with affiliates. MSV may incur indebtedness beyond the specific baskets allowed under the Senior Secured Discount Notes, provided MSV maintains a leverage ratio (as defined) of 6 to 1. Noncompliance with any of the covenants without cure or waiver would constitute an event of default under the Senior Secured Discount Notes. An event of default resulting from a breach of a covenant may result, at the option of the note holders, in an acceleration of the principal and interest outstanding. The Senior Secured Discount Notes also contain other customary events of default (subject to specified grace periods), including defaults based on events of bankruptcy and insolvency, and nonpayment of principal, interest or fees when due. MSV was in compliance with the covenants of the Senior Secured Discount Notes as of June 30, 2008.

Senior Unsecured Notes

On January 7, 2008, Harbinger Capital Partners Master Fund I, Ltd., and Harbinger Capital Partners Special Situations Fund L.P. (together Harbinger), purchased $150 million of MSV’s Senior Unsecured Notes due 2013 (the “Senior Unsecured Notes”) and ten year warrants to purchase 9.1 million shares of the Company’s common stock, with an exercise price of $10 per share. The Senior Unsecured Notes bear interest at a rate of 16.5%, payable in cash or in-kind, at MSV’s option until December 15, 2011, and thereafter payable in cash. The Senior Unsecured Notes mature on May 1, 2013.

In June 2008, the Company made its scheduled interest payment on the Senior Unsecured Notes through the issuance of $10.9 million of additional Senior Unsecured Notes, which are included in the balance of Senior Unsecured Notes in the accompanying balance sheet as of June 30, 2008.

The Senior Unsecured Notes have subsidiary guarantees and covenants similar to those contained in the Senior Secured Discount Notes, with such modifications as appropriate to reflect the financial terms of the Senior Unsecured Notes. The Securities Purchase Agreement governing the Senior Unsecured Notes also contains more restrictive covenants regarding mergers, consolidation and transfer of assets and restricted payments. The more restrictive covenants, the right of first negotiation and the pre-emptive rights expire once Harbinger and their affiliates beneficially own less than 5% of the outstanding common stock of the Company or, if earlier, on December 31, 2011. The terms of the Senior Unsecured Notes require MSV to comply with certain covenants that restrict some of MSV’s corporate activities, including MSV’s ability to incur additional debt, pay dividends, create liens, make investments, sell assets, make capital expenditures, repurchase equity or subordinated debt, and engage in specified transactions with affiliates. Noncompliance with any of the covenants without cure or waiver would constitute an event of default under the Senior Unsecured Notes. An event of default resulting from a breach of a covenant may result, at the option of the note holders, in an acceleration of the principal and interest outstanding. The Senior Unsecured Notes also contain other customary events of default (subject to specified grace periods), including defaults based on events of bankruptcy and insolvency, and nonpayment of principal, interest or fees when due. MSV was in compliance with the covenants of the Senior Unsecured Notes as of June 30, 2008.

Inmarsat Cooperation Agreement

In December 2007, to further organize large blocks of contiguous spectrum for the use of MSV, SkyTerra, MSV and MSV Canada (together the MSV Parties) and Inmarsat Global Limited (Inmarsat) entered into a Cooperation Agreement relating to the use of L-band spectrum for mobile satellite and ATC services in North

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America. The Cooperation Agreement addresses a number of regulatory, technology and spectrum coordination matters involving L-band spectrum.

Upon receipt of an investment of $100 million in MSV by a third party for general corporate purposes and election by the MSV Parties to trigger certain provisions, the MSV Parties will be able to expand its trials and deployments to a broadband ATC trial using wider spectrum bandwidths, on a specific designation of combined Inmarsat and MSV spectrum in a pre-agreed market. Simultaneously upon the election by the MSV Parties regarding such an investment, the Company is required to issue to Inmarsat $31.3 million of the Company’s common stock, valued in accordance with terms of the agreement.

Upon the occurrence of certain events, until September 1, 2011, the MSV Parties have the option (the Phase 1 Option), subject to certain conditions, to effect a transition to a modified band plan within an 18 to 30 month period. Such transition will include modification of certain of Inmarsat’s network and end user devises and a shift in frequencies between the MSV Parties and Inmarsat which would lead to additional spectrum contiguity and more relaxed operating rules for the Company. Over the transition period, the MSV Parties will be required to make payments to Inmarsat of $250 million in cash. Upon the commencement of Phase 1, the Company will issue to Inmarsat a number of shares of the Company’s common stock having a value of $31.3 million, valued in accordance with terms of the agreement. In accordance with the terms of the agreement, Inmarsat and the MSV Parties are in discussions as to whether the closing of the Senior Unsecured Notes will be designated by the MSV Parties as a triggering investment and, if so, what the valuation of the Company’s common stock would be in connection with the required stock issuance. Upon the completion of the transition of the spectrum in Phase 1, the Company will issue to Inmarsat a number of shares of the Company’s common stock having a value of $56.3 million based on the average closing price of the Company’s common stock for the prior forty five (45)-trading day period. The MSV Parties have the option to accelerate the transition timing by accelerating payment to Inmarsat of $50 million that would be credited towards the $250 million in cash payments.

Subsequent to the exercise of the Phase 1 Option, between January 1, 2010 and January 1, 2013, the MSV Parties have the option (the Phase 2 Option) for Inmarsat to modify its North American operations in a manner that will make additional spectrum available to MSV at a cost of $115 million per year, resulting in substantially more spectrum to the benefit of MSV Parties. If the Company does not exercise the Phase 2 Option, then between January 1, 2013 and January 1, 2015, Inmarsat would have the option to require the MSV Parties to exercise the Phase 2 Option on the same terms.

Future Financing Needs

The Company will need significant additional financing in the future. This additional financing may take the form of the issuance of bonds or other types of debt securities, the issuance of equity securities, loans under a credit facility or a combination of the foregoing. Debt or additional equity financing may not be available when needed, on favorable terms, or at all. Any debt financing the Company obtains may impose various restrictions and covenants on the Company which could limit its ability to respond to market conditions, provide for unanticipated capital investments or take advantage of business opportunities. The Company may also be subject to significant interest expense under the terms of any debt the Company incurs.

The Company continues dialogue with other MSS operators who operate systems in adjacent spectrum in the L-band with the objective of rearranging respective spectrum assignments to create contiguous blocks of spectrum, and in some instances enabling MSV to access additional spectrum for the benefit of MSV and its strategic partners. The consummation of agreements of this nature could result in significant time, effort and cost. The likelihood or timing of reaching such agreements is uncertain.

Off-balance Sheet Financing

The Company did not enter into any off-balance sheet financing arrangements, other than operating leases in the normal course of business, during the three and six months ended June 30, 2008. As of June 30, 2008, the Company does not have any off-balance sheet financing arrangements that had or were reasonably likely to have a current or future impact on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Future Minimum Commitments

The Company leases office space, computers and other equipment under operating lease agreements. In addition to base rent, the Company is responsible for certain taxes, utilities and maintenance costs, and several leases include options for renewal or purchase. The Company’s various non-cancelable vendor arrangements (including satellite, launch vehicle, base transceiver subsystems and air interface technology construction), long-

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term and other debt arrangements, non-cancelable operating leases and agreements with initial terms of greater than one year are as follows as of June 30, 2008 for the years ending December 31 (in thousands):

	Leases		Boeing (a)		HNS		Launch Services		Satellite Operational Services		Debt		Other		Total
2008	$	1,274	$	36,104	$	8,829	$	20,210	$	1,667	$	15,729	$	5,908	$	89,721
2009		2,008		66,380		10,946		98,316		2,884		34,416		3,924		218,874
2010		2,194		79,426		—		38,589		1,884		146,108		300		268,501
2011		615		—		—		—		1,434		146,380		158		148,587
2012		336		—		—		—		1,434		151,251		158		153,179
Thereafter		4,661		—		—		—		17,447		980,084		1,895		1,004,087
	$	11,088	$	181,910	$	19,775	$	157,115	$	26,750	$	1,473,968	$	12,343	$	1,882,949

(a) Amounts exclude in-orbit incentives and associated interest. The amounts also exclude payments to Boeing under vendor notes payable, as such amounts are included in the future payments related to debt.

Cash Flow

Net Cash Used in Operating Activities. During the six months ended June 30, 2008, as compared to the same period in 2007, net cash used in operating activities increased $10.2 million primarily due to increases in personnel, staffing and related costs, and increased expenses to develop the next generation network.

Net Cash Used in Investing Activities. During the six months ended June 30, 2008, as compared to the same period in 2007, net cash used in investing increased due to sales and maturities of investments, and the payment of estimated taxes related to TMI Delaware in 2008, offset by a reduction in the purchase of property and equipment.

Net Cash Provided by Financing Activities. During the six months ended June 30, 2008, as compared to the same period in 2007, net cash provided by financing activities increased primarily as a result of proceeds from the issuance of the Senior Unsecured Notes of $150 million in 2008.

Related Parties

Prior to their spin-off in October by BCE (which holds a significant interest in the Company), Telesat and Infosat Communications were related parties through common ownership by BCE. Through common ownership by the Apollo Stockholders, the Company’s related parties also included HNS and Hughes Telematics, Inc. In April 2008, Harbinger acquired substantially all of Apollo’s interests in the Company.

Through common ownership by Harbinger, the Company’s related parties include Inmarsat, TerreStar Corporation, TerreStar Networks and HNS. The Company’s related parties also include LCC International Inc., which is controlled by a former limited partner and former member of MSV GP’s Board of Directors. Certain of MSV’s intellectual property was acquired by assignment from entities controlled by such fomer limited partner. In certain circumstances where the Company generates royalties from licensing its ATC intellectual property to third parties, the Company may be required to share a portion of such royalty payments with such former limited partner and related entities. The following tables summarize related party transactions (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2008		2007		2008		2007
Income, including management fees	$	162	$	566	$	335		$	1,134
Expenses		—		1,257		1,010			1,952
Costs related to system under construction		4,398		4,300		10,913			4,300

	As of June30, 2008		As of December 31, 2007
Due from related parties	$	104	$	617
Due to related parties		7,226		247

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rate Risk

The United States dollar is the functional currency for the Company’s consolidated financials. The functional currency of the Company’s Canadian subsidiary and two Canadian joint ventures is the Canadian dollar. The financial statements of these entities are translated to United States dollars using period end rates for assets and liabilities, and the weighted average rate for the period for all expenses and revenues. During the normal course of business, the Company is exposed to market risks associated with fluctuations in foreign currency exchange rates, primarily the Canadian dollar and the Euro. To reduce the impact of these risks on the Company’s earnings and to increase the predictability of cash flows, the Company uses natural offsets in receipts and disbursements within the applicable currency as the primary means of reducing the risk. When natural offsets are not sufficient, from time to time, the Company enters into certain derivative contracts to buy and sell foreign currencies.

The Company’s foreign currency management policy prohibits speculative trading and allows for derivative contracts to be entered into only when a future foreign currency requirement is identified. These contracts generally have durations of less than one year. The Company accounts for derivatives in accordance with SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended, which requires the recognition of all derivatives as either assets or liabilities measured at fair value with changes in fair value of derivatives reflected as current period income or loss unless the derivatives qualify as hedges of future cash flows. The Company has not elected hedge accounting for any derivative contracts during the six month periods ended June 30, 2008 and 2007, or at any other time over the past two years. As of June 30, 2008, the Company held contracts of $3.3 million. The Company recognized a gain of $0.1 million during the three and six months ended June 30, 2008 related to such contracts.

Interest Rate Risk

Changes in interest rates affect the fair value of the Company’s fixed rate debt. The fair value of the Senior Secured Discount Notes at June 30, 2008 was $516.6 million. The fair value of the Senior Unsecured Notes at June 30, 2008 was $125.5 million. Based on securities outstanding at June 30, 2008, a 1% increase or decrease in interest rates, assuming similar terms and similar assessment of risk by the Company’s lenders, would change the estimated market value, of these securities, by $24.6 million and $25.9 million, respectively at June 30, 2008. The Company does not have cash flow exposure to changing interest rates on its Senior Secured Discount Notes or Senior Unsecured Notes because the interest rates for those securities are fixed. This sensitivity analysis provides only a limited, point-in-time view of the market risk sensitivity of certain of the Company’s financial instruments. The actual impact of future changes in market interest rates on Senior Secured Discount Notes and Senior Unsecured Notes may differ significantly from the impact shown in this analysis.

The Company has cash flow exposure to changing interest rates on its Vendor Notes because the interest rate for these securities is not fixed. As of June 30, 2008 the Company had $54.2 million outstanding under its Vendor Notes with interest rates tied to changes in the LIBOR rate. Based on balances outstanding at June 30, 2008, a 1% increase in interest rates, assuming repayment of the Vendor Note in accordance with scheduled maturities, could add $0.8 million to the Company’s annual interest expense.

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Item4. Controls and Procedures

(a) Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on such evaluation, the Company’s chief executive officer and chief financial officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that the Company files or submit under the Exchange Act.

(b) Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting during the three-month period ended June 30, 2008 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

 

Item1. Legal Proceedings

The Company is involved in various legal proceedings arising in the normal course of business. Although the outcomes of legal proceedings are inherently difficult to predict, the Company does not expect the resolution of any currently pending matters to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Item1A. Risk Factors

The following risk factors should be read in conjunction with the risk factors in our annual report on Form 10-K for the year ended December 31, 2007.

Failure to comply with FCC and Industry Canada rules and regulations could damage our business.

FCC and Industry Canada rules and regulations, and the terms of our satellite authorizations and ATC license from the FCC, require us to meet certain conditions, such as satellite construction and launch milestones, maintenance of satellite coverage of all fifty states, Puerto Rico, and the United States Virgin Islands and the provision of an integrated service offering. Non-compliance by us with these or other conditions, including other FCC or Industry Canada gating criteria, could result in fines, additional license conditions, license revocation, or other adverse FCC or Industry Canada actions.

In a September 2006 decision, the FCC granted MSV authority to slightly exceed the 25% indirect foreign ownership limit specified in the Communications Act. To comply with the amount of indirect foreign ownership approved by the FCC, we must monitor the extent to which our stock is owned or voted by non-U.S. citizens. The foreign ownership restrictions limit our ability to be owned by non-U.S. citizens absent prior FCC approval. Exceeding the amount of foreign ownership approved by the FCC in the September 2006 decision without securing prior approval from the FCC may subject MSV to fines, forfeitures, or revocation of our FCC licenses. In March 2007, we filed a Petition for Declaratory Ruling with the FCC seeking approval for MSV’s level of indirect foreign ownership. In October 2007, we provided additional information in response to the FCC’s request for further ownership information regarding certain investors. On November 6 and 26, 2007, we amended that filing. On January 25 and 29, 2008, we further amended our filing to provide updated ownership information and to respond to informal staff requests. On January 11, 2008, Harbinger tendered a petition to the FCC seeking expedited action on a declaratory ruling to permit Harbinger to raise their interest in the Company through open market share acquisitions to a level in excess of that previously approved by the FCC. That petition was amended on January 16, 2008, and MSV and the Company joined in the petition in a further amendment submitted on January 17, 2008. On January 29, 2008, Harbinger tendered to the FCC a petition seeking permanent authority to make the level of acquisitions specified in their January 11 petition. On March 7, 2008, the FCC issued an order granting the March 2007 and January 11, 2008 petitions. The grant of those petitions was without prejudice to any enforcement action by the FCC for the Company’s possible non-compliance with the foreign ownership rules prior to the grant. The FCC did not act on Harbinger’s January 29, 2008 request for permanent authority. We cannot predict when the FCC will do so or whether it will grant the request. There is also no assurance that foreign persons or entities have not acquired or will not acquire additional shares in the Company that may result in our exceeding the level of foreign ownership approved by the FCC.

Harbinger and its affiliates beneficially own a majority of our shares of voting common stock and, as a result, the trading price for our common stock may be depressed.

As of July 31, 2008, Harbinger and its affiliates collectively owned an aggregate of 17,098,565 shares of our voting common stock, representing approximately 48.4 percent of our outstanding common stock. In addition, as of July 31, 2008, Harbinger had the right to acquire (i) an additional 442,825 shares of voting common stock, which shares are being held in escrow pursuant to the terms of Harbinger’s agreement with the Apollo Stockholders, and (ii) an aggregate of approximately 12.5 million shares of voting common stock upon exercise of warrants. Harbinger and its affiliates also beneficially own an aggregate of 20,580,940 shares of our non-voting common stock. Harbinger also owns a significant interest in TerreStar Corporation, and therefore may acquire a substantial number of additional shares of our voting common stock upon TerreStar Corporation’s completion of its distribution to stockholders of approximately 25.5 million shares of our common stock held by TerreStar Corporation.

Harbinger and its affiliates can take actions that may be adverse to the interests of other investors.

The significant concentration of ownership of our stock by Harbinger and its affiliates may adversely affect the trading price of our common stock because investors often perceive disadvantages in owning stock in companies

46

with controlling stockholders. Harbinger and its affiliates have the ability to exert substantial influence over all matters requiring approval by our stockholders, including the election and removal of directors, amendment of our certificate of incorporation, and any proposed merger, consolidation or sale of all or substantially all of our assets. In light of the foregoing, Harbinger can significantly influence the management of our business and affairs. This concentration of ownership could have the effect of delaying, deferring or preventing a change in control, or impeding a merger or consolidation, takeover or other business combination that could be favorable to investors. There can be no assurance that the interests of Harbinger are aligned with other holders of our common stock.

 

Item2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item3. Defaults Upon Senior Securities.

None.

 

Item4. Submission of Matters to a Vote of Security Holders.

None.

 

Item5. Other Information.

Drew Caplan has served as the Company’s Chief Network Officer since January 2007. Mr. Caplan previously served as Vice President of National Network Services at Nextel Communications from November 1996 to August 2005. Prior to joining Nextel, Mr. Caplan served in progressive engineering, operations, and product development roles at MCI Communications from 1983 to 1995. He was a founding member of MCImetro, MCI’s CLEC startup, in 1993. Mr. Caplan, who is 47 years of age, holds a BS from Georgetown University.

Effective August 4, 2008, the Company entered into a retention bonus arrangement (“Bonus Arrangement”) with Mr. Drew Caplan pursuant to which the Company has agreed to pay to Mr. Caplan two lump sum cash payments: the first payment of $175,000 will be made on August 15, 2008, and the second payment of $175,000 will be made on December 29, 2008, subject to his continued employment with the Company on each such date. If prior to August 15, 2010, the Company terminates Mr. Caplan’s employment other than for cause, he will be entitled to retain any previously paid portion of the retention bonus but he will forfeit the right to any yet unpaid retention bonus payment. If prior to August 15, 2010, Mr. Caplan’s employment with the Company terminates because of his death or disability, the Company will pay to Mr. Caplan or his beneficiaries any then unpaid portion of the retention bonus on the applicable payment date. In the event that prior to August 15, 2010, Mr. Caplan’s employment is terminated by the Company for cause or Mr. Caplan terminates his employment with the Company for any reason, or for no reason, Mr. Caplan will be obligated to repay any previously paid amounts to the Company within 30 days of the date on which the notice of such termination is given. If Mr. Caplan (i) continues to be employed by the Company as of August 15, 2010, (ii) the Company has not given notice of intention to terminate Mr. Caplan’s employment for cause and (iii) Mr. Caplan has not given notice of his intention to terminate his employment with the Company, his repayment obligation will terminate.

The Bonus Arrangement provides that effective August 15, 2008, the Company has granted to Mr. Caplan 50,000 shares of restricted common stock of the Company, par value $0.01 per share, under the Company’s 2006 Equity and Incentive Plan. The restricted stock will become vested in full on August 15, 2010, provided that Mr. Caplan continues to be employed by the Company on such date. During the restricted period the restricted stock will not be transferable but Mr. Caplan will have other rights as a stockholder with respect to such shares, including the right to vote the shares and the right to receive dividends; provided, that if there is a stock dividend, stock split or other change in character or amount of the restricted stock award, any new, substituted or additional securities to which Mr. Caplan is entitled by reason of his ownership of the restricted stock will be subject to the same restrictions and risk of forfeiture as is the original grant of restricted stock. If prior to August 15, 2010, Mr. Caplan’s employment with the Company is terminated (i) by the Company without cause or (ii) because of Mr. Caplan’s death or disability the restricted stock will immediately vest in full. If prior to August 15, 2010, Mr. Caplan’s employment with the Company is terminated for any other reason, the restricted stock will immediately be forfeited.

47

 

Item6. Exhibits.

10.1	Master Contribution and Support Agreement, dated July 24, 2008, by and among Harbinger Capital Partners Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., Harbinger Capital Partners Fund I, L.P., Harbinger Co-Investment Fund, L.P., SkyTerra Communications, Inc., Mobile Satellite Ventures Subsidiary LLC, and Mobile Satellite Ventures L.P. (incorporated by reference to Exhibit 10.1 to SkyTerra's Current Report on Form 8-K filed on July 25, 2008).
10.2	Stock Purchase Agreement, dated July 24, 2008, between SkyTerra Communications, Inc. and Harbinger Co-Investment Fund, L.P. (incorporated by reference to Exhibit 10.2 to SkyTerra's Current Report on Form 8-K filed on July 25, 2008).
10.3	Securities Purchase Agreement, dated July 24, 2008, by and among Mobile Satellite Ventures LP, Mobile Satellite Ventures Finance Co., SkyTerra Communications, Inc., Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (incorporated by reference to Exhibit 10.3 to SkyTerra's Current Report on Form 8-K filed on July 25, 2008).
10.4	Form of Indenture (incorporated by reference to Exhibit 10.4 to SkyTerra's Current Report on Form 8-K filed on July 25, 2008).
10.5	Form of Warrants (incorporated by reference to Exhibit 10.5 to SkyTerra's Current Report on Form 8-K filed on July 25, 2008).
10.6	Registration Rights Agreement, dated July 24, 2008, by and among SkyTerra Communications, Inc., Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P. and Harbinger Capital Partners Fund I, L.P. (incorporated by reference to Exhibit 10.6 to SkyTerra's Current Report on Form 8-K filed on July 25, 2008).
10.7	Director Stock Option Grant Form of Award
10.8	SkyTerra Communications, Inc./Mobile Satellite Ventures, LP Executive Employment Agreement for Alex H. Good
10.9	SkyTerra Communications, Inc./Mobile Satellite Ventures, LP Executive Employment Agreement for Scott G. Macleod
10.10	Executive Severance Agreement between SkyTerra Communications, Inc. and Randy Segal
10.11	Amendment No. 1 to the 2006 SkyTerra Communications, Inc. Equity and Incentive Plan.
10.12	Letter Agreement dated August 4, 2008, between SkyTerra and Drew Caplan regarding certain employment matters
10.13	Appendix A – Promissory Note
10.14	Appendix B - Drew Caplan Restricted Stock Agreement dated August 4, 2008
31.1	Certification of Alexander H. Good, Chief Executive Officer and President of the Company, required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Scott Macleod, Executive Vice President and Chief Financial Officer of the Company, required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Alexander H. Good, Chief Executive Officer and President of the Company, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Scott Macleod, Executive Vice President and Chief Financial Officer of the Company, Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

48

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, this Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 4, 2008	By:	/s/ Alexander H. Good
		Alexander H. Good
		Chief Executive Officer and President
Date: August 4, 2008	By:	/s/ Scott Macleod
		Scott Macleod
		Executive Vice President and Chief Financial Officer

49

EX-10

[AWARD FOR

MAY 1, 2008 DIRECTOR GRANTS]

TERMS OF STOCK OPTION

This Agreement, including Schedule A hereto, (collectively, the "Agreement") sets forth the terms of one or more stock options (each an "Option" collectively, the "Options") granted to you (the "Grantee") by SkyTerra Communications, Inc., a Delaware corporation (the "Company").

BACKGROUND

A. Grantee is a director of the Company.

B.        In consideration of services to be performed, the Company desires to afford Grantee an opportunity to purchase shares of its common stock in accordance with the SkyTerra Communications, Inc. 2006 Equity and Incentive Plan (the "Plan") as hereinafter provided.

C.        Any capitalized terms not otherwise defined herein shall have the meaning accorded them under the Plan.

NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and valuable consideration, the parties, hereto, intending to be legally bound, agree as follows:

1.         Grant of Options. The Company hereby irrevocably grants to the Grantee the right to purchase all or any part of the aggregate number of shares of Common Stock (the "Option Shares") specified on Schedule A attached hereto (the "Certificate"), which option(s) shall constitute a Nonqualified Stock Option, at the grant price(s) listed in the Certificate (the "Option Price"), during the period and subject to the conditions hereinafter set forth.

2.         Option Period. The Options may be exercised in accordance with the provisions of Paragraphs 3 and 4 hereof during the applicable Option Period, which shall begin on the Grant Date specified in the Certificate and shall end on the Option Expiration Date specified in the Certificate. All rights to exercise the Options shall terminate on the applicable Option Expiration Date, unless terminated sooner in accordance with the terms hereof.

3.         Exercise of Option. Each Option shall be exercisable in accordance with the applicable vesting schedule and at the applicable grant price per share specified on Certificate, provided that any portion of any Option which is exercisable in any year, but not exercised, may be carried forward and exercised in any future year during the applicable Option Period, but in no event past the applicable Option Expiration Date.

(a) Except as provided in Section 3(b), upon the termination by the Company or its Subsidiaries of the Grantee’s service with the Company and its Subsidiaries, other than for Cause, any portion of the Options that is not exercisable as of the date of such termination of service shall immediately vest, and the vested portion of the Options shall remain exercisable for a

period of one year from and including the date of termination of service (and shall terminate thereafter).

(b) In the event that, following the Grant Date, the Grantee's service with the Company and its Subsidiaries is terminated as a result of such Grantee's not being renominated to an additional term of the Board of Directors, any portion of the Options that is not exercisable as of the date of such termination of service shall become fully vested and exercisable upon the date of such termination of service and shall remain exercisable until the Option Expiration Date.

(c) Upon the termination by the Grantee of the Grantee’s service with the Company or its Subsidiaries, that portion of the Options which is exercisable as of the date of such termination of service shall remain exercisable for a period of 90 days from and including the date of termination of service (and shall terminate thereafter). Unless the Committee in its sole discretion determines otherwise, any portion of outstanding Options which is not exercisable as of the date of such termination of employment shall terminate upon the date of such termination of service.

(d) If the Grantee shall die while providing services to the Company or its Subsidiaries, or within 30 days after the date of termination of Grantee’s service, or if the Grantee's service terminates by reason of Disability, that portion of the Options which is exercisable as of the date of such termination of service shall remain exercisable for a period of one year from and including the date of termination of employment or service (and shall terminate thereafter). Unless the Committee in its sole discretion determines otherwise, any portion of the Options which is not exercisable as of the date of such termination of service shall terminate upon the date of such termination of service.

(e) If the Grantee's service is terminated by the Company or its Subsidiaries for Cause, all outstanding Options, whether or not they are exercisable as of the date of such termination of service, shall terminate upon the date of such termination of service.

4.         Manner of Exercise. Exercise of the Options shall be by written notice to Company pursuant to Paragraph 10 hereof which includes payment for the Option Shares in accordance with the terms of the Plan. Upon receipt of such notice and payment, the Company shall deliver a certificate or certificates representing the Option Shares purchased. The certificate or certificates representing the Option Shares shall be registered in the name of the Grantee, or if the Grantee so requests, shall be issued in or transferred into the name of the Grantee and another person jointly with the right of survivorship. The certificate or certificates shall be delivered to or upon the written order of the Grantee. No Grantee or his legal representative, legatees or distributees, as the case may be, shall be or shall be deemed to be a holder of any shares subject to the Options unless and until certificates for such shares are issued

(3)

to him or them upon the exercise of an Option. The Option Shares that shall be purchased upon the exercise of the Options as provided herein shall be fully paid and nonassessable.

5.         Transferability of Options. The Options are not transferable by the Grantee other than by will or by the laws of descent and distribution in the event of the Grantee's death, in which event the Options may be exercised by the heirs or legal representatives of the Grantee as provided in Paragraph 4 hereof. The Options may be exercised during the lifetime of the Grantee only by the Grantee. Any attempt at assignment, transfer, pledge or disposition of the Options contrary to the provisions hereof or the levy of any execution, attachment or similar process upon the Options shall be null and void and without effect. Any exercise of the Options by a person other than the Grantee shall be accompanied by appropriate proofs of the right of such person to exercise the Options.

6.         Option Shares to be Purchased for Investment. Unless the Company has notified the Grantee pursuant to Paragraph 10 hereof that a registration statement covering the Option Shares has become effective under the Securities Act of 1933 (the "Act"), it shall be a condition to the exercise of the Options that the Option Shares acquired upon such exercise be acquired for investment and not with a view to distribution. If requested by the Company upon advice of its counsel that the same is necessary or desirable, the Grantee shall, at the time of purchase of the Option Shares, deliver to the Company Grantee's written representation that Grantee (a) is purchasing the Option Shares for his own account for investment, and not with a view to public distribution or with any present intention of reselling any of the Option Shares (other than a distribution or resale which, in the opinion of counsel satisfactory to the Company, may be made without violating the registration provisions of the Act); (b) has been advised and understands that (i) the Option Shares have not been registered under the Act and are subject to restrictions on transfer and (ii) the Company is under no obligation to register the Option Shares under the Act or to take any action which would make available to the Grantee any exemption from such registration; and (c) has been advised and understands that such Option Shares may not be transferred without compliance with all applicable federal and state securities laws.

7.         Changes in Capital Structure. The number of Option Shares covered by the Options and the Option Price shall be subject to adjustment in accordance with Section 4(d) of the Plan.

8.       Legal Requirements. If the listing, registration or qualification of the Option Shares upon any securities exchange or under any federal or state law, or the consent or approval of any governmental regulatory body is necessary as a condition of or in connection with the purchase of the Option Shares, the Company shall not be obligated to issue or deliver the certificates representing the Option Shares as to which the Options have been exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained. The Options do not hereby impose on the Company a duty to so list, register, qualify, or effect or obtain consent or approval. If registration is considered unnecessary by the Company or its counsel, the Company may cause a legend to be placed on the certificates for the Option Shares being issued calling attention to the fact that they have been acquired for investment and have not been registered, such legend to read substantially as follows:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE

(3)

SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING SUCH SECURITIES OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS."

9.       No Obligation to Exercise Options. The Grantee shall be under no obligation to exercise the Options.

10.     Notices. All notices required or permitted hereunder shall be in writing and shall be deemed to be properly given when personally delivered to the party entitled to receive the notice or when sent by certified or registered mail, postage prepaid, properly addressed to the party entitled to receive such notice at the address stated below:

If to the Company: Address of Company on file with the

Securities and Exchange Commission

Attention: General Counsel

If to the Grantee: Address of Grantee on file with the Company

11.       Administration. The Options have been granted pursuant to the Plan, and are subject to the terms and provisions thereof. By acceptance hereof the Grantee acknowledges receipt of a copy of the Plan. All questions of interpretation and application of the Plan and the Options shall be determined by the Company, and such determination shall be final, binding and conclusive.

12.       Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

13.       Governing Law. This Agreement shall be governed by and construed under the laws of the State of Delaware without regard to conflicts of laws principles.

14.       Acceptance. This Agreement may be accepted via an electronic acceptance, or in manually executed counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

15.       Amendment. This Agreement may not be amended except via an electronic acceptance or in a writing signed by both parties.

(4)

IN WITNESS WHEREOF, this Agreement has been executed and delivered to the Grantee identified in Schedule A hereto as of the Grant Date.

SKYTERRA COMMUNICATIONS, INC
By:	/s/ Randy Segal
	Name: Randy Segal
	Title: Senior Vice President and General
	Counsel

GRANTEE

(5)

SCHEDULE A

NAME:

TYPE OF OPTIONS	NUMBER OF OPTIONS	GRANT DATE	EXERCISE PRICE PER SHARE	VESTING SCHEDULE	OPTION EXPIRATION DATE
NQSO	20,000	May 1, 2008	$8.15	1/3 of the Options on each anniversary of the Grant Date, subject to the terms and conditions of the Plan and this Agreement	May 1, 2018

(6)

EX-10

SKYTERRA COMMUNICATIONS, INC. /

MOBILE SATELLITE VENTURES, LP

EXECUTIVE EMPLOYMENT AGREEMENT

for

ALEXANDER H. GOOD

This Executive Employment Agreement (“Agreement”) is entered into on the date set forth on the signature page hereto by and between Alexander H. Good (“Executive”), SkyTerra Communications, Inc., a Delaware corporation, (“SkyTerra”) and Mobile Satellite Ventures LP, a Delaware limited partnership (“MSV”) (SkyTerra and MSV, collectively, the “Companies”).

WHEREAS, the Companies and the Executive are parties to an Employment Agreement dated February 26, 2004, as amended as of April 3, 2006 (the “Existing Employment Agreement”);

WHEREAS, the Companies desire to extend employment of the Executive to provide personal services to the Companies, and the Executive wishes to continue to be employed by the Companies, all on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows:

1. EMPLOYMENT BY THE COMPANIES.

1.1Term. The effective date (the “Effective Date”) of this Agreement shall be May 5, 2008. The term of employment under this Agreement (the “Term”) shall be three years, renewing on a day by day, continuous basis. However, upon written notice by the Companies to the Executive, the remaining term may be modified upon a majority vote of the Companies’ Boards of Directors (collectively, the “Boards”) to be a three year fixed term (commencing on the date of such written notice), and thereafter, the term of employment under this Agreement shall renew for successive two-year terms unless either party gives written notice not less than 24 months prior to the Term expiration that the Term will not be extended, provided that the Term shall end no later than the Executive’s termination from employment pursuant to Section 3.

1.2Joint and Several Employment. The Executive will be employed jointly and severally by the Companies. Except where individual performance is specified below, MSV and SkyTerra are each fully responsible on a joint and several basis for performance of this Agreement (and the Exhibits hereto), provided however that, as between them, either may delegate its performance (but not its obligations) to the other, and in no event shall the joint and several nature of the Executive’s employment result in a duplication of compensation or benefits.

1.3Position. Subject to terms set forth herein, the Companies agree to employ Executive in the positions of Chairman, Chief Executive Officer and President of SkyTerra and Vice Chairman (or Chairnman at such time as the Executive is elected to such position by the Board of MSV), Chief Executive Officer and President of MSV and

2

further agree to nominate the Executive during the Term to serve on each of the Boards, and the Executive hereby accepts such employment. During the term of employment with the Companies, the Executive shall devote his best efforts and substantially all of his business time and attention to the business of the Companies.

1.4Duties. The Executive shall have all authorities, duties and responsibilities customarily exercised by an individual serving in the positions set forth in Section 1.3 above in entities of the size and nature of the Companies. The Executive shall report solely and directly to the Boards.

1.5Policies and Procedures. The employment relationship between the parties shall also be governed by the written employment policies and practices of the Companies provided to the Executive or that are generally applicable from time to time to all or substantially all employees, including those relating to protection of confidential information and assignment of inventions, provided that in the event the terms of this Agreement differ from or are in conflict with such policies or practices, this Agreement shall control.

3

1.6Exclusions. Nothing herein shall preclude the Executive from (i) with the consent of the Board, serving on the board of directors of publicly traded entities, and on the boards of directors of other business entities, (ii) engaging in charitable activities, educational activities and community affairs, including serving on the boards of directors (or equivalent bodies) of any charitable, educational or community organization and (iii) managing his personal investments and affairs, provided any of the activities set forth in clauses (i) – (iii) above do not materially interfere with the performance of his duties and responsibilities hereunder.

2. COMPENSATION.

2.1        Salary. During the Term, the Executive shall receive for services to be rendered hereunder an annualized base salary of $625,200 payable on regular payroll dates established by the Companies (but not less frequently than monthly), subject to required payroll withholdings. The base salary shall be reviewed annually for appropriate merit and cost of living increases, but may not be decreased (as so adjusted, the “Base Salary”).

2.2Bonus. In addition to his Base Salary, during the Term, the Executive shall receive an annual (calendar year) bonus (the “Bonus”) of 100% of the Executive’s Base Salary then in effect (the “Target Bonus”), subject to the Boards having the option to either (i) pay a smaller Bonus if the Boards determine that the Executive has failed to satisfactorily perform objectives mutually agreed upon by the Executive and the Compensation Committee of the Companies (including but not necessarily limited to the items described in Exhibit B) and, where such failure is capable of being cured, notifies

4

the Executive in writing with a reasonable time period to cure, or (ii) pay a larger Bonus if the Boards determine that the Executive has exceeded performance expectations The Bonus earned by the Executive for any calendar year shall be paid in a single lump sum in cash following the close of such calendar year and within ten (10) days of the Companies’ receipt of audited financials for such calendar year but in no event later than March 31^st of the year following the year for which such Bonus is earned.

2.3Participation in Policies and Benefit Plans. Except as otherwise provided herein, the Executive’s employment shall be subject to the personnel policies that apply generally to the Companies’ executive employees as the same may be interpreted, adopted, revised or deleted from time to time, during the Term, by the Companies in their discretion. During the Term, the Executive shall be entitled to participate in and receive the benefits under all benefit plans, programs and arrangements provided to executive level employees of one or both of the Companies (the “Benefit Plans”). If the same type of benefit is provided to such employees under the plans or arrangement of both of the Companies but on different terms, the Executive shall be provided such benefit upon the most favorable terms applicable under the plans in question. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the Base Salary or Bonus payable to the Executive pursuant to Section 2.1 or Section 2.2 hereof, respectively. Without limiting the generality of the foregoing, the Executive shall be entitled to the following during the Term:

5

(a)Vacation. The Executive shall be entitled to paid vacations in accordance with the regular policies of the Companies, but in any event, no less than the aggregate of four (4) weeks per annum.

(b)Life Insurance. The Companies shall provide the Executive, at the Companies’ cost, with term life insurance coverage in an amount equal to two (2) times Base Salary, for which the Executive may designate the beneficiary.

(c)Long-Term Disability Insurance. The Companies shall provide the Executive, at the Companies’ cost, with long-term disability insurance which provides income continuation to the Executive at 50% of his Base Salary, subject to a cap of $400,000 annually ($33,333 per month) through age 65.

(d)Directors and Officers Liability Insurance / Indemnification. The Companies shall maintain the existing coverage level of directors’ and officers’ liability insurance to protect Executive from liability related to his employment with the Companies, unless the Boards determine in their discretion to reduce such coverage provided that the Companies maintain an adequate level of coverage and that such level shall be at least 50% of the current level of coverage. The Companies shall each indemnify Executive for liability related to his employment with the Companies to the extent Executive is not indemnified by such insurance to the maximum extent permitted by Delaware corporate and partnership law, respectively, and the respective organizational documents of each of the Companies, which obligation shall survive the termination of the Executive’s employment hereunder.

6

(e) Reimbursement of Expenses. The Companies shall promptly reimburse the Executive for all reasonable business expenses incurred by the Executive in the performance of his duties hereunder, subject to Section 7.

2.4 Stock Options/Restricted Stock.

On the closing date of the option exchange offer currently pending and described in SkyTerra’s registration statement on Form S-4, SkyTerra shall exchange the Executive’s 600,000 options in MSV (at a current exercise price of $6.45 per share) for 1,692,000 options (the “Options”) in SkyTerra Common Stock at an exercise price of $2.29 per share as part of, and subject to the terms and conditions of, the exchange transaction to be consummated between SkyTerra and MSV optionholders and on the terms and conditions set forth in the Form S-4 Registration Statement filed by SkyTerra and declared effective by the Securities and Exchange Commission. The Options shall also be subject to accelerated vesting under certain circumstances as provided below. The parties acknowledge that, as stated in the prospectus relating to SkyTerra's option exchange offer to holders of MSV options, the Board of Directors of SkyTerra may, in its sole discretion, permit the sale of shares of SkyTerra common stock issued upon the exercise of the Options earlier than would otherwise be permitted under the terms of the lockup that is part of the option exchange offer..

On the Effective Date, the Companies shall also grant to the Executive 600,000 shares of restricted common stock of SkyTerra (the “Restricted Stock”). The Restricted Stock shall vest with respect to one third (1/3^rd) of the stock on each of January 1^st of 2009, 2010 and 2011. On each of the vesting dates, the Companies may withhold from delivery

7

to the Executive, out of the total number of shares of Restricted Stock that vest on such date, a number of such shares with an aggregate fair market value on such vesting date equal to the amount of all taxes required by law to be withheld on account of the vesting of all such shares of Restricted Stock on such date.

3. TERMINATION OF EMPLOYMENT.

3.1At-Will Relationship. The Executive’s employment relationship is at-will. Either the Executive or the Companies may terminate the employment relationship at any time, for any reason, subject to the terms and conditions contained herein.

3.2 Termination Without Cause.

(a)       If Companies terminate the Executive’s employment without Cause (as defined below), such termination shall be effective upon written notice to the Executive.

(b)       In the event the Executive’s employment is terminated without Cause, subject to the provisions of Section 5, the Companies shall, in lieu of any other payment due pursuant to this Agreement:

(i)        within ten (10) days of the date of termination, pay the Executive a lump sum cash amount equal to two (2) times the sum of his Base Salary and the Target Bonus, provided that payment shall not be made before the release described in Section 5 becomes irrevocable nor later than 2-1/2 months following the date of termination;

8

(ii)       on the 60th day after the date of termination (or, if not a business day, the next following business day), pay the Executive an amount equal to the Target Bonus, pro rated for the number of days elapsed in the year prior to the date of termination, provided that (a) payment shall not be made before the release described in Section 5 becomes irrevocable, and (b) if the Executive is a “specified employee” within the meaning of Section 409A of the Code on the date of termination, payment shall instead be made in the seventh month following the date of termination;

(iii)      For a period of two (2) years following the Executive’s termination date (the Executive’s “Coverage Period”), the Executive and the Executive’s dependents shall be provided with the same health benefits coverage, at the same level and subject to the same terms and conditions, as in effect for the Executive immediately prior to his termination date under the Companies’ group medical, dental, vision and/or prescription drug plans (the Companies” “Health Care Plans”).

During the portion of the Executive’s Coverage Period in which the Executive is entitled to continuation coverage under either of the Companies’ Health Care Plans under Section 4980B of the Code (“COBRA Coverage”), (A) the health benefits coverage to be provided to the Executive pursuant to the preceding sentence shall be provided under such Health Care Plans (if reasonably practicable), and (B) the Companies shall pay the same percentage of the total cost of providing such coverage to the Executive as the percentage of the total cost that the Companies paid with respect to the coverage provided to the Executive under such Health Care Plans immediately before such termination. During any portion of the Executive’s Coverage Period in which the Executive is not entitled to COBRA Coverage under the Companies’ Health Care Plans

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(other than by reason of coverage under another group health plan), the Companies shall reimburse the Executive (and/or the Executive’s dependents) for the cost of purchasing health benefits coverage equivalent to that which it is intended that the Executive and/or the Executive’s dependents receive under the first sentence of this clause (iii) for such portion of the Executive’s Coverage Period. Such amount shall be paid in accordance with Section 7;

(iv)      continue to provide the Executive, at the Companies’ expense, with group term life insurance and accident and long-term disability insurance benefits substantially similar to the benefits being provided to the Executive immediately prior to the date of termination, and the benefits set forth in Sections 2.3(b) and (c), for a period of two years after the date of termination, provided that, to the extent any benefit provided under this paragraph is taxable to the Executive and the Executive is a “specified employee” within the meaning of Section 409A of the Code on the date of termination, such coverage shall not be provided until the seventh month following the date of termination and, if the Executive pays for such coverage for the period between his termination date and such seventh month, the Companies shall reimburse the Executive for such expenses in accordance with Section 7;

(v)       accelerate the vesting and, as applicable, delivery of all SkyTerra and MSV stock options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive, such that all such stock options, restricted stock and other equity-based awards shall become fully vested and, in the case of stock options, fully and immediately exercisable on such date,

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and provided further that the Executive shall have a post-termination exercise period with respect to all stock options extending to their respective original expiration dates; and

(vi)      pay and provide to the Executive all Payments and Benefits (as defined below) accrued or vested, but not yet paid, through the date of termination within ten (10) days after the date of termination (except in the case of compensation and benefits under plans, programs and arrangements, at such other time and in such manner as determined under the terms and conditions of such plans, programs and arrangements). For purposes hereof, “Payments and Benefits” shall mean the Executive’s accrued but unpaid Base Salary, any earned, but unpaid Bonus in respect of the year prior to the current year, reimbursement for all unreimbursed business expenses, accrued and unpaid vacation days, and all accrued or vested compensation and benefits payable to the Executive under all Benefit Plans and all compensation plans, programs or arrangements in which the Executive participates.

3.3 Termination for Cause.

(a)       The Companies may terminate the Executive’s employment with the Companies for Cause determined in the Board’s discretion as described below upon written notice to the Executive. In such event, the Executive shall not be entitled to pay in lieu of notice or any other such compensation, except as required by law, but shall be paid and provided all Payments and Benefits through the date of termination at the times and in the manner set forth in Section 3.2(b)(vi) above.

(b) “Cause” shall mean:

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(i)        the willful and continued failure of the Executive to substantially perform the Executive's duties with the Companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Boards which specifically identifies the manner in which the Boards believe that the Executive has not substantially performed the Executive's duties;

(ii)       the willful engaging by the Executive in gross misconduct which is materially and demonstrably injurious to either of the Companies;

(iii)      material breach of fiduciary duty to either of the Companies that in either case results in personal profit to the Executive at the expense of either of the Companies; or

(iv)      the Executive is convicted or pleads nolo contendre to a felony under Federal or state law or willfully violates any law, rule or regulation (other than traffic violations, misdemeanors or similar offenses) or cease-and-desist order, court order, judgment or supervisory agreement, which violation is materially and demonstrably injurious to either of the Companies.

For purposes of the preceding clauses, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive's action or omission was in the best interests of the Companies. Any act, or failure to act, based upon prior approval given by the Boards or based upon the advice of counsel for the Companies, shall be conclusively presumed to be done, or omitted to be done, by the

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Executive in good faith and in the best interests of the Companies. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive, as part of the notice of termination, a copy of a resolution duly adopted by the affirmative vote of not less thanthree quarters (3/4)of the entire membership of the Boards at a meeting of the Boards called and held for the purpose of considering such termination (after reasonable written notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Boards) finding that, in the good faith opinion of the Boards, the Executive is guilty of the conduct described in clause (i) or (ii) above, and specifying the particulars thereof in detail.

3.4 Termination for Good Reason.

(a)       The Executive may voluntarily terminate his employment for “Good Reason” by notifying the Companies in writing, within ninety (90) days after the Executive first obtains knowledge of the occurrence of one of events below, that the Executive is terminating his employment for Good Reason, and, if such Good Reason is not cured, the Executive must actually terminate employment no later than six months following the initial existence of such Good Reason. "Good Reason" means the occurrence of any of the following events:

(i)        a material diminution in the Executive’s duties inconsistent in with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities contemplated by Sections 1.3 and 1.4

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above or any other action by the Companies which results in a material diminution in any respect in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith that is remedied by the Companies promptly after receipt of notice thereof given by the Executive;

(ii)       A change in the Executive’s reporting from solely and directly to the Boards;

(iii)      a material reduction in the Executive's Base Salary or Target Bonus ;

(iv)      the Companies’ requiring the Executive to be based at any officethat is more than twenty-five (25) miles from the Executive's current office in Reston, Virginia;

(v)       a material diminution in the Executive’s benefits as a result of the failure by the Companies (a) to continue in effect any compensation plan in which the Executive participates that is material to the Executive's total compensation, unless he has been offered participation in an economically equivalent compensation arrangement (embodied in an ongoing substitute or alternative plan) or (b) to continue the Executive's participation in any such compensation plan (or in any substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of compensation provided and the level of the Executive's participation relative to other participants, than existed prior to such failure;

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(vi)      the material failure by the Companies to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Companies’ pension, life insurance, medical, health and accident, disability or other welfare plans in which the Executive was participating immediately prior to such failure;

(vii)     any action or inaction by either of the Companies that constitutes a material breach of the terms and provisions of this Agreement (and its Exhibits).

Anything herein to the contrary notwithstanding, the Executive’s employment shall not be terminated for Good Reason unless he provides written notice to the Companies stating the basis of such termination and the Companies fail to cure the action or inaction that is such basis within thirty (30) days after receipt of such notice.

(b)       In the event Executive terminates his employment for Good Reason, subject to the provisions of Section 5, the Companies shall pay and provide to the Executive the payments, benefits and rights set forth, and at the times provided, in Section 3.2(b) above as if the Executive’s employment was terminated without Cause.

3.5 Termination by Virtue of Death or Disability of the Executive.

(a) In the event of the Executive’s death during the Term, the

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Companies shall pay and provide to the Executive’s legal representatives the Payments and Benefits through the date of death at the times and in the manner set forth in Section 3.2(b)(vi) above. The Executive’s family, heirs and beneficiaries shall be eligible for any benefit continuation or conversion rights provided by the provisions of such benefit plans, programs or arrangements or by law. In addition, all SkyTerra and/or MSV stock options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive by the Companies and held by him at the time of his death shall become fully vested and exercisable on the date of death, and in the case of stock options, shall remain exercisable through the earlier of the one-year period following the date of death and their respective original expiration dates.

(b)       Subject to applicable state and federal law, the Companies shall at all times have the right, upon written notice to the Executive, to terminate the Executive’s employment under this Agreement as a result of the Executive’s Disability (as defined below). Termination by the Companies of the Executive’s employment as a result of “Disability” shall mean termination because the Executive is unable due to a physical or mental condition to perform the essential functions of his positions with or without reasonable accommodation for six (6) months in the aggregate during any twelve (12) month period, based on the written certification by a licensed physician reasonably acceptable to the Companies and the Executive. This definition shall be interpreted and applied consistent with the Americans with Disabilities Act, the Family and Medical Leave Act, and other applicable law. In the event the Executive’s employment is terminated as a result of the Executive’s Disability, the Companies shall pay and provide to the Executive the Payments and Benefits through the date of termination at the times

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and in the manner set forth in Section 3.2(b)(iv) above. The Executive shall be eligible for any benefit continuation or conversion rights provided by the provisions of such benefit plans, programs or arrangements or by law. In addition, all SkyTerra and/or MSV stock options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive shall become fully vested and exercisable on the date of termination, and in the case of stock options, shall remain exercisable through the earlier of the one-year period following the date of Disability and their respective original expiration dates.

3.6Termination without Good Reason. The Executive may terminate his employment without Good Reason upon ten (10) days written notice to the Companies. In such event, on or before the date which is ten (10) days after the date of termination, the Companies shall pay and provide the Payments and Benefits to the Executive through the date of termination at the times and in the manner set forth in Section 3.2(b)(vi) above.

3.7Termination by Mutual Consent. If at any time during the course of this Agreement the parties by mutual consent decide to terminate this Agreement, they shall do so by separate written agreement setting forth the terms and condition of such termination.

4. Change in Control.

For purposes of this Section 4, the terms “Member” and “Partnership” refer to MSV. In the event of a Change in Control of SkyTerra, the terms “Member” and

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“Partnership” shall refer to and be replaced with “Shareholders” and “Corporation”, respectively.

(a)Definition. Subject to the immediately preceding paragraph, a “Change in Control” means the occurrence of any of the following events after the date hereof in respect of either or both of the Companies:

(i)        any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but other than Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners) together with its affiliates, excluding employee benefit plans, becomes, directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Partnership or SkyTerra representing 40% or more of the combined voting power of the Partnership's or SkyTerra’s then outstanding securities;

(ii)       the dissolution or liquidation of the Partnership or a merger, consolidation, or reorganization of the Partnership or SkyTerra with one or more other entities in which the Partnership or SkyTerra is not the surviving entity or the sale of substantially all of the assets of the Partnership or SkyTerra to another person or entity (excluding a merger of MSV into SkyTerra);

(iii)      any transaction (including without limitation a merger or reorganization in which the Partnership or SkyTerra is the surviving entity) which results in any person or entity (other than Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners) owning or controlling more than 50% of the

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combined voting power of all classes of securities/interests of the Partnership or SkyTerra;

(iv)      in instances where Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners own or control more than 50% of the combined voting power of all classes of securities/interests in the Partnership or SkyTerra, any transaction (including without limitation a merger or reorganization in which the Partnership or SkyTerra is the surviving entity) which results in a third party owning or controlling more than 50% of Harbinger Capital Partners’ or affiliated funds of Harbinger Capital Partners’ combined voting power of all classes of securities in the Partnership or SkyTerra; or

(v)       individuals who at the beginning of any two-year period constitute the applicable Board, plus new directors of the Partnership or SkyTerra whose election or nomination for election by the Partnership's Members or SkyTerra’s Shareholders is approved by a vote of at least two-thirds of the directors of the Partnership or SkyTerra still in office who were directors of the Partnership or SkyTerra at the beginning of such two-year period, cease for any reason during such two-year period to constitute at least two-thirds of the members of the applicable Board.

Notwithstanding the immediately foregoing, a Change of Control shall not be deemed to occur solely as a result of any of the following: (i) an initial public offering by the Partnership or any successor thereto, (ii) the consummation of the conversion of the Partnership or its business into a corporation, or (iii) a transaction, or

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series of related transactions, the result of which is that SkyTerra share ownership in MSV increases.

(b)Accelerated Vesting. Immediately prior to a Change in Control of either of the Companies all options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive by the Companies and held by him immediately prior to such a Change in Control shall become immediately and fully vested and exercisable and, in the case of stock options, shall remain exercisable for their respective original terms.

(c)Section 280G.  Exhibit A attached to this Agreement shall be applicable in the event of the occurrence of a Change in Control, or in the event that any payments or benefits to be made to or for the benefit of the Executive under this Agreement or under any plan or arrangement maintained by the Companies or otherwise, are subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”).

5. Release.

Upon the termination of Executive’s employment under Sections 3.2 or 3.4 above, Executive shall provide the Companies with an executed and effective release substantially in the form attached to this Agreement as Exhibit A, which may be amended by the Companies to provide for an effective release under applicable law.

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6. COOPERATION WITH COMPANIES.

During and after the term of the Executive’s employment, the Executive will cooperate with the Companies in responding to the reasonable requests of the Companies in connection with any and all existing or future litigation, arbitrations, mediations or investigations brought by or against the Companies, or its or their respective affiliates, agents, officers, directors or employees, whether administrative, civil or criminal in nature, in which the Companies reasonably deems the Executive’s cooperation necessary or desirable. In such matters, the Executive agrees to provide the Companies with reasonable advice, assistance and information, including offering and explaining evidence, providing sworn statements, and participating in discovery and trial preparation and testimony. The Executive also agrees to promptly send the Companies copies of all correspondence (for example, but not limited to, subpoenas) received by the Executive in connection with any such legal proceedings, unless the Executive is expressly prohibited by law from so doing. To the extent possible, the Companies shall try to limit the Executive’s cooperation under this Section 6 to regular business hours. In any event, (i) in any matter subject to this Section 6, the Executive shall not be required to act against his own legal interest and (ii) any request for such cooperation shall take into account (A) the significance of the matters at issue in the litigation, arbitration, mediation or investigation and (B) the Executive’s other personal and business commitments. The Companies agree to provide the Executive reasonable notice, to the extent practicable, in the event his assistance is required. The Companies shall reimburse the Executive for the reasonable costs and expenses incurred by him as a result of providing such cooperation, upon the submission of the appropriate documentation to the

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Companies. Such costs and expenses shall include, without limitation, demonstrably lost wages (after the termination of his employment by the Companies), travel costs and legal fees to the extent the Executive reasonably believes that separate representation is warranted. The Executive’s entitlement to reimbursement of such costs and expenses, including legal fees, pursuant to this Section 6, shall in no way affect the Executive’s rights to be indemnified and/or advanced expenses in accordance with the Companies’ organizational documents, any applicable insurance policy, and/or in accordance with this Agreement. After termination of Executive’s employment, the Companies shall also pay the Executive a fee in the amount of $500 per hour for the time the Executive devotes to matters as requested by the Companies under this Section 6 (“the Fees”). The Companies will not deduct or withhold any amount from the Fees for taxes, social security, or other payroll deductions, but will instead issue an IRS Form 1099 with respect to the Fees, except as otherwise required by law. The Executive acknowledges that in cooperating in the manner described in Section 7.1, he will be serving as an independent contractor, not a Companies employee, and he will be entirely responsible for the payment of all income taxes and any other taxes due and owing as a result of the payment of Fees. The Executive hereby indemnifies the Companies and its officers, directors, agents, attorneys, employees, shareholders, subsidiaries, and affiliates and holds them harmless from any liability for any taxes, penalties, and interest that may be assessed by any taxing authority with respect to the Fees, with the exception of the employer’s share of employment taxes subsequently determined to be applicable, if any.

7.SECTION 409A. The parties intend that any compensation, benefits and other amounts payable or provided to the Executive under this Agreement be paid or

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provided in compliance with Section 409A of the Code and all regulations, guidance, and other interpretative authority issued thereunder (collectively, “Section 409A”) such that there will be no adverse tax consequences, interest, or penalties for the Executive under Section 409A as a result of the payments and benefits so paid or provided to him. The parties agree to modify this Agreement, or the timing (but not the amount) of the payment of the severance or other compensation, or both, to the extent necessary to comply with Section 409A. In addition, notwithstanding anything to the contrary contained in any other provision of this Agreement, the payments and benefits to be provided to the Executive under this Agreement shall be subject to the provisions set forth below.

(a)       Any payment subject to Section 409A that is triggered by a termination from employment shall be triggered by a “separation from service,” as defined in the regulations issued under Section 409A.

(b)       If the Executive is a “specified employee” within the meaning of the Section 409A at the time of the Executive’s “separation from service” within the meaning of Section 409A, then any payment otherwise required to be made to the Executive under this Agreement on account of the Executive’s separation from service, to the extent such payment (after taking in to account all exclusions applicable to such payment under Section 409A) is properly treated as deferred compensation subject to Section 409A, shall not be made until the first business day after (i) the expiration of six months from the date of the Executive’s separation from service, or (ii) if earlier, the date of the Executive’s death (the “Delayed Payment Date”). On the Delayed Payment

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Date, there shall be paid to the Executive or, if the Executive has died, to the Executive’s estate, in a single cash lump sum, an amount equal to aggregate amount of the payments delayed pursuant to the preceding sentence, plus interest thereon at the Delayed Payment Interest Rate (as defined below) computed from the date on which each such delayed payment otherwise would have been made to the Executive until the Delayed Payment Date. For purposes of the foregoing, the “Delayed Payment Interest Rate” shall mean the national average annual rate of interest payable on jumbo six-month bank certificates of deposit, as quoted in the business section of the most recently published Sunday edition of The New York Times preceding the date as of which Executive is treated as having incurred a separation from service for purposes of Section 409A.

(d)       All expenses eligible for reimbursement hereunder that are taxable to the Executive shall be paid to the Executive no earlier than in the seventh month after separation from service and no later than December 31 of the calendar year following the calendar year in which such expenses were incurred. The expenses incurred by the Executive in any calendar year that are eligible for reimbursement under this Agreement shall not affect the expenses incurred by the Executive in any other calendar year that are eligible for reimbursement hereunder. The Executive’s right to receive any reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit.

 

8. GENERAL PROVISIONS

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8.1Notices. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight courier, to the Companies at their headquarters office location and to the Executive at his address as listed in the Companies’ records.

8.2Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.

8.3Waiver. No waiver, amendment or modification of this Agreement shall be effective unless signed by the parties hereto. If the parties should waive any breach of any provisions of this Agreement, the waiving party shall not be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

8.4Complete Agreement. This Agreement and its Exhibits, constitute the entire agreement between Executive and the Companies with respect to the subject matter hereof. It is entered into without reliance on any promise or representation other than those expressly contained herein. This Agreement supersedes and replaces the Existing Employment Agreement and the Agreement dated as of February 29, 2004

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between the Executive and MSV in their entirety. For clarity, the Confidentiality, Non-Competition and Non-Solicitation Agreement dated February 24, 2005 between the Executive and MSV shall remain in full force and effect.

8.5Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

8.6Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

8.7Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Companies, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder except to his estate as to designated beneficiaries as provided in applicable compensation and benefit plans and agreements. No rights or obligations of either of the Companies under this Agreement may be assigned or transferred by either of the Companies without the Executive’s prior written consent, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which a Company is not the continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of a Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of such Company and assumes the liabilities, obligations and duties of such Company under this Agreement, either

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contractually or by operation of law. The Companies further agree that, in the event of any disposition of its business and assets described in the preceding sentence, they shall use their best efforts to cause such assignee or transferee expressly to assume the liabilities, obligations and duties of the applicable Company hereunder.

8.8Survival. The rights and obligations of the parties hereunder shall survive termination of Executive’s employment with the Companies to the extent necessary and appropriate to carry out the intentions of the parties.

8.8Remedies. The Executive acknowledges that a remedy at law for any material breach or material threatened breach by him of any confidentiality requirements and the provisions of the Confidentiality, Non-Competition and Non-Solicitation Agreement dated February 24, 2005 between the Executive and MSV would be inadequate, and he therefore agrees that the Companies shall be entitled to seek injunctive relief in case of any such breach or threatened breach, in addition to any other remedies available to the Companies.

8.9Attorneys’ Fees. If any party hereto brings any action to enforce his or its rights hereunder each party shall be responsible for and pay their own attorneys’ fees and costs incurred in connection with such action, except as provided in Section 8.10 below.

8.10Arbitration Procedures. Any controversy, dispute or claim arising out of or relating to this Agreement, any other agreement or arrangement between the Executive and the Companies, the Executive’s employment with the Companies, or the termination thereof (collectively, "Covered Claims") shall be resolved by binding

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arbitration, to be held in Reston, Virginia, in accordance with the Commercial Arbitration Rules of the American Arbitration Association and this Section 8.10. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The Companies shall promptly advance to the Executive (and his beneficiaries) any and all costs and expenses (including without limitation attorneys’ fees) incurred by the Executive (or any of his beneficiaries) in resolving any such Covered Claim; provided, however, that the recipient agrees to repay any amounts advanced to the extent that the recipient’s claims/defenses are found by the arbitrator(s) to have lacked a reasonable basis. Pending the resolution of any Covered Claim, the Executive (and his beneficiaries) shall continue to receive all payments and benefits due under this Agreement or otherwise.

8.11No Mitigation. The Company agrees that, if the Executive’s employment by the Company is terminated for any reason, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the executive by the Company pursuant to this Agreement. Further, the amount of any payment or benefit provided for under this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, or be offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

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8.12Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of Virginia, without regard to conflicts of law principles.

8.13 Nonduplication Of Benefits. No provision of this Agreement shall require the Companies to provide the Executive with any payment, benefit, or grant that duplicates any payment, benefit, or grant that the Executive is entitled to receive under any compensation or benefit plan, award agreement, or other arrangement of the Companies.

8.14 Taxes. Each Company may withhold from any benefits payable under this Agreement all taxes that the Company reasonably determines to be required pursuant to any law, regulation, or ruling. However, it is the Executive’s obligation to pay all required taxes on any amounts and benefits provided under this Agreement.

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

SKYTERRA COMMUNICATIONS, INC. /
MOBILE SATELLITE VENTURES LP
By:
	[Name]
	[Title]
Date: May __, 2008

Accepted and agreed this

____ day of May, 2008.

Alexander Good, an Individual

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EXHIBIT A

RELEASE

(a)       In consideration of the payments and benefits set forth in Section __ of the Employment Agreement, except for the rights expressly provided herein, the Executive for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “Releasors”) does hereby irrevocably and unconditionally release, acquit and forever discharge the Company, subsidiaries, and their respective current and former officers, directors, employees, representatives, agents, attorneys, shareholders, in their official capacities (collectively, “Releasees”), and each of them from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever arising out of or relating to his employment relationship, or the termination of that relationship, with the Company and its subsidiaries, known or unknown, whether in law or equity and whether arising under federal, state or local law including, without limitation, any such claim under the Corporate and Criminal Fraud Accountability Act of 2002, also known as the Sarbanes Oxley Act; any claim for discrimination based upon race, color, ethnicity, sex, age (including under the Age Discrimination in Employment Act of 1967 (the “ADEA”) and the Older Workers Benefit Protection Act of 1990), national origin, religion, disability, retaliation, or any other unlawful criterion or circumstance, the New York State Human Rights Law; and any other federal, state or local laws, rules or

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regulations, whether equal employment opportunity laws, rules or regulations or otherwise, which the Executive and the other Releasors had, now have, or may have in the future against each or any of the Company, or any other Releasees from the beginning of the world until the date the Executive signed this Agreement (the “Execution Date”) relating to the Executive’s employment with the Company and its subsidiaries. Anything herein to the contrary notwithstanding, nothing herein shall release the Company or any other Releasees from any claims or damages based on: (i) any right or claim that arises after the Execution Date, (ii) any right, including a right to a payment or benefit, the Executive may have under this Agreement or for accrued or vested benefits and stock based awards pursuant to the terms and conditions of the applicable plan document, (iii) the Executive’s eligibility for indemnification, in accordance with applicable laws or the certificate of incorporation or by-laws of the Company, or under any applicable insurance policy, with respect to any liability the Executive incurs or has incurred as a director, officer or employee of the Company and its subsidiaries, or (iv) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against him as a result of any act or failure to act for which he and the Company or any other Releasee are jointly liable.

(b)       The Executive acknowledges that: (i) this entire Agreement is written in a manner calculated to be understood by him; (ii) he has been advised to consult, and has consulted with, an attorney before executing this Agreement; (iii) he was given a period of twenty-one (21) days within which to consider this Agreement; and (iv) to the extent he executes this Agreement before the expiration of the twenty-one-day period, he does so knowingly and voluntarily and only after consulting his attorney. The

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Executive shall have the right to cancel and revoke this Agreement during a period of seven (7) days following the Execution Date, and this Agreement shall not become effective, and no money shall be paid hereunder prior to the expiration of such seven-day period (the “Revocation Date”). The seven-day period of revocation shall commence upon the Execution Date. In order to revoke this Agreement, the Executive shall deliver to the Company’s Chief Legal Officer, prior to the expiration of said seven-day period, a written notice of revocation. Upon such revocation, this Agreement shall be null and void and of no further force or effect on either party.

(c)       The Executive acknowledges and agrees that the consideration provided to him exceeds anything to which he is otherwise entitled and that he is owed no wages, commissions, bonuses, finder’s fees, equity or incentive awards, severance pay, vacation pay or any other compensation or vested benefits or payments or remuneration of any kind or nature other than as specifically provided for in this Agreement. If Executive should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Company or any other Releasees with respect to any cause, matter or thing which is the subject of the Executive’s release hereunder, this Agreement may be raised as a complete bar to any such action, claim or proceeding, and the Company or any other Releasees, as applicable may recover from the Executive all costs incurred in connection with such action, claim or proceeding, including attorneys’ fees.

(d)       Executive represents and agrees that he has not filed any lawsuits against any of the Company or any other Releasees, or filed or caused to be filed any charges or complaints against the Company or any other Releasees with any municipal,

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state or federal agency charged with the enforcement of any law. Pursuant to and as a part of the Executive’s release and discharge of the Company or any other Releasees, as set forth herein, the Executive agrees to the fullest extent permitted by law, not to sue or file a charge, complaint, grievance or demand for arbitration against the Company, the Affiliated Entities or any other Releasees in any forum with respect to any matter which is the subject of Executive’s release hereunder.

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(e)       The Company, on behalf of itself and the other Releasees, also agrees that, subject to this Agreement becoming effective, they hereby irrevocably and unconditionally release, acquit and forever discharge the Executive from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether in law or equity and whether arising under federal, state or local law that any Releasee had, now has, or may have in the future against the Executive and the other Releasors from the beginning of the world until the Execution Date arising out of or relating to the Executive’s employment relationship or the termination of that relationship with the Company and/or its subsidiaries, except that this paragraph shall not apply to: (i) any act that constitutes a criminal act under any Federal, state or local law committed or perpetuated by the Executive during the course of the Executive’s employment with the Company or its affiliates or thereafter prior to the Execution Date (including any criminal act of fraud, misappropriation of funds or embezzlement or any other criminal action); (ii) any act of fraud or theft committed by Executive in connection with his employment with the Company or thereafter prior to the Execution Date; or (iii) Executive’s obligations under this Agreement.

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EXHIBIT B

Objectives

The objectives of the Executive, as Chief Executive Officer, include but are not necessarily limited to maintaining the following:

(a)       The Companies remain duly organized and in good standing under the laws of the jurisdiction of its organization;

(b)       Neither of the the Companies is in violation of any provisions of their organizational documents, each as amended to date;

(c)       The Registration Statements or other SEC Reports filed on behalf of the Companies present fairly, in all material respects, the consolidated financial position of the Companies as of the dates specified and the consolidated results of operations and cash flows for the periods specified, in each case, in conformity with GAAP applied on a consistent basis during the periods involved, except as indicated therein or in the notes thereto;

(d)       The Companies maintain systems of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as

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necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;

(e)       Except as otherwise disclosed, the Companies’ business complies with all applicable US, state, local and foreign laws.

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EXHIBIT C

1. Gross-Up Payments.

If upon or following a Change in Control (as defined in Section 4 of the Employment Agreement of which these provisions are a part) or otherwise, any payment or benefit made or provided to or for the benefit of the Executive (whether pursuant to the terms of such Employment Agreement or any other plan, arrangement or agreement with the Companies, with any person or persons whose actions result in a Change in Control, or with any affiliate of the Companies or any such person or persons, and including, without limitation, any severance benefits and any amounts received or deemed received, within the meaning of any provision of the Internal Revenue Code of 1986, as amended (the “Code”), by the Executive as a result of, and not by way of limitation, any automatic vesting, lapse of restrictions and/or accelerated target or performance achievement provisions, or otherwise, applicable to outstanding grants or awards to Executive under any of the Companies’ incentive plans or agreements ) (any such payment or benefit, other than any Gross-up Payment or Additional Gross-Up Payment as defined below, is referred to hereinafter as a “Company Payment”), is determined to be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), the Companies shall pay in cash to the Executive or for the Executive’s benefit as provided below an additional amount (referred to herein as a “Gross-Up Payment”), which additional

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amount shall be determined and paid in accordance with the provisions in Paragraphs 2 and 3 below.

 

2. Amount of Gross-Up Payment.

 

The Gross-up Payment to be made with respect to the Excise Tax to which any Company Payment is subject shall be an amount which, after reductionof such amount by anyExcise Tax imposed thereon and by allfederal, state and local income, employment, and other taxes payable by the Executive thereon, is equal to the Excise Tax payable with respect to such Company Payment, plus any interest or penalties payable with respect to such Excise Tax.

3. Determination and Payment of Initial Gross-Up Payment.

By no later than twenty (20) days before the date on which any Company Payment is scheduled to be made to the Executive (or as soon thereafter as is administratively practicable), a determination shall be made as to whether such Company Payment will be subject to Excise Tax, and if so, as to the amount of such Excise Tax and the amount of the Gross-up Payment required to be made hereunder with respect to such Excise Tax (the “Determination”). Such Determination shall be made in writing by a nationally-recognized certified public accounting firm selected by the Companies that has not rendered services to either of the Companies within two years prior to the date of the

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occurrence of the Change in Control (the “Accounting Firm”). All fees and expenses of the Accounting Firm shall be borne by the Companies. Promptly after the Accounting Firm has made its Determination, it shall provide to the Companies and to the Executive copies of its Determination, together with all detailed supporting calculations and documentation and any assumptions used or opinions rendered by the Accounting Firm in making its Determination. Subject to any determinations made by the Internal Revenue Service (the “IRS”), all determinations of the Accounting Firm with respect to the initial amount of any Gross-up Payment to be made hereunder (and of any Additional Gross-up Payment to be made pursuant to Paragraph 5 below), shall be binding on the Companies and the Executive. The initial amount of the Gross-Up Payment so determined with respect to any Company Payment (the “Initial Gross-Up Payment”) shall be paid by the Companies to the Executive or to the IRS and any other applicable taxing authority on behalf of the Executive as soon as practicable following the Executive’s receipt or deemed receipt of such Company Payment, and may be satisfied by the Companies making a payment or payments on Executive’s account in lieu of withholding for tax purposes, but in all events shall be made by no later than thirty (30) days after the Executive’s receipt or deemed receipt of such Company Payment.

4. Computation Assumptions.

For purposes of the Determination to be made by the Accounting Firm as to whether any Company Payment will be subject to Excise Tax, and if so, the amount of any such Excise Tax that will be payable with respect to such Company Payment, and the amount

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of any Gross-Up Payment or Additional Gross-Up Payment to be made with respect to such Excise Tax, the following assumptions shall be made by the Accounting Firm:

a. Any other Company Payment received or to be received by the Executive in connection with or contingent upon a Change in Control of either of the Companies shall be aggregated to determine whether the Executive has received or will receive any “parachute payment” within the meaning of Section 280G(b)(2) of the Code, and if so, the amount of any “excess parachute payments” within the meaning of Code Section 280G(b)(1) that will be treated as subject to the Excise Tax, except to the extent that the Accounting Firm rendering the Determination concludes that any such other Company Payment does not constitute a parachute payment, or that any portion of such excess parachute payments represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;

b. The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm rendering the Determination in accordance with the principles of Section 280G(d)(3) and (4) of the Code and the applicable regulations issued under Code Section 280G.

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c. The compensation and benefits provided for in the Executive’s Employment Agreement, and any other compensation earned by the Executive prior to the Executive’s Date of Termination (as defined in such Employment Agreement) pursuant to either of the Companies’ compensation programs (if such compensation would have been payable in the future in any event, even though the timing of such payment is triggered by the Change in Control), shall for purposes of any Determination to be made pursuant to Paragraph 3 of this Exhibit A be deemed to be reasonable; and

d. The Executive shall be deemed to pay federal, state, and local income taxes at the highest applicable marginal rate of taxation (and shall be deemed to be subject to employment taxes only to the extent determined by taking into account any wage base limitations, applicable in the calendar year in which the Gross-Up Payment is to be made.

 

5. Additional Gross-up Payments

 

If it should be subsequently determined by the Accounting Firm or the IRS that Excise Tax is payable with respect to any Company Payment in an amount greater than the amount taken into account in calculating the amount of the Initial Gross-Up Payment made hereunder with respect thereto (including by reason of any other Company Payment the existence or amount of which could not be determined at the time such Initial Gross-Up Payment was made), the Companies shall make an additional Gross-Up Payment (“Additional Gross-up Payment”) to the Executive or to the IRS and any other applicable

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taxing authority for his benefit in respect of such excess (such excess is referred to hereinafter as an “Additional Excise Tax”), plus any interest, penalties or additions payable by the Executive with respect to such Additional Excise Tax. If the Accounting Firm determines that any such Additional Excise Tax is payable with respect to any Company Payment, the Additional Gross-Up Payment with respect thereto shall be made by no later than thirty (30) days from the date of the Accounting Firm’s determination. If the IRS claims that any Additional Excise Tax is payable with respect to any Company Payment, any Additional Gross-Up Payment payable with respect thereto shall be made at the time provided in Paragraph 6 below.

 

6. Notification to Companies.

 

The Executive shall promptly notify the Companies in writing of any claim by the IRS that, if successful, would require the payment by the Companies of an Additional Gross-Up Payment. If the Companies notifies the Executive in writing that it desires to contest such claim, the Executive shall: (a) give the Companies any information reasonably requested by the Companies relating to such claim; (b) take such action in connection with contesting such claim as the Companies shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Companies that is reasonably acceptable to the Executive; (c) cooperate in good faith in order to effectively contest such claim; and (d) permit the Companies to participate in any proceedings relating to such claim; provided that the Companies shall bear and pay directly all attorneys fees, and all other costs and

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expenses (including additional interest, penalties and additions to tax) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for all taxes (including, without limitation, all federal, state and local income, employment and excise taxes), interest, penalties and additions to tax imposed in relation to such claim and in relation to the payment of such fees, costs and expenses or indemnification. Without limitation on the foregoing provisions of this Paragraph, and to the extent its actions do not unreasonably interfere with or prejudice the Executive’s disputes with the IRS as to other issues, the Companies shall control all proceedings taken in connection with such contest, and in its reasonable discretion, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the IRS in respect of such claim and may, at its sole option, either direct the Executive to pay the tax, interest or penalties claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Companies shall determine; provided, however, that if the Companies directs the Executive to pay such claim and sue for a refund, the Companies shall advance an amount equal to such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from all taxes (including, without limitation, all federal, state and local income, employment and excise taxes), interest, penalties and additions to tax imposed with respect to such advance or with respect to any imputed income with respect to such advance, by no later than fifteen (15) days after any such amounts are due and payable; and, further, provided, that any extension of the statute of limitations relating to payment

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of taxes, interest, penalties or additions to tax for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount; and, provided, further, that any settlement of any claim shall be reasonably acceptable to the Executive and the Companies’ control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue.

7. Subsequent Recalculation.

In the event of a binding or uncontested determination by the IRS that Additional Excise Tax is payable with respect to any Company Payment made to the Executive, the Additional Gross-Up Payment payable hereunder with respect thereto shall be paid to the Executive, or to the IRS and other applicable taxing authorities for his benefit, by no later than ten (10) days after such determination. In the event of a binding or uncontested determination by the IRS that adjusts the computation set forth in the Determination so that the Executive received a Gross-Up Payment in excess of the amount required pursuant to this Exhibit A, then the Executive shall promptly pay to the Companies (without interest) the amount of such excess; provided, however, that if any portion of a Gross-Up Payment that is to be refunded to the Companies was paid to the IRS or to any state or local taxing authority, repayment thereof (and related amounts) shall not be required until actual refund or credit of such portion has been made to the Executive.

8. Timing of Payment

For purposes of Section 409A, payment pursuant to this Exhibit will not be made later than the end of the Executive’s taxable year next following the year in which the related

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taxes are remitted to the applicable taxing authority. In addition, any payment under this Exhibit that is conditioned upon a separation from service shall not be made before the seventh month following separation from service.

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EX-10

SKYTERRA COMMUNICATIONS, INC. /

MOBILE SATELLITE VENTURES, LP

EXECUTIVE EMPLOYMENT AGREEMENT

for

SCOTT G. MACLEOD

This Executive Employment Agreement (“Agreement”) is entered into on the date set forth on the signature page hereto by and between Scott G. Macleod (“Executive”), SkyTerra Communications, Inc., a Delaware corporation, (“SkyTerra”) and Mobile Satellite Ventures LP, a Delaware limited partnership (“MSV”) (SkyTerra and MSV, collectively, the “Companies”).

WHEREAS, the Companies and the Executive are parties to an Employment Agreement dated January 9, 2006 (the “Existing Employment Agreement”);

WHEREAS, the Companies desire to extend employment of the Executive to provide personal services to the Companies, and the Executive wishes to continue to be employed by the Companies, all on the terms and conditions set forth herein;

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, it is hereby agreed by and between the parties hereto as follows:

1. EMPLOYMENT BY THE COMPANIES.

1.1Term. The effective date (the “Effective Date”) of this Agreement shall be May 5, 2008. The term of employment under this Agreement (the “Term”) shall be three years, renewing on a day by day, continuous basis. However, upon written notice by the Companies to the Executive, the remaining term may be modified upon a majority vote of the Companies’ Boards of Directors (collectively, the “Boards”) to be a three year fixed term (commencing on the date of such written notice), and thereafter, the term of employment under this Agreement shall renew for successive one-year terms unless either party gives written notice not less than 12 months prior to the Term expiration that the Term will not be extended, provided that the Term shall end no later than the Executive’s termination from employment pursuant to Section 3.

1.2Joint and Several Employment. The Executive will be employed jointly and severally by the Companies. Except where individual performance is specified below, MSV and SkyTerra are each fully responsible on a joint and several basis for performance of this Agreement (and the Exhibits hereto), provided however that, as between them, either may delegate its performance (but not its obligations) to the other, and in no event shall the joint and several nature of the Executive’s employment result in a duplication of compensation or benefits.

1.3Position. Subject to terms set forth herein, the Companies agree to employ Executive in the positions of Chief Financial Officer of SkyTerra and of MSV, and the Executive hereby accepts such employment. During the term of employment with

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the Companies, the Executive shall devote his best efforts and substantially all of his business time and attention to the business of the Companies.

1.4Duties. The Executive shall have all authorities, duties and responsibilities customarily exercised by an individual serving in the positions set forth in Section 1.3 above in entities of the size and nature of the Companies. The Executive shall report solely and directly to Alex Good, Chief Executive Offer of SkyTerra and MSV.

1.5Policies and Procedures. The employment relationship between the parties shall also be governed by the written employment policies and practices of the Companies provided to the Executive or that are generally applicable from time to time to all or substantially all employees, including those relating to protection of confidential information and assignment of inventions, provided that in the event the terms of this Agreement differ from or are in conflict with such policies or practices, this Agreement shall control.

1.6Exclusions. Nothing herein shall preclude the Executive from (i) with the consent of the Board, serving on the board of directors of publicly traded entities, and on the boards of directors of other business entities, (ii) engaging in charitable activities, educational activities and community affairs, including serving on the boards of directors (or equivalent bodies) of any charitable, educational or community organization and (iii) managing his personal investments and affairs, provided any of the activities set forth in clauses (i) – (iii) above do not materially interfere with the performance of his duties and responsibilities hereunder.

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2. COMPENSATION.

2.1        Salary. During the Term, the Executive shall receive for services to be rendered hereunder an annualized base salary of $390,750 payable on regular payroll dates established by the Companies (but not less frequently than monthly), subject to required payroll withholdings. The base salary shall be reviewed annually for appropriate merit and cost of living increases, but may not be decreased (as so adjusted, the “Base Salary”).

2.2Bonus. In addition to his Base Salary, during the Term, the Executive shall receive an annual (calendar year) bonus (the “Bonus”) of 75% of the Executive’s Base Salary then in effect (the “Target Bonus”), subject to the Boards having the option to either (i) pay a smaller Bonus if the Boards determine that the Executive has failed to satisfactorily perform objectives mutually agreed upon by the Executive and the Compensation Committee of the Companies (including but not necessarily limited to the items described in Exhibit B) and, where such failure is capable of being cured, notifies the Executive in writing with a reasonable time period to cure, or (ii) pay a larger Bonus if the Boards determine that the Executive has exceeded performance expectations The Bonus earned by the Executive for any calendar year shall be paid in a single lump sum in cash following the close of such calendar year and within ten (10) days of the Companies’ receipt of audited financials for such calendar year but in no event later than March 31^st of the year following the year for which such Bonus is earned.

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2.3Participation in Policies and Benefit Plans. Except as otherwise provided herein, the Executive’s employment shall be subject to the personnel policies that apply generally to the Companies’ executive employees as the same may be interpreted, adopted, revised or deleted from time to time, during the Term, by the Companies in their discretion. During the Term, the Executive shall be entitled to participate in and receive the benefits under all benefit plans, programs and arrangements provided to executive level employees of one or both of the Companies (the “Benefit Plans”). If the same type of benefit is provided to such employees under the plans or arrangement of both of the Companies but on different terms, the Executive shall be provided such benefit upon the most favorable terms applicable under the plans in question. Nothing paid to the Executive under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the Base Salary or Bonus payable to the Executive pursuant to Section 2.1 or Section 2.2 hereof, respectively. Without limiting the generality of the foregoing, the Executive shall be entitled to the following during the Term:

(a)Vacation. The Executive shall be entitled to paid vacations in accordance with the regular policies of the Companies, but in any event, no less than the aggregate of four (4) weeks per annum.

(b)Life Insurance. The Companies shall provide the Executive, at the Companies’ cost, with term life insurance coverage in an amount equal to two (2) times Base Salary, for which the Executive may designate the beneficiary.

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(c)Long-Term Disability Insurance. The Companies shall provide the Executive, at the Companies’ cost, with long-term disability insurance which provides income continuation to the Executive at 50% of his Base Salary, subject to a cap of $250,000 annually ($20,833 per month) through age 65.

(d)Directors and Officers Liability Insurance / Indemnification. The Companies shall maintain the existing coverage level of directors’ and officers’ liability insurance to protect Executive from liability related to his employment with the Companies, unless the Boards determine in their discretion to reduce such coverage provided that the Companies maintain an adequate level of coverage and that such level shall be at least 50% of the current level of coverage. The Companies shall each indemnify Executive for liability related to his employment with the Companies to the extent Executive is not indemnified by such insurance to the maximum extent permitted by Delaware corporate and partnership law, respectively, and the respective organizational documents of each of the Companies, which obligation shall survive the termination of the Executive’s employment hereunder.

(e) Reimbursement of Expenses. The Companies shall promptly reimburse the Executive for all reasonable business expenses incurred by the Executive in the performance of his duties hereunder, subject to Section 7.

2.4 Stock Options/Restricted Stock.

On the closing date of the option exchange offer currently pending and described in SkyTerra’s registration statement on Form S-4, SkyTerra shall exchange the Executive’s 225,000 options in MSV (at a current exercise price of $20.94 per share) for 634,500

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options (the “Options”) in SkyTerra Common Stock at an exercise price of $7.426 per share as part of, and subject to the terms and conditions of, the exchange transaction to be consummated between SkyTerra and MSV optionholders and on the terms and conditions set forth in the Form S-4 Registration Statement filed by SkyTerra and declared effective by the Securities and Exchange Commission. The Options shall also be subject to accelerated vesting under certain circumstances as provided below. The parties acknowledge that, as stated in the prospectus relating to SkyTerra's option exchange offer to holders of MSV options, the Board of Directors of SkyTerra may, in its sole discretion, permit the sale of shares of SkyTerra common stock issued upon the exercise of the Options earlier than would otherwise be permitted under the terms of the lockup that is part of the option exchange offer..

On the Effective Date, the Companies shall also grant to the Executive 400,000 shares of restricted common stock of SkyTerra (the “Restricted Stock”). The Restricted Stock shall vest with respect to one third (1/3^rd) of the stock on each of January 1^st of 2009, 2010 and 2011. On each of the vesting dates, the Companies may withhold from delivery to the Executive, out of the total number of shares of Restricted Stock that vest on such date, a number of such shares with an aggregate fair market value on such vesting date equal to the amount of all taxes required by law to be withheld on account of the vesting of all such shares of Restricted Stock on such date.

3. TERMINATION OF EMPLOYMENT.

3.1At-Will Relationship. The Executive’s employment relationship is at-will. Either the Executive or the Companies may terminate the employment

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relationship at any time, for any reason, subject to the terms and conditions contained herein.

3.2 Termination Without Cause.

(a)       If Companies terminate the Executive’s employment without Cause (as defined below), such termination shall be effective upon written notice to the Executive.

(b)       In the event the Executive’s employment is terminated without Cause, subject to the provisions of Section 5, the Companies shall, in lieu of any other payment due pursuant to this Agreement:

(i)        within ten (10) days of the date of termination, pay the Executive a lump sum cash amount equal to one (1) times the sum of his Base Salary and the Target Bonus, provided that payment shall not be made before the release described in Section 5 becomes irrevocable nor later than 2-1/2 months following the date of termination;

(ii)       on the 60th day after the date of termination (or, if not a business day, the next following business day), pay the Executive an amount equal to the Target Bonus, pro rated for the number of days elapsed in the year prior to the date of termination, provided that (a) payment shall not be made before the release described in Section 5 becomes irrevocable, and (b) if the Executive is a “specified employee” within the meaning of Section 409A of the Code on the date of termination, payment shall instead be made in the seventh month following the date of termination;

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(iii)      For a period of one (1) year following the Executive’s termination date (the Executive’s “Coverage Period”), the Executive and the Executive’s dependents shall be provided with the same health benefits coverage, at the same level and subject to the same terms and conditions, as in effect for the Executive immediately prior to his termination date under the Companies’ group medical, dental, vision and/or prescription drug plans (the Companies” “Health Care Plans”).

During the portion of the Executive’s Coverage Period in which the Executive is entitled to continuation coverage under either of the Companies’ Health Care Plans under Section 4980B of the Code (“COBRA Coverage”), (A) the health benefits coverage to be provided to the Executive pursuant to the preceding sentence shall be provided under such Health Care Plans (if reasonably practicable), and (B) the Companies shall pay the same percentage of the total cost of providing such coverage to the Executive as the percentage of the total cost that the Companies paid with respect to the coverage provided to the Executive under such Health Care Plans immediately before such termination. During any portion of the Executive’s Coverage Period in which the Executive is not entitled to COBRA Coverage under the Companies’ Health Care Plans (other than by reason of coverage under another group health plan), the Companies shall reimburse the Executive (and/or the Executive’s dependents) for the cost of purchasing health benefits coverage equivalent to that which it is intended that the Executive and/or the Executive’s dependents receive under the first sentence of this clause (iii) for such portion of the Executive’s Coverage Period. Such amount shall be paid in accordance with Section 7;

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(iv)      continue to provide the Executive, at the Companies’ expense, with group term life insurance and accident and long-term disability insurance benefits substantially similar to the benefits being provided to the Executive immediately prior to the date of termination, and the benefits set forth in Sections 2.3(b) and (c), for a period of one year after the date of termination, provided that, to the extent any benefit provided under this paragraph is taxable to the Executive and the Executive is a “specified employee” within the meaning of Section 409A of the Code on the date of termination, such coverage shall not be provided until the seventh month following the date of termination and, if the Executive pays for such coverage for the period between his termination date and such seventh month, the Companies shall reimburse the Executive for such expenses in accordance with Section 7;

(v)       accelerate the vesting and, as applicable, delivery of all SkyTerra and MSV stock options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive, such that all such stock options, restricted stock and other equity-based awards shall become fully vested and, in the case of stock options, fully and immediately exercisable on such date, and provided further that the Executive shall have a post-termination exercise period with respect to all stock options extending to their respective original expiration dates; and

(vi)      pay and provide to the Executive all Payments and Benefits (as defined below) accrued or vested, but not yet paid, through the date of termination within ten (10) days after the date of termination (except in the case of compensation and benefits under plans, programs and arrangements, at such other time and in such manner as determined under the terms and conditions of such plans,

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programs and arrangements). For purposes hereof, “Payments and Benefits” shall mean the Executive’s accrued but unpaid Base Salary, any earned, but unpaid Bonus in respect of the year prior to the current year, reimbursement for all unreimbursed business expenses, accrued and unpaid vacation days, and all accrued or vested compensation and benefits payable to the Executive under all Benefit Plans and all compensation plans, programs or arrangements in which the Executive participates.

3.3 Termination for Cause.

(a)       The Companies may terminate the Executive’s employment with the Companies for Cause determined in the Board’s discretion as described below upon written notice to the Executive. In such event, the Executive shall not be entitled to pay in lieu of notice or any other such compensation, except as required by law, but shall be paid and provided all Payments and Benefits through the date of termination at the times and in the manner set forth in Section 3.2(b)(vi) above.

(b) “Cause” shall mean:

(i)        the willful and continued failure of the Executive to substantially perform the Executive's duties with the Companies (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Boards which specifically identifies the manner in which the Boards believe that the Executive has not substantially performed the Executive's duties;

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(ii)       the willful engaging by the Executive in gross misconduct which is materially and demonstrably injurious to either of the Companies;

(iii)      material breach of fiduciary duty to either of the Companies that in either case results in personal profit to the Executive at the expense of either of the Companies; or

(iv)      the Executive is convicted or pleads nolo contendre to a felony under Federal or state law or willfully violates any law, rule or regulation (other than traffic violations, misdemeanors or similar offenses) or cease-and-desist order, court order, judgment or supervisory agreement, which violation is materially and demonstrably injurious to either of the Companies.

For purposes of the preceding clauses, no act or failure to act, on the part of the Executive, shall be considered "willful" unless it is done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive's action or omission was in the best interests of the Companies. Any act, or failure to act, based upon prior approval given by the Boards or based upon the advice of counsel for the Companies, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Companies. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive, as part of the notice of termination, a copy of a resolution duly adopted by the affirmative vote of not less thanthree-quarters (3/4)of the entire membership of the Boards at a meeting of the Boards called and held for the purpose of considering such termination (after reasonable written notice is provided to

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the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Boards) finding that, in the good faith opinion of the Boards, the Executive is guilty of the conduct described in clause (i) or (ii) above, and specifying the particulars thereof in detail.

3.4 Termination for Good Reason.

(a)       The Executive may voluntarily terminate his employment for “Good Reason” by notifying the Companies in writing, within ninety (90) days after the Executive first obtains knowledge of the occurrence of one of events below, that the Executive is terminating his employment for Good Reason, and, if such Good Reason is not cured, the Executive must actually terminate employment no later than six months following the initial existence of such Good Reason. "Good Reason" means the occurrence of any of the following events:

(i)        a material diminution in the Executive’s duties inconsistent in with the Executive's position (including status, offices, titles and reporting requirements), authority, duties or responsibilities contemplated by Sections 1.3 and 1.4 above or any other action by the Companies which results in a material diminution in any respect in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith that is remedied by the Companies promptly after receipt of notice thereof given by the Executive;

(ii)       A change in the Executive’s reporting from solely and directly to Alex Good, the Chief Executive Officer of the Companies, other than by

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reason of Mr. Good’s voluntary termination, termination due to death or Disability, or termination for Cause;

(iii)      a material reduction in the Executive's Base Salary or Target Bonus ;

(iv)      the Companies’ requiring the Executive to be based at any officethat is more than twenty-five (25) miles from the Executive's current office in Reston, Virginia;

(v)       a material diminution in the Executive’s benefits as a result of the failure by the Companies (a) to continue in effect any compensation plan in which the Executive participates that is material to the Executive's total compensation, unless he has been offered participation in an economically equivalent compensation arrangement (embodied in an ongoing substitute or alternative plan) or (b) to continue the Executive's participation in any such compensation plan (or in any substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of compensation provided and the level of the Executive's participation relative to other participants, than existed prior to such failure;

(vi)      the material failure by the Companies to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Companies’ pension, life insurance, medical, health and accident, disability or other welfare plans in which the Executive was participating immediately prior to such failure;

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(vii)     any action or inaction by either of the Companies that constitutes a material breach of the terms and provisions of this Agreement (and its Exhibits).

Anything herein to the contrary notwithstanding, the Executive’s employment shall not be terminated for Good Reason unless he provides written notice to the Companies stating the basis of such termination and the Companies fail to cure the action or inaction that is such basis within thirty (30) days after receipt of such notice.

(b)       In the event Executive terminates his employment for Good Reason, subject to the provisions of Section 5, the Companies shall pay and provide to the Executive the payments, benefits and rights set forth, and at the times provided, in Section 3.2(b) above as if the Executive’s employment was terminated without Cause.

3.5 Termination by Virtue of Death or Disability of the Executive.

(a)       In the event of the Executive’s death during the Term, the Companies shall pay and provide to the Executive’s legal representatives the Payments and Benefits through the date of death at the times and in the manner set forth in Section 3.2(b)(vi) above. The Executive’s family, heirs and beneficiaries shall be eligible for any benefit continuation or conversion rights provided by the provisions of such benefit plans, programs or arrangements or by law. In addition, all SkyTerra and/or MSV stock options, restricted stock and other equity-based awards (including the Options and the

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Restricted Stock) granted to the Executive by the Companies and held by him at the time of his death shall become fully vested and exercisable on the date of death, and in the case of stock options, shall remain exercisable through the earlier of the one-year period following the date of death and their respective original expiration dates.

(b)       Subject to applicable state and federal law, the Companies shall at all times have the right, upon written notice to the Executive, to terminate the Executive’s employment under this Agreement as a result of the Executive’s Disability (as defined below). Termination by the Companies of the Executive’s employment as a result of “Disability” shall mean termination because the Executive is unable due to a physical or mental condition to perform the essential functions of his positions with or without reasonable accommodation for six (6) months in the aggregate during any twelve (12) month period, based on the written certification by a licensed physician reasonably acceptable to the Companies and the Executive. This definition shall be interpreted and applied consistent with the Americans with Disabilities Act, the Family and Medical Leave Act, and other applicable law. In the event the Executive’s employment is terminated as a result of the Executive’s Disability, the Companies shall pay and provide to the Executive the Payments and Benefits through the date of termination at the times and in the manner set forth in Section 3.2(b)(iv) above. The Executive shall be eligible for any benefit continuation or conversion rights provided by the provisions of such benefit plans, programs or arrangements or by law. In addition, all SkyTerra and/or MSV stock options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive shall become fully vested and exercisable on the date of termination, and in the case of stock options, shall remain exercisable

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through the earlier of the one-year period following the date of Disability and their respective original expiration dates.

3.6Termination without Good Reason. The Executive may terminate his employment without Good Reason upon ten (10) days written notice to the Companies. In such event, on or before the date which is ten (10) days after the date of termination, the Companies shall pay and provide the Payments and Benefits to the Executive through the date of termination at the times and in the manner set forth in Section 3.2(b)(vi) above.

3.7Termination by Mutual Consent. If at any time during the course of this Agreement the parties by mutual consent decide to terminate this Agreement, they shall do so by separate written agreement setting forth the terms and condition of such termination.

4. Change in Control.

For purposes of this Section 4, the terms “Member” and “Partnership” refer to MSV. In the event of a Change in Control of SkyTerra, the terms “Member” and “Partnership” shall refer to and be replaced with “Shareholders” and “Corporation”, respectively.

(a)Definition. Subject to the immediately preceding paragraph, a “Change in Control” means the occurrence of any of the following events after the date hereof in respect of either or both of the Companies:

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(i)        any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but other than Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners) together with its affiliates, excluding employee benefit plans, becomes, directly or indirectly, the "beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Partnership or SkyTerra representing 40% or more of the combined voting power of the Partnership's or SkyTerra’s then outstanding securities;

(ii)       the dissolution or liquidation of the Partnership or a merger, consolidation, or reorganization of the Partnership or SkyTerra with one or more other entities in which the Partnership or SkyTerra is not the surviving entity or the sale of substantially all of the assets of the Partnership or SkyTerra to another person or entity (excluding a merger of MSV into SkyTerra);

(iii)      any transaction (including without limitation a merger or reorganization in which the Partnership or SkyTerra is the surviving entity) which results in any person or entity (other than Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners) owning or controlling more than 50% of the combined voting power of all classes of securities/interests of the Partnership or SkyTerra;

(iv)      in instances where Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners own or control more than 50% of the combined voting power of all classes of securities/interests in the Partnership or SkyTerra, any transaction (including without limitation a merger or reorganization in

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which the Partnership or SkyTerra is the surviving entity) which results in a third party owning or controlling more than 50% of Harbinger Capital Partners’ or affiliated funds of Harbinger Capital Partners’ combined voting power of all classes of securities in the Partnership or SkyTerra; or

(v)       individuals who at the beginning of any two-year period constitute the applicable Board, plus new directors of the Partnership or SkyTerra whose election or nomination for election by the Partnership's Members or SkyTerra’s Shareholders is approved by a vote of at least two-thirds of the directors of the Partnership or SkyTerra still in office who were directors of the Partnership or SkyTerra at the beginning of such two-year period, cease for any reason during such two-year period to constitute at least two-thirds of the members of the applicable Board.

Notwithstanding the immediately foregoing, a Change of Control shall not be deemed to occur solely as a result of any of the following: (i) an initial public offering by the Partnership or any successor thereto, (ii) the consummation of the conversion of the Partnership or its business into a corporation, or (iii) a transaction, or series of related transactions, the result of which is that SkyTerra share ownership in MSV increases.

(b)Accelerated Vesting. Immediately prior to a Change in Control of either of the Companies all options, restricted stock and other equity-based awards (including the Options and the Restricted Stock) granted to the Executive by the Companies and held by him immediately prior to such a Change in Control shall become

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immediately and fully vested and exercisable and, in the case of stock options, shall remain exercisable for their respective original terms.

(c)Section 280G.  Exhibit A attached to this Agreement shall be applicable in the event of the occurrence of a Change in Control, or in the event that any payments or benefits to be made to or for the benefit of the Executive under this Agreement or under any plan or arrangement maintained by the Companies or otherwise, are subject to the excise tax under Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”).

5. Release.

Upon the termination of Executive’s employment under Sections 3.2 or 3.4 above, Executive shall provide the Companies with an executed and effective release substantially in the form attached to this Agreement as Exhibit A, which may be amended by the Companies to provide for an effective release under applicable law.

6. COOPERATION WITH COMPANIES.

During and after the term of the Executive’s employment, the Executive will cooperate with the Companies in responding to the reasonable requests of the Companies in connection with any and all existing or future litigation, arbitrations, mediations or investigations brought by or against the Companies, or its or their respective affiliates, agents, officers, directors or employees, whether administrative, civil or criminal in nature, in which the Companies reasonably deems the Executive’s cooperation necessary or desirable. In such matters, the Executive agrees to provide the

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Companies with reasonable advice, assistance and information, including offering and explaining evidence, providing sworn statements, and participating in discovery and trial preparation and testimony. The Executive also agrees to promptly send the Companies copies of all correspondence (for example, but not limited to, subpoenas) received by the Executive in connection with any such legal proceedings, unless the Executive is expressly prohibited by law from so doing. To the extent possible, the Companies shall try to limit the Executive’s cooperation under this Section 6 to regular business hours. In any event, (i) in any matter subject to this Section 6, the Executive shall not be required to act against his own legal interest and (ii) any request for such cooperation shall take into account (A) the significance of the matters at issue in the litigation, arbitration, mediation or investigation and (B) the Executive’s other personal and business commitments. The Companies agree to provide the Executive reasonable notice, to the extent practicable, in the event his assistance is required. The Companies shall reimburse the Executive for the reasonable costs and expenses incurred by him as a result of providing such cooperation, upon the submission of the appropriate documentation to the Companies. Such costs and expenses shall include, without limitation, demonstrably lost wages (after the termination of his employment by the Companies), travel costs and legal fees to the extent the Executive reasonably believes that separate representation is warranted. The Executive’s entitlement to reimbursement of such costs and expenses, including legal fees, pursuant to this Section 6, shall in no way affect the Executive’s rights to be indemnified and/or advanced expenses in accordance with the Companies’ organizational documents, any applicable insurance policy, and/or in accordance with this Agreement. After termination of Executive’s employment, the Companies shall also pay

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the Executive a fee in the amount of $500 per hour for the time the Executive devotes to matters as requested by the Companies under this Section 6 (“the Fees”). The Companies will not deduct or withhold any amount from the Fees for taxes, social security, or other payroll deductions, but will instead issue an IRS Form 1099 with respect to the Fees, except as otherwise required by law. The Executive acknowledges that in cooperating in the manner described in Section 7.1, he will be serving as an independent contractor, not a Companies employee, and he will be entirely responsible for the payment of all income taxes and any other taxes due and owing as a result of the payment of Fees. The Executive hereby indemnifies the Companies and its officers, directors, agents, attorneys, employees, shareholders, subsidiaries, and affiliates and holds them harmless from any liability for any taxes, penalties, and interest that may be assessed by any taxing authority with respect to the Fees, with the exception of the employer’s share of employment taxes subsequently determined to be applicable, if any.

7.SECTION 409A. The parties intend that any compensation, benefits and other amounts payable or provided to the Executive under this Agreement be paid or provided in compliance with Section 409A of the Code and all regulations, guidance, and other interpretative authority issued thereunder (collectively, “Section 409A”) such that there will be no adverse tax consequences, interest, or penalties for the Executive under Section 409A as a result of the payments and benefits so paid or provided to him. The parties agree to modify this Agreement, or the timing (but not the amount) of the payment of the severance or other compensation, or both, to the extent necessary to comply with Section 409A. In addition, notwithstanding anything to the contrary contained in any

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other provision of this Agreement, the payments and benefits to be provided to the Executive under this Agreement shall be subject to the provisions set forth below.

(a)       Any payment subject to Section 409A that is triggered by a termination from employment shall be triggered by a “separation from service,” as defined in the regulations issued under Section 409A.

(b)       If the Executive is a “specified employee” within the meaning of the Section 409A at the time of the Executive’s “separation from service” within the meaning of Section 409A, then any payment otherwise required to be made to the Executive under this Agreement on account of the Executive’s separation from service, to the extent such payment (after taking in to account all exclusions applicable to such payment under Section 409A) is properly treated as deferred compensation subject to Section 409A, shall not be made until the first business day after (i) the expiration of six months from the date of the Executive’s separation from service, or (ii) if earlier, the date of the Executive’s death (the “Delayed Payment Date”). On the Delayed Payment Date, there shall be paid to the Executive or, if the Executive has died, to the Executive’s estate, in a single cash lump sum, an amount equal to aggregate amount of the payments delayed pursuant to the preceding sentence, plus interest thereon at the Delayed Payment Interest Rate (as defined below) computed from the date on which each such delayed payment otherwise would have been made to the Executive until the Delayed Payment Date. For purposes of the foregoing, the “Delayed Payment Interest Rate” shall mean the national average annual rate of interest payable on jumbo six-month bank certificates of

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deposit, as quoted in the business section of the most recently published Sunday edition of The New York Times preceding the date as of which Executive is treated as having incurred a separation from service for purposes of Section 409A.

(d)       All expenses eligible for reimbursement hereunder that are taxable to the Executive shall be paid to the Executive no earlier than in the seventh month after separation from service and no later than December 31 of the calendar year following the calendar year in which such expenses were incurred. The expenses incurred by the Executive in any calendar year that are eligible for reimbursement under this Agreement shall not affect the expenses incurred by the Executive in any other calendar year that are eligible for reimbursement hereunder. The Executive’s right to receive any reimbursement hereunder shall not be subject to liquidation or exchange for any other benefit.

 

8. GENERAL PROVISIONS

8.1Notices. Any notices provided hereunder must be in writing and shall be deemed effective upon the earlier of personal delivery (including personal delivery by fax) or the next day after sending by overnight courier, to the Companies at their headquarters office location and to the Executive at his address as listed in the Companies’ records.

8.2Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under

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applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the parties.

8.3Waiver. No waiver, amendment or modification of this Agreement shall be effective unless signed by the parties hereto. If the parties should waive any breach of any provisions of this Agreement, the waiving party shall not be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.

8.4Complete Agreement. This Agreement and its Exhibits, constitute the entire agreement between Executive and the Companies with respect to the subject matter hereof. It is entered into without reliance on any promise or representation other than those expressly contained herein. This Agreement supersedes and replaces the Existing Employment Agreement dated January 9, 2006 between the Executive and MSV in their entirety. For clarity, the Confidentiality, Non-Competition and Non-Solicitation Agreement dated January 9, 2006 between the Executive and MSV shall remain in full force and effect.

8.5Counterparts. This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but all of which taken together will constitute one and the same Agreement.

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8.6Headings. The headings of the sections hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.

8.7Successors and Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Companies, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of his duties hereunder and he may not assign any of his rights hereunder except to his estate as to designated beneficiaries as provided in applicable compensation and benefit plans and agreements. No rights or obligations of either of the Companies under this Agreement may be assigned or transferred by either of the Companies without the Executive’s prior written consent, except that such rights or obligations may be assigned or transferred pursuant to a merger or consolidation in which a Company is not the continuing entity, or a sale, liquidation or other disposition of all or substantially all of the assets of a Company, provided that the assignee or transferee is the successor to all or substantially all of the assets of such Company and assumes the liabilities, obligations and duties of such Company under this Agreement, either contractually or by operation of law. The Companies further agree that, in the event of any disposition of its business and assets described in the preceding sentence, they shall use their best efforts to cause such assignee or transferee expressly to assume the liabilities, obligations and duties of the applicable Company hereunder.

8.8Survival. The rights and obligations of the parties hereunder shall survive termination of Executive’s employment with the Companies to the extent necessary and appropriate to carry out the intentions of the parties.

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8.8Remedies. The Executive acknowledges that a remedy at law for any material breach or material threatened breach by him of any confidentiality requirements and the provisions of the Confidentiality, Non-Competition and Non-Solicitation Agreement dated February 24, 2005 between the Executive and MSV would be inadequate, and he therefore agrees that the Companies shall be entitled to seek injunctive relief in case of any such breach or threatened breach, in addition to any other remedies available to the Companies.

8.9Attorneys’ Fees. If any party hereto brings any action to enforce his or its rights hereunder each party shall be responsible for and pay their own attorneys’ fees and costs incurred in connection with such action, except as provided in Section 8.10 below.

8.10Arbitration Procedures. Any controversy, dispute or claim arising out of or relating to this Agreement, any other agreement or arrangement between the Executive and the Companies, the Executive’s employment with the Companies, or the termination thereof (collectively, "Covered Claims") shall be resolved by binding arbitration, to be held in Reston, Virginia, in accordance with the Commercial Arbitration Rules of the American Arbitration Association and this Section 8.10. Judgment upon the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof. The Companies shall promptly advance to the Executive (and his beneficiaries) any and all costs and expenses (including without limitation attorneys’ fees) incurred by the Executive (or any of his beneficiaries) in resolving any such Covered Claim; provided, however, that the recipient agrees to repay any amounts advanced to the extent that the recipient’s claims/defenses are found by the arbitrator(s) to have lacked a

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reasonable basis. Pending the resolution of any Covered Claim, the Executive (and his beneficiaries) shall continue to receive all payments and benefits due under this Agreement or otherwise.

8.11No Mitigation. The Company agrees that, if the Executive’s employment by the Company is terminated for any reason, the Executive shall not be required to seek other employment or to attempt in any way to reduce any amounts payable to the executive by the Company pursuant to this Agreement. Further, the amount of any payment or benefit provided for under this Agreement shall not be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, or be offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

8.12Choice of Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the law of the State of Virginia, without regard to conflicts of law principles.

8.13 Nonduplication Of Benefits. No provision of this Agreement shall require the Companies to provide the Executive with any payment, benefit, or grant that duplicates any payment, benefit, or grant that the Executive is entitled to receive under any compensation or benefit plan, award agreement, or other arrangement of the Companies.

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8.14 Taxes. Each Company may withhold from any benefits payable under this Agreement all taxes that the Company reasonably determines to be required pursuant to any law, regulation, or ruling. However, it is the Executive’s obligation to pay all required taxes on any amounts and benefits provided under this Agreement.

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

SKYTERRA COMMUNICATIONS, INC. /
MOBILE SATELLITE VENTURES LP
By:
	[Name]
	[Title]
Date: May __, 2008

Accepted and agreed this

____ day of May, 2008.

Scott Macleod, an Individual

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EXHIBIT A

RELEASE

(a)       In consideration of the payments and benefits set forth in Section __ of the Employment Agreement, except for the rights expressly provided herein, the Executive for himself, his heirs, administrators, representatives, executors, successors and assigns (collectively “Releasors”) does hereby irrevocably and unconditionally release, acquit and forever discharge the Company, subsidiaries, and their respective current and former officers, directors, employees, representatives, agents, attorneys, shareholders, in their official capacities (collectively, “Releasees”), and each of them from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever arising out of or relating to his employment relationship, or the termination of that relationship, with the Company and its subsidiaries, known or unknown, whether in law or equity and whether arising under federal, state or local law including, without limitation, any such claim under the Corporate and Criminal Fraud Accountability Act of 2002, also known as the Sarbanes Oxley Act; any claim for discrimination based upon race, color, ethnicity, sex, age (including under the Age Discrimination in Employment Act of 1967 (the “ADEA”) and the Older Workers Benefit Protection Act of 1990), national origin, religion, disability, retaliation, or any other unlawful criterion or circumstance, the New York State Human Rights Law; and any other federal, state or local laws, rules or

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regulations, whether equal employment opportunity laws, rules or regulations or otherwise, which the Executive and the other Releasors had, now have, or may have in the future against each or any of the Company, or any other Releasees from the beginning of the world until the date the Executive signed this Agreement (the “Execution Date”) relating to the Executive’s employment with the Company and its subsidiaries. Anything herein to the contrary notwithstanding, nothing herein shall release the Company or any other Releasees from any claims or damages based on: (i) any right or claim that arises after the Execution Date, (ii) any right, including a right to a payment or benefit, the Executive may have under this Agreement or for accrued or vested benefits and stock based awards pursuant to the terms and conditions of the applicable plan document, (iii) the Executive’s eligibility for indemnification, in accordance with applicable laws or the certificate of incorporation or by-laws of the Company, or under any applicable insurance policy, with respect to any liability the Executive incurs or has incurred as a director, officer or employee of the Company and its subsidiaries, or (iv) any right the Executive may have to obtain contribution as permitted by law in the event of entry of judgment against him as a result of any act or failure to act for which he and the Company or any other Releasee are jointly liable.

(b)       The Executive acknowledges that: (i) this entire Agreement is written in a manner calculated to be understood by him; (ii) he has been advised to consult, and has consulted with, an attorney before executing this Agreement; (iii) he was given a period of twenty-one (21) days within which to consider this Agreement; and (iv) to the extent he executes this Agreement before the expiration of the twenty-one-day period, he does so knowingly and voluntarily and only after consulting his attorney. The

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Executive shall have the right to cancel and revoke this Agreement during a period of seven (7) days following the Execution Date, and this Agreement shall not become effective, and no money shall be paid hereunder prior to the expiration of such seven-day period (the “Revocation Date”). The seven-day period of revocation shall commence upon the Execution Date. In order to revoke this Agreement, the Executive shall deliver to the Company’s Chief Legal Officer, prior to the expiration of said seven-day period, a written notice of revocation. Upon such revocation, this Agreement shall be null and void and of no further force or effect on either party.

(c)       The Executive acknowledges and agrees that the consideration provided to him exceeds anything to which he is otherwise entitled and that he is owed no wages, commissions, bonuses, finder’s fees, equity or incentive awards, severance pay, vacation pay or any other compensation or vested benefits or payments or remuneration of any kind or nature other than as specifically provided for in this Agreement. If Executive should hereafter make any claim or demand or commence or threaten to commence any action, claim or proceeding against the Company or any other Releasees with respect to any cause, matter or thing which is the subject of the Executive’s release hereunder, this Agreement may be raised as a complete bar to any such action, claim or proceeding, and the Company or any other Releasees, as applicable may recover from the Executive all costs incurred in connection with such action, claim or proceeding, including attorneys’ fees.

(d)       Executive represents and agrees that he has not filed any lawsuits against any of the Company or any other Releasees, or filed or caused to be filed any charges or complaints against the Company or any other Releasees with any municipal,

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state or federal agency charged with the enforcement of any law. Pursuant to and as a part of the Executive’s release and discharge of the Company or any other Releasees, as set forth herein, the Executive agrees to the fullest extent permitted by law, not to sue or file a charge, complaint, grievance or demand for arbitration against the Company, the Affiliated Entities or any other Releasees in any forum with respect to any matter which is the subject of Executive’s release hereunder.

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(e)       The Company, on behalf of itself and the other Releasees, also agrees that, subject to this Agreement becoming effective, they hereby irrevocably and unconditionally release, acquit and forever discharge the Executive from any and all charges, complaints, claims, liabilities, obligations, promises, agreements, controversies, damages, remedies, actions, causes of action, suits, rights, demands, costs, losses, debts and expenses (including attorneys’ fees and costs) of any nature whatsoever, known or unknown, whether in law or equity and whether arising under federal, state or local law that any Releasee had, now has, or may have in the future against the Executive and the other Releasors from the beginning of the world until the Execution Date arising out of or relating to the Executive’s employment relationship or the termination of that relationship with the Company and/or its subsidiaries, except that this paragraph shall not apply to: (i) any act that constitutes a criminal act under any Federal, state or local law committed or perpetuated by the Executive during the course of the Executive’s employment with the Company or its affiliates or thereafter prior to the Execution Date (including any criminal act of fraud, misappropriation of funds or embezzlement or any other criminal action); (ii) any act of fraud or theft committed by Executive in connection with his employment with the Company or thereafter prior to the Execution Date; or (iii) Executive’s obligations under this Agreement.

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EXHIBIT B

Objectives

The objectives of the Executive, as Chief Executive Officer, include but are not necessarily limited to maintaining the following:

(a)       The Companies remain duly organized and in good standing under the laws of the jurisdiction of its organization;

(b)       Neither of the Companies is in violation of any provisions of their organizational documents, each as amended to date;

(c)       The Registration Statements or other SEC Reports filed on behalf of the Companies present fairly, in all material respects, the consolidated financial position of the Companies as of the dates specified and the consolidated results of operations and cash flows for the periods specified, in each case, in conformity with GAAP applied on a consistent basis during the periods involved, except as indicated therein or in the notes thereto;

(d)       The Companies maintain systems of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as

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necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability;

(e)       Except as otherwise disclosed, the Companies’ business complies with all applicable US, state, local and foreign laws.

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EXHIBIT C

1. Gross-Up Payments.

If upon or following a Change in Control (as defined in Section 4 of the Employment Agreement of which these provisions are a part) or otherwise, any payment or benefit made or provided to or for the benefit of the Executive (whether pursuant to the terms of such Employment Agreement or any other plan, arrangement or agreement with the Companies, with any person or persons whose actions result in a Change in Control, or with any affiliate of the Companies or any such person or persons, and including, without limitation, any severance benefits and any amounts received or deemed received, within the meaning of any provision of the Internal Revenue Code of 1986, as amended (the “Code”), by the Executive as a result of, and not by way of limitation, any automatic vesting, lapse of restrictions and/or accelerated target or performance achievement provisions, or otherwise, applicable to outstanding grants or awards to Executive under any of the Companies’ incentive plans or agreements ) (any such payment or benefit, other than any Gross-up Payment or Additional Gross-Up Payment as defined below, is referred to hereinafter as a “Company Payment”), is determined to be subject to the excise tax imposed by section 4999 of the Code (the “Excise Tax”), the Companies shall pay in cash to the Executive or for the Executive’s benefit as provided below an additional amount (referred to herein as a “Gross-Up Payment”), which additional

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amount shall be determined and paid in accordance with the provisions in Paragraphs 2 and 3 below.

 

2. Amount of Gross-Up Payment.

 

The Gross-up Payment to be made with respect to the Excise Tax to which any Company Payment is subject shall be an amount which, after reductionof such amount by anyExcise Tax imposed thereon and by allfederal, state and local income, employment, and other taxes payable by the Executive thereon, is equal to the Excise Tax payable with respect to such Company Payment, plus any interest or penalties payable with respect to such Excise Tax.

3. Determination and Payment of Initial Gross-Up Payment.

By no later than twenty (20) days before the date on which any Company Payment is scheduled to be made to the Executive (or as soon thereafter as is administratively practicable), a determination shall be made as to whether such Company Payment will be subject to Excise Tax, and if so, as to the amount of such Excise Tax and the amount of the Gross-up Payment required to be made hereunder with respect to such Excise Tax (the “Determination”). Such Determination shall be made in writing by a nationally-recognized certified public accounting firm selected by the Companies that has not rendered services to either of the Companies within two years prior to the date of the

38

occurrence of the Change in Control (the “Accounting Firm”). All fees and expenses of the Accounting Firm shall be borne by the Companies. Promptly after the Accounting Firm has made its Determination, it shall provide to the Companies and to the Executive copies of its Determination, together with all detailed supporting calculations and documentation and any assumptions used or opinions rendered by the Accounting Firm in making its Determination. Subject to any determinations made by the Internal Revenue Service (the “IRS”), all determinations of the Accounting Firm with respect to the initial amount of any Gross-up Payment to be made hereunder (and of any Additional Gross-up Payment to be made pursuant to Paragraph 5 below), shall be binding on the Companies and the Executive. The initial amount of the Gross-Up Payment so determined with respect to any Company Payment (the “Initial Gross-Up Payment”) shall be paid by the Companies to the Executive or to the IRS and any other applicable taxing authority on behalf of the Executive as soon as practicable following the Executive’s receipt or deemed receipt of such Company Payment, and may be satisfied by the Companies making a payment or payments on Executive’s account in lieu of withholding for tax purposes, but in all events shall be made by no later than thirty (30) days after the Executive’s receipt or deemed receipt of such Company Payment.

4. Computation Assumptions.

For purposes of the Determination to be made by the Accounting Firm as to whether any Company Payment will be subject to Excise Tax, and if so, the amount of any such Excise Tax that will be payable with respect to such Company Payment, and the amount

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of any Gross-Up Payment or Additional Gross-Up Payment to be made with respect to such Excise Tax, the following assumptions shall be made by the Accounting Firm:

a. Any other Company Payment received or to be received by the Executive in connection with or contingent upon a Change in Control of either of the Companies shall be aggregated to determine whether the Executive has received or will receive any “parachute payment” within the meaning of Section 280G(b)(2) of the Code, and if so, the amount of any “excess parachute payments” within the meaning of Code Section 280G(b)(1) that will be treated as subject to the Excise Tax, except to the extent that the Accounting Firm rendering the Determination concludes that any such other Company Payment does not constitute a parachute payment, or that any portion of such excess parachute payments represent reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code in excess of the base amount within the meaning of Section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;

b. The value of any non-cash benefits or any deferred payment or benefit shall be determined by the Accounting Firm rendering the Determination in accordance with the principles of Section 280G(d)(3) and (4) of the Code and the applicable regulations issued under Code Section 280G.

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c. The compensation and benefits provided for in the Executive’s Employment Agreement, and any other compensation earned by the Executive prior to the Executive’s Date of Termination (as defined in such Employment Agreement) pursuant to either of the Companies’ compensation programs (if such compensation would have been payable in the future in any event, even though the timing of such payment is triggered by the Change in Control), shall for purposes of any Determination to be made pursuant to Paragraph 3 of this Exhibit A be deemed to be reasonable; and

d. The Executive shall be deemed to pay federal, state, and local income taxes at the highest applicable marginal rate of taxation (and shall be deemed to be subject to employment taxes only to the extent determined by taking into account any wage base limitations, applicable in the calendar year in which the Gross-Up Payment is to be made.

 

5. Additional Gross-up Payments

 

If it should be subsequently determined by the Accounting Firm or the IRS that Excise Tax is payable with respect to any Company Payment in an amount greater than the amount taken into account in calculating the amount of the Initial Gross-Up Payment made hereunder with respect thereto (including by reason of any other Company Payment the existence or amount of which could not be determined at the time such Initial Gross-Up Payment was made), the Companies shall make an additional Gross-Up Payment (“Additional Gross-up Payment”) to the Executive or to the IRS and any other applicable

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taxing authority for his benefit in respect of such excess (such excess is referred to hereinafter as an “Additional Excise Tax”), plus any interest, penalties or additions payable by the Executive with respect to such Additional Excise Tax. If the Accounting Firm determines that any such Additional Excise Tax is payable with respect to any Company Payment, the Additional Gross-Up Payment with respect thereto shall be made by no later than thirty (30) days from the date of the Accounting Firm’s determination. If the IRS claims that any Additional Excise Tax is payable with respect to any Company Payment, any Additional Gross-Up Payment payable with respect thereto shall be made at the time provided in Paragraph 6 below.

 

6. Notification to Companies.

 

The Executive shall promptly notify the Companies in writing of any claim by the IRS that, if successful, would require the payment by the Companies of an Additional Gross-Up Payment. If the Companies notifies the Executive in writing that it desires to contest such claim, the Executive shall: (a) give the Companies any information reasonably requested by the Companies relating to such claim; (b) take such action in connection with contesting such claim as the Companies shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney selected by the Companies that is reasonably acceptable to the Executive; (c) cooperate in good faith in order to effectively contest such claim; and (d) permit the Companies to participate in any proceedings relating to such claim; provided that the Companies shall bear and pay directly all attorneys fees, and all other costs and

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expenses (including additional interest, penalties and additions to tax) incurred in connection with such contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for all taxes (including, without limitation, all federal, state and local income, employment and excise taxes), interest, penalties and additions to tax imposed in relation to such claim and in relation to the payment of such fees, costs and expenses or indemnification. Without limitation on the foregoing provisions of this Paragraph, and to the extent its actions do not unreasonably interfere with or prejudice the Executive’s disputes with the IRS as to other issues, the Companies shall control all proceedings taken in connection with such contest, and in its reasonable discretion, may pursue or forego any and all administrative appeals, proceedings, hearings and conferences with the IRS in respect of such claim and may, at its sole option, either direct the Executive to pay the tax, interest or penalties claimed and sue for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Companies shall determine; provided, however, that if the Companies directs the Executive to pay such claim and sue for a refund, the Companies shall advance an amount equal to such payment to the Executive, on an interest-free basis, and shall indemnify and hold the Executive harmless, on an after-tax basis, from all taxes (including, without limitation, all federal, state and local income, employment and excise taxes), interest, penalties and additions to tax imposed with respect to such advance or with respect to any imputed income with respect to such advance, by no later than fifteen (15) days after any such amounts are due and payable; and, further, provided, that any extension of the statute of limitations relating to payment

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of taxes, interest, penalties or additions to tax for the taxable year of the Executive with respect to which such contested amount is claimed to be due is limited solely to such contested amount; and, provided, further, that any settlement of any claim shall be reasonably acceptable to the Executive and the Companies’ control of the contest shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder, and the Executive shall be entitled to settle or contest, as the case may be, any other issue.

7. Subsequent Recalculation.

In the event of a binding or uncontested determination by the IRS that Additional Excise Tax is payable with respect to any Company Payment made to the Executive, the Additional Gross-Up Payment payable hereunder with respect thereto shall be paid to the Executive, or to the IRS and other applicable taxing authorities for his benefit, by no later than ten (10) days after such determination. In the event of a binding or uncontested determination by the IRS that adjusts the computation set forth in the Determination so that the Executive received a Gross-Up Payment in excess of the amount required pursuant to this Exhibit A, then the Executive shall promptly pay to the Companies (without interest) the amount of such excess; provided, however, that if any portion of a Gross-Up Payment that is to be refunded to the Companies was paid to the IRS or to any state or local taxing authority, repayment thereof (and related amounts) shall not be required until actual refund or credit of such portion has been made to the Executive.

8. Timing of Payment

For purposes of Section 409A, payment pursuant to this Exhibit will not be made later than the end of the Executive’s taxable year next following the year in which the related

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taxes are remitted to the applicable taxing authority. In addition, any payment under this Exhibit that is conditioned upon a separation from service shall not be made before the seventh month following separation from service.

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EX-10

EXECUTIVE SEVERANCE AGREEMENT

THIS AGREEMENT, dated July 15, 2008, is made by and between SkyTerra Communications, Inc., a Delaware corporation (the “Company”), and Randy Segal (the “Executive”).

WHEREAS, the Company considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel; and

WHEREAS, the Board recognizes that, as is the case with many publicly held corporations, the possibility of a Change in Control exists and that such possibility, and the uncertainty and questions which it may raise among management, may result in the departure or distraction of management personnel to the detriment of the Company and its stockholders; and

WHEREAS, the Board has determined that appropriate steps should be taken to reinforce and encourage the continued attention and dedication of members of the Company’s management, including the Executive, to their assigned duties without distraction in the face of potentially disturbing circumstances arising from the possibility of a Change in Control;

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Executive hereby agree as follows:

1.Defined Terms. The definitions of capitalized terms used in this Agreement are provided in the last Section hereof.

2.         Term of Agreement. The Term of this Agreement shall commence on the date hereof and shall continue in effect through June 30, 2012; provided, however, that commencing on July 1, 2011 and each July 1 thereafter, the Term shall automatically be extended for one additional year unless, not later than the preceding April 1, the Company or the Executive shall have given notice not to extend the Term; and further provided, however, that if a Change in Control shall have occurred during the Term, the Term shall expire no earlier than twenty-four (24) months beyond the month in which such Change in Control occurred.

3.         Company’s Covenants Summarized. In order to induce the Executive to remain in the employ of the Company and in consideration of the Executive’s covenants set forth in Section 4 hereof, the Company agrees, under the conditions described herein, to pay the Executive the Severance Payments and the other payments and benefits described herein. Except as provided in Section 6.1 hereof, no Severance Payments shall be payable under this Agreement unless there shall have been (or, under the terms of the second sentence of Section 6.1 hereof, there shall be deemed to have been) a termination of the Executive’s employment with the Company following a Change in Control and during the Term. This Agreement shall not be construed as creating an express or implied contract of employment and, except as otherwise agreed in writing between the Executive and the Company, the Executive shall not have any right to be retained in the employ of the Company.

4.         The Executive’s Covenants. The Executive agrees that, subject to the terms and conditions of this Agreement, in the event of a Potential Change in Control during the Term, the Executive will remain in the employ of the Company until the earliest of (i) a date which is six months following the date of such Potential Change in Control, (ii) the date of a Change in Control, (iii) the date of termination by the Executive of the Executive’s employment for Good Reason or by reason of death, Disability or Retirement, or (iv) the termination by the Company of the Executive’s employment for any reason.

5. Compensation Other Than Severance Payments.

5.1       Following a Change in Control and during the Term, during any period that the Executive fails to perform the Executive’s full-time duties with the Company as a result of incapacity due to physical or mental illness, the Company shall pay the Executive’s full salary to the Executive at the rate in effect at the commencement of any such period, together with all compensation and benefits payable to the Executive under the terms of any compensation or benefit plan, program or arrangement maintained by the Company during such period (other than any disability plan), until the Executive’s employment is terminated by the Company for Disability.

5.2       If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay the Executive’s full salary to the Executive through the Date of Termination at the rate in effect immediately prior to the Date of Termination or, if higher, the rate in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, together with all compensation and benefits payable to the Executive through the Date of Termination under the terms of the Company’s compensation and benefit plans, programs or arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

5.3       If the Executive’s employment shall be terminated for any reason following a Change in Control and during the Term, the Company shall pay to the Executive the Executive’s normal post-termination compensation and benefits as such payments become due. Such post-termination compensation and benefits shall be determined under, and paid in accordance with, the Company’s retirement, insurance and other compensation or benefit plans, programs and arrangements as in effect immediately prior to the Date of Termination or, if more favorable to the Executive, as in effect immediately prior to the occurrence of the first event or circumstance constituting Good Reason.

6. Severance Payments and Benefits.

6.1       If the Executive’s employment is terminated during the Term and following the first to occur of a Change in Control or July 15, 2008, other than (A) by the Company for Cause, (B) by reason of death or Disability, or (C) by the Executive without Good Reason, then the Company shall pay the Executive the amounts, and provide the Executive the benefits, described in this Section 6.1 (“Severance Payments”) in addition to any payments and benefits to which the Executive is entitled under Section 5 hereof. For purposes of this

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Agreement, the Executive’s employment shall be deemed to have been terminated following a Change in Control by the Company without Cause or by the Executive with Good Reason, if (i) the Executive’s employment is terminated by the Company without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of a Person who has entered into an agreement with the Company the consummation of which would constitute a Change in Control, (ii) the Executive terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Person, or (iii) the Executive’s employment is terminated by the Company without Cause or by the Executive for Good Reason and such termination or the circumstance or event which constitutes Good Reason is otherwise in connection with or in anticipation of a Change in Control (whether or not a Change in Control ever occurs).

(A)      In lieu of any further salary payments to the Executive for periods subsequent to the Date of Termination and in lieu of any severance benefit otherwise payable to the Executive, the Company shall pay to the Executive a lump sum severance payment, in cash, equal to the sum of (i) the Executive’s base salary as in effect immediately prior to the Date of Termination or, if higher, in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, (ii) the Executive’s target annual bonus under any annual bonus or incentive plan maintained by the Company in respect of the fiscal year in which occurs the Date of Termination or, if higher, the fiscal year in which occurs the first event or circumstance constituting Good Reason and (iii) a pro rata portion to the Date of Termination of the annual incentive bonus the Executive could have received for the year in which the Date of Termination occurs, calculated by multiplying the amount determined under clause (ii) by a fraction, the numerator of which is the number days during such the year in which the Date of Termination occurs up to the Date of Termination and the denominator of which is 365.

(B)      For the 12-month period immediately following the Date of Termination, the Company shall arrange to provide the Executive and his dependents life, accident and health insurance benefits substantially similar to those provided to the Executive and his dependents immediately prior to the Date of Termination or, if more favorable to the Executive, those provided to the Executive and his dependents immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after tax cost to the Executive than the after tax cost to the Executive immediately prior to such date or occurrence; provided, however, that, unless the Executive consents to a different method, such health insurance benefits shall be provided through a third-party insurer. Benefits otherwise receivable by the Executive pursuant to this Section 6.1(B) shall be reduced to the extent benefits of the same type are received by or made available to the Executive during the 12-month period following the Executive’s termination of employment (and any such benefits received by or made available to the Executive shall be reported to the Company by the Executive); provided, however, that the Company shall reimburse the Executive for the excess, if any, of the after tax cost of such benefits to the Executive over such cost immediately prior to the Date of Termination or, if more favorable to the Executive, the first occurrence of an event or circumstance constituting Good Reason.

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(C)      If requested by the Executive, the Company shall provide the Executive with outplacement services suitable to the Executive’s position for a period of 12 months or, if earlier, until the first acceptance by the Executive of an offer of employment.

(D)      Any equity awards, including without limitation stock options, restricted stock and restricted stock units, which have been issued to the Executive by the Company shall become fully vested and, as applicable, exercisable, shall remain exercisable for the full term thereof, and any performance conditions imposed with respect to such awards shall be deemed to be fully achieved. The Executive shall also be entitled to similar treatment as benefit active employees for purposes of implementation, modifications and amendments of equity awards, including without limitation, employee cashless exercise programs, equity sale programs, exchange offers, participation in rights offers, equity adjustments to reflect transactions, and any other program or offer made available to active employees generally.

6.2       The payment provided in subsection (A) of Section 6.1 hereof shall be made not later than the fifth day following the Date of Termination; provided, however, that if the amounts of such payments, cannot be finally determined on or before such day, the Company shall pay to the Executive on such day an estimate, as determined in good faith by the Executive, of the minimum amount of such payments to which the Executive is clearly entitled and shall pay the remainder of such payments (together with interest on the unpaid remainder (or on all such payments to the extent the Company fails to make such payments when due) at 120% of the rate provided in section 1274(b)(2)(B) of the Code) as soon as the amount thereof can be determined but in no event later than the 30th day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan by the Company to the Executive, payable on the fifth business day after demand by the Company (together with interest at 120% of the rate provided in section 1274(b)(2)(B) of the Code). At the time that payments are made under this Agreement, the Company shall provide the Executive with a written statement setting forth the manner in which such payments were calculated and the basis for such calculations including, without limitation, any opinions or other advice the Company has received from Tax Counsel, the Auditor or other advisors or consultants (and any such opinions or advice which are in writing shall be attached to the statement).

6.3       The Company also shall reimburse the Executive for all legal fees and expenses incurred by the Executive in disputing in good faith any issue hereunder relating to the termination of the Executive’s employment, in seeking in good faith to obtain or enforce any benefit or right provided by this Agreement or in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within five business days after delivery of the Executive’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require, but in no event later than the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

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7. Termination Procedures.

7.1       Notice of Termination. After a Change in Control and during the Term, any purported termination of the Executive’s employment (other than by reason of death) shall be communicated by written Notice of Termination from one party hereto to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated.

7.2       Date of Termination. “Date of Termination,” with respect to any purported termination of the Executive’s employment after a Change in Control and during the Term, shall mean (i) if the Executive’s employment is terminated for Disability, 30 days after Notice of Termination is given (provided that the Executive shall not have returned to the full-time performance of the Executive’s duties during such 30-day period), and (ii) if the Executive’s employment is terminated for any other reason, the date specified in the Notice of Termination (which, in the case of a termination by the Company, shall not be less than 30 days (except in the case of a termination for Cause) and, in the case of a termination by the Executive, shall not be less than 15 days nor more than 60 days, respectively, from the date such Notice of Termination is given).

8.         No Mitigation. The Company agrees that, if the Executive’s employment with the Company terminates during the Term, the Executive is not required to seek other employment or to attempt in any way to reduce any amounts payable to the Executive by the Company pursuant to Section 6 hereof. Further, except as specifically provided in Section 6.1(B) hereof, no payment or benefit provided for in this Agreement shall be reduced by any compensation earned by the Executive as the result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Executive to the Company, or otherwise.

9. Successors; Binding Agreement.

9.1       In addition to any obligations imposed by law upon any successor to the Company, the Company shall require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, prior to such succession, to expressly assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

9.2       This Agreement shall inure to the benefit of and be enforceable by the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If the Executive shall die while any amount would still be payable to the Executive hereunder (other than amounts which, by their terms, terminate upon the death of the Executive) if the Executive had continued to live, all such amounts, unless

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otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the executors, personal representatives or administrators of the Executive’s estate.

10.       Notices. For the purpose of this Agreement, notices and all other communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed, if to the Executive, to the address set forth in the personnel records of the Company and, if to the Company, to the address set forth below, or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notice of change of address shall be effective only upon actual receipt:

To the Company:

SkyTerra Communications

10802 Parkridge Boulevard

Reston, VA 22091

Attention: General Counsel

Copy: Human Resources

11.       Miscellaneous. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and signed by the Executive and such officer as may be specifically designated by the Board. No waiver by either party hereto at any time of any breach by the other party hereto of, or of any lack of compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. This Agreement supersedes any other agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof which have been made by either party; provided, however, that this Agreement shall supersede any agreement setting forth the terms and conditions of the Executive’s employment with the Company only in the event that the Executive’s employment with the Company is terminated on or following a Change in Control, by the Company other than for Cause or by the Executive for Good Reason. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of Delaware. All references to sections of the Exchange Act or the Code shall be deemed also to refer to any successor provisions to such sections. Any payments provided for hereunder shall be paid net of any applicable withholding required under federal, state or local law and any additional withholding to which the Executive has agreed. The obligations of the Company and the Executive under this Agreement which by their nature may require either partial or total performance after the expiration of the Term (including, without limitation, those under Sections 6 and 7 hereof) shall survive such expiration.

12.       Section 409A. The intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code and the regulations and other guidance promulgated thereunder (“Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted and administered to be in compliance therewith.

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Notwithstanding anything contained herein to the contrary, Executive shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payments shall be due to Executive under this Agreement providing for payment of amounts on termination of employment unless Executive would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each amount to be paid or benefit to be provided under this Agreement shall be construed as a separate identified payment for purposes of Section 409A and any payments described in this Agreement that are due within the “short term deferral period” as defined in Section 409A shall not be treated as deferred compensation unless applicable law requires otherwise. All reimbursements shall be paid within five business days after delivery of Executive’s written request for payment accompanied by evidence of the fees and expenses incurred, as the Company may reasonably require, but in no event later than the end of the calendar year following the calendar year in which such fees and expenses are incurred. To the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Agreement during the six-month period immediately following Executive’s termination of employment shall instead be paid on the first business day after the date that is six months following Executive’s termination of employment (or upon Executive’s death, if earlier), together with interest calculated from the fifth day following termination of employment until the date of payment, at an annual rate equal to the prime rate as reported in the Wall Street Journal from time to time, compounded annually. Notwithstanding anything in Section 6.2 hereof to the contrary, to the extent the Executive is terminated (i) following a Change in Control but prior to a change in ownership or control of the Company within the meaning of Section 409A or (ii) prior to a Change in Control in a manner described in Section 6.1, to the extent required to avoid accelerated taxation and/or tax penalties under Section 409A, amounts payable to the Executive hereunder, to the extent not in excess of the amount that the Executive would have received under any other severance plan or arrangement with the Company that is not contingent on the occurrence of a Change in Control had such plan or arrangement been applicable, shall be paid at the time and in the manner provided by such plan or arrangement and the remainder shall be paid to the Executive in accordance with the provisions of Section 6.2.

13.       Validity. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect.

14.       Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument.

15. Settlement of Disputes; Arbitration.

15.1    All claims by the Executive for benefits under this Agreement shall be directed to and determined by the Board and shall be in writing. Any denial by the Board of a claim for benefits under this Agreement shall be delivered to the Executive in writing and shall set forth the specific reasons for the denial and the specific provisions of this Agreement relied upon. The Board shall afford a reasonable opportunity to the Executive for a review of the

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decision denying a claim and shall further allow the Executive to appeal to the Board a decision of the Board within 60 days after notification by the Board that the Executive’s claim has been denied. Notwithstanding the above, in the event of any dispute, any decision by the Board hereunder shall be subject to a de novo review by the arbitrator.

15.2     Any further dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Washington, D.C. in accordance with the rules of the American Arbitration Association then in effect; provided, that the Federal Rules of Evidence shall apply, and the arbiter shall establish the applicable rules of discovery. The arbiter shall determine the scope of arbitrability.

16.       Definitions. For purposes of this Agreement, the following terms shall have the meanings indicated below:

(A)      “Affiliate” shall have the meaning set forth in Rule 12b-2 promulgated under Section 12 of the Exchange Act.

(B)      “Auditor” shall mean the accounting firm which was immediately prior to the Change in Control the Company’s independent auditor.

(C)      “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

(D) “Board” shall mean the Board of Directors of the Company.

(E)       “Cause” for termination by the Company of the Executive’s employment shall mean (i) the willful and continued failure of the Executive to substantially perform the Executive’s duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Executive by the Board which specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive’s duties; (ii) the willful engaging by the Executive in gross misconduct which is materially and demonstrably injurious to the Company; (iii) material breach of fiduciary duty to the Company that results in personal profit to the Executive at the expense of the Company; or (iv) the Executive is convicted or pleads nolo contendre to a felony under Federal or state law or willfully violates any law, rule or regulation (other than traffic violations, misdemeanors or similar offenses) or cease-and-desist order, court order, judgment or supervisory agreement, which violation is materially and demonstrably injurious to the Company. For purposes of the preceding clauses, no act or failure to act, on the part of the Executive, shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith and without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon prior approval given by the Board or based upon the advice of counsel for the Company, shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. The cessation of employment of the Executive shall not be deemed to be for Cause unless and until there shall have been delivered to the Executive, as part of the Notice of Termination, a copy of a resolution duly adopted by the affirmative vote of not

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less than three quarters (3/4) of the entire membership of the Board at a meeting of the Board called and held for the purpose of considering such termination (after reasonable written notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board) finding that, in the good faith opinion of the Board, the Executive is guilty of the conduct described in clause (i), (ii), (iii) or (iv) above, and specifying the particulars thereof in detail.

(F)       A “Change in Control” shall mean the occurrence of any of the following events:

(I)        any person or group of persons (as defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, but other than Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners) together with its affiliates, excluding employee benefit plans, becomes, directly or indirectly, the “beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934) of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding securities;

(II)      the dissolution or liquidation of the Company or a merger, consolidation, or reorganization of the Company with one or more other entities in which the Company is not the surviving entity or the sale of substantially all of the assets of the Company to another person or entity (excluding a merger of Mobile Satellite Venture, LP into the Company);

(III)     any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in any person or entity (other than Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners) owning or controlling more than 50% of the combined voting power of all classes of securities of the Company;

(IV)     in instances where Harbinger Capital Partners or affiliated funds of Harbinger Capital Partners own or control more than 50% of the combined voting power of all classes of securities in the Company, any transaction (including without limitation a merger or reorganization in which the Company is the surviving entity) which results in a third party owning or controlling more than 50% of Harbinger Capital Partners’ or affiliated funds of Harbinger Capital Partners’ combined voting power of all classes of securities in the Company; or

(V)      individuals who at the beginning of any two-year period constitute the Board, plus new directors of the Company whose election or nomination for election by the Company’s shareholders is approved by a vote of at least two-thirds of the directors of the Company still in office who were directors of the Company at the beginning of such two-year period, cease for any reason during such two-year period to constitute at least two-thirds of the members of the Board.

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(G)      “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.

(H)      “Company” shall mean SkyTerra Communications, Inc. and, except in determining under Section 16(F) hereof whether or not any Change in Control of the Company has occurred, shall include any successor to its business and/or assets which assumes and agrees to perform this Agreement by operation of law, or otherwise.

(I)        “Date of Termination” shall have the meaning set forth in Section 7.2 hereof.

(J)       “Disability” shall be deemed the reason for the termination by the Company of the Executive’s employment, if, as a result of the Executive’s incapacity due to physical or mental illness, the Executive shall have been absent from the full-time performance of the Executive’s duties with the Company for a period of six consecutive months, the Company shall have given the Executive a Notice of Termination for Disability, and, within 30 days after such Notice of Termination is given, the Executive shall not have returned to the full-time performance of the Executive’s duties.

(K)      “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

(L)       “Executive” shall mean the individual named in the first paragraph of this Agreement.

(M) “Good Reason” shall mean the occurrence of any of the following events:

(I)        a material diminution in the Executive’s duties inconsistent with the Executive’s position (including status, offices, titles and reporting requirements), authority, duties or responsibilities as in effect prior to such diminution or any other action by the Company which results in a material diminution in any respect in such position, authority, duties or responsibilities, excluding for this purpose an isolated, insubstantial and inadvertent action not taken in bad faith that is remedied by the Company promptly after receipt of notice thereof given by the Executive, but including for such purpose any change in the Executive’s function, status and/or title such that the Executive is no longer the chief officer (other than the Chief Executive Officer) responsible for the Executive’s function at the Company (and parent company, if any);

(II)      a material reduction in the Executive’s base salary or target bonus;

(III)     the Company requiring the Executive to be based at any office that is more than 25 miles from the Executive’s current office in Reston, Virginia;

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(IV)     a material diminution in the Executive’s benefits as a result of the failure by the Company (a) to continue in effect any compensation plan in which the Executive participates that is material to the Executive’s total compensation, unless he has been offered participation in an economically equivalent compensation arrangement (embodied in an ongoing substitute or alternative plan) or (b) to continue the Executive’s participation in any such compensation plan (or in any substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of compensation provided and the level of the Executive’s participation relative to other participants, than existed prior to such failure;

(V)      the material failure by the Company to continue to provide the Executive with benefits substantially similar to those enjoyed by the Executive under any of the Company’s pension, life insurance, medical, health and accident, disability or other welfare plans in which the Executive was participating immediately prior to such failure; or

(VI)     any action or inaction by the Company that constitutes a material breach of the terms and provisions of this Agreement.

Anything herein to the contrary notwithstanding, the Executive’s employment shall not be terminated for Good Reason unless (i) he provides written notice to the Company within 90 days after the Executive first obtains knowledge of the occurrence of one of events above, that the Executive is terminating his employment for Good Reason and stating the basis of such termination, (ii) the Company fails to cure the action or inaction that is such basis within 30 days after receipt of such notice and (iii) the Executive terminates employment no later than six months following the initial existence of such Good Reason.

(N)      “Notice of Termination” shall have the meaning set forth in Section 7.1 hereof.

(O)      “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (i) the Company or any of its subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or any of its Affiliates, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by the stockholders of the Company in substantially the same proportions as their ownership of stock of the Company.

(P)       “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(I)        the Company enters into an agreement, the consummation of which would result in the occurrence of a Change in Control;

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(II)      the Company or any Person publicly announces an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(III)     any Person becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 15% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its affiliates); or

(IV)     the Board adopts a resolution to the effect that, for purposes of this Agreement, a Potential Change in Control has occurred.

(Q)      “Retirement” shall be deemed the reason for the termination by the Executive of the Executive’s employment if such employment is terminated in accordance with the Company’s retirement policy, including early retirement, generally applicable to its salaried employees.

(R)      “Severance Payments” shall have the meaning set forth in Section 6.1 hereof.

(S)       “Tax Counsel” shall mean tax counsel reasonably acceptable to the Executive and selected by the Auditor.

(T)       “Term” shall mean the period of time described in Section 2 hereof (including any extension, continuation or termination described therein).

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

SKYTERRA COMMUNICATIONS, INC.

By: /s/ ALEXANDER GOOD

Name: Alexander Good

Title: Chairman, CEO and President

/s/ RANDY SEGAL

EXECUTIVE

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EX-10

Amendment No. 1 to

SkyTerra Communications, Inc.

2006 Equity and Incentive Plan

THIS AMENDMENT NO. 1 is made to the SkyTerra Communications, Inc. 2006 Equity and Incentive Plan (the “Equity Plan”) effective as of July 24, 2008. Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Equity Plan.

WHEREAS, the Board of Directors of SkyTerra Communications, Inc. (the “Company”) has previously adopted the Equity Plan;

WHEREAS, Section 15 of the Equity Plan provides in relevant part that the Board of Directors of the Company (the “Board”) may at any time amend the Equity Plan in any respect whatsoever, subject to stockholder approval if required under applicable law; provided, that no such amendment may adversely affect the rights of a Participant under any outstanding Award without such Participant’s consent;

WHEREAS, the Board has determined that it is in the best interests of the Company and its stockholders to amend the Plan as provided herein; and

WHEREAS, the Board has further determined that (i) stockholder approval of the amendment set forth herein is not required by applicable law and (ii) no Participant’s rights under outstanding Awards are adversely affected by such amendment;

NOW THEREFORE, pursuant to its authority under Section 15 of the Equity Plan, Section 4(c) of the Equity Plan is amended in its entirety to read as follows:

In the event that the Committee shall determine that any dividend or other distribution (whether in the form of cash, Common Stock, or other property), re-capitalization, Common Stock split, reverse Common Stock split, reorganization, merger, consolidation, spin-off, combination, repurchase, share exchange, rights offering made on the same terms to all Company stockholders, or other similar corporate transaction or event, makes an adjustment appropriate in order to prevent dilution or enlargement of the rights of Participants under the Plan, then the Committee shall make such equitable changes or adjustments as it in its good faith discretion deems necessary or appropriate to any or all of (1) the number and kind of shares of Common Stock or other securities which may thereafter be issued in connection with Awards, (2) the number and kind of shares of Common Stock, securities or other property issued or issuable in respect of outstanding Awards, (3) the exercise price, grant price or purchase price relating to any Award, and (4) the maximum number of shares subject to Awards which may be awarded to any employee during any tax year of the Company; provided that, with respect to Incentive Stock Options,

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any such adjustment shall be made in accordance with Section 424 of the Code.

Except as amended hereby, the Equity Plan shall remain in full force and effect.

SKYTERRA COMMUNICATIONS, INC.
By:	/s/ Randy Segal
	Randy Segal
Title:	SVP, General Counsel and Secretary

2

EX-10

August 4, 2008

Drew Caplan

902 Countryside Court

McLean, VA 22101

Dear Drew:

SkyTerra Communications, Inc. (the “Company”) considers it essential to the best interests of its stockholders to foster the continued employment of key management personnel. This Letter Agreement and the Promissory Note attached as Appendix A hereto set forth the terms of the payment to you by the Company of a retention bonus in an aggregate amount equal to $350,000 (your “Retention Bonus”), which is subject to forfeiture and repayment under certain circumstances as described herein. This Letter Agreement and the form of agreement attached as Appendix B hereto sets forth the terms grant of restricted shares of the Company’s common stock pursuant to the Company’s 2006 Equity and Incentive Plan (the “Equity Plan”).

The Company will pay your Retention Bonus to you in two installments: the first installment of $175,000 will be paid on August 15, 2008, and the second installment of $175,000 will be paid on December 29, 2008(each such date, a “Payment Date”), subject to your continued employment with the Company as of each such Payment Date. Your Retention Bonus will be paid in cash, subject to applicable Federal, state, local and other withholding requirements.

If prior to August 15, 2010, your employment with the Company is terminated by the Company for Cause, as defined in the Equity Plan, or you terminate your employment with the Company for any reason or for no reason, you will repay to the Company that portion of the Retention Bonus that has previously been paid to you (without interest) within 30 days following actual termination. Further details of your repayment obligation are set forth in the Promissory Note. If prior to August 15, 2010, the Company terminates your employment other than for Cause, you will be entitled to retain any previously paid portion of the Retention Bonus but the Company will have no further obligation to pay any then unpaid portion of the Retention Bonus; provided, that for purposes of determining the Company’s obligation under this sentence of this Letter Agreement, the Company will be considered to have terminated your employment other than for Cause on the date on which the Company delivers notice of such termination of employment. If prior to August 15, 2010, your employment with the Company terminates because of your death or Disability (as defined in the Equity Plan), the Company will pay any then unpaid portion of the Retention Bonus to you or such beneficiaries on the applicable Payment Date.

In addition to the Retention Bonus, the Company has further determined to grant to you 50,000 shares of restricted common stock of the Company (your “Restricted Stock Grant”) pursuant to

SkyTerra Communications, Inc.10802 Parkridge Boulevard, Reston, Virginia, 20191-4334

the Equity Plan. Your Restricted Stock Grant will vest in full on August 15, 2010, subject to the terms and conditions of the Equity Plan and the form of agreement attached hereto as Appendix B.

Finally, the Executive shall receive an annual (calendar year) bonus (the “Bonus”) for the calendar year 2008 and 2009 of 50% of the Executive’s Base Salary then in effect (the “Target Bonus”), subject to the Compensation Committee having the option to either (i) pay a smaller Bonus if the Boards determine that the Executive has failed to satisfactorily perform objectives mutually agreed upon by the Executive and the Chief Executive Officer of the Companies and, where such failure is capable of being cured, notifies the Executive in writing with a reasonable time period to cure, or (ii) pay a larger Bonus if the Compensation Committee determines that the Executive has exceeded performance expectations. The Bonus earned by the Executive for any calendar year shall be paid in a single lump sum in cash following the close of such calendar year and within ten (10) days of the Companies’ receipt of audited financials for such calendar year but in no event later than March 31^st of the year following the year for which such Bonus earned.

Any notices required or permitted hereunder will be addressed to the Company at its principal offices, 10802 Parkridge Boulevard, Reston, Virginia, 20191, or you at the address then on record with the Company, as the case may be, and deposited, postage prepaid, in the United States mail. Either party may, by notice to the other given in the manner aforesaid, change his or its address for future notices.

This Letter Agreement will be governed by and construed in accordance with the laws of the Commonwealth of Virginia without regard to any conflicts of law principles.

If you are in agreement with the terms of this Letter Agreement, the Promissory Note and the Restricted Stock Grant, please execute each of these documents in the space provided and return one copy to Trey Jones (Head of Human Resources) at the Company.

We appreciate your ongoing efforts on behalf of the Company.

SKYTERRA COMMUNICATIONS, INC.
By:	/s/ Scott Macleod
Name:	Scott Macleod
	/s/ Drew Caplan
Name:	Drew Caplan
	Executive

EX-10

Appendix A

PROMISSORY NOTE

$175,000 (as of August 15, 2008)

OR Reston, Virginia

$175,000 (as of December 29, 2008

FOR VALUE RECEIVED, the undersigned, [___________], an individual with an address of [____________________] ("Maker") hereby promises to pay to the order of SkyTerra Communications, Inc., a Delaware corporation ("Company") whose address is 10802 Parkridge Boulevard, Reston, Virginia 20191, or to such other person or place as the holder hereof may from time to time designate in writing to Maker, the principal sum of (i) as of August 15, 2008 [__________________] Dollars ($[______]) or, as of [________ __, 200_], [__________________] Dollars ($[______]), in either case, upon the occurrence of certain events as set forth in this Note. Amounts owing hereunder shall be payable in lawful money of the United States of America.

The principal sum shall be due and payable in full within 30 days following the date upon which (i) the Company gives notice to the Maker that his employment with the Company is terminated for “Cause,” as defined in the SkyTerra Communications, Inc. 2006 Equity and Incentive Plan, or (ii) the Maker gives notice to the Company that he is terminating his employment with the Company for any reason or for no reason.

This Promissory Note and the Maker’s obligations hereunder shall expire on August 15, 2010, provided that as of such date, (i) the Maker is employed by the Company, (ii) the Company has not given notice to the Maker that his employment with the Company is terminated for Cause and (ii) the Maker has not given notice to the Company that he is terminating his employment with the Company.

If suit is brought to collect this Note, the Note holder shall be entitled to collect all reasonable costs and expenses of suit, including, but not limited to, reasonable attorney fees and expenses.

The Maker hereby waives presentment, demand, notice of protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. Maker further waives, to the fullest extent permitted by law, the right to (i) plead any statutes of limitations as a defense to any demand on this Note, and (ii) a jury trial in action brought by any Note holder to enforce this Note.

This Note shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. If any provision of this Note or any application of such provision shall be declared by a court of competent jurisdiction to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other application of

such provision or any other provisions hereof which shall, to the fullest extent possible, remain in full force and effect and shall not effect the Maker's obligation to make the required payment pursuant to the terms this Note. Wherever used, the words "Company" and "Maker" shall include their respective successors and assigns. This Note may not be changed orally, but only by an agreement in writing signed by the parties hereto.

IN WITNESS WHEREOF, Maker has duly executed this Note at the place and as of the date first above written.

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EX-10

SKYTERRA COMMUNICATIONS, INC.

2006 EQUITY AND INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

This RESTRICTED STOCK AGREEMENT (this “Agreement”), dated as of the 4^th day of August, 2008, is entered into by and between SkyTerra Communications, Inc., a Delaware corporation (the “Company”), and Drew Caplan (the “Grantee” and, together with the Company, the “Parties”).

RECITALS

The Board of Directors of the Company has determined to grant to the Grantee restricted shares of common stock, par value $0.01 per share, pursuant to the 2006 Equity and Incentive Plan (the “Plan”), on the terms and conditions set forth herein, and hereby grants such restricted shares.

Any capitalized terms not defined herein shall have their respective meanings set forth in the Plan.

NOW, THEREFORE, the Parties hereto agree as follows:

1.         Grant of Restricted Stock. The Grantee is entitled to 50,000 shares of Common Stock pursuant to the terms and conditions of this Agreement (the “Restricted Stock”) granted effective as of August 15, 2008, (the “Date of Grant”), subject to the restrictions set forth below and the terms of this Agreement. The Grantee shall not be required to pay any cash consideration in exchange for the Restricted Shares.

2. Restrictions and Restricted Period.

(a)       Restrictions. Shares of Restricted Stock granted hereunder may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of and shall be subject to a risk of forfeiture as described in Section 4 below until the lapse of the Restricted Period (as defined below).

(b)       Restricted Period. The restrictions set forth above shall lapse and the shares of Restricted Stock shall become vested and transferable (provided, that such transfer is otherwise in accordance with federal and state securities laws) on August 15, 2010 (the period from the Date of Grant until the date on which the restrictions lapse is the “Restricted Period”).

3.         Rights of a Stockholder. From and after the Date of Grant and for so long as the Restricted Stock is held by or for the benefit of the Grantee, the Grantee shall have all the rights of a stockholder of the Company with respect to the Restricted Stock, including, but not limited to, the right to receive dividends and the right to vote such shares. If there is any stock dividend, stock split or other change in character or amount of the Restricted Stock, then in such event, any and all new, substituted or additional

1

securities to which Grantee is entitled by reason of the Restricted Stock shall be immediately subject to the restrictions and risk of forfeiture set forth in Sections 2 and 4 with the same force and effect as the Restricted Stock subject to such restrictions and risk of forfeiture immediately before such event.

4. Cessation of Service.

(a)       Forfeiture. If the Grantee’s employment with the Company terminates for any reason other than those set forth in Section 4(b) of this Agreement, then any portion of the Restricted Stock for which the Restricted Period has not lapsed shall be forfeited to the Company without payment of any consideration by the Company, and neither the Grantee nor any of his successors, heirs, assigns, or personal representatives shall thereafter have any further rights or interests in such shares of Restricted Stock.

(b)       Accelerated Vesting. If prior to the end of the Restricted Period, the Grantee’s employment with the Company is terminated (i) by the Company without Cause or (ii) because of the Grantee’s death or Disability, the Restricted Stock will immediately vest in full and the Company shall deliver a certificate or certificates representing the unrestricted shares promptly following such termination of service.

5.         Certificates. Restricted Stock granted herein may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Grantee, then the Company may retain physical possession of the certificate until the Restricted Period has lapsed.

6.         Legends. The Company may require, as a condition of the issuance and delivery of certificates evidencing Restricted Stock pursuant to the terms hereof, that the certificates bear the legend as set forth immediately below, in addition to any other legends required under federal and state securities laws or as otherwise determined by the Committee. All certificates representing any of the shares of Restricted Stock subject to the provisions of this Agreement shall have endorsed thereon the following legend:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS UPON TRANSFER HELD BY THE ISSUER OR ITS ASSIGNEES(S) AS SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE HOLDER OF THE SHARES, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY.

Such legend shall not be removed until such shares vest pursuant to the terms hereof.

7.         Taxes. The Grantee shall pay to the Company promptly upon request, at the time the Grantee recognizes taxable income in respect to the shares of Restricted Stock, an amount equal to the federal, state and/or local taxes the Company determines it is required to withhold under applicable tax laws with respect to the shares of Restricted

2

Stock. In lieu of collecting payment from the Grantee, the Company may, in its discretion, distribute vested shares of Common Stock net of the number of whole shares of Common Stock the fair market value of which is equal to the minimum amount of federal, state and local taxes required to be withheld under applicable tax laws. The Grantee understands that he (and not the Company) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by this Agreement.

8. Miscellaneous.

(a)        Restrictions on Transfer. Shares of Restricted Stock may not be transferred or otherwise disposed of by the Grantee, including by way ofsale, assignment, transfer, pledge, hypothecation or otherwise, except as permitted by the Committee, or by will or the laws of descent and distribution.

(b)       Compliance with Law and Regulations. The award and any obligation of the Company hereunder shall be subject to all applicable federal, state and local laws, rules and regulations and to such approvals by any government or regulatory agency as may be required. Any purported transfer or sale of the shares of Common Stock shall be subject to restrictions on transfer imposed by any applicable state and Federal securities laws. Any transferee shall hold such shares of Common Stock subject to all the provisions hereof and shall acknowledge the same by signing a copy of this Agreement.

(c)       Invalid Transfers. No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of the shares of Restricted Stock by any holder thereof in violation of the provisions of this Restricted Stock Agreement shall be valid, and the Company will not transfer any of said shares of Restricted Stock on its books or otherwise nor will any of said shares of Restricted Stock be entitled to vote, nor will any dividends be paid thereon, unless and until there has been full compliance with said provisions to the satisfaction of the Company. The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions.

(d)       Incorporation of Plan. This Agreement is made under the provisions of the Plan (which is incorporated herein by reference) and shall be interpreted in a manner consistent with it. Except as provided herein, to the extent that this Agreement is silent with respect to, or in any way inconsistent with, the terms of the Plan, the provisions of the Plan shall govern and this Restricted Stock Agreement shall be deemed to be modified accordingly.

(e)       Notices. Any notices required or permitted hereunder shall be addressed to the Company, at its principal offices, or to the Grantee at the address then on record with the Company, as the case may be, and deposited, postage prepaid, in the United States mail. Either party may, by notice to the other given in the manner aforesaid, change his or its address for future notices.

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(f)        Successor. This Agreement shall bind and inure to the benefit of the Company, its successors and assigns, and the Grantee and his or her personal representatives and beneficiaries.

(g)       Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. The Committee shall have final authority to interpret and construe the Plan and this Agreement and to make any and all determinations under them, and its decision shall be binding and conclusive upon the Grantee and his legal representative in respect of any questions arising under the Plan or this Agreement.

(h)       Amendment. This Agreement may be amended or modified by the Company at any time; provided that notice is provided to the Grantee in accordance with Section 8(e); and provided further that no amendment or modification that is adverse to the rights of the Grantee as provided by this Agreement shall be effective unless set forth in a writing signed by the Parties.

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

SKYTERRA COMMUNICATIONS, INC.

By

Name:

Title:

The undersigned hereby accepts and agrees to all the terms and provisions of the foregoing Agreement.

[Grantee]

Address

EX-31

Exhibit 31.1

CERTIFICATIONS

I, Alexander H. Good, certify that:

1. I have reviewed this quarterly report on Form 10-Q (the “Report”) of SkyTerra Communications, Inc. (the “Registrant”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 4, 2008

/s/ Alexander H. Good

Alexander H. Good

Chief Executive Officer and President

EX-31

Exhibit 31.2

CERTIFICATIONS

I, Scott Macleod, certify that:

1. I have reviewed this quarterly report on Form 10-Q (the “Report”) of SkyTerra Communications, Inc. (the “Registrant”);

2. Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this Report;

3. Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this Report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

(b) Designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this Report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

(d) Disclosed in this Report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 4, 2008

/s/ Scott Macleod

Scott Macleod

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SkyTerra Communications, Inc. (the “Company”) for the period ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alexander H. Good, Chief Executive Officer and President of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Alexander H. Good

Alexander H. Good

Chief Executive Officer and President

August 4, 2008

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SkyTerra Communications, Inc. (the “Company”) for the period ended September 30, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Macleod, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Scott Macleod

Scott Macleod

Executive Vice President

and Chief Financial Officer

August 4, 2008