10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

xAnnual report pursuant to Section13 or 15(d) of the Securities Exchange Act

of 1934 for the fiscal year ended December31, 2008, or

oTransition report pursuant to Section13 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 Number)
10802 Parkridge Boulevard Reston, VA 20191	20191
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (703) 390-1899

Securities registered pursuant to Section12(b) of the Act: None

Securities registered pursuant to Section12(g) of the Act:

Common Stock, $.01 par value

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes  o    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes  o    No  x

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 periods 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 if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  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 (as defined in Rule 12b-2 of the Act).

Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in defined in Rule 12b-2 of the Act).

Yes  o    No  x

The aggregate market value of the voting and non-voting common stock held by non-affiliates of the registrant, as of June 30, 2008, was $256,882,543. As of February 18, 2009, there were 48,822,787 shares of our voting common stock and 59,958,499 shares of our non-voting common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement intended to be filed by Registrant with the Commission prior to April 30, 2009 are incorporated by reference into Part III of this Report.

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SKYTERRA COMMUNICATIONS INC. TABLE OF CONTENTS
PART I		Page
Item 1.	Business	4
Item 1A.	Risk Factors	21
Item 1B.	Unresolved Staff Comments	34
Item 2.	Properties	34
Item 3.	Legal Proceedings	34
Item 4.	Submission of Matters to a Vote of Security Holders	34
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities	35
Item 6.	Selected Financial Data	37
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	38
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	66
Item 8.	Financial Statements and Supplementary Data	67
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	67
Item 9A.	Controls and Procedures	67
Item 9B.	Other Information	69
PART III
Item 10.	Directors, Executive Officers, and Corporate Governance	69
Item 11.	Executive Compensation	69
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Relate Stockholder Matters	69
Item 13.	Certain Relationships and Related Transactions, and Director Independence	69
Item 14.	Principal Accountant Fees and Services	69
PART IV
Item 15.	Exhibits, Financial Statement Schedules, and Reports on Form 8-K	69

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PART I

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including statements regarding our capital needs, business strategy, expectations and intentions. 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 our current views with respect to future events. Because our business is subject to numerous risks, uncertainties and other factors, our actual results could differ materially from those anticipated in the forward-looking statements. These risks and uncertainties include those set forth below under “Item 1. Business,” “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Actual results may differ from the forward looking statements in this report, and the differences could be substantial. We disclaim any obligation to publicly update these statements, or disclose any difference between our actual results and those reflected in these statements. The factors set forth below under “Item 1. Business,” “Item 1A. Risk Factors,” “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other cautionary statements made in this report should be read and understood as being applicable to all related forward-looking statements wherever they appear in this report.

Information about Exhibits Included in this Form 10-K

In reviewing the agreements included or incorporated by reference as exhibits to this Form 10K, please remember they are intended to provide you with information regarding their terms and are not to provide any other factual or disclosure information about the Company or the other parties thereto. Certain of the agreements contain representations and warranties by the parties named therein. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one or more of the parties if those statements prove to be inaccurate;

• have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this Form 10-K and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov. Please also see the section entitled “Available Information” in Part 1, Item 1 of this report.

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Item1. Business

Name Change of SkyTerra Subsidiaries

On December 8, 2008 the names of all SkyTerra subsidiaries that used “Mobile Satellite Ventures” in any part of their name were changed to replace the “Mobile Satellite Ventures” portion of the name with “SkyTerra,” including those listed in the table below which indicates the previous and current name of each subsidiary:

Former Name:	New Name:
Mobile Satellite Ventures GP Inc.	SkyTerra GP Inc.
Mobile Satellite Ventures LP	SkyTerra LP
Mobile Satellite Ventures (Canada) Inc.	SkyTerra (Canada) Inc.
Mobile Satellite Ventures Holdings (Canada) Inc.	SkyTerra Holdings (Canada) Inc.
MSV Finance Co.	SkyTerra Finance Co.

In this Form 10-K, unless otherwise stated or the context otherwise requires, references to “we,” “us,” “our,” the “Company” and similar references refer to SkyTerra Communications, Inc. (SkyTerra) and its directly or indirectly owned subsidiaries, including SkyTerra LP and its subsidiaries. SkyTerra LP holds a 46.4% effective interest in SkyTerra (Canada) Inc. (“SkyTerra Canada”) through its 20% interest in SkyTerra Canada and a 33% interest in SkyTerra Holdings (Canada) Inc, which is the parent company of SkyTerra Canada. SkyTerra LP has determined that it is the primary beneficiary of SkyTerra Canada as a result of its obligation, by contract, to fund the operations of SkyTerra Canada, and as a result of a rights and services agreement and a capacity lease agreement between SkyTerra LP and SkyTerra Canada. As such, and in accordance with FASB Interpretation No. 46, Variable Interest Entities (FIN 46), SkyTerra Canada has been consolidated into the financial results of SkyTerra LP. SkyTerra Canada is Canadian owned and controlled within the meaning of the Telecommunications Act (Canada) and the Radiocommunication Regulations (Canada). Unless otherwise stated, references to “our satellites,” “our spectrum,” “our authorizations,” “our network” and similar references refer to the satellites, spectrum, authorizations and networks of SkyTerra LP and SkyTerra Canada.

SkyTerra Communications

SkyTerra has five officers and no other employees. All SkyTerra officers are full-time employees of SkyTerra LP.  Through SkyTerra LP and other of the Company’s subsidiaries and affiliates, the Company is pursuing plans to develop, build and operate a next generation mobile satellite system complemented by an ancillary terrestrial component. Ancillary terrestrial component (ATC) permits the use of its L-band satellite frequencies in the operation of an advanced, integrated satellite and terrestrial hybrid network capable of providing wireless broadband on a fixed, portable and fully mobile basis in the United States. The Company’s subsidiaries and affiliates operate in the United States and Canada. The Company was incorporated in Delaware in 1985 as International Cogeneration Corporation.

Over the past several years the Company has consummated a series of transactions to acquire additional interests in SkyTerra LP, its principal operating subsidiary, from SkyTerra LP’s other limited partners in exchange for shares of SkyTerra voting and non-voting common stock. As a result, SkyTerra now owns 100% of SkyTerra LP. In addition to SkyTerra LP, SkyTerra owns 11.1% of TerreStar Networks Inc. (TerreStar Networks).

SkyTerra LP Exchange Transactions

On September 25, 2006, the Company issued 39.6 million shares of its voting and non-voting common stock to TerreStar Corporation and other partners in SkyTerra LP in exchange for limited partnership interests in SkyTerra LP (the “2006 SkyTerra LP Exchange Transactions”), resulting in SkyTerra owning 59% of SkyTerra LP as of the closing. Pursuant to the terms of these transactions, TerreStar Corporation agreed to use commercially reasonable efforts to distribute the 25.5 million shares of the Company’s common stock that it received to its common stockholders. Prior to any such distribution these shares were non-voting. TerreStar Corporation was also given the right to exchange its remaining limited partnership interests of SkyTerra LP for shares of the Company’s non-voting common stock at a predefined ratio.

Notwithstanding the legal form of the transactions, the 2006 SkyTerra LP Exchange Transactions were accounted for as a reverse acquisition, with SkyTerra LP being treated as the accounting acquirer of SkyTerra. Accordingly, the historical financial statements of the Company prior to September 25, 2006 are the historical financial statements of SkyTerra LP. The

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consolidated financial statements of SkyTerra LP were retroactively adjusted to reflect the recapitalization of SkyTerra LP with the 39.6 million shares of SkyTerra common stock issued to SkyTerra LP equity holders in the 2006 SkyTerra LP Exchange Transactions.

On January 5, 2007, the Company acquired all of the equity interests in SkyTerra LP owned by BCE Inc. (BCE) through the purchase of a BCE wholly-owned subsidiary, TMI Communications Delaware Limited Partnership (TMI Delaware). The Company issued 22.5 million shares of non-voting common stock in exchange for limited partnership interests in SkyTerra LP (the “BCE Exchange Transaction”). These shares of non-voting common stock are exchangeable for a like number of shares of voting common stock upon a sale by BCE in the open market or to a person who will not beneficially own 10% or more of the Company’s voting common stock. In addition, the Company issued 176,250 shares of common stock to Winchester Development LLC, a company beneficially owned by a former director of SkyTerra LP. Such shares were issued in exchange for $0.4 million in cash and limited partnership interests of SkyTerra LP. This transaction, together with the BCE Exchange Transaction, resulted in the Company owning 81% of SkyTerra LP.

On February 12, 2007, the Company issued 14.4 million shares of common stock to TerreStar Corporation as a result of TerreStar Corporation exercising its option to exchange a portion of its remaining limited partnership interests in SkyTerra LP. As a result, the Company’s ownership of SkyTerra LP increased to 95%. On November 30, 2007, the Company issued 4.4 million shares of common stock to TerreStar Corporation as a result of TerreStar Corporation exercising its option to exchange the remaining limited partnership interests in SkyTerra owned by it. As a result, the Company’s ownership of SkyTerra LP increased to 99.3%.

On December 10, 2008, the Company issued 736,209 shares of voting common stock to the remaining minority limited partners and acquired all of the remaining limited partnership interests in SkyTerra LP it did not already own. As a result, the Company’s ownership of SkyTerra LP increased to 100%.

SkyTerra and SkyTerra LP Unit Option Exchange

On August 6, 2008 the Company completed an offer to all SkyTerra LP option holders as of that date, to grant them new options, generally in exchange for surrender and termination of their SkyTerra LP options (the “Option Exchange”). All participating U.S. SkyTerra LP option holders received options to purchase shares of SkyTerra common stock pursuant to the terms of the Option Exchange at a ratio of 2.82 SkyTerra options for each SkyTerra LP option terminated, with an exercise price equal to the exercise price of the SkyTerra LP options terminated divided by 2.82. All participating Canadian SkyTerra LP option holders received the right to exchange SkyTerra LP options for SkyTerra options on the same terms in the future. Sale of all shares subject to the options received upon exchange is subject to restriction until May 1, 2010, with certain exceptions that could result in earlier termination of the restrictions. Upon the release of these restrictions, Canadian SkyTerra LP option holders participating in the Option Exchange will have three business days to complete the exchange of their respective SkyTerra LP options for SkyTerra options, or their SkyTerra LP options will become unexercisable.

Upon consummation of the Option Exchange, 11 million SkyTerra options were issued in exchange for SkyTerra LP options held by U.S. SkyTerra LP option holders. Additionally, Canadian SkyTerra LP option holders received rights to receive 1.7 million SkyTerra options if they exchange their respective SkyTerra LP options for SkyTerra options in the future.

SkyTerra LP

Next Generation Network

SkyTerra LP 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. SkyTerra LP plans to launch two new satellites, SkyTerra-1 and SkyTerra-2 (formerly MSV-1 and MSV-2), that will serve as the core of its next generation network. The Company is working closely with Boeing, the satellite manufacturer of both SkyTerra-1 and SkyTerra-2, to carefully track, monitor and support the progress of the satellite construction program.  Based on Boeing’s most recent estimates, SkyTerra-1 will be available for launch in very late 2009.  To ensure the availability of a launch window for SkyTerra-1, and accounting for the possibility of potential future construction or other delays that have occurred on other complex spacecraft, SkyTerra has selected a launch window that provides scheduled launch assurance in case the manufacturer’s construction schedule is delayed.

Specifically, SkyTerra has contracted for a launch window for SkyTerra-1 that opens in March of 2010 and continues through May 2010.  This date was selected carefully, to account for the possibility of future manufacturer construction delays as mentioned above.  If SkyTerra-1 construction does not deviate from its current schedule, SkyTerra may seek an earlier

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launch date from the launch service provider, including late 2009.  While there can be no guarantee of the availability of such earlier launch time, SkyTerra believes the launch service provider will work in good faith to accommodate an earlier launch. 

The launch of SkyTerra-2 is currently expected to occur in the fourth quarter of 2010 or the first quarter of 2011 and, similar to SkyTerra-1, within all regulatory milestones.

The Company’s current and next generation satellite systems are licensed by either the United States or Canadian governments to operate in the 1.5 - 1.6 GHz frequency band (the “L-band”) using spectrum that SkyTerra LP and SkyTerra Canada have coordinated for their use. This spectrum is positioned between the frequencies used by terrestrial wireless providers. SkyTerra LP and SkyTerra Canada have coordinated approximately 30 MHz of this spectrum throughout the United States and Canada and this coordinated spectrum covers a total population of over 330 million. The Company plans to use its spectrum for both satellite and terrestrial service in operating its next generation integrated network.

SkyTerra LP holds an ATC authorization that permits the use of its L-band satellite frequencies in the operation of an advanced, integrated satellite and terrestrial hybrid network capable of providing wireless broadband on a fixed, portable and fully mobile basis in the United States. Deployment of an ATC network has not yet begun, and development is in process. SkyTerra LP was the first mobile satellite service (“MSS”) provider to receive a license to operate an ATC network from the Federal Communications Commission (“FCC”) and was a major proponent of the FCC’s February 2003 and February 2005 ATC and ATC Reconsideration Orders, both of which were adopted on a bipartisan, 5-0 basis.

With access to spectrum that is conducive for mobile and fixed broadband wireless services, the Company believes it is well positioned to support an extensive wireless business plan. The next generation integrated network may create the opportunity to use the Company’s United States and Canadian nationwide spectrum, in its current configuration, to establish a strong position within the wireless industry. Using an all-Internet Protocol, 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, flexibility to support a range of custom IP applications and services, and added communications flexibility in the event terrestrial services are unavailable or interrupted. The Company’s current business plan envisions a “carrier’s carrier” wholesale model whereby strategic partners and other wholesale customers can use the Company’s network to provide differentiated broadband services to their subscribers. The Company’s 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 to create a variety of custom applications and services for consumers.

The Company believes the changing dynamics of the telecommunications industry have created a compelling market opportunity for its next generation network. Increased competition, industry consolidation, wireless substitution for wireline services and the general convergence of media and telecommunications have led major service providers to attempt to offer consumers a bundle of video, broadband data, voice and mobile wireless services. However, incumbent wireless providers may be constrained by certain factors, such as their spectrum positions and legacy second generation (“2G”) and 3G circuit-switched network architectures, as the demand for an advanced bundle has increased. Wireless carriers may also be pursuing different market strategies based upon their existing networks and customers rather than offering new services like those we plan to provide using next generation integrated technology. New technologies are emerging to deliver advanced broadband wireless services and applications to a potentially wide range of devices at price points we believe will be lower than those offered by incumbents’ legacy networks.

The Company anticipates that our United States and Canadian nationwide spectrum holdings and strategy to deploy a wireless, all-IP network will, through wholesale customers and other strategic distribution partners, have the potential to provide superior connectivity to an array of devices, satisfy the evolving needs of the industry and capture a greater percentage of the consumer’s total spending on communications services. The potential market opportunity may include participation from large enterprises that have limited access to the wireless services business (potentially including content companies, video service providers, web services firms, consumer electronics companies, enterprise service providers, device and chipset vendors and Internet service providers). Those enterprises have large, loyal customer bases and are exploring opportunities to incorporate broadband wireless connectivity to differentiate and expand their core service offerings.

While the Company has been focused on a wholesale, “carriers carrier” business model, conversations have nonetheless taken place with strategic partners who view the Company’s assets, including access of up to a potential 46 MHz of spectrum and the ability to provide a differentiated, integrated satellite-terrestrial service, as a very attractive platform for the delivery of 4G services using traditional models for the distribution of services and content. Such traditional business models include potential exclusive relationships with existing operating partners and/or new entrants.

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Current Generation Network

SkyTerra LP offers a range of mobile satellite services using two nearly identical geostationary satellites that support the delivery of data, voice, fax and dispatch radio services. SkyTerra LP offers services to a number of vertical markets in the United States and Canada. Penetration is highest in markets where terrestrial wireless infrastructure is cost-prohibitive or non-existent, where point-to-multipoint services such as voice dispatch are essential for ongoing operations, or where network availability is a critical requirement for service.

SkyTerra LP provides wholesale satellite capacity to customers who implement their own networks. These customers typically purchase specified amounts of bandwidth and power. The bandwidth and power are dedicated to the customer and are not subject to other sale, or to preemption except for emergency purposes as provided in our authorizations from the FCC and Industry Canada. A majority of these customers access the network for fleet management and asset tracking services.

SkyTerra LP markets satellite telephony services through dealers in the United States and on a wholesale basis in the United States and Canada. The basic service is two-way circuit switched voice, facsimile and data at up to 4.8 kbps. A range of satellite handset configurations is available to address the particular communications needs of select markets. User equipment can be installed on trucks, ships, and airplanes or at a fixed location. Customers can use the phones for standard voice communication, including value added services such as call forwarding, call waiting, and conference calling, as well as for file transfers, faxes and e-mail. Many of these users are federal, state and local agencies involved in public safety and security that depend on the Company’s network for redundant and ubiquitous wireless services during daily operations and in the case of emergencies.

In addition to circuit switched service, SkyTerra LP provides satellite-delivered “dispatch” service. Dispatch service provides the wide-area equivalent of push-to-talk two-way radio service among users in customer defined groups. Each user can belong to as many as 15 groups, and each group can have up to 9,999 members. Group members can operate anywhere in the United States and Canadian coverage area. Dispatch service facilitates team-based group operations and is highly suited for emergency communications.

Circuit switched users are charged both fixed access and variable usage fees. Dispatch users pay a fixed access fee for unlimited usage; however, the fee varies with the coverage available. Monthly fees for satellite voice users range from $25 for certain public safety and emergency applications to over $100 for high volume users.

Packet data services is distributed through a reseller channel and provides the capability to transmit data in an “always-on” fashion (circuit switched service requires establishment of a dedicated connection for every new data transaction). Common applications include fleet and load management, credit card verification, e-mail, vehicle position reporting, mobile computing, and data message broadcasting.

SkyTerra LP currently sells a mobile transceiver for use with our telephony and dispatch services. This device provides integrated Global Positioning Satellite (“GPS”) capability. The Company offers a PSTN telephony interface box manufactured by Link Communications, Inc. The interface allows customers to use SkyTerra LP’s MSAT-G2 voice and push-to-talk services using a conventional analog cordless phone. For packet data services, the Company uses terminal equipment from EMS technologies. The EMS PDT-100 is an integrated vehicle mounted antenna and transceiver unit that is used with a variety of user interface devices. The network terminates calls from its telephony services via both the AT&T and Sprint networks in the United States and via Bell Canada in Canada.

Competition

SkyTerra LP’s current products and services compete with a number of communications services, including existing satellite services offered by Iridium, Globalstar LLC and Inmarsat, terrestrial air-to-ground services, and terrestrial land-mobile and fixed services and may compete with new technologies in the future. Iridium and Globalstar provide voice, data, and paging services via constellations of Low Earth Orbiting satellites that cover the globe. The Iridium and Globalstar systems are more complex and expensive than the Company’s satellite network and offer some advantages over the Company’s voice services such as smaller handheld telephones, global coverage, and in certain circumstances, reduced transmission delay. However, neither company currently offers a commercial satellite dispatch service. Inmarsat’s primary offerings consist of maritime voice, facsimile and data services. The Inmarsat system has higher per minute charges than those charged by the Company for comparable service. Inmarsat’s current generation of satellites, Inmarsat-4, are more powerful than the Company’s current operating satellites. One of Inmarsat’s current generation satellites covers most of North America and is used to provide Inmarsat’s new Broadband Global Area Network service in addition to traditional Inmarsat services.

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Spectrum Improvement – Agreement with Inmarsat

To improve our spectrum assets, in December 2007, SkyTerra, SkyTerra LP, and SkyTerra Canada (together the “SkyTerra Parties”) and Inmarsat Global Limited (“Inmarsat”) entered into a Cooperation Agreement relating to the use of L-band spectrum for both MSS and ATC services in North America. The Cooperation Agreement addresses a number of regulatory, technology and spectrum coordination matters involving L-band spectrum, including:

• Coordination of the parties’ respective next generation satellite systems covering North America;

• Provisions for re-banding the parties’ L-band spectrum in North America that provide each party with increased contiguous spectrum bandwidth for their operations. This increased contiguity will occur in a phased approach, with certain phases dependent on the payment of designated amounts to Inmarsat by the SkyTerra Parties, and upon the occurrence of various financial, regulatory and other governmental actions;

• Provisions for increased flexibility in system operations and system enhancements that will result in greater protection from harmful interference for all relevant systems operations, and that progressively increases flexibility and supports more robust MSS/ATC operations, from the onset of the Cooperation Agreement through the various options that the SkyTerra Parties may exercise;

• Provisions for increased reuse of a substantial segment of North American L-band spectrum to support the deployment of new services and to provide increased innovation and customer service to all users throughout North America;

• Settlement of outstanding regulatory disputes regarding the operation of certain L-band MSS and MSS/ATC services; and

• Pre-negotiated financial and operational terms for an option for the SkyTerra Parties to obtain additional spectrum and technical flexibility for the deployment and operation of a 4G ATC network.

In addition, upon the achievement of certain events, including regulatory approvals and coordination among the other L-band operators, SkyTerra LP and SkyTerra Canada, would, over time, have the potential for coordinated access for up to 2 x 23 MHz of L-band spectrum (including large blocks of contiguous channels).

Possible Merger and Acquisition of Inmarsat - Master Agreement with Harbinger

In July 2008, the Company, SkyTerra LP and SkyTerra Subsidiary LLC entered into a Master Contribution and Support Agreement (the “Master Agreement”) and certain other agreements with Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund L.P., Harbinger Capital Partners Fund I, L.P., and Harbinger Co-Investment Fund, L.P. (together "Harbinger"). The Master Agreement provides for the possible combination of the Company and Inmarsat plc ("Inmarsat"), a UK public listed company and a leading provider of global mobile satellite services. Harbinger owns approximately 28.8% of the issued and outstanding ordinary shares of Inmarsat. Pursuant to the Master Agreement, the proposed business combination of the Company and Inmarsat would be structured as an offer by the Company for all of the issued and outstanding shares of Inmarsat not owned by Harbinger, and would be subject to the receipt of required regulatory and antitrust clearances.

On August 22, 2008, pursuant to the Master Agreement, Harbinger and the Company submitted applications to the FCC seeking consent for transfer of control of the Company to Harbinger and consent for the possible business combination between the Company and Inmarsat. The applications also sought a declaratory ruling approving a range of possible foreign ownership levels associated with Harbinger’s ownership of up to 100% of the Company.

On August 22, 2008, the Company filed a notice with the U.S. Department of Justice's Antitrust Division under the Hart-Scott-Rodino Act in connection with the possible offer by the Company for Inmarsat. On September 22, 2008, the 30-day Hart-Scott-Rodino waiting period expired without any action from the U.S. Department of Justice’s Antitrust Division. No second request was issued.

The Company and Harbinger expect the FCC approval process to take approximately 12 to 18 months from the July 2008 announcement. The Company is continuing to work cooperatively with Harbinger with respect to the possible offer for Inmarsat, including obtaining all required regulatory approvals for the business combination.

Assuming an acceptable conclusion to the regulatory approval process and Harbinger’s determination to proceed with the transaction, the proposed business combination with Inmarsat is expected to 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

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Harbinger and in accordance with the Master Agreement. Harbinger has not yet proposed the formal terms or structure of a possible Offer to SkyTerra or Inmarsat. Harbinger may terminate the Master Agreement at any time and is not obligated to proceed with any business combination transaction involving SkyTerra and Inmarsat.

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 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 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 of 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. In exchange for such contributions, SkyTerra would issue to Harbinger new shares of voting common stock at $10 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.

Qualcomm Satellite Enabled Mobile Chipsets for Next Generation Network

In September 2008, SkyTerra LP entered into a 15-year agreement with Qualcomm Incorporated (Qualcomm) for the provision by Qualcomm of satellite-enabled mobile chipsets and satellite base station components built upon Qualcomm-adapted EV-DO technology to facilitate the development of mobile devices and network systems for use with the Company’s planned next generation network. A broad range of Qualcomm chipsets, to be available on a mass-market basis, will include satellite and L-band capabilities. Under this agreement, SkyTerra LP and Qualcomm have completed the detailed specifications for the first release of the technology, which will be sufficient to support voice and data services in an integrated, dual mode manner over SkyTerra’s satellites and terrestrial networks, including L-band ATC.

The agreement with Qualcomm also contemplates that other operators (together with SkyTerra LP, each an Operator) may enter into similar arrangements with Qualcomm. The termination by one Operator of its agreement with Qualcomm does not affect the agreement of any other Operator. The Company has been advised that ICO Satellite Services G.P. (ICO) and TerreStar Networks have entered into a similar agreement with Qualcomm. Each Operator will fund a portion of the related non-recurring expenses (NRE) incurred in connection with the agreements, which will result in a further sharing of NRE if and when additional Operators (in addition to SkyTerra LP, ICO, and TerreStar) enter into similar agreements with Qualcomm. The SkyTerra LP portion of the NRE to be paid to Qualcomm is expected to be in an amount not to exceed $10 million, subject to reduction based on the participation of other Operators with Qualcomm.

In connection with entering into the Qualcomm agreement, SkyTerra LP and ICO have entered into a mutual non-assertion agreement with ICO with respect to relevant aspects of their respective patent portfolios as well as certain other agreements related to the Qualcomm development effort.

EV-DO Compatible Base Transceiver Subsystems

The Company is currently in negotiations with several vendors for the procurement of EV-DO compatible transceiver subsystems. The Company expects that it will enter into a material definitive contract for those subsystems during the first half of 2009.

Financing

On July 24, 2008, SkyTerra, SkyTerra LP, and SkyTerra Finance Co. entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which SkyTerra LP and SkyTerra Finance Co. agreed to issue Harbinger up to $500 million aggregate principal amount of 18% Senior Unsecured Notes due July 1, 2013 in four tranches. The proceeds of this funding commitment are expected to fund the Company’s business plan through the third quarter of 2010. As amended, the Securities Purchase Agreement provides that the 18% Senior Unsecured Notes bear interest at a rate of 18% per annum, and that, in conjunction with the issuance of the 18% Senior Unsecured Notes

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pursuant to the Securities Purchase Agreement, SkyTerra will issue to Harbinger warrants to purchase up to an aggregate of 32.5 million shares of voting or non-voting common stock of SkyTerra (at the option of the holder) at an exercise price of $0.01 per share of common stock. Harbinger’s purchase of the 18% Senior Unsecured Notes is not conditioned upon the commencement or consummation of a business combination with Inmarsat, as described elsewhere in this document. Harbinger may not be required to purchase the 18% Senior Unsecured Notes under certain circumstances, including upon the occurrence of a material adverse effect.

On January 7, 2009 the Company issued the first of the four issuances of the 18% Senior Unsecured Notes to Harbinger under the Securities Purchase Agreement, in an aggregate principal amount of $150 million. In addition, at this closing the Company issued Harbinger ten-year warrants to purchase 7.5 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. The remaining $350 million of 18% Senior Unsecured Notes is scheduled to be issued to Harbinger in three tranches of $175 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively.

The Company is actively pursuing incremental financing alternatives to continue to increase the amount of capital available to fund current operations and development of the next generation network. The Company is considering means to raise capital, including strategic partnerships, vendor financing, sale of its interest in TerreStar Networks, and additional debt or equity financing, among others. There is no assurance that the Company can raise sufficient capital, or raise sufficient capital with terms that are favorable to the Company, and/or permitted under the terms of existing financing agreements, to complete the next generation network and realize an ATC build-out.

Intellectual Property

SkyTerra LP has prepared and filed a significant number of patent applications representing significant depth and breadth of claims related to the commercialization and development of a satellite and terrestrial integrated network. The applications have been filed in both the United States and in several key countries abroad. The Company believes that a next generation integrated network cannot effectively and efficiently be implemented on a commercially viable basis without the benefits of the patent portfolio it holds rights to. The Company is committed to vigorously enforcing and defending the rights afforded through its patents.

The Company currently, and expects to continue to, incorporate licensed patents and unpatented technology and software into existing and planned networks. Certain agreements between the Company and third parties include provisions pursuant to which the Company has or will receive a non exclusive license to developments including, among other things, technology and related software created by such third parties for use in existing and planned networks. The Company expects to enter into additional agreements in the normal course of business and with strategic partners that will include licenses to third party intellectual property as the next generation network is developed. The Company believes the intellectual property rights and licenses are sufficient in scope and duration for the operation of the business.

TerreStar Networks Inc.

The Company owns 11.1% of TerreStar Networks, which was established to develop, build and operate a next generation satellite system complemented by an ATC in the 2 GHz MSS band (“S-band”). Prior to September 12, 2008, TerreStar Corporation, the majority parent of TerreStar Networks, owned 29,926,074 millions shares of the Company.

On September 12, 2008, the Company entered into a Transfer and Exchange Agreement with TerreStar Corporation. Pursuant to the agreement future transferees of the TerreStar Networks shares held by the Company (but not the Company itself) will have the right until May 15, 2014 to exchange shares of TerreStar Networks for shares of TerreStar Corporation common stock at an exchange ratio of 4.37 shares of TerreStar Corporation common stock per TerreStar Networks share. The agreement also provides for SkyTerra’s waiver of TerreStar Corporation’s obligation in the Exchange Agreement among SkyTerra, TerreStar Corporation and Motient Ventures Holding Inc. (a subsidiary of TerreStar Corporation), dated May 6, 2006, to use its commercially reasonable efforts to distribute 29,926,074 shares of non-voting common stock of SkyTerra (the “SkyTerra Shares”) to TerreStar Corporation’s stockholders.

Employees

As of December 31, 2008, the Company and its consolidated subsidiaries had 175 employees. The Company believes its relationship with employees is good, and no employees are represented by a union. Generally, employees are retained on an at-will basis. The Company has entered into employment agreements with certain key employees. Certain employees have non-competition agreements that prohibit them from competing with the Company for various periods following termination of their employment.

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Government Regulation

The mobile satellite communications business of SkyTerra LP is subject to extensive government regulation in the United States and Canada. We are also subject to the securities laws and regulations applicable to all publicly owned companies and laws and regulations applicable to businesses generally.

Overview

The operation of our satellite system and our development of a nationwide ATC network is subject in the United States to the rules and regulations of the FCC and in Canada to the rules and regulations of Industry Canada and, to a lesser extent, the Canadian Radio-television and Telecommunications Commission, or CRTC. The FCC acts under authority established by the Communications Act and related federal laws. Among other things, the FCC allocates portions of the radio frequency spectrum to certain services and grants licenses to and regulates individual entities using that spectrum. The FCC also ensures that communications devices comply with technical requirements for minimizing interference and human exposure to radio frequency emissions. Industry Canada acts pursuant to the Radiocommunication Act (Canada) and the Telecommunications Act (Canada). Industry Canada manages the use and allocation of radio spectrum in Canada through the issuance of radio and spectrum licenses. Our satellite system’s access to spectrum is in part also subject to treaty obligations of the United States and Canadian governments, including those contained in the International Radio Regulations of the International Telecommunication Union.

Beginning in January 2001, the Company filed the first ATC application and was a leader in the effort to demonstrate the public interest benefits of permitting substantial flexibility in the deployment and operation of ATC facilities. In 2003, the FCC in a bi-partisan, 5-0 decision adopted rules that permit the Company to provide broadband wireless service. The Company was then granted the first-ever ATC license in November 2004. In February 2005, the FCC followed its earlier decision with another 5-0 decision to further liberalize the technical and operational rules for ATC, enabling us to deploy a more competitive wireless broadband service. Industry Canada has adopted a similarly flexible regime for the provision of an integrated satellite terrestrial service.

Authority to Operate ATC in the United States

In February 2003, the FCC adopted a unanimous ATC Order, giving MSS operator’s broad authority to use their assigned spectrum to operate an ancillary terrestrial component and providing MSS operators with ability to deploy cell sites using the same spectrum authorized for satellite operations. In February 2005, the FCC, on another unanimous vote, adopted its ATC Reconsideration Order, which substantially relaxed the technical restrictions for ATC in the L-band. These decisions establish a set of preconditions (sometimes called “gating criteria”) and technical requirements for ATC operations, as well as an application process for an ATC license. With the February 2005 order, we believe the Company achieved a number of substantial, material improvements to the rules for ATC operations and, as such, gained the opportunity to deploy an ATC network with technical parameters substantially similar to those in other wireless bands, including the PCS spectrum band. The February 2005 order also gave us the opportunity to apply for certain additional flexibilities not permitted in some other wireless bands including the ability to pursue a TDD ATC configuration. The Cooperation Agreement (see Government Regulation—L-band Coordination) provides substantial additional flexibility.

Inmarsat asked the FCC to reconsider the ATC Reconsideration Order and requested the FCC to tighten the technical restrictions on L-band ATC base stations, further define the coordination obligations of L-band operators deploying ATC base stations, and limit the number of ATC terminals that can transmit simultaneously in the 1626.5-1645.5 and 1646.5-1660.5 MHz band. We opposed Inmarsat’s requests. Pursuant to the Cooperation Agreement (see Government Regulation - L-band Coordination), Inmarsat has since withdrawn this filing.

L-band Coordination

The spectrum we use for communication between user terminals and our satellites is known as the “L-band.” Our existing satellite system is authorized to operate its service links in a portion of two 33 MHz wide bands known as the MSS L-band. The specific allocation is 1525-1544 and 1545-1559 MHz for space-to-Earth transmissions and 1626.5-1645.5 and 1646.5-1660.5 MHz for Earth-to-space transmissions. The spectrum is allocated both internationally and domestically for MSS.

We share L-band spectrum internationally with several other MSS systems, pursuant to the Radio Regulations of the ITU. Since our system became operational in 1996, spectrum access has been governed by a multilateral five-administration agreement referred to as the “Mexico City MoU” and by bilateral agreements. The Mexico City MoU agreement provides for yearly spectrum sharing agreements, or SSAs, among the five systems that operate in North America: SkyTerra LP, SkyTerra

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Canada, Inmarsat, and, to a lesser extent, Russian and Mexican systems. In addition, a new Japanese system operates with some overlap with our satellites, requiring limited ongoing coordination.

The Company is currently in a formal process to coordinate its next generation satellites (SkyTerra-1 and SkyTerra-2) with the Mexican administration.

Spectrum availability, particularly in the L-band, is a function of not only how much spectrum is assigned to SkyTerra LP by the FCC, but also the extent to which the same L-band frequencies are used by our and other satellite systems in the North American region, and the manner of such use. All spectrum use is required to be coordinated with other parties that are providing, or plan to provide, mobile satellite based communications in the same geographical region using the same spectrum.

As described above, on December 20, 2007, SkyTerra, SkyTerra LP, SkyTerra Canada, and Inmarsat entered into the Cooperation Agreement, which includes coordination of the current and next generation satellites of the parties’ satellite systems and the Company’s ATC system. Pursuant to the Cooperation Agreement, the Company has withdrawn all of its filings asking the FCC to refrain from authorizing access to Inmarsat’s new or relocated satellites and the Company’s interference complaints with the FCC regarding those satellites. SkyTerra Canada has withdrawn its interference complaints to Industry Canada regarding these satellites and has requested that Industry Canada withdraw similar complaints that were filed by the government of Canada with the ITU and the administration of the United Kingdom. Similarly, Inmarsat has since withdrawn its challenges to the ATC Order on Reconsideration, the Company’s ATC license, its pending ATC license modification application, and the FCC’s determination that the Company met its initial milestones for its next generation satellites.

Under the 1999 SSA, spectrum is divided among the five L-band operators. In some cases, the spectrum assigned to the five operators is in broadband, contiguous frequency segments; in other cases, the spectrum is in narrow and non-contiguous frequency segments. As part of this assignment framework, we believe that SkyTerra LP and SkyTerra Canada have sufficient spectrum to deploy a variety of broadband wireless air interfaces including Wi-MAX, W-CDMA, CDMA EVDO and Flash-OFDM. The Cooperation Agreement provides SkyTerra LP and SkyTerra Canada access to wider and more contiguous frequency segments than the assignments that they currently have pursuant to the 1999 SSA. SkyTerra LP and SkyTerra Canada have been able to coordinate access to spectrum but additional coordination will enhance the contiguity of our spectrum. We believe it is unlikely that international coordination would result in a decrease of spectrum available to us. Other L-band MSS operators and their Administrations may have coordination goals that conflict with ours. While we believe we ultimately will achieve our coordination goals, there is no guarantee we will be able to do so.

Gating Criteria for ATC Operations

The gating criteria for ATC operations are intended to ensure that MSS spectrum continues to be used for satellite service. The primary requirements are:

• continuous satellite coverage of all fifty states, Puerto Rico, and the United States Virgin Islands;

• provision of a substantial commercial satellite service; and

• an “integrated service” offering.

The requirement for an “integrated service offering” can be met if every user device the licensee makes available permits users to communicate both through the satellite system and through the terrestrial network. The FCC has also stated that uniform pricing of satellite and terrestrial service may satisfy the integration requirement.

The rules also require us to maintain a spare satellite on the ground within one year of commencing operations and to launch it into orbit during the next commercially reasonable launch window following a satellite failure. In 2007, the FCC granted our request for waiver of this requirement.

The rules preclude the use of all spectrum by the terrestrial network if such use would be to the exclusion of any satellite service.

Technical Requirements

For each MSS band, the FCC has adopted specific technical requirements for ATC operations to prevent interference to other spectrum users. We believe that, as a practical matter, these requirements do not limit our network deployment or our ability to meet our business plans.

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We have also agreed to comply with requirements on our user terminals and base stations that we negotiated with the GPS industry to provide additional protection to GPS receivers, beyond existing mandatory limits. Our compliance with these limits is a condition of our ATC license. All of our broadband wireless system designs take into account these requirements and specifications. We believe that they do not materially limit our network deployment or our ability to achieve our business plan.

We believe that the technical requirements imposed in the L-band as a result of the 2005 ATC Reconsideration Order provide us with substantial flexibility to deploy a broadband, integrated wireless system. With the unanimous February 2005 order, we believe SkyTerra LP has achieved a number of substantial, material improvements to the technical requirements for ATC operations and has gained the ability to deploy an ATC network that is substantially similar to networks deployed in other wireless bands, including the PCS band. We believe SkyTerra LP has also achieved certain additional flexibility not available to licensees in some other wireless bands, including the opportunity to pursue a TDD or an FDD ATC configuration and the opportunity to pursue one of the multitude of state-of-the-art 3G and 4G wireless air interfaces.

Current ATC License

In November 2004, the FCC’s International Bureau granted one of our wholly owned subsidiaries, SkyTerra Subsidiary LLC (formerly Mobile Satellite Ventures Subsidiary LLC) or SkyTerra Sub, an ATC license. The Bureau granted SkyTerra Sub various waivers of, or variances from, the FCC’s rules, including authority to deploy ATC capable of supporting GSM, CDMA and WCDMA air interface protocols, to use a link-margin booster in conjunction with ATC terminals used with our current generation satellites, and to initiate ATC services without constructing a new satellite of the same design as the current generation in-orbit satellites to have as an on-ground spare.

The FCC permits ATC to be provided in the United States in conjunction with MSS satellites and spectrum that are licensed and coordinated by countries other than the United States, including Canada. SkyTerra Sub’s ATC license in the United States permits the Company to provide ATC using the satellite and spectrum that are licensed to SkyTerra Sub using United States and Canadian coordination assignments. Inmarsat filed an Application for Review with the FCC regarding the Bureau’s decision granting SkyTerra Sub’s ATC license. Pursuant to the Cooperation Agreement (see - L-band Coordination), Inmarsat has since withdrawn this filing.

Pending ATC Modification Application

Because SkyTerra Sub’s current ATC license was granted prior to the ATC Reconsideration Order, it does not allow SkyTerra Sub to operate in accordance with the significantly relaxed technical restrictions adopted in the ATC Reconsideration Order. Accordingly, in November 2005, SkyTerra Sub filed an application to modify its ATC license to take advantage of these relaxed technical restrictions. Among other things, SkyTerra Sub sought authority to deploy ATC using a variety of additional air interfaces using the FDD and TDD protocols, other than GSM, CDMA and WCDMA as well as waivers of, or variances from, some of the Commission’s ATC rules. Inmarsat opposed our modification application. Pursuant to the Cooperation Agreement (see L-band Coordination), Inmarsat has since withdrawn this filing. Until our modification application is granted, we must operate in accordance with the technical restrictions in SkyTerra Sub’s current ATC license. In December 2008, SkyTerra Sub amended the ATC modification application pursuant to the flexibility accorded in the Cooperation Agreement. Inmarsat has agreed to support this amendment. The FCC has not yet placed the amendment on public notice for comment, and we do not know whether it will be opposed.

Additional Regulatory Approvals Required

Before SkyTerra LP can provide ATC on a commercial basis, it must receive additional regulatory approvals, such as an FCC blanket license for its user terminals, FCC certification for its user terminals and base stations, local zoning approval for base stations, and certification from State Public Utility Commissions in some states. Similar additional regulatory approvals are required for commencement of service in most other wireless and satellite bands, and we believe that we should be able to fulfill the conditions required for such regulatory approvals. We will also need to coordinate the operation of certain of our base stations with wireless operators, aeronautical telemetry stations, and Search and Rescue Satellite-aided Tracking (SARSAT) earth stations.

Satellite Operations

Our ATC operations are dependent on the continued operation of our satellite system, their integration with the satellite system, and the satellite system’s access to spectrum.

SkyTerra Sub holds a license issued by the FCC to operate an L-band satellite, MSAT-2, at the nominal 101 ° WL orbital location to provide MSS to the fifty states, Puerto Rico, the Virgin Islands, and United States coastal areas up to 200

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miles. The FCC also permits United States licensed satellites such as MSAT-2 to provide service in foreign territories without obtaining additional approval from the FCC.

The license for MSAT-2 will expire in August 2010. We anticipate that the FCC will allow us to operate the satellite for its entire useful life if after the launch of SkyTerra-1 we can identify a suitable orbit location to which MSAT-2 could be relocated. SkyTerra Sub also holds a number of earth station licenses to operate with MSAT-2 with varying expiration dates. We anticipate that these licenses will be renewed in due course.

L-band Service Links

The L-band satellite license allows us to operate our United States licensed satellite (MSAT-2) throughout a portion of the 1525-1544 and 1545-1559 MHz (space-to-Earth) and 1626.5-1645.5 and 1646.5-1660.5 MHz (Earth-to-space) band, up to at least 10 MHz x2 of United States coordinated spectrum. The original license gave SkyTerra Sub access only to what is known as the upper L-band, but the FCC modified the license in 2002 to allow us to access spectrum in both the upper and lower L-bands. In this decision, the FCC also reduced the amount of United States coordinated L-band spectrum SkyTerra Sub could use on MSAT-2 from 14 MHz x2 to 10 MHz x2. The Company has pending a Petition for Clarification and Partial Reconsideration of this decision asking the FCC to allow SkyTerra Sub to use 14 MHz x2 of United States coordinated L-band spectrum. The Company has also asked the FCC to clarify that the spectrum coordinated by Industry Canada for SkyTerra Canada will not be attributed to SkyTerra Sub. The FCC has not imposed any limit on the amount of spectrum that can be used by SkyTerra Canada or MSAT-1.

Feeder Links

Feeder links are the frequencies that connect the satellites to large gateway earth stations that are typically interconnected with public networks or, in the case of large users, with private networks. SkyTerra-1 is authorized to use Appendix 30B Ku-band frequencies for feeder links: 10.75-10.95 GHz and 11.2-11.45 GHz (downlink); and 12.75-13.25 GHz (uplink). Our modification application to revise the authorized technical parameters for SkyTerra-1, including requesting authority to operate feeder link spot beams was granted in November 2008. The Company plans to operate four fixed earth stations, two in the United States and two in Canada, in conjunction with SkyTerra-1 and SkyTerra-2. In October 2008, the FCC granted two U.S. earth station applications submitted by SkyTerra Sub, and Industry Canada gave approval to two earth station applications submitted by SkyTerra Corp. The U.S. earth station licenses require that we construct the stations and certify to commencement of operations by May 2010 which coincides with the launch and operate milestone of SkyTerra-1.

In December 2003, the FCC issued a proposal pertaining to coordination procedures between new fixed earth stations in the Appendix 30B Ku-band and mobile Broadcast Auxiliary Services/Cable Television Relay Service (“BAS/CARS”) licensees that share the band. In this proceeding, the Society of Broadcast Engineers (“SBE”) has argued that it is not possible for an earth station using Appendix 30B Ku-band frequencies to protect mobile BAS/CARS operations in the band. As a solution, SBE proposed that the FCC restrict new earth stations using Appendix 30B Ku-band frequencies used for MSS systems to only areas outside 150 kilometers of the Top 100 TV markets. SkyTerra LP has opposed SBE’s proposal. SkyTerra Sub’s earth station licenses are conditioned on compliance with any earth station requirements adopted in this rulemaking proceeding.

TT&C

SkyTerra LP also relies on access to certain frequencies to control satellite operation. MSAT-2 is authorized to operate using certain telemetry, transfer, and control (“TT&C”) frequencies in the standard Ku-band. SES Americom operates a satellite at the 101° WL orbital location using standard Ku-band frequencies. SkyTerra LP and SES have an agreement covering MSAT-2 that may require SkyTerra LP to modify our operations or make certain payments to SES if SkyTerra LP’s operations cause interference to those of SES. We do not anticipate any interference in the operations of MSAT-2 and those of SES. Further, it is not anticipated that this agreement will be required in connection with the operation of SkyTerra-1 and SkyTerra-2.

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101 ° WL Replacement Satellite

SkyTerra Sub holds a license issued by the FCC to operate an L-band satellite, SkyTerra-1, on a non-common carrier basis at the nominal 101 ° WL orbital location to replace MSAT-2. The satellite is licensed to use up to 10 MHz x2 of United States coordinated L-band spectrum for service links and 500 MHz x2 of Appendix 30B Ku-band frequencies for feeder links, subject to successful coordination. The Company must comply with the following FCC milestones for this satellite:

• enter into a binding non-contingent construction contract (May 26, 2006);

• complete critical design review (May 26, 2007);

• begin construction of the satellite (May 26, 2008); and

• launch and operate the satellite (May 26, 2010).

Similar milestone requirements apply to most FCC satellite licensees. If the FCC concludes that SkyTerra LP has failed to satisfy a milestone set forth in our license, the FCC may declare the license for SkyTerra-1 null and void. In April 2006, the FCC’s International Bureau found that we met the initial milestone for the SkyTerra-1 satellite. In June 2007, the FCC determined that the Company met the critical design review milestone requirement. In August 2007, the FCC determined that the Company met the begin construction milestone requirement.

In November 2008, the FCC granted our modification application to revise the authorized technical parameters for SkyTerra-1. We will need to apply for and receive approval from the FCC to the extent we seek to further modify the satellite parameters from those that we provided in the granted FCC application for SkyTerra-1. We plan to coordinate this satellite with other North American L-band operators.

In February 2008, we reached an agreement with all the satellite operators at the nominal 101° WL orbital location for the operation of MSAT-2 and SkyTerra-1 at 101.3° WL and we have since received FCC approval for such operations.

Relocation of MSAT Satellites

Prior to the launch and operation of our next generation satellites, MSAT-1 and MSAT-2 will need to be moved from their current orbital locations or de-orbited. The Company and SkyTerra Canada will need to obtain the necessary regulatory approvals, submit applicable ITU filings, and coordinate with affected satellite operators, if any.

L-Band Satellite to Serve South America

One of SkyTerra LP’s subsidiaries held a license issued by the FCC to operate an L-band satellite, MSV-SA, at the 63.5^o WL orbital location to provide MSS on a common carrier basis to South America. This subsidiary has surrendered the license for the satellite and requested the withdrawal and release of its $2.25 million satellite performance bond. That request is pending.

Other General Regulatory Issues

The Company’s operation of an integrated satellite and ATC system in the L-band is subject to certain regulations in the United States and Canada. The Company is regulated to varying degrees at the federal, state (provincial in Canada), and local levels in both the United States and Canada. Various legislative and regulatory proposals under consideration from time to time by the United States Congress, Canadian Parliament, the FCC and Industry Canada have in the past materially affected and may in the future materially affect the telecommunications industry in general, and our wireless business and that of potential customers in particular. The following is a summary of significant laws, regulations and policies affecting the operation of our business. In addition, many aspects of regulation at the federal, state and local level currently are subject to judicial review or are the subject of administrative or legislative proposals to modify, repeal, or adopt new laws and administrative regulations and policies.

The Company operates pursuant to various licenses granted by the FCC and Industry Canada. As a matter of general regulation by the FCC and Industry Canada, we are subject to, among other things, payment of regulatory fees and restrictions on the level of radio frequency emissions of our system’s satellites, user terminals, and base stations, just like other licensees. Any of these regulations may have an adverse impact on the conduct of our business.

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Transfers of Control—FCC

The Communications Act and the FCC’s rules require that we obtain the consent of the FCC prior to any change in the legal or actual control of the Company or over the spectrum for which we are licensed. Traditionally, the FCC has determined whether a licensee retains actual control on a case-by-case basis by considering the following factors, among others:

• use of facilities and equipment;

• control of daily operations;

• control and execution of policy decisions, such as preparation and filing of applications with the Commission;

• control of hiring, supervision, and dismissal of personnel;

• control over membership of a corporate Board of Directors;

• control of payment of financial obligations, including expenses arising out of operation; and

• receipt of monies and profits from the operations of the facilities.

There is no assurance that present or future shareholders have not acquired or will not acquire additional shares in the Company, or that such persons or entities have not or will not take actions which may be viewed as evidence of exercising control over the Company or the spectrum for which we are licensed. If we are found to have relinquished actual control without approval from the FCC, we may be subject to fines, forfeitures, or revocation of our licenses.

Just like other licensees, our ability to enter into funding or partnering arrangements may be limited by the requirement that we maintain actual control of the spectrum for which we are licensed. In October 2008, in a decision involving Globalstar, the FCC adopted an order clarifying its policy for the leasing of ATC spectrum and rejecting arguments that it should focus on the considerations identified above in assessing actual control of a license. The policy parallels the policy the FCC established in 2003 for leases by terrestrial wireless carriers. Under this policy, the licensee is considered to retain control of spectrum it leases if the licensee remains responsible for ensuring the lessee’s compliance with the Communications Act and all applicable policies and rules directly related to the use of the spectrum. This responsibility must include maintaining reasonable operational oversight over the leased spectrum so as to ensure that the spectrum lessee complies with all applicable technical and service rules, including safety guidelines relating to radiofrequency radiation. In addition, the licensee must retain responsibility for meeting all frequency coordination obligations and resolving interference-related matters, and must retain the right to inspect the lessee’s operations and terminate the lease to ensure compliance. The licensee must also be responsible for all interactions with the Commission, including notification about the spectrum leasing arrangement and all Commission filings required under the license authorization and applicable service rules that are directly related to the use of the leased spectrum.

Common Carrier Regulation by the FCC

We received approval in 2008 to modify our license for our SkyTerra-1 satellite to offer L-band satellite capacity on a non-common carrier basis.

SkyTerra is regulated as a common carrier to the extent we provide service directly to end users for profit and for interconnection with the public switched telephone network. To the extent that is the case, we would be required to offer service at just and reasonable rates on a first-come, first-served basis, without any unjust or unreasonable discrimination, and we would be subject to the FCC’s complaint process. The FCC has forborne from applying numerous common carrier provisions of the Communications Act to wireless carriers. In particular, wireless carriers are not subject to traditional public utility rate-of-return regulation and are not required to file tariffs with the FCC.

Universal Service Fund—FCC

As a provider of interstate telecommunications services, SkyTerra LP is required to contribute to the FCC’s universal service fund, which supports the provision of affordable telecommunications to high-cost areas, and the provision of advanced telecommunications services to schools, libraries, and rural health care providers. Under the FCC’s current rules, SkyTerra LP is required to contribute a percentage of the end-user telecommunications revenues it derives from the retail sale of interstate telecommunications services. Currently excluded from a carrier’s universal service contribution base are end-user revenues derived from the sale of information and other non-telecommunications services and wholesale revenues derived from the sale of telecommunications. Current rules also do not require that SkyTerra LP imputes to its contribution base retail revenues derived when SkyTerra LP uses its own transmission facilities to provide a service that includes both information service and telecommunications components. The FCC is currently conducting a proceeding which may reform the USF contribution methodology. There can be no assurances that the FCC will retain the exclusions described herein or its

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current policy regarding the scope of a carrier’s contribution base. We may also be required to contribute to state universal service programs.

In two separate proceedings related to USF, the Commission is considering whether a telecommunications service provided over satellite facilities should be eligible for high cost universal service support and whether recipients of high cost universal service support should be required to offer broadband Internet access, and whether such Internet access could be provided by satellite. An adverse decision in either proceeding could affect our ability and the ability of our potential customers to offer certain services.

Customer Proprietary Network Information (“CPNI”)

As is any other telecommunications services provider, we are subject to FCC regulations requiring us to protect CPNI. The FCC has recently begun to audit compliance with CPNI regulations. While we believe we are in compliance with these regulations, there can be no guarantee that the FCC will not conclude otherwise, in which case we could be subject to fines or other penalties. In addition, existing and contemplated CPNI rules could impose significant new costs on us.

Communications Assistance for Law Enforcement Act (“CALEA”)

Where CALEA applies, we must ensure that United States law enforcement agencies can intercept certain communications transmitted over our networks as is required from any other telecommunications services provider. We also must ensure that law enforcement agencies are able to access certain call-identifying information relating to communications over our networks. The Company has entered into an agreement with the Federal Bureau of Investigation, Department of Justice, and Department of Homeland Security (“Team Telecom”) regarding United States law enforcement agency access to our network. In October 2008, the Company and Team Telecom executed an amendment to the existing CALEA agreement that permits the Company to continue routing traffic through its earth stations in Canada for its next generation system. CALEA requirements could affect the ability of our potential customers to offer applications via our hybrid system. The Company is required to comply with similar lawful access rules in Canada as a condition of our authorizations from Industry Canada.

Foreign Ownership

The Communications Act restricts the foreign ownership of common carrier radio licenses, which include some of our FCC licenses: (1) the license may not be held by a corporation of which more than 20% of the capital stock is directly owned of record or voted by non-U.S. citizens or entities or their representatives and (2) the license may not be held by a corporation controlled by another corporation (“indirect ownership”) if more than 25% of the controlling corporation’s capital stock is owned of record or voted by non-U.S. citizens or entities or their representatives, if the FCC finds that the public interest would be served by the refusal or revocation of such licenses. With the implementation of the Basic Telecommunications Agreement, which was negotiated under the auspices of the World Trade Organization (“WTO”), the FCC presumes that indirect ownership interests in FCC licensees in excess of 25% by non-U.S. citizens or entities from WTO-member countries will serve the public interest. In a September 2006 decision, the FCC granted SkyTerra LP authority to slightly exceed the 25% indirect foreign ownership limit. 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. In March 2007, we filed a Petition for Declaratory Ruling with the FCC seeking approval for a new level of indirect foreign ownership for the Company. 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. 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 and could result in the Company being subject to fines, forfeitures, or revocation of our FCC licenses.

Priority and Preemptive Access

SkyTerra LP’s operations in the L-band are required by the FCC and Industry Canada to be capable of providing priority and preemptive access for Aeronautical Mobile Satellite (Route) Service traffic in the upper L-band and for Global Maritime Distress and Safety Service traffic in the lower L-band. If we are unable to meet these requirements, the FCC or

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Industry Canada could authorize and give priority spectrum access to one or more additional satellite systems in the L band that meet the specified requirements.

Enhanced 911 (“E911”) Service

The FCC is currently studying the feasibility of requiring MSS providers to offer E911, including the ability to automatically locate the position of all transmitting user terminals. SkyTerra LP has not traditionally supported automatic location information with its current generation L-band satellite system. Further, like all commercial mobile wireless service providers, we will be required to offer E911 services on our terrestrial component. We are currently exploring the design and implementation of systems required supporting automatic location information with our current and next generation L-band system and ATC operations without adding to the cost of our mobile equipment or reconfiguring our communications ground segment software. Moreover, there can no be assurance that we can meet any E911 requirement for our next generation integrated network without cost or impact to our network deployment.

Hearing Aid Compatibility (“HAC”)

The FCC is currently studying the feasibility of requiring providers of MSS (including ATC operations) to offer mobile handsets that are compatible with hearing aids. There can no be assurance that hearing aid compatibility requirements will not be imposed on existing or future MSS or ATC handsets, or that compliance with such requirements can be done without cost or impact to our network deployment.

700 MHz Proceeding

In an order issued August 10, 2007, establishing service and auction rules governing wireless licensees in the 700 MHz band, the FCC imposed the requirement that the winner of the 700 MHz D Block license would be required to operate a joint broadband network with the nationwide licensee of the public safety broadband spectrum. Among other obligations, the D Block licensee would be required to make available to public safety users at least one handset that includes a seamlessly integrated satellite solution. That handset must be capable of operating both on the 700 MHz public safety spectrum and on the satellite frequency bands and/or systems of the satellite service providers with which the nationwide licensee of the public safety broadband spectrum has contracted for satellite service. The auction, which concluded in 2008, did not result in the licensing of the D Block spectrum. Since then, the FCC has twice invited comments on the requirements applicable to the D Block license, including the satellite handset requirement. We cannot predict whether the FCC will retain this requirement or what impact this decision may have on our business.

Regulatory Framework in Canada

Use of radio spectrum to provide wireless telecommunications services is subject to licensing by Industry Canada under the Radiocommunication Act (Canada). Under this legislation, Industry Canada is authorized to issue radio licenses, to plan the allocation and use of the radio spectrum and to perform other duties to ensure the orderly development and efficient operation of radiocommunication in Canada. With respect to spectrum licensing, Industry Canada has the authority to revoke a license for non-compliance with terms and conditions or failure to pay associated spectrum license fees. However, revocation is rare and licenses are usually renewed year to year upon payment of the applicable fee.

SkyTerra Canada is authorized by Industry Canada to operate the MSAT-1 satellite at the 106.5 ° WL orbital location for the purposes of providing MSS in Canada. The MSAT-1 satellite will remain in this orbital position until 2010, at which point in time we intend to move it to a new orbital position.

Spectrum is coordinated for the MSAT-1 satellite by Industry Canada pursuant to the Mexico City MOU and this coordination is subject to the same policies and procedures as described above for the MSAT-2 satellite. On December 20, 2007, the SkyTerra Parties and Inmarsat entered into a Cooperation Agreement that includes coordination of the current and next generation satellites of the parties’ satellite systems and the SkyTerra LP ATC system. Pursuant to the Cooperation Agreement, SkyTerra Canada has withdrawn all of its filings asking Industry Canada to refrain from authorizing access to Inmarsat’s new or relocated satellites. SkyTerra Canada has also withdrawn its interference complaints to Industry Canada regarding these satellites and has requested that Industry Canada withdraw similar complaints that were filed by the government of Canada with the ITU and the administration of the United Kingdom.

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Approval in Principle for SkyTerra-2 Satellite

On April 5, 2005, Industry Canada issued an approval in principle to SkyTerra Canada to operate the SkyTerra-2 satellite at the 107.3 ° WL orbital position. This approval in principle requires SkyTerra Canada to meet three important milestones:

• submission of final design specifications for the SkyTerra-2 satellite for Industry Canada approval by December 15, 2006, which occurred on July 5, 2006;

• signature of contracts for the construction and launch of the SkyTerra-2 satellite by March 15, 2007 which contracts were filed with Industry Canada on February 22, 2007 and confirmed as compliant by Industry Canada on October 28, 2008; and

• placement of the SkyTerra-2 satellite into its assigned orbital position by March 31, 2011.

We anticipate that SkyTerra Canada will likely satisfy its remaining milestone requirement on or before the March 31, 2011 milestone deadline. Consistent with Industry Canada’s policies for the licensing of MSS operators, SkyTerra Canada’s approval in principle from Industry Canada also requires it to make fair and reasonable efforts to provide MSS to all regions of Canada and to provide service to public institutions in Canada to an amount reflecting 2% of its adjusted gross revenues from the lifetime operation of the satellite.

Authority to Operate ATC in Canada

In May 2004, the Canadian government adopted a policy allowing authorized MSS operators in the L-band, S-band, and Big LEO bands to provide ATC on a no-protection, non-interference basis. The Canadian ATC policy contains gating criteria similar to those of the FCC and requires, among other things, that a service provider’s ATC network be operated as an integral and indefeasible part of an MSS service and that the spectrum it uses for ATC service does not constrain the growth of MSS service offerings. Industry Canada has stated that it intends to develop other technical and operational details applicable to ATC systems in future Radio Standard Specifications and Standard Radio System Plans and Radio Standards Specifications. Industry Canada has also stated that it intends to establish license fees for ATC operators through a separate process. SkyTerra Canada has filed an ATC application with Industry Canada, but it does not yet have authority to operate ATC in Canada. SkyTerra Canada will apply to amend its ATC application to Industry Canada pursuant to the flexibility contemplated in the Cooperation Agreement (see L-band Coordination). Inmarsat has agreed to support this amendment.

Foreign Ownership Restrictions and Transfers of Control - Canada

SkyTerra Canada is required by its authorization from Industry Canada to comply with certain restrictions on non-Canadian ownership that are set out in the Telecommunications Act (Canada) and the Radiocommunication Regulations (Canada). These restrictions require that, among other things:

• at least 80% of the voting equity of SkyTerra Canada be held by Canadians;

• at least 80% of the board of directors of SkyTerra Canada be resident Canadians;

• at least 66 2/3% of the voting equity of any parent corporation of SkyTerra Canada be held by Canadians; and

• SkyTerra Canada cannot be otherwise controlled in fact by non-Canadians.

As at the date hereof, SkyTerra Canada is “Canadian owned and controlled” within the meaning of the Telecommunications Act (Canada) and the Radiocommunication Regulations (Canada). SkyTerra Corp., a wholly-owned subsidiary of SkyTerra LP organized under the laws of Nova Scotia, is not required to comply with these restrictions on non-Canadian ownership because it does not operate facilities in Canada that would make it subject to these rules.

Neither SkyTerra Canada nor SkyTerra Corp. may transfer their Industry Canada authorizations without the prior approval of Industry Canada. In addition, the prior approval of Industry Canada is required for any material change in the ownership or control of SkyTerra Canada.

CRTC—Regulation of Telecommunications Services

Companies that own or operate transmission facilities in Canada that are used to provide telecommunications services to the public for compensation are classified as “telecommunications common carriers” under the Telecommunications Act (Canada) and are subject to the regulatory authority of the CRTC.

The CRTC has the discretionary power to forbear from exercising certain of its regulatory powers over Canadian carriers where it finds that a telecommunications service or class of services is, or will be, subject to competition sufficient to protect the interests of users. Some Canadian carriers, such as the incumbent local exchange carriers, are classified by the

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CRTC as “dominant” in the provision of certain services because of their market power and control over the supply of local telephone services and certain other services. Carriers classified as “non-dominant” by the CRTC are subject to less regulation than dominant carriers and include mobile wireless providers, such as SkyTerra Canada, facilities based long distance providers, and competitive local exchange carriers.

Canada’s Universal Service or “Contribution” Regime

The CRTC has established a revenue based regime for the payment of “contribution.” (Contribution payments are used, in effect, to subsidize local telephone services in high-cost areas of Canada.) Under this regime, all telecommunications service providers (“TSPs”) are required to pay contribution based on a percentage (a rate of 0.87% was applied by the CRTC on a final basis for 2008 and renewed at this level on an interim basis for 2009) of their total “contribution eligible revenues” for the previous year—that is, their total Canadian telecommunications service revenues (“CTSR”), less certain permitted deductions. These permitted deductions include revenues generated from the sale or rental of terminal equipment, revenues from paging services and inter carrier payments for services purchased from other telecommunications service providers. The CRTC has established a minimum revenue threshold that will trigger the obligation to pay contribution. If the annual CTSR of a TSP and all of its affiliates are less than Cdn $10.0 million, then contribution is not payable in the following year.

International Licensing Regime

Under the Telecommunications Act (Canada), all providers of basic international telecommunications services in Canada are required to hold and keep current a basic international telecommunications service license issued by the CRTC. The CRTC has the authority to suspend or revoke an international telecommunications service license if it believes that the licensee has contravened the Telecommunications Act (Canada), the regulations there under or any condition of its license. Both SkyTerra Canada and SkyTerra Corp. hold valid international licenses from the CRTC.

Available Information

The public may read and copy any materials that the Company files with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information in the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file with the SEC at http://www.sec.gov. The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, proxy statements and amendments to those reports, are also available free of charge through our internet website at http://www.skyterra.com as soon as reasonably practicable after such reports are electronically filed with or furnished to the SEC.

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Item1A. Risk Factors

You should carefully consider the risks described below in evaluating our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us may also impair our operations and business, and in particular SkyTerra LP. If we do not successfully address any of the risks described below, there could be a material adverse effect on our financial condition, operating results and business, and the trading price of our common stock may decline. We cannot assure you that we will successfully address these risks.

Risks Associated with Our Next Generation Business Plan

If we fail to obtain additional financing necessary to develop and construct our next generation integrated network on a timely basis, or if our current financing sources do not provide the Company with previously committed funding and we are unable to obtain alternative financing, we may not be able to continue as a going concern.

The remaining cost of carrying out our business plan will be significant, and is significantly more than our currently available and committed resources. Our cost could be greater than our current estimates. For example, if we elect to further defer payments under our satellite construction contract, and/or if we exercise certain options to buy additional satellites or other equipment or services, our costs for the satellite component of our network will increase, possibly significantly. The cost to develop devices could be greater, perhaps significantly, than our current estimates, depending on our ability to attract distribution partners in both the satellite and terrestrial spaces.

In addition, we will require significant funds to construct the terrestrial component of our integrated network. We plan to pursue, with a partner, a top 50 market terrestrial footprint and have estimated that the total deployment of the terrestrial portion of our network could be a multi-billion dollar undertaking depending on the implementation of air interface technology, the scope of the terrestrial build within each market and the targeted service offering (limited mobile, portable or fully mobile). The cost to build the terrestrial component of the network could be greater, perhaps significantly, than our current estimates, depending on changing costs of supplies, market conditions, and other factors over which we will have no control.

We will actively pursue financing alternatives to continue to increase the amount of capital available to fund our current operations and development of our next generation network, including constructing SkyTerra-1 and SkyTerra-2, the satellite component of the network. We are considering means to raise capital, including strategic partnerships (for example, a technology partnership carrying a capital investment), vendor financing, sale of our interest in TerreStar Networks, and debt or equity financing, among others. We are actively evaluating various strategic alternatives as they arise, and weigh capital needs against technology commitments or other potentially limiting factors. There is no assurance that we can raise sufficient capital, or raise sufficient capital with terms that are favorable to us, under these various financing alternatives to continue to operate our business or complete our network.

Our projections assume that a portion of the remaining costs associated with constructing the satellite and terrestrial components of our next generation integrated network will be borne in part by one or more technology and strategic partners. If we are not able to enter into agreements with third parties to cover such costs, or if such funding sources are not able to cover such costs, our funding requirements will be significantly greater than we currently anticipate. We have not entered into any such agreements, and entering into such agreements in the future is not assured.

In addition, a delay in the implementation of a satellite air interface technology could result in a reduction in our near-term revenue projections, which would increase our overall financing need. Likewise, implementation of an air interface technology that is not consistent with the strategic plans of potential telecommunications partners could adversely affect our ability to attract strategic capital and partnerships.

Pursuant to the Securities Purchase Agreement, Harbinger agreed to purchase up to $500 million in aggregate principal amount of 18% Senior Unsecured Notes in four tranches. The proceeds of such notes are expected to fund the Company’s business plan through the third quarter of 2010. On January 7, 2009 the Company issued the first of the four issuances of the 18% Senior Unsecured Notes to Harbinger under the Securities Purchase Agreement, in an aggregate principal amount of $150 million. In addition, at this closing the Company issued Harbinger ten-year warrants to purchase 7.5 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. The remaining $350 million of 18% Senior Unsecured Notes is scheduled to be issued to Harbinger in three tranches of $175.0 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively. Under the Securities Purchase Agreement, we are required to satisfy certain conditions to funding prior to each funding date, including material compliance with our covenants under the Master Agreement, the absence of a material adverse effect (as defined in the Securities Purchase Agreement) and the accuracy of the representations and warranties made by us in the Securities Purchase

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Agreement. If we fail to satisfy any condition to funding, Harbinger will not be obligated to purchase the 18% Senior Unsecured Notes.

The U.S. and worldwide financial markets have recently experienced unprecedented volatility, particularly in the financial services sector. No assurance can be given that Harbinger will satisfy its obligations under the Securities Purchase Agreement and purchase the 18% Senior Unsecured Notes in a timely manner, or at all. If Harbinger does not satisfy its obligations to purchase the 18% Senior Unsecured Notes, we may be unable to find alternative financing sources, particularly in light of the current turmoil in the U.S. and worldwide financial markets.

The terms of our current indebtedness and the Securities Purchase Agreement include significant limitations on additional debt, including amount, terms, access to security, duration, among other factors, and impose limitations on the structure of strategic transactions. In addition, the Master Agreement as amended includes significant limitations on the issuance by the Company of additional debt and equity securities.

In addition to the contractual limitations described above, there currently is limited trading in shares of our common stock, which limits our ability to raise funding through public equity issuances. The recent turmoil in global credit markets and the weakening global economy could negatively impact our ability to access the capital markets and fund our operations if Harbinger does not purchase the 18% Senior Unsecured Notes. Furthermore, our ability to sell our 11.1% ownership stake in TerreStar Networks, which represents a potential source of capital, on favorable terms, or at all, is not assured given recent capital market volatility and the overall decline in the stock price of its parent, TerreStar Corporation.

If we fail to obtain necessary additional financing on a timely basis, or if our current financing sources do not provide the Company with previously committed funding, our satellite construction, launch, or other events necessary to conduct our business could be materially delayed, or our costs could materially increase; we could default on our commitments to our satellite construction or launch contractors, creditors or other third parties, leading to termination of construction or inability to launch our satellites; we may not be able to launch our next generation integrated network as planned and may have to discontinue operations or seek a purchaser for our satellite business or assets. The Company could lose its FCC or Industry Canada licenses or its international rights if it fails to achieve required performance milestones. We may not be able to continue as a going concern if we fail to receive previously committed funding and we are unable to obtain alternative financing or if we fail to obtain additional necessary financing on a timely basis.

Our substantial debt obligations could impair our liquidity and financial condition.

We are a highly leveraged company and have significant amounts of long-term debt. Our ability to make payments on our debt and to fund operations and significant planned capital expenditures will depend on our ability to generate cash in the future. The Company has not generated cash flow from operations and makes significant cash investments in capital items.

Our substantial indebtedness and debt service obligations could have important consequences, including the following:

• limiting our ability to borrow money or sell stock to fund working capital, capital expenditures, debt service requirements or other purposes;

• making it more difficult for us to make payments on our indebtedness;

• increasing our vulnerability to general economic and industry conditions;

• limiting our flexibility in planning for, or reacting to, changes in our business or the industry;

• reducing the amount of cash available for other purposes by requiring us to dedicate a substantial portion of our cash flow from operations to the payment of principal of, and interest on, our indebtedness; and

• placing us at a competitive disadvantage to competitors who are less leveraged than we are.

In March 2006, SkyTerra LP issued Senior Secured Discount Notes with an aggregate principal amount of $750 million at maturity, and generated gross proceeds of $436 million. Interest on the notes will accrete from the issue date at a rate of 14.0% per annum, until they reach full principal amount at April 1, 2010 (the “Senior Secured Discount Notes”). 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 of $52.5 million being due 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 our and our subsidiaries’ assets.

In January 2008, SkyTerra LP issued notes to Harbinger, in an aggregate principal amount of $150 million (the “Harbinger Notes”). The Harbinger Notes bear interest at a rate of 16.5%, payable in cash or in-kind, at SkyTerra LP’s option through December 15, 2011, and thereafter payable in cash. The Harbinger Notes mature on May 1, 2013.

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In January 2009, SkyTerra LP issued $150.0 million of 18% Senior Unsecured Notes to Harbinger. The 18% Senior Unsecured Notes bear interest at a rate of 18.0% per annum, payable in cash or in-kind, at SkyTerra LP’s option through January 1, 2011, and thereafter payable in cash. 

A significant portion of any future additional financing may consist of debt securities. As a result, we may be even more highly leveraged. If additional funds are raised through the incurrence of indebtedness, we may incur significant interest charges and become subject to various restrictions and covenants that could limit our ability to respond to market conditions, provide for unanticipated capital investments or take advantage of business opportunities.

The market for our planned service is new and unproven and the success of our next generation business will depend on market acceptance.

Other than satellite radio, we are not aware of any integrated (i.e., combined satellite and terrestrial) wireless service in commercial operation. Neither we, nor any other company, have developed an integrated next generation network. Our business plan contemplates that a significant portion of our revenues will be derived from strategic partners. To date, neither we nor SkyTerra LP have entered into any strategic partnerships with respect to distribution of our next generation integrated network. As a result, we can estimate only with a partial level of certainty the potential demand for such services and the degree to which we will meet that demand. Furthermore, there may not be sufficient demand to enable SkyTerra LP, or there may be additional costs that do not allow SkyTerra LP, to earn sufficient revenues, achieve sufficient cash flow or record a profit. Among other things, end user acceptance of our next generation integrated service will depend upon:

• whether we provide integrated wireless services consistent with market demand;

• the relative attractiveness of our service offerings to our anticipated partners;

• the cost and availability of user equipment whose form factor is little different from standard wireless devices, but incorporates the new technology required to operate on our network;

• federal, state, local and international regulations affecting the operation of satellite networks and wireless systems;

• whether competitors develop new and alternative next generation technologies; and

• general and local economic conditions.

If we cannot gain market acceptance for our planned products and services, our business will be significantly harmed. We have made, and will continue to make, significant capital investments to generate demand for SkyTerra LP’s services. Accordingly, any material miscalculation with respect to our operating strategy or business plan will harm our business.

We will depend on one or more third parties to incorporate our next generation technology into their consumer offerings, and such third parties may not be successful or effective in their use of our next generation technology.

We do not plan to manufacture or sell next generation end-user devices to consumers. The success of our network will depend on partnerships with third parties that incorporate our next generation technology into their service and product offerings. In particular, we will not produce next generation wireless devices for sale to wireless consumers but instead will need to work with our future, not yet identified partners and customers to apply our next generation technology to standard wireless devices that they in turn market. If these future partners are not successful in incorporating our next generation technology or marketing devices compatible with our network, our revenues would be less than expected, and our business would suffer.

We will depend on one or more third party contractors to construct the terrestrial base station component of our next generation integrated network.

We currently plan to contract with one or more third parties to construct the terrestrial component of our next generation integrated network. Our success in implementing our next generation integrated network and in penetrating our targeted vertical markets will depend, to a large extent, on the efforts of these third party vendors. The development and rollout of the terrestrial network by these third parties may be subject to unforeseen delays, cost overruns, regulatory changes, engineering and technological changes and other factors, some of which may be outside of our control. If we are not able to enter into contracting relationships and construct the terrestrial component of our next generation integrated network, we may not be able to implement our business plan.

Failure to develop and supply end-user devices to customers in a timely manner will negatively impact our revenues.

We will rely on third party manufacturers and their distributors to manufacture and distribute next generation devices. Next generation devices are not yet available, and we and third party vendors may be unable to develop and produce enough affordable next generation devices in a timely manner to permit the widespread introduction of service. If we, our customers

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or our manufacturers fail to develop devices that are available for timely commercial sale at affordable prices, the launch of our next generation service would be delayed, our revenues would be less than expected, and our business would suffer. Furthermore, progress by these third-parties may be hindered by our strategic decisions or determinations to delay selections, with respect to technologies for various aspects of the network and end-user products, some of which may depend upon or be modified based on strategic partnerships that have not yet been entered into. Delays in those decisions will have a direct impact on the time to market for our next-generation services, our transition plans for current customers and our revenues.

Our current customers may migrate away from our service in advance of our termination of existing service. Our current customers may not migrate to our next generation devices and services.

To fully transition to our next generation services, all current revenue generating services may terminate in the future. We currently expect all current revenue generating services to terminate in 2012. We may modify this expectation to an earlier date, or later date, in the future. In advance of termination of current services, our customers may migrate away from our current and future services. Upon termination of service our customers will be forced to select new services. There is no assurance that our next generation services will be selected by our customers.

Our integrated wireless network will depend on the development and integration of complex technologies in a satellite configuration that might not work.

Our next generation integrated network will require new applications of existing technology, complex integration of different technologies and the development of new technologies. We will have to integrate a number of sophisticated satellite and other wireless technologies that typically have not been integrated in the past, and some of which are not yet fully developed, before we can begin offering our next generation service. In order for our service to be received by traditional consumer devices, additional components and software will need to be added to such devices to adjust for the L-band frequencies as well as satellite communications. Although we intend to test the components of our next generation integrated network, we cannot confirm the ability of the system to function until we have deployed a substantial portion of our next generation integrated network.

There could also be delays in the planned development, integration and operation of the components of our next generation integrated network. If the technological integration of our next generation integrated network is not completed in a timely and effective manner, our business would be harmed. In our next generation integrated network, we will seek to develop and deploy network management techniques so that mobile devices used on our network will be able to seamlessly transition between satellite mode and terrestrial mode. We intend to develop such techniques primarily by adapting existing techniques used in PCS/cellular systems and digital/analog systems. However, such techniques have not been deployed before in a combined satellite/terrestrial two-way mobile communications system, and there can be no assurances that we will be successful in developing such techniques or deploying them in its next generation integrated network in a cost effective or timely manner. If we are not able to develop or deploy such techniques, mobile devices used on our network may not be able to seamlessly transition between satellite and terrestrial modes, and this may make our next generation integrated network less attractive to potential partners and end-user customers.  

Our next generation satellites are subject to possible construction and delivery delays, the occurrence of which could materially and adversely affect our business.

Our next generation satellites are subject to possible construction and delivery delays. The manufacture of such satellites is technically complex, and delays could result from a variety of causes. Such causes could include failure of third-party vendors to perform as anticipated and changes in the technical specifications of the satellite, including increases in weight or mass that could limit our ability to utilize our primary launch alternative resulting in delays if our alternative provider does not have schedule availability during our desired launch window. Alternatively, such changes to technical specifications could limit our ability to move to an alternate launch provider if our primary provider experiences material schedule delays.

There can be no assurance that delivery of our next generation satellites will be timely, which may hinder the introduction of our planned next generation integrated network. Any delay could also make it more difficult for us to secure desired distribution partnerships.

During any period of delay, we would continue to have significant cash requirements that could materially increase the aggregate amount of funding we need. We may not be able to obtain additional financing on favorable terms, or at all, during periods of delay. A delay could also require rescheduling of the anticipated launch date, and another launch slot may not be available within a reasonable period of time. In addition, a delay in satellite system operations could also result in revocation of our regulatory approvals and our international rights.

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Our satellites could be damaged or destroyed during launch or deployment, fail to achieve their designated orbital location after launch or experience significant launch delays.

A percentage of satellites never become operational because of, among other factors, launch failure, satellite destruction or damage during launch, improper orbital placement and/or the failure of antennas to fully deploy. Launch failure rates vary depending on the particular launch vehicle and contractor. Even launch vehicles with good track records experience some launch failures, and there can be no assurance that we will be able to launch our satellites on vehicles with higher success rates. If one or more launches or deployments fail, we will suffer significant delays that will be damaging to our business, we will incur significant additional costs associated with the failed launches, and our revenue generating activities will be delayed. We cannot assure you that our satellite launches or deployments will be successful. The deployment of large antennas, such as the antennas on our next generation satellites, which are larger than most commercial satellites, pose additional risks during deployment. Even if launched into orbit, a satellite may fail to enter into its designated orbital location, or we may use more fuel than planned to place a satellite into its orbital location and, as a result, may reduce the overall useful life of the satellite. In addition, a delay in satellite system operations could also result in revocation of our regulatory approvals and our international rights.

Satellites have a limited useful life and premature failure of our satellites could damage our business.

During and after their launch, all satellites are subject to equipment failures, malfunctions and other problems. If one of our satellites were to fail prematurely, it likely would affect the quality of our service, substantially delay the commencement or interrupt the continuation of our service and harm our business and could impact our licenses. This harm to our business would continue until we either extend service to our customers on another satellite or build and launch additional satellites. Each of the MSAT-1 and MSAT-2 satellites has in the past experienced malfunctions and neither operates at full capacity. Our satellites could experience future malfunctions at any time, which could damage their ability to serve our customers, harm our reputation in the marketplace, reduce the expected useful life of the satellites and possibly adversely affect our government approvals. In addition, each of the MSAT-1 and MSAT-2 satellites is operating in inclined orbit, which may increasingly affect the service delivery, particularly to customers operating at the edge of the satellites respective coverage area. There can be no assurance that our existing satellites will remain operational until such time as we launch our next generation satellites. Any gap could have a material adverse effect on our business and could result in the loss of licenses.

Our ability to generate revenue depends on the lives of our existing and next generation satellites. Each satellite has a limited useful life. A number of factors could decrease the useful lives of our satellites to less than what is currently expected, including, without limitation:

• defects in construction;

• faster than expected degradation of solar panels;

• durability of component parts;

• loss of fuel on board;

• higher than anticipated use of fuel to maintain the satellite’s orbital location or higher than anticipated use of fuel during orbit raising following launch;

• random failure of satellite components that are not protected by back-up units;

• electromagnetic storms; and

• collisions with other objects in space.

Limitations on our spectrum and services are included in current arrangements with partners and further limitations may be included in future arrangements with these and other partners.

Our arrangements with partners may constrain the quantity and type of current-generation devices that can be supported in the future. As a result, our current customers could be forced to transition to next-generation devices or terminate service with us, negatively impacting our revenues. Our arrangements with partners may place limits on the amount of spectrum available for next-generation satellite services that may negatively impact our revenues. Interference standards and frequency plans that could result from future arrangements with partners could adversely impact capacity on our next generation satellites, negatively impacting our revenues.

Damage to our satellites may not be fully covered by insurance.

We intend to purchase launch and in-orbit insurance policies for our next generation satellites from global space insurance underwriters. If certain material adverse changes in market conditions for full in-orbit insurance were to make it commercially unreasonable for us to maintain full in-orbit insurance, we could forego such insurance. Other adverse changes

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in insurance market conditions may substantially increase the premiums we will have to pay for such insurance or may preclude us from fully insuring its loss. If the launch of our next generation satellite system is a total or partial failure, our insurance may not fully cover our losses, and these failures may also cause insurers to include additional exclusions in our insurance policies when they come up for renewal. There can be no assurance that additional financing will be available to construct, launch and insure a replacement satellite or, if available, will be available on terms favorable to us. We do not expect to buy insurance to cover, and would not have protection against, business interruption, loss of business or similar losses. Also, any insurance we obtain will likely contain certain customary exclusions and material change conditions that would limit our coverage. We do not have insurance with respect to the existing MSAT satellites.

Delays in deployment of our terrestrial network due to limited tower availability, local zoning approvals or adequate telecommunications transport capacity would negatively impact our revenues.

Our business strategy includes the deployment of a terrestrial network. Tower sites and authorizations in some desirable areas may be very costly and time intensive to obtain. If we are unable to obtain tower space, local zoning approvals or adequate telecommunications transport capacity to develop our network in a timely fashion, the launch of our next generation integrated network would be delayed, our revenues would be less than expected and our business would suffer.

Our planned terrestrial network or other ground facilities could be damaged by natural catastrophes or man-made disasters.

Since our planned terrestrial network will be attached to buildings, towers and other structures around the country, an earthquake, tornado, flood or other catastrophic event or other man-made disaster or vandalism could damage our network, interrupt our service and harm our business in the affected area. We will not have replacement or fully redundant facilities that can be used to assume the functions of our terrestrial network in the event of a catastrophic event. Any damage to our terrestrial network would likely result in degradation of our service for some subscribers and could result in complete loss of service in some affected areas. Temporary disruptions could also damage our reputation and the demand for our services.

We may be unable to achieve our business and financial objectives because the communications industry is highly competitive.

In seeking market acceptance for our next generation services, we will encounter competition from many sources, including:

• existing satellite services from other operators;

• conventional terrestrial wireless services;

• traditional wireline voice and high-speed data offerings;

• terrestrial land-mobile and fixed services; and

• next generation integrated services that may be offered in the future by other networks operating in the S-band, L-band or Big LEO band.

The communications industry includes major domestic and international companies, many of which have financial, technical, marketing, sales, distribution and other resources substantially greater than we do and which provide a wider range of services than will be provided by us. While we have stated that we believe our services will be complementary to terrestrial wireless services, we may be adversely affected by competition from companies that provide services using existing wireless technologies.

We may also face competition from companies using new technologies and new integrated networks in the future. For instance, the FCC has authorized ICO and TerreStar Networks to use radio frequencies for mobile satellite services within the S-band. Although these potential competitors currently have no commercial operations in this band, they are planning to launch integrated networks similar to those envisioned by us. Through SkyTerra LP’s subsidiary, ATC Technologies LLC, SkyTerra LP has also granted TerreStar a license to use SkyTerra LP’s intellectual property for the development of TerreStar’s network. TerreStar has announced plans to launch an S-band satellite in June 2009 in advance of the estimated launch of SkyTerra-1 and SkyTerra-2, and ICO launched an S-band satellite in April 2008. Additionally, ICO received ATC authority in January 2008, and TerreStar has submitted an application for ATC authority. Failure to offer next generation integrated services that compete effectively with potential competitors such as TerreStar and ICO would have an adverse impact on our revenues, profitability and liquidity. We will also face competition with respect to entering into strategic partnerships.

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We and our partners must continue to identify, develop and market innovative products or enhance existing products on a timely basis to maintain our profit margins and our competitive position.

Our future growth may depend on our ability to gauge the direction of commercial and technological progress in key markets and on our ability to fund and successfully develop and market products and services. Our competitors may have access to technologies not available to us, which may enable them to provide communications services of greater interest to end users, or at a more competitive cost. We may not be able to develop new products or technology, either alone or with third parties, or license any additional necessary intellectual property rights from third parties on a commercially competitive basis. The satellite and wireless industries are both characterized by rapid technological change, frequent new product innovations, changes in customer requirements and expectations and evolving industry standards. If we or our partners are unable to keep pace with these changes, our business may be unsuccessful. Products using new technologies, or emerging industry standards, could make our technologies obsolete. If we or our partners fail to keep pace with the evolving technological innovations in our markets on a competitive basis, our financial condition and results of operation could be adversely affected.

Demand for our services may not grow or be accepted in particular geographic markets, for particular types of services, or during particular time periods. A lack of demand could adversely affect our ability to sell our services, enter into strategic partnerships or develop and successfully market new services. In addition, demand patterns shift over time, and consumer preferences may not favor the services we plan to offer.

Economic downturns or declines in consumer spending could negatively affect our results of operations and our access to capital.

We expect the primary consumer of our next generation services will be customers of our distribution partners and customers within certain vertical markets (for example, public safety, fleet management and consumer telematics). If the United States or Canada experience further economic downturns or if spending by end customers declines in the future, our business may be negatively affected.

We may not be able to protect our proprietary information and intellectual property rights, which could limit the growth of our business and impact our ability to compete.

As of February 4, 2009, SkyTerra LP has filed a significant number of patent applications (each application being filed in the United States and in several countries abroad), and owns over 85 U.S. and numerous foreign patents covering the fundamental principles of our next generation integrated technology. There is no assurance that the patents for which SkyTerra LP has applied will be issued or, if issued, will be sufficient to fully protect our technology. In addition, there can be no assurance that any patents issued or licensed to SkyTerra LP will not be challenged, invalidated or circumvented.

We also rely upon unpatented proprietary technology and other trade secrets. While it is our policy to enter into confidentiality agreements with employees and third parties to protect our proprietary expertise and other trade secrets, these agreements may not be enforceable, or, even if legally enforceable, we may not have adequate remedies for breaches of such agreements. The failure of our patents or confidentiality agreements to protect our proprietary technology or trade secrets could result in significantly lower revenues, reduced profit margins or loss of market share.

We may be unable to determine when third parties are using our intellectual property rights without our authorization. The undetected or unremedied use of our intellectual property rights or the legitimate development or acquisition of intellectual property similar to ours by third parties could reduce or eliminate any competitive advantage we have as a result of our intellectual property, adversely affecting our financial condition and results of operations.

If we must take legal action to protect, defend or enforce our intellectual property rights, any suits or proceedings could result in substantial costs and diversion of our resources and our management’s attention and could have material adverse effect on our financial condition and results of operations, regardless of the final outcome of such legal action. Despite our efforts to safeguard and maintain our intellectual property rights, there can be no assurance that we will be successful in doing so or that our competitors will not independently develop or patent technologies equivalent or superior to our technologies. A failure to protect, defend or enforce our intellectual property rights could have an adverse effect on our business, financial condition and results of operations. We believe that third parties may infringe upon our intellectual property now and in the future.

Third parties may claim that our products or services infringe their intellectual property rights, which may cause us to pay unexpected litigation costs or damages, or prevent us from making, using, or selling our products.

Other parties may have patents or pending patent applications relating to integrated wireless technology that may later mature into patents. Although we do not intend to, we may infringe on the intellectual property rights of others. Such parties

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may bring suit against us for patent or other infringement of intellectual property rights. If our products or services are found to infringe or otherwise violate the intellectual property rights of others, we may need to obtain licenses from those parties or substantially re-engineer our products or processes in order to avoid infringement.

We may not be able to obtain the necessary licenses on commercially reasonable terms, if at all, or be able to re-engineer our products successfully. Moreover, if we are found by a court of law to infringe or otherwise violate the intellectual property rights of others, we could be required to pay substantial damages or be enjoined from making, using, or selling the infringing products or technology. We could also be enjoined from making, using, or selling the allegedly infringing products or technology, pending the final outcome of the suit.

Our business could be harmed if we cannot attract and retain key personnel.

Our success depends, in large part, upon the continuing contributions of our key technical, marketing, sales and management personnel. We generally do not enter into employment agreements with our employees for fixed terms and do not maintain “key-executive” insurance on any of our employees. The loss of the services of several key employees within a short period of time could harm our business and our future prospects. Our future success will also depend on our ability to attract and retain additional management and technical personnel required in connection with the growth and development of our business. Competition for such personnel is intense, and if we fail to retain or attract such personnel our business could suffer. We have entered into arrangements with certain executives which provide for payments upon a change of control, as defined in those agreements.

Regulatory Risks Associated with Our Business

We may not be able to coordinate successfully with other L-band satellite system operators to access and use the full amount of L-band spectrum we currently believe we will be able to utilize.

We are required to coordinate the use of our satellites as part of the satellite registration process of the International Telecommunication Union (“ITU”). With respect to the primary frequencies used by commercial GEOs, the ITU rules grant rights to member states (which are the national governments party to the ITU treaty) on a “first-in-time, first-in-right” basis and set forth a process for protecting earlier-registered satellite systems from interference from later-registered satellite systems. To comply with these rules, we must coordinate the operation of our satellites with other satellites. The coordination process may require us to modify our proposed coverage areas, or satellite design or transmission plans, in order to eliminate or minimize interference with other satellites or ground-based facilities. In addition, while the ITU’s rules require later-in-time systems to coordinate their operations with us, we cannot guarantee that other operators will conduct their operations so as to avoid transmitting any signals that would cause harmful interference to the signals that we, or our customers, transmit.

Since the Company’s system became operational in 1996, its spectrum access in North America has been governed by a multi-lateral agreement referred to as the Mexico City Memorandum of Understanding (“Mexico City MoU”) and by bilateral agreements. Five national administrations, the United States, Canada, Mexico, Russia and the United Kingdom, are party to the Mexico City MoU. We operate our satellites under the auspices of the United States and Canada. Accordingly, we must coordinate with operators and their administrations to operate in the L-band and to reconfigure the L-band. Since 1999, there has been no new, comprehensive, spectrum sharing agreement among all the satellite system operators represented by the five administrations and we have not completed coordination of our new satellites. Our recent agreement with Inmarsat, which has been accepted in part by our Administrations, is a significant step to completing the coordination of our new satellites, providing substantial spectrum access, and creating additional flexibility for ancillary terrestrial operations. Additional approvals are required, however, before coordination of the satellite networks, under all phases specified in the Cooperation Agreement, will be complete. At the same time, the agreement with Inmarsat includes certain limitations on our system operations in order to facilitate spectrum reuse by Inmarsat; these limitations may have an adverse impact on the extent that we are technically able to provide certain satellite and terrestrial services and, as a result, the revenues we are able to generate from those services.

Additionally, the initial international frequency coordination of our system was done for narrowband services and air interfaces. Newer broadband services and air interfaces require larger blocks of contiguous spectrum. While some of our L-band spectrum is already in sufficiently large contiguous blocks to permit the offering of such new formats, we are trying to increase the extent to which our spectrum is contiguous. Our recent agreement with Inmarsat is a significant step in the process of rebanding to provide for additional contiguity. We would obtain further, substantial benefit from successful negotiations with the Mexican operator and Administration to further reconfigure the L-band spectrum. In the absence of an arrangement with the Mexican operator and Administration, we may pursue other means of further reconfiguring the L-band spectrum. It is uncertain whether we will be able to successfully complete such negotiations at a reasonable economic and technical price or be able to otherwise reconfigure the L-band spectrum. The failure to reconfigure the L-band into larger

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blocks of contiguous spectrum will prevent us from maximizing the efficiency and capacity of our next generation integrated network.

Moreover, we cannot guarantee that the ITU will not change its rules in the future in a way that could limit or preclude our use of some or all of our existing or future orbital locations or frequencies.

We may not be able to secure the return of certain spectrum we loaned to Inmarsat.

In 1999 and 2003, and consistent with the Mexico City MoU, SkyTerra LP and SkyTerra Canada loaned approximately 3 MHz of L-band spectrum to Inmarsat for its temporary use (“Original Loan”). Our recent agreement with Inmarsat addresses a dispute regarding the return of the loaned spectrum, including the possibility of arbitration under certain circumstances. In addition, pursuant to the recent agreement, we are temporarily loaning Inmarsat additional spectrum (“New Loan”). There is no assurance that we will receive the return of the Original Loan and/or New Loan, whether through arbitration or otherwise, and certain provisions of our recent agreement with Inmarsat provide that upon the occurrence of certain events the loaned spectrum would become integrated with the agreed upon band plans for operation and would not be separately subject to return.

Our service may cause or be subject to interference, and we may have to limit our services to avoid harmful interference

As a satellite provider and ATC system operator, we are required to provide our satellite and ATC service without causing harmful interference to other spectrum users and we must accept some interference from other spectrum users. This requirement may potentially hinder the operation, limit the deployment or add additional cost to our satellite and/or ATC system and may, in certain cases, subject our users to a degradation in service quality. Although we have agreements with certain spectrum users in neighboring spectrum bands and within the L-band to avoid harmful interference, there is no assurance that these agreements will be sufficient or that additional interference issues with other systems will not occur.

The ultimate resolution of pending FCC proceedings could materially affect our ability to develop and offer ATC services and have a material adverse effect on our next generation business plans.

Prior to entering into the Cooperation Agreement in December 2007, Inmarsat challenged two FCC orders that may impact our ability to maximize the efficiency of our ATC in the L-band: the November 2004 Application Approval, which granted SkyTerra LP’s ATC license, and the February 2005 Order establishing revised rules for ATC. Inmarsat also objected to the Company’s pending 2005 application for a modified ATC license to take advantage of the new ATC rules. Pursuant to the Cooperation Agreement (see Government Regulation—L-band Coordination), Inmarsat has filed a motion to withdraw these filings. The FCC granted the motion with respect to the November 2004 Application Approval but has not acted on the motion with respect to the February 2005 Order or granted SkyTerra LP’s 2005 application for a modified ATC license. If the FCC acts unfavorably to us, it may impede or preclude our ability to deploy and operate our proposed next generation integrated network.

We need additional regulatory approvals before we can operate ATC.

Pursuant to the Cooperation Agreement, in December 2008 the Company filed an application with the FCC to provide authority for additional flexibility for operation of ATC. Inmarsat had opposed an earlier pending application by SkyTerra LP to modify its ATC authorization to provide additional flexibility. Pursuant to the Cooperation Agreement (see Government Regulation—L-band Coordination), Inmarsat has agreed to support this application. The FCC has not yet placed the amendment on public notice for comment, and we do not know whether it will be opposed. In addition, the Company will need further regulatory approvals before it can operate ATC, including a blanket license for its user terminals and FCC certification of its user terminals and base stations. Any difficulty in obtaining these approvals may delay the commencement of operation of our new system. SkyTerra Canada does not yet have authority from Industry Canada to operate an ATC in Canada. We cannot provide any assurance if or when we will obtain any of these approvals.

A 2002 decision could be construed to limit a portion of our operations to using no more than 20 MHz of L-band spectrum.

In a 2002 decision, the FCC granted our subsidiary, SkyTerra Sub, a license to use up to 20 MHz of L-band spectrum on MSAT-2. That decision also states that spectrum acquired under a future merger between our corporate predecessor and TMI Communications, which formerly held both the Industry Canada and FCC L-band authorizations associated with the MSAT-1 satellite, would be included within the 20 MHz limit. The Company filed a petition for clarification and partial reconsideration of that decision because SkyTerra Sub had already been established pursuant to an FCC order in 2001 that had authorized SkyTerra Sub to use TMI Communications’ spectrum without imposing such spectrum limitations. Under the most recent SSA developed pursuant to the Mexico City MoU, SkyTerra LP was assigned less than 20 MHz of L-band

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spectrum for the United States satellites. We believe that, even if limited to 20 MHz of spectrum on the United States satellites, we would continue to be able to use all of the coordinated spectrum (approximately 30 MHz) on SkyTerra Canada’s satellite and on our integrated network, as well as up to 20 MHz of coordinated spectrum on SkyTerra LP’s satellite. We cannot be sure how or when the FCC will dispose of the Company’s petition, but subsequent FCC decisions suggest that spectrum licensed to SkyTerra Canada is not included within the 20 MHz limit. If the FCC decides adversely to the Company, our United States licensed L-band satellites (MSAT-2 and SkyTerra-1) could be limited to a maximum of 20 MHz, which could reduce our ability to offer certain new services.

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 50 states, Puerto Rico, Canada, 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 the Company 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 the Company 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 a new level of indirect foreign ownership for the Company. 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 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.

We may not be able to obtain the necessary regulatory consents for transfer of control of the Company to Harbinger or for a business combination between SkyTerra and Inmarsat.

On August 22, 2008, pursuant to the Master Agreement with Harbinger and certain of its affiliates, Harbinger and SkyTerra submitted applications to the FCC seeking consent for transfer of control of the Company to Harbinger and for a business combination between SkyTerra and Inmarsat. The applications also sought a declaratory ruling approving a range of possible foreign ownership levels associated with Harbinger’s ownership of up to 100% of SkyTerra. We will need to submit additional filings and obtain approvals from other regulatory bodies before we can consummate the transactions contemplated by the Master Agreement. There can be no assurance that we will obtain all the necessary regulatory approvals for the proposed transactions. If we do not obtain all the required approvals, we may be unable to achieve our business and financial objectives.

If the supply of available mobile licensed spectrum increases, the value of our spectrum assets may decrease.

The FCC or Industry Canada could allocate large amounts of additional mobile licensed spectrum that could be used to compete with us, or that could decrease the perceived market value of our wireless capacity. The FCC in 2006, for example, auctioned 90 MHz of spectrum in the 1.7/2.1 GHz range. More recently, the FCC auctioned almost all of the available spectrum in the 698-806 MHz band (“the 700 MHz Band”). Industry Canada also conducted an auction of PCS and Advanced Wireless Spectrum, which concluded in July 2008 and further auctions in Canada are anticipated for the 700 MHz band as well as the 2.5 GHz band. Additional spectrum auctions may be scheduled in the future in both the United States and Canada. In addition, incremental allocations of spectrum may make it easier for new competitors to enter the market, and could further diminish the value of our spectrum assets.

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Technical challenges or regulatory requirements may limit the attractiveness of our spectrum for providing mobile services.

We believe our L-band spectrum with ATC capability will be attractive to potential partners if our spectrum is at least functionally equivalent to PCS/cellular spectrum. The FCC and Industry Canada require us to provide substantial satellite service throughout the United States and Canada. This requirement may limit the availability of some of our spectrum for terrestrial service in some markets at some times. In addition, we must give priority and pre-emptive access to certain other users of the L-band, for example, for safety-related transmissions in the Global Maritime Distress and Safety System and the Aeronautical Mobile Satellite (Route) Service. PCS/cellular spectrum is not constrained by any such requirement. If we are not able to develop technology that allows our partners to use our spectrum in a manner comparable to PCS/cellular operators, we may not be successful in entering into partnership arrangements.

Our ability to offer a primarily fixed service may be limited by the policies of the FCC.

The FCC has permitted SkyTerra LP to provide fixed services on a non-interference basis, which means that such operations are not permitted to cause interference to various other users of the band and are not permitted to claim protection from such other users. The FCC also has required SkyTerra LP’s fixed services to be offered on an “incidental or ancillary” basis, conditions which the FCC has not defined in this context.

We may face difficulties in obtaining regulatory approvals for provision of telecommunications services and may face changes in regulation, each of which could adversely affect our operations.

The provision of telecommunications services is highly regulated. We may be required to obtain additional approvals from national and local authorities in connection with the services that we currently provide or may wish to provide in the future, including in connection with services associated with our next generation integrated network. As a provider of communications services in the United States and Canada, we are subject to the regulatory authority of both the United States and Canada. Violations of laws or regulations may result in various sanctions including fines, loss of authorizations and the denial of applications for new authorizations or for the renewal of existing authorizations.

Moreover, we may be required to obtain additional approvals from national and local regulatory authorities in connection with the services that we currently provide or wish to provide in the future. From time to time, governmental entities may impose new conditions on our authorizations which could have an effect on our ability to generate revenue and conduct our current and next generation business as currently planned. Industry Canada has also stated that it intends to establish license fees for ATC operators. If we are required to pay such fees, we may be subject to substantially increased costs. The United States federal government is also currently considering whether to impose spectrum fees on the right to use frequencies for ATC and possibly satellite services. While we believe that adoption of such fees in the United States is not likely, if implemented and extended to the frequencies used by us, use of such frequencies may be subject to substantially increased costs.

Export control and embargo laws may preclude us from obtaining necessary satellites, parts or data or providing certain services in the future.

United States companies and companies located in the United States must comply with United States export control laws in connection with any information, products, or materials that they provide to SkyTerra LP relating to satellites, associated equipment and data and with the provision of related services. If these entities cannot or do not obtain the necessary export or re-export authorizations from the United States government, we will be required to obtain such authorizations. It is possible that, in the future, we may not be able to obtain and maintain the necessary authorizations, or existing authorizations could be revoked.

If we cannot obtain and maintain the necessary authorizations, this failure could adversely affect our ability to:

• procure new United States-manufactured satellites;

• control our existing satellites;

• acquire launch services;

• obtain insurance and pursue our rights under insurance policies; or

• conduct our satellite-related operations.

In addition, if we do not properly manage our internal compliance processes and violate United States export laws, the terms of an export authorization, or embargo laws, the violation could make it more difficult, or even impossible, to maintain or obtain licenses and could result in civil and criminal penalties.

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Our contractual relationship with potential partners that may operate ATC facilities in our next generation integrated network must comply with FCC and Industry Canada rules that require ATC to be integrated with the satellite service and require us, as a license holder, to control ATC operations.

We must ensure compliance with the ATC rules of the FCC and Industry Canada. This may require agreements with some partners that provide for a degree of control by SkyTerra LP and SkyTerra Canada in the operation of their businesses that may be difficult to negotiate.

In addition, the Communications Act and the FCC’s rules require the Company to maintain legal as well as actual control over the spectrum for which it is licensed. Our ability to enter into partnering arrangements may be limited by the requirement that we maintain de facto control of the spectrum for which we are licensed. If the Company is found to have relinquished control without approval from the FCC, we may be subject to fines, forfeitures, or revocation of its licenses.

Rules relating to Canadian ownership and control of SkyTerra Canada are subject to interpretation and change.

SkyTerra Canada is subject to foreign ownership restrictions imposed by the Telecommunications Act (Canada) and the Radiocommunication Act (Canada) and regulations made pursuant to these Acts. Although we believe that SkyTerra Canada is in compliance with the relevant legislation, there can be no assurance that a future determination by Industry Canada or the Canadian Radio-television and Telecommunications Commission, or events beyond its control, will not result in SkyTerra Canada ceasing to comply with the relevant legislation. If such a development were to occur, the ability of SkyTerra Canada to operate as a Canadian carrier under the Telecommunications Act (Canada) or to maintain, renew or secure its Industry Canada authorizations could be jeopardized and our business could be materially adversely affected.

Risks Relating to Our Common Stock Generally

Fluctuations in our operating results could adversely affect the trading price of our common stock.

Our operating results may fluctuate as a result of a variety of factors, many of which are outside of our control, including:

• risks and uncertainties affecting the current and proposed business of SkyTerra LP and the mobile satellite services industry;

• increased competition in the mobile satellite services industry; and

• general economic conditions.

As a result of these possible fluctuations, period-to-period comparisons of our financial results may not be reliable indicators of future performance.

The price of our common stock has been volatile.

The market price of our common stock has been volatile, and is likely to continue to be. In recent years, the stock market has experienced significant price and volume fluctuations that have particularly affected the market prices of equity securities of many companies in the technology sector. Future market movements may materially and adversely affect the market price of our common stock, particularly in light of the limited liquidity of our common stock.

Our common stock is quoted on the OTC Bulletin Board, which limits the liquidity and could negatively affect the value of our common stock.

Since January 30, 2003, following our delisting from the NASDAQ National Market, price quotations have been available on the OTC Bulletin Board. Delisting from the NASDAQ National Market resulted in a reduction in the liquidity of our common stock. This lack of liquidity may also make it more difficult for us to raise additional capital, if necessary, through equity financings.

We do not intend to pay dividends on shares of our common stock in the foreseeable future.

We currently expect to retain our future earnings, if any, for use in the operation and expansion of our business. We do not anticipate paying any cash dividends on shares of our common stock in the foreseeable future.

The issuance of preferred stock or additional common stock may adversely affect our stockholders.

Our board of directors has the authority to issue up to 10,000,000 shares of preferred stock and to determine the terms, including voting rights, of those shares without any further vote or action by our common stockholders. The voting and other

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rights of the holders of our common stock will be subject to, and may be adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. Similarly, our board may issue additional shares of common stock without any further vote or action by our common stockholders, which would have the effect of diluting common stockholders. An issuance could occur in the context of another public or private offering of shares of common stock or preferred stock or in a situation where the common stock or preferred stock is used to acquire the assets or stock of another company. The issuance of common stock or preferred stock, while providing desirable flexibility in connection with possible acquisitions, investments and other corporate purposes, could have the effect of delaying, deferring or preventing a change in control.

Anti-takeover provisions could make a third-party acquisition of our company difficult.

We are a Delaware corporation. The Delaware General Corporation Law contains provisions that could make it more difficult for a third party to acquire control of our company. In addition, the holders of any preferred stock we may issue many certain rights which could prevent or impair the ability of a third party to acquire control of the company.

Compliance with changing regulation of corporate governance and public disclosure may result in additional expenses.

Changing laws, regulations and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, have created some uncertainty for companies such as ours. We are committed to maintaining high standards of corporate governance and public disclosure. As a result, we intend to invest reasonably necessary resources to comply with evolving standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from assisting SkyTerra LP in revenue-generating activities to compliance activities, which could harm our business prospects.

Harbinger and its affiliates beneficially own a significant portion of our outstanding shares of Voting Common Stock and a significant portion of our outstanding shares of Non-Voting Common Stock. Harbinger and its affiliates can take actions that may be adverse to the interests of other stockholders.

As of February 6, 2009 Harbinger and its affiliates collectively owned 23,452,480 shares of Voting Common Stock and 29,946,362 shares of Non-Voting Common Stock representing 48.0% of the voting common shares outstanding and 49.1% of the total common shares outstanding.  Harbinger also has the right to an additional 9,984,270 common shares currently being held in escrow pending the FCC’s decision on Harbinger’s application to acquire control of the Company.  The shares held in escrow represent 9.1% of the Company’s total shares outstanding and include (i) 442,825 shares of voting common stock held in escrow by Akin Gump Strauss Hauer and Feld LLP and (ii) 7,906,737 shares of non-voting common stock and 1,634,422 shares of voting common stock held in escrow by Wells Fargo Bank.  In addition, Harbinger has the right to acquire up to 20,024,818 common shares upon the exercise of warrants.

Pursuant to the Master Agreement, Harbinger may acquire a significant number of shares of our common stock if our combination with Inmarsat is successful, in order to fund such combination, or if the combination is not successful, pursuant to a shareholder rights offering. If the proposed business combination of SkyTerra and Inmarsat is completed, it is expected that Harbinger would own in excess of 85% of the outstanding Voting Common Stock of the combined entity.

The significant concentration of ownership of our common 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 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.

Shares eligible for future sale could cause the price of our Voting Common Stock to decline.

The market price of our Voting Common Stock could decline as a result of future sales of substantial amounts of our common stock, or the perception that such sales could occur. In connection with the closing of the Exchange Transactions in September 2006 and the BCE exchange transaction in January 2007, we issued in excess of 41.4 million shares of our common stock which are covered by effective registration statements. The sale of such shares could have an adverse impact on our stock price. Furthermore, certain of the Harbinger entities have the right to require us to register certain shares of

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common stock that they hold as well as the shares of Voting Common Stock underlying the Series 1-A and 2-A warrants to facilitate their sale of shares in the public market. The Series 1-A and Series 2-A warrants are exercisable at any time and expire on June 4, 2009. The Series 1-A warrants are exercisable for 681,838 shares of our Voting Common Stock. The Series 2-A warrants are exercisable for 2,698,942 shares of our Voting Common Stock. Additionally, in connection with the $150 million of notes SkyTerra LP issued to Harbinger in January 2008, we issued ten year warrants to purchase 9,144,038 shares of our common stock, with an exercise price of $10 per share. In connection with the $150 million of 18% Senior Unsecured Notes SkyTerra LP issued to Harbinger in January 2009, we issued five year warrants to purchase 7,500,000 shares of our common stock, with an initial exercise price of $0.01 per share.

In July 2008, in connection with the Inmarsat combination and the Securities Purchase Agreement, as amended, we agreed to issue to Harbinger warrants to purchase up to an aggregate of 32.5 million shares of our common stock, upon the first, second and fourth issuances of the Additional Harbinger Notes (warrants for 7.5 million shares of common stock on January 7, 2009, 21.25 million shares of common stock on April 1, 2009 and 3.75 million shares of common stock on January 4, 2010) at an exercise price of $0.01 per share of common stock. Also, pursuant to a stock purchase agreement between SkyTerra and Harbinger, dated July 24, 2008 (the “Stock Purchase Agreement”) we entered into concurrently with the Master Agreement, Harbinger will be entitled to purchase new shares of our Voting Common Stock for up to $2.4 billion in cash, or such greater amount as Harbinger may determine. The Harbinger stockholders also have the right to require us to register the shares of common stock underlying the Harbinger warrants to facilitate their sale of shares in the public market. The future sale of substantial amounts of our common stock pursuant to any such registration statements could have an adverse impact on our stock price.

 

Item1B. Unresolved Staff Comments

None.

 

Item2. Properties

We currently lease facilities located in Reston, Virginia (70,000 square feet, lease expires February 28, 2011), Ottawa, Ontario (Canada) (22,400 square feet) lease will expire January 30, 2024 (occupying under a binding Offer to Lease and the final lease is pending signatures) and Calgary, Alberta (Canada) (150 square feet, lease expires June 30, 2010). We routinely evaluate our facilities for adequacy in light of our plans for the future.

 

Item3. Legal Proceedings

Various legal actions, claims, assessments and other contingencies arising in the ordinary course of our business are pending against us and certain of our subsidiaries. We believe we have adequate legal defenses for each of the actions and claims. These matters are subject to uncertainty and it is possible that some of these matters ultimately could be decided, resolved or settled adversely. We have not recorded any material accruals as of December 31, 2008 for losses related to matters that we would consider to be probable and that could be estimated reasonably. We believe that the ultimate resolution of those matters will not result in a material adverse effect on our results and operations.

 

Item4. Submission of Matters to a Vote of Security Holders

On November 7, 2008 the Company held a special meeting of holders of shares of voting and non-voting common stock of the Company, to consider and vote upon a proposal to adopt an amendment to the Company’s Restated Certificate of Incorporation to authorize an increase in the aggregate number of shares of non-voting common stock from 100,000,000 shares to 125,000,000 shares, and to authorize an increase in the aggregate number of shares of the Company’s capital stock from 310,000,000 shares to 335,000,000 shares.  The proposal was approved by the shareholders. More specifically, there were 36,254,914 votes for the proposal, 67,676 votes against the proposal, 15,202 abstentions, and no broker non-votes.

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PART II

 

Item5. Market for the Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

Since January 30, 2003, the Company’s common stock has been listed on the OTC Bulletin Board. The Company’s common stock trades under the symbol “SKYT”. The following table sets forth, for the fiscal quarters indicated, the high and low sales prices per share as reported on the OTC Bulletin Board:

	High		Low
Year ended December31, 2008
First quarter	$	7.80	$	6.00
Second quarter	$	8.75	$	6.50
Third quarter	$	6.25	$	3.67
Fourth quarter	$	3.35	$	1.37
Year ended December31, 2007
First quarter	$	11.75	$	8.20
Second quarter	$	9.20	$	7.70
Third quarter	$	9.35	$	6.50
Fourth quarter	$	7.80	$	4.13

The above quotations reported by the OTC Bulletin Board reflect interdealer prices, which may not include retail mark-ups, mark-downs or commissions and may not necessarily represent actual transactions. On February 20, 2009, the last sale price for the Company’s common stock as reported by the OTC Bulletin Board was $3.97 per share.

As of February 12, 2009, not including beneficial owners, the Company had approximately 397 recordholders of the Company’s common stock. This number was derived from the Company’s stockholder records, and does not include beneficial owners of the Company’s common stock whose shares are held in the names of various dealers, clearing agencies, banks, brokers, and other fiduciaries. Holders of the Company’s common stock are entitled to share ratably in dividends, if and when declared by the Company’s board of directors.

The Company has not paid a cash dividend on its common stock for the years ended December 31, 2008 and 2007, and it is unlikely that the Company will pay any cash dividends on its common stock in the foreseeable future. The payment of cash dividends on the Company’s common stock will depend on, among other things, the Company’s earnings, capital requirements and financial condition, and general business conditions.

For information on securities authorized for issuance under the Company’s equity compensation plans, see “Item 12 – Security Ownership of Certain Beneficial Owners and Related Stockholder Matters.”

Performance Measurement Comparison

The following graph shows the total stockholder return through December 31, 2008 of an investment of $100 in cash on January 1, 2004 for SkyTerra common stock and an investment of $100 in cash on January 1, 2004 for (i) the NASDAQ Market Index and (ii) the Hemscott Group (Diversified Communication Services) Index (the “Hemscott Group Index”). Historic stock performance is not necessarily indicative of future stock price performance. All values assume reinvestment of the full amount of all dividends and are calculated as of the last day of each month:

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	Investment Balance as of December 31,
	2003		2004		2005		2006		2007		2008
SkyTerra Communications, Inc.	$	100	$	1,783	$	2,250	$	768	$	453	$	119
Hemscott Group Index	$	100	$	152	$	133	$	144	$	191	$	93
NASDAQ Market Index	$	100	$	108	$	111	$	122	$	134	$	79

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Item6. Selected Financial Data

The following selected financial data should be read in conjunction with the Company’s consolidated financial statements and related notes thereto and with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this Form 10-K. The selected consolidated statements of operations data for the years ended December 31, 2008, 2007 and 2006 and the selected consolidated balance sheet data as of December 31, 2008 and 2007 are derived from the Company’s audited consolidated financial statements included elsewhere in this report.

On September 26, 2006, we completed the 2006 SkyTerra LP Exchange Transactions that resulted in our owning the majority of SkyTerra LP. This transaction has been accounted for as a “reverse acquisition” with SkyTerra LP being treated as the accounting acquirer of SkyTerra. As such, the Company’s historical financial statements prior to September 25, 2006 are the historical financial statements of SkyTerra LP. The consolidated financial statements of SkyTerra LP have been retroactively restated to reflect the recapitalization of SkyTerra LP with the 39.6 million shares of the Company’s common stock issued to SkyTerra LP equity holders in the 2006 SkyTerra LP Exchange Transactions.

	2008			2007			2006			2005			2004
Consolidated statements of operations data:
Total revenues	$	34,485		$	34,083		$	34,854		$	29,974		$	29,597
Total operating expense		138,992			106,174			77,113			69,127			56,532	)
Operating loss		(104,507	)		(72,091	)		(42,259	)		(39,153	)		(26,755	)
Net loss		(204,935	)		(123,556	)		(57,100	)		(40,955	)		(33,455	)
Net loss from continuing operations per share		(1.93	)		(1.24	)		(1.24	)		(0.81	)		(1.00	)
Consolidated balance sheet data:
Total assets		1,360,702			1,295,035			767,047			216,284			246,233
Senior secured discount notes, net		629,759			552,719			483,410			—			—
16.5% senior unsecured notes (related party), net		147,119			—			—			—			—
Vendor notes payable		60,940			52,047			—			—			—
Notes payable - other		372			1,282			470			696			916
Long-term deferred revenue, net of current portion		12,383			16,333			20,971			23,243			20,690
Stockholders’ equity (deficit)	$	471,353		$	616,218		$	(125,388	)	$	181,260		$	212,964

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Item7. 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 7. 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.

The following discussion of the Company’s financial condition and results of operations should be read together with the Company’s consolidated financial statements and the related notes thereto.

Overview

Name Change of SkyTerra Subsidiaries

On December 8, 2008 the names of all SkyTerra subsidiaries that used “Mobile Satellite Ventures” in any part of their name were changed to replace the “Mobile Satellite Ventures” portion of the name with “SkyTerra,” including those listed in the table below which indicates the previous and current name of each subsidiary:

Former Name:	New Name:
Mobile Satellite Ventures GP Inc.	SkyTerra GP Inc.
Mobile Satellite Ventures LP	SkyTerra LP
Mobile Satellite Ventures (Canada) Inc.	SkyTerra (Canada) Inc.
Mobile Satellite Ventures Holdings (Canada) Inc.	SkyTerra Holdings (Canada) Inc.
MSV Finance Co.	SkyTerra Finance Co.

All SkyTerra Communications, Inc. (SkyTerra or the Company) operating and development activity is performed through its wholly owned consolidated subsidiary SkyTerra LP. SkyTerra LP holds a 46.4% effective interest in SkyTerra (Canada) Inc. (SkyTerra Canada) through its 20% interest in SkyTerra Canada and a 33% interest in SkyTerra Holdings Canada Inc., which is the parent company of SkyTerra Canada. SkyTerra LP has determined that it is the primary beneficiary of SkyTerra Canada as a result of its obligation, by contract, to fund the operations of SkyTerra Canada, and as a result of a rights and services agreement and a capacity lease agreement between SkyTerra LP and SkyTerra Canada. As such, and in accordance with FASB Interpretation No. 46R, Variable Interest Entities (FIN 46R), SkyTerra Canada has been consolidated into the financial results of SkyTerra LP. Although SkyTerra Canada is Canadian owned and controlled within the meaning of the Telecommunications Act (Canada) and the Radiocommunication Regulations (Canada), references to the "Company" or SkyTerra LP, include SkyTerra Canada.

Next Generation Network

SkyTerra LP 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. SkyTerra LP plans to launch two new satellites, SkyTerra-1 and SkyTerra-2 (formerly MSV-1 and MSV-2), that will serve as the core of its next generation network. The Company is working closely with Boeing, the satellite manufacturer of both SkyTerra-1 and SkyTerra-2, to carefully track, monitor and support the progress of the satellite construction program.  Based on Boeing’s most recent estimates, SkyTerra-1 will be available for launch in very late 2009.  To ensure the availability of a launch window for SkyTerra-1, and accounting for the possibility of potential future construction or other delays that have occurred on other complex spacecraft, SkyTerra has selected a launch window that provides scheduled launch assurance in case the manufacturer’s construction schedule is delayed.

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Specifically, SkyTerra has contracted for a launch window for SkyTerra-1 that opens in March of 2010 and continues through May 2010.  This date was selected carefully, to account for the possibility of future manufacturer construction delays as mentioned above.  If SkyTerra-1 construction does not deviate from its current schedule, SkyTerra may seek an earlier launch date from the launch service provider, including late 2009.  While there can be no guarantee of the availability of such earlier launch time, SkyTerra believes the launch service provider will work in good faith to accommodate an earlier launch. 

The launch of SkyTerra-2 is currently expected to occur in the fourth quarter of 2010 or the first quarter of 2011 and, similar to SkyTerra-1, within all regulatory milestones.

SkyTerra LP is licensed by either United States or Canadian governments to operate both current and next generation satellite systems in the 1.5 to 1.6 GHz frequency band (the “L-band”) spectrum that SkyTerra LP and SkyTerra Canada have coordinated for their use. This spectrum is positioned between the frequencies used by terrestrial wireless providers. SkyTerra LP and SkyTerra Canada have coordinated approximately 30 MHz of this spectrum throughout the United States and Canada and this coordinated spectrum covers a total population of over 330 million. The Company plans to use its spectrum for both satellite and terrestrial service in operating its next generation integrated network.

SkyTerra LP holds an ancillary terrestrial component (ATC) authorization that permits the use of its L-band satellite frequencies in the operation of an advanced, integrated satellite and terrestrial hybrid network capable of providing wireless broadband on a fixed, portable and fully mobile basis in the United States. Deployment of an ATC network has not yet begun, and development is in process. SkyTerra LP was the first MSS provider to receive a license to operate an ATC network from the Federal Communications Commission (“FCC”) and was a major proponent of the FCC’s February 2003 and February 2005 ATC and ATC Reconsideration Orders, both of which were adopted on a bipartisan, 5-0 basis. The Company’s ATC license permits the use of our L-band satellite frequencies in the operation of an advanced, integrated network capable of providing wireless broadband on a fixed, portable and fully mobile basis.

With access to spectrum that is conducive for mobile and fixed broadband wireless services, the Company believes it is well positioned to support an extensive wireless business plan. The next generation integrated network may create the opportunity to use the Company’s United States and Canadian nationwide spectrum, in its current configuration, to establish a strong position within the wireless industry. Using an all-Internet Protocol, 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, flexibility to support a range of custom IP applications and services, and added communications flexibility in the event terrestrial services are unavailable or interrupted. The Company’s current business plan envisions a “carrier’s carrier” wholesale model whereby strategic partners and other wholesale customers can use the Company’s network to provide differentiated broadband services to their subscribers. The Company’s 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 to create a variety of custom applications and services for consumers.

The Company believes the changing dynamics of the telecommunications industry have created a compelling market opportunity for its next generation network. Increased competition, industry consolidation, wireless substitution for wireline services and the general convergence of media and telecommunications have led major service providers to attempt to offer consumers a bundle of video, broadband data, voice and mobile wireless services. However, incumbent wireless providers may be constrained by certain factors, such as their spectrum positions and legacy second generation (“2G”) and 3G circuit-switched network architectures, as the demand for an advanced bundle has increased. Wireless carriers may also be pursuing different market strategies based upon their existing networks and customers rather than offering new services like those we plan to provide using next generation integrated technology. New technologies are emerging to deliver advanced broadband wireless services and applications to a potentially wide range of devices at price points we believe will be lower than those offered by incumbents’ legacy networks.

The Company anticipates that its United States and Canadian nationwide spectrum holdings and strategy to deploy a wireless, all-IP network will, through wholesale customers and other strategic distribution partners, have the potential to provide superior connectivity to an array of devices, satisfy the evolving needs of the industry and capture a greater percentage of the consumer’s total spending on communications services. The potential market opportunity may include participation from large enterprises that have limited access to the wireless services business (potentially including content companies, video service providers, web services firms, consumer electronics companies, enterprise service providers, device and chipset vendors and Internet service providers). Those enterprises have large, loyal customer bases and are exploring opportunities to incorporate broadband wireless connectivity to differentiate and expand their core service offerings.

While the Company has been focused on a wholesale, “carriers carrier” business model, conversations have nonetheless taken place with strategic partners who view the Company’s assets, including access of up to a potential 46 MHz of spectrum and the ability to provide a differentiated, integrated satellite-terrestrial service, as a very attractive platform for

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the delivery of 4G services using traditional models for the distribution of services and content. Such traditional business models include potential exclusive relationships with existing operating partners and/or new entrants.

The Company is developing plans 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 satellite 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 offer bandwidth and power to customers of the next generation system who will therefore have the opportunity to 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.  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 continues to develop its current business plan for an integrated next generation MSS/ATC network in North America. 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 and MSS ground-based network construction by the manufacturer.

• Evaluating and managing development and construction timelines as new components of the next generation network are added (chipsets, air-interfaces) to ensure integration and cost-effectiveness.

• Development of the infrastructure and technologies required to operate MSS services upon launch of next generation space-based network.

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

• Arrangement of distribution partnerships for both MSS and ATC components of the next generation network.

• Support Harbinger in a potential offer for Inmarsat.

• Closing of subsequent funding commitments from Harbinger (April 1, 2009: $175 million, July 1, 2009: $75 million, January 4, 2010: $100 million).

While pursuing the integrated next generation MSS/ATC business plan, the Company nonetheless retains the opportunity to pursue other alternative business plans, including a greater emphasis on the provision of certain MSS-only rather than integrated MSS/ATC services.

Current Generation Network

SkyTerra LP offers a range of mobile satellite communications services (“MSS”) using two nearly identical geostationary satellites that support the delivery of data, voice, fax and dispatch radio services. SkyTerra LP offers services to a number of vertical markets in the United States and Canada. Penetration is highest in markets where terrestrial wireless infrastructure is cost-prohibitive or non-existent, where point-to-multipoint services such as voice dispatch are essential for ongoing operations, or where network availability is a critical requirement for service.

Corporate Activity

Qualcomm Satellite Enabled Mobile Chipsets for Next Generation Network

In September 2008, SkyTerra LP entered into a 15-year agreement with Qualcomm Incorporated (Qualcomm) for the provision by Qualcomm of satellite-enabled mobile chipsets and satellite base station components built upon Qualcomm-adapted EV-DO technology to facilitate the development of mobile devices and network systems for use with the Company’s planned next generation network. A broad range of Qualcomm chipsets, to be available on a mass-market basis, will include satellite and L-band capabilities. Under this agreement, SkyTerra LP and Qualcomm have completed the detailed

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specifications for the first release of the technology, which will be sufficient to support voice and data services in an integrated, dual mode manner over SkyTerra’s satellites and terrestrial networks, including L-band ATC.

The agreement with Qualcomm also contemplates that other operators (together with SkyTerra LP, each an Operator) may enter into similar arrangements with Qualcomm. The termination by one Operator of its agreement with Qualcomm does not affect the agreement of any other Operator. The Company has been advised that ICO Satellite Services G.P. (ICO) has entered into a similar agreement with Qualcomm. Each Operator will fund a portion of the related non-recurring expenses (NRE) incurred in connection with the agreements, which will result in a further sharing of NRE if and when additional Operators (in addition to SkyTerra LP and ICP) enter into similar agreements with Qualcomm.

The SkyTerra LP portion of the NRE to be paid to Qualcomm is expected to be in an amount not to exceed $10 million, which amount will be reduced if other Operators enter into similar agreements with Qualcomm.

In connection with entering into the Qualcomm agreement, SkyTerra LP and ICO have entered into a mutual non-assertion agreement with ICO with respect to relevant aspects of their respective patent portfolios as well as certain other agreements related to the Qualcomm development effort.

EV-DO Compatible Base Transceiver Subsystems

The Company is currently in negotiations with several vendors for the procurement of EV-DO compatible transceiver subsystems. The Company expects that it will enter into a material definitive contract for those subsystems during the first half of 2009.

Possible Merger and Acquisition of Inmarsat - Master Agreement with Harbinger

In July 2008, the Company, SkyTerra LP and SkyTerra Subsidiary LLC entered into a Master Contribution and Support Agreement (the “Master Agreement”) and certain other agreements with Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund L.P., Harbinger Capital Partners Fund I, L.P., and Harbinger Co-Investment Fund, L.P. (together "Harbinger"). The Master Agreement provides for the possible combination of the Company and Inmarsat plc ("Inmarsat"), a UK public listed company and a leading provider of global mobile satellite services. Harbinger owns approximately 28.8% of the issued and outstanding ordinary shares of Inmarsat. Pursuant to the Master Agreement, the proposed business combination of the Company and Inmarsat would be structured as an offer by the Company for all of the issued and outstanding shares of Inmarsat not owned by Harbinger, and would be subject to the receipt of required regulatory and antitrust clearances.

On August 22, 2008, pursuant to the Master Agreement, Harbinger and the Company submitted applications to the FCC seeking consent for transfer of control of the Company to Harbinger and consent for the possible business combination between the Company and Inmarsat. The applications also sought a declaratory ruling approving a range of possible foreign ownership levels associated with Harbinger’s ownership of up to 100% of the Company.

On August 22, 2008, the Company filed a notice with the U.S. Department of Justice's Antitrust Division under the Hart-Scott-Rodino Act in connection with the possible offer by the Company for Inmarsat. On September 22, 2008, the 30-day Hart-Scott-Rodino waiting period expired without any action from the U.S. Department of Justice’s Antitrust Division. No second request was issued.

The Company and Harbinger expect the FCC approval process to take approximately 12 to 18 months from the July 2008 announcement. The Company is continuing to work cooperatively with Harbinger with respect to the possible offer for Inmarsat, including obtaining all required regulatory approvals for the business combination.

Assuming an acceptable conclusion to the regulatory approval process and Harbinger’s determination to proceed with the transaction, the proposed business combination with Inmarsat is expected to 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. Harbinger has not yet proposed the formal terms or structure of a possible Offer to SkyTerra or Inmarsat. Harbinger may terminate the Master Agreement at any time and is not obligated to proceed with any business combination transaction involving SkyTerra and Inmarsat.

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 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

41

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 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 of 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. In exchange for such contributions, SkyTerra would issue to Harbinger new shares of voting common stock at $10 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.

Financing

On July 24, 2008, SkyTerra, SkyTerra LP, and SkyTerra Finance Co. entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which SkyTerra LP and SkyTerra Finance Co. agreed to issue Harbinger up to $500 million aggregate principal amount of 18% Senior Unsecured Notes due July 1, 2013 (the “18% Senior Unsecured Notes”) in four tranches. The proceeds of this funding commitment are expected to fund the Company’s business plan through the third quarter of 2010. As amended, the Securities Purchase Agreement provides that the 18% Senior Unsecured Notes bear interest at a rate of 18% per annum, and that, in conjunction with the issuance of the 18% Senior Unsecured Notes pursuant to the Securities Purchase Agreement, SkyTerra will issue to Harbinger warrants to purchase up to an aggregate of 32.5 million shares of voting or non-voting common stock of SkyTerra (at the option of the holder) at an exercise price of $0.01 per share of common stock. Harbinger’s purchase of the 18% Senior Unsecured Notes is not conditioned upon the commencement or consummation of a business combination with Inmarsat, as described elsewhere in this document. Harbinger may not be required to purchase the 18% Senior Unsecured Notes under certain circumstances, including upon the occurrence of a material adverse change.

On January 7, 2009 the Company issued the first of the four issuances of the 18% Senior Unsecured Notes to Harbinger under the Securities Purchase Agreement, in an aggregate principal amount of $150 million. In addition, at this closing the Company issued Harbinger ten-year warrants to purchase 7.5 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. The remaining $350 million of 18% Senior Unsecured Notes is scheduled to be issued to Harbinger in three tranches of $175 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively.

The Company is actively pursuing other financing alternatives to continue to increase the amount of capital available to fund the development of the next generation network, including constructing SkyTerra-1 and SkyTerra-2, the satellite component of the network. The Company is considering means to raise capital, including strategic partnerships, vendor financing, sale of its interest in TerreStar Networks, and additional debt or equity financing, among others. There is no assurance that the Company can raise sufficient capital, or raise sufficient capital with terms that are favorable to the Company, to complete the next generation network and realize an ATC build-out.

Boeing Deferred Payment Schedule

On July 3, 2008, SkyTerra LP 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 SkyTerra-2 satellite, currently planned for the second half of 2010.

SkyTerra LP Exchange Transactions

On September 25, 2006, the Company issued 39.6 million shares of its voting and non-voting common stock to TerreStar Corporation and other partners in SkyTerra LP in exchange for limited partnership interests in SkyTerra LP (the “2006 SkyTerra LP Exchange Transactions”), resulting in SkyTerra owning 59% of SkyTerra LP as of the closing. Pursuant to the terms of these transactions, TerreStar Corporation agreed to use commercially reasonable efforts to distribute the 25.5 million shares of the Company’s common stock that it received to its common stockholders. Prior to any such distribution these shares were non-voting. TerreStar Corporation had the right to exchange its remaining limited partnership interests of SkyTerra LP for shares of the Company’s non-voting common stock at a defined ratio.

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Notwithstanding the legal form of the transactions, the 2006 SkyTerra LP Exchange Transactions were accounted for as a reverse acquisition, with SkyTerra LP being treated as the accounting acquirer of SkyTerra. Accordingly, the historical financial statements of the Company prior to September 25, 2006 are the historical financial statements of SkyTerra LP. The consolidated financial statements of SkyTerra LP were retroactively adjusted to reflect the recapitalization of SkyTerra LP with the 39.6 million shares of SkyTerra common stock issued to SkyTerra LP equity holders in the 2006 SkyTerra LP Exchange Transactions.

On January 5, 2007, the Company acquired all of the equity interests in SkyTerra LP owned by BCE Inc. (BCE) through the purchase of a BCE wholly-owned subsidiary, TMI Communications Delaware Limited Partnership (TMI Delaware). In exchange for 8 million limited partnership interests in SkyTerra LP, the Company issued 22.5 million shares of non-voting common stock (the “BCE Exchange Transaction”). These shares of non-voting common stock are exchangeable for a like number of shares of voting common stock upon a sale by BCE in the open market or to a person who will not beneficially own 10% or more of the Company’s voting common stock.

Substantially concurrently with the BCE Exchange Transaction, the Company issued 176,250 shares of common stock to Winchester Development LLC, a Delaware limited liability company beneficially owned by a former director of SkyTerra LP. Such shares were issued in exchange for $0.4 million in cash and 50,226 limited partnership interests of SkyTerra LP. This transaction, together with the BCE Exchange Transaction, resulted in the Company owning 81% of SkyTerra LP.

On February 12, 2007, TerreStar Corporation exercised its option to exchange 5.1 million limited partnership interests in SkyTerra LP to acquire 14.4 million shares of the Company’s common stock. As a result, the Company’s ownership of SkyTerra LP increased to 95%. On November 30, 2007, TerreStar Corporation exercised its option to exchange its remaining interest in SkyTerra LP, or 1.6 million limited partnership interests, to acquire 4.4 million shares of the Company’s common stock. As a result, the Company’s ownership of SkyTerra LP increased to 99.3%.

On December 10, 2008, the Company acquired all of the limited partnership interests in SkyTerra LP owned by certain remaining minority limited partners. In exchange for 261,067 limited partnership interests in SkyTerra LP, the Company issued 736,209 shares of its voting common stock to these minority limited partners. As a result, the Company’s ownership of SkyTerra LP increased to 100%.

Critical Accounting Policies and Estimates

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 equity-based compensation, the valuation of the Company’s investment in TerreStar Networks, valuation of intangible assets, and the useful lives of long-lived assets, and judgments involved in evaluating asset impairments among others, have a material impact on the Company’s financial statements. The Company bases its estimates on historical experience and various other assumptions that it believes are reasonable, the results of which form the basis for making judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

SkyTerra and SkyTerra LP do not have any ownership interests in any special purpose or other entities that are not consolidated into the Company’s consolidated financial statements. SkyTerra and SkyTerra LP have related party transactions as defined under Statement of Financial Accounting Standards (“SFAS”) No. 57, “Related Party Disclosures” that are discussed in “Related Parties” below.

Investments

The Company’s investments include commercial paper, certificates of deposit, municipal bonds and securities issued by government agencies or guaranteed by government agencies. Interest income is recognized when earned. Realized gains and losses for marketable securities are derived using the specific identification method. The classification of investments is determined at the time of purchase and re-evaluated at each balance sheet date. The Company holds investments classified as “held-to-maturity” that are reported at amortized cost. The Company holds one investment classified as “available-for-sale” that is reported at fair value, with changes in fair value reported within equity as a component of other comprehensive income. The Company holds no investments that are classified as “trading securities”.

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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.

During the second half of 2008 the credit markets came under severe pressure from a confluence of events including the collapse of the sub-prime debt market, deterioration in the credit default swap market, and the near-standstill of the commercial paper market. As a result of these market conditions, the Company made adjustments to its cash and investment position in an effort to reduce exposure to principal loss. Specifically, several securities previously classified as “held-to-maturity” were sold resulting in insignificant realized gains or losses on those securities during 2008.

The Company evaluated the fair value of its holdings using relevant and available indicators in order to determine if any of the Company’s investments were other-than-temporarily impaired. As result of the Company’s analysis it was determined that one commercial paper investment had become other-than-temporarily impaired in the amount of $1.6 million and was written down to its estimated fair value, with the impairment charge included in the statement of operations during 2008.

Investment in TerreStar Networks

The Company owns 11.1% of TerreStar Networks (a consolidated privately-held subsidiary of TerreStar Corporation) that it accounts for under the cost method. Prior to September 12, 2008, TerreStar Corporation owned 29,926,074 million shares of the Company.

The Company evaluates impairment of such investments in accordance with FSP FAS 115-1/124-1, 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.

On September 12, 2008, the Company entered into a Transfer and Exchange Agreement with TerreStar Corporation. Pursuant to the agreement, transferees (but not the Company itself) will have the right until May 15, 2014 to exchange shares of TerreStar Networks for shares of TerreStar Corporation common stock at an exchange ratio of 4.37 shares of TerreStar Corporation common stock per TerreStar Networks share. The Agreement also provides for SkyTerra’s waiver of TerreStar Corporation’s obligation in the Exchange Agreement among SkyTerra, TerreStar and Motient Ventures Holding Inc., dated May 6, 2006, to use its commercially reasonable efforts to distribute 29,926,074 shares of non-voting common stock of SkyTerra (the “SkyTerra Shares”) to TerreStar Corporation’s stockholders. Throughout 2008, the observable quoted market price of TerreStar Corporation common stock continually 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, effective January 1, 2008, 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 (Market Method) that utilized observable quoted market inputs (Level 1 inputs) and observable other than quoted market inputs (Level 2 inputs), was at a higher level of the fair value hierarchy than other methods it had previously utilized. Accordingly, the Company used the Market Method to perform its assessment of impairment of the investment in TerreStar Networks at March 31, 2008, and June 30, 2008.

To perform its assessment of impairment as of September 30, 2008 and December 31, 2008, the Company updated its approach in light of the Transfer and Exchange Agreement with TerreStar Corporation and the exchange ratio agreed upon that would allow exchange of TerreStar Networks shares for TerreStar Corporation shares that are publicly traded (Exchange Method). The Company now uses that exchange ratio and the quoted market price of TerreStar Corporation common stock to determine the fair value of the TerreStar Networks shares. The Company believes that the previously used Market Method is a lower level in the fair value hierarchy due to the Exchange Method’s direct, rather than indirect, link to the publicly traded securities of TerreStar Corporation. The privately held investment in TerreStar Networks, in certain circumstances, may be worth more than its “as-if-exchanged” value.

At December 31, 2008, the investment in TerreStar Networks valued under the Exchange Method described above was $7.4 million. As a result, the Company determined that the TerreStar Networks investment is other-than-temporarily impaired. The investment was written down to estimated fair value, resulting in total impairment charges of $70.7 million for the year ended December 31, 2008.

Intangible and Other Long-Lived Assets

The Company’s intangible assets and goodwill arose as a result of acquisitions accounted for using the purchase method of accounting. At the time of the acquisitions, the Company allocated the purchase price to the assets acquired and

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liabilities assumed based on their respective estimated fair values. The identified intangible assets are spectrum assets, and intellectual property, and customer relationships. The Company’s spectrum assets and intellectual property are being amortized over periods ranging from 16 to 20.  Customer relationships are being amortized over periods ranging from 4.5 to 7 years.

The Company reviews long-lived assets, including intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an asset is impaired, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset. The Company has made significant investments in certain technology related to its next generation network, including development of a satellite air interface. If the Company were to utilize different technologies than those on which it has begun development work, it may realize significant impairment charges in the future.

Based on a deterioration in the economic environment and a goodwill impairment charge in November 2008, the Company evaluated its next generation long-lived assets to assess recoverability as of December 31, 2008. The Company’s long-lived assets consist mainly of components of the Company’s planned next generation network. As such, to evaluate impairment, the Company compared the net undiscounted cash flows estimated to be generated by the next generation network to the recorded value of the assets. The net undiscounted cash flows estimated to be generated exceeded the recorded value of the assets, resulting in no impairment as of December 31, 2008. The Company’s estimates of net undiscounted cash flows were based upon historical results, projections of market and service growth, customer surveys, and market size estimates provided by industry experts. A 10% change in the estimated undiscounted cash flows would not have had an impact on impairment.

Goodwill

Goodwill is not amortized, but rather is tested for impairment at least annually. Goodwill impairment is determined using a two step process. The first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. The fair value of the reporting unit is allocated to all the assets and liabilities, including any previously unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. 

The Company performs its annual impairment assessment on November 30, however, the Company could be required to evaluate the recoverability of goodwill prior to the required annual assessment if the Company experiences indications of impairment. The Company has three reporting units, Current Generation, Next Generation and SkyTerra Corporate. As of the evaluation date, the Company carried goodwill of $10.4 million and $0.1 million at the Next Generation and Current Generation reporting units, respectively, as a result of SkyTerra LP’s acquisition of satellite businesses in previous years. The SkyTerra Corporate reporting unit has no goodwill.

The Company estimated the fair value of its reporting units using discounted cash flow analyses. The cash flow estimates required various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company’s budgets, business plans, economic projections, and anticipated future cash flows.

The Current Generation reporting unit is a steady, long-term business that faces technological obsolescence and the retirement of its operating assets towards the end of 2010, when it plans to cease operations. To forecast cash flows of the Current Generation Reporting unit, the Company assumed operating margins in the next two years of network life consistent with or at lower levels then realized in the most current year due to expected customer defections as the current generation network approaches technological obsolescence and retirement. The Next Generation reporting unit has several different viable business plans that the Company is currently evaluating, including a plan that includes mobile satellite services only (and related costs), and a plan that includes both mobile satellite and ATC services (and related costs). For purposes of its goodwill impairment analysis, the Company utilized the business plan that includes mobile satellite services only. Within the mobile satellite services only business plan the Company assumed operating margins applicable to a significantly broader range of services that will be available on the next generation network.

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The Company compared the combined fair values of its reporting units with its market capitalization, adjusted for a control premium as demonstrated by large transactions in the Company’s stock. The Company’s estimated market value based on its average closing stock price over a relatively short period of time, plus control premium, approximated the combined fair values of its reporting units determined through discounted cash flow analysis.

The Company compared the estimated fair values of its reporting units with their carrying amounts, including goodwill. The estimated fair value the Current Generation reporting unit exceeded its carrying amounts that include goodwill of $0.1 million. As such, no goodwill impairment loss was recognized related to the Current Generation reporting unit. The estimated fair value the Next Generation reporting unit did not exceed its carrying amounts that include goodwill of $10.4 million. The fair value of the identifiable net assets of the Next Generation reporting unit, determined as if the reporting unit had been acquired in a business combination when compared to the fair value of the reporting unit, resulted in a determination that the implied fair value of goodwill was zero. As the $10.4 million carrying amount of Next Generation reporting unit goodwill exceeds the implied fair value of that goodwill (zero), an impairment loss was recognized in an amount equal to the full amount of goodwill carried in this reporting unit. Accordingly, at December 31, 2008 the remaining goodwill of $0.1 million relates to the Current Generation reporting unit.

Stock-based Compensation Expense

The Company measures and recognizes compensation expense for all share-based payment awards made to employees and directors based on estimated fair values in accordance with SFAS 123(R), Share Based Payment, which requires it to estimate the fair value of certain share-based payment awards on the date of grant using an option-pricing model. The Company’s determination of fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards and actual and projected employee stock option exercise behaviors. Changes in these underlying factors and assumptions may result in significant variability in the stock-based compensation costs the Company records, which makes such amounts difficult to accurately predict. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period.

On August 6, 2008 the Company completed an offer to all SkyTerra LP option holders as of that date, to grant them new SkyTerra options, generally in exchange for surrender and termination of their SkyTerra LP options (the “Option Exchange”). All participating U.S. SkyTerra LP option holders received options to purchase shares of SkyTerra common stock pursuant to the terms of the Option Exchange at a ratio of 2.82 SkyTerra options for each SkyTerra LP option terminated, with an exercise price equal to the exercise price of the SkyTerra LP options terminated divided by 2.82. All participating Canadian SkyTerra LP option holders received the right to exchange SkyTerra LP options for SkyTerra options on the same terms in the future. Sale of all shares subject to the options received upon exchange is subject to restriction until May 1, 2010, with certain exceptions that could result in earlier release of the restrictions. Upon the release of these restrictions, Canadian SkyTerra LP option holders participating in the Option Exchange will have three business days to complete the exchange of their respective SkyTerra LP options for SkyTerra options, or their SkyTerra LP options will become unexercisable.

Upon consummation of the Option Exchange, 11.1 million SkyTerra options were issued in exchange for SkyTerra LP options held by U.S. SkyTerra LP option holders. Additionally, Canadian SkyTerra LP option holders received rights to receive 1.7 million SkyTerra options if they exchange their respective SkyTerra LP options for SkyTerra options in the future.

The exchange of vested options held by U.S. SkyTerra LP option holders that were outstanding at September 25, 2006, the date of the 2006 SkyTerra LP Exchange Transactions, and had not been subsequently modified, have been accounted for as the acquisition of minority interest under the purchase method of accounting.  The fair value of these SkyTerra options was determined using Monte Carlo simulations.

Options that were granted to SkyTerra LP U.S. employees subsequent to September 25, 2006, or granted prior to September 25, 2006 and subsequently modified after that date (before the exchange), and exchanged on August 6, 2008, have been accounted for as modifications, pursuant to SFAS 123(R), Share-Based Payment. The rights granted to SkyTerra LP Canadian employees to exchange their options in the future have also been accounted for as modifications, pursuant to SFAS 123(R), as those option holders continue to hold and have the ability to exercise their respective SkyTerra LP options. The Company determined that there was no incremental compensation cost as a result of these modifications, based on estimated fair values determined by Monte Carlo simulations.

The Company’s determination of fair value of stock option awards on the date of the Option Exchange using Monte Carlo simulations was affected by its stock price as well as assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards, judgments related to the lapse of transfer restrictions on options received in the Option Exchange, and

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actual and projected employee stock option exercise behaviors. Changes in these underlying factors and assumptions may result in significant variability in the stock-based compensation costs the Company records, which makes such amounts difficult to accurately predict. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period in the Company’s Consolidated Statements of Operations.

Recently Issued Accounting Standards

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.

In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS No. 161). SFAS No. 161 amends SFAS No. 133 by improving financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The provisions of SFAS No. 161 are effective for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company is in the process of evaluating the impact, if any, that SFAS No. 161 will have on disclosures in its consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock (EITF 07-5). EITF 07-5 applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative, as defined.  If an instrument, or an embedded feature, is not considered indexed to the issuer’s stock under EITF 07-5, that instrument is not eligible for equity classification and would be classified as an asset or liability and re-measured at fair value through earnings.  The Company will be required to adopt EITF 07-5 on January 1, 2009. The consensus must be applied to all instruments outstanding on the date of adoption and the cumulative effect of applying the consensus must be recognized as an adjustment to the opening balance of retained earnings at transition. The Company has outstanding warrants to purchase common stock that have been preliminarily evaluated as ineligible for equity classification under EITF 07-05 because of certain provisions that may result in an adjustment to the exercise price of the warrants. Accordingly, the adjustment feature may cause the warrant to fail to be indexed solely to the Company’s stock. The warrants would therefore be classified as liabilities and re-measured at fair value with changes in the fair value recognized in operating results. The Company has not completed its analysis of these instruments nor determined the effects of pending adoption, if any, on its financial statements.

Current Business

The Company’s significant operating activity, providing mobile satellite communication services, is performed through its consolidated subsidiary SkyTerra LP. SkyTerra LP provides service in the United States and Canada using two nearly identical satellites. End users of SkyTerra LP’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. SkyTerra LP sells equipment for use on the network.

Comparison of the years ended December 31 2008, 2007 and 2006

The following tables detail the Company’s consolidated financial results for the years ended December 31, 2008, 2007 and 2006 in the following segments: Next Generation (research, development, and implementation of a next generation network), Current Generation (current satellite services), and SkyTerra corporate activities.

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	Year ended December31, 2008 In Thousands
	Next Generation			Current Generation			Total SkyTerra LP			SkyTerra Corporate			Eliminations			SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	28,571		$	28,571		$	—		$	—		$	28,571
Equipment sales		—			5,025			5,025			—			—			5,025
Other revenues		—			889			889			—			—			889
Total revenues		—			34,485			34,485			—			—			34,485
Operating expenses:
Cost of equipment sold		—			4,165			4,165			—			—			4,165
Operations and cost of services (exclusive of depreciation and amortization)		16,243			16,067			32,310			—			—			32,310
Sales and marketing		4,508			3,944			8,452			—			—			8,452
Research and development (exclusive of depreciation and amortization)		15,557			—			15,557			—			—			15,557
General and administrative		16,009			7,843			23,852			11,579			—			35,431
Depreciation and amortization		30,083			2,605			32,688			—			—			32,688
Impairment of goodwill		10,389			—			10,389			—			—			10,389
Total operating expenses		92,789			34,624			127,413			11,579			—			138,992
Operating loss		(92,789	)		(139	)		(92,928	)		(11,579	)		—			(104,507	)
Other income (expense):
Interest income		6,660			—			6,660			484			(339	)		6,805
Interest expense		(40,242	)		—			(40,242	)		(339	)		339			(40,242	)
Impairment of investment in TerreStar Networks		—			—			—			(70,730	)		—			(70,730	)
Other income, net		(1,011	)		(468	)		(1,479	)		530			—			(949	)
Loss before income taxes, minority interest and extraordinary gain		(127,382	)		(607	)		(127,989	)		(81,634	)		—			(209,623	)
Benefit for income taxes		—			1,110			1,110			—			—			1,110
Minority interest in loss of subsidiary		—			—			—			—			572			572
Net income (loss) before extraordinary gain		(127,382	)	$	503			(126,879	)		(81,634	)		572			(207,941	)
Extraordinary gain on acquisition of minority interest		3,006			—			3,006			—			—			3,006
Net income (loss)	$	(124,376	)		503		$	(123,873	)	$	(81,634	)	$	572		$	(204,935	)

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	Year ended December31, 2007 In Thousands
	Next Generation			Current Generation			Total SkyTerra LP			SkyTerra Corporate			Eliminations			SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	27,754		$	27,754		$	—		$	—		$	27,754
Equipment sales		—			5,265			5,265			—			—			5,265
Other revenues		—			1,064			1,064			—			—			1,064
Total revenues		—			34,083			34,083			—			—			34,083
Operating expenses:
Cost of equipment sold		—			4,245			4,245			—			—			4,245
Operations and cost of services (exclusive of depreciation and amortization)		8,044			16,986			25,030			—			—			25,030
Sales and marketing		3,957			3,602			7,559			—			—			7,559
Research and development (exclusive of depreciation and amortization)		10,568			—			10,568			—			—			10,568
General and administrative		14,268			7,746			22,014			7,629			—			29,643
Depreciation and amortization		26,671			2,458			29,129			—			—			29,129
Total operating expenses		63,508			35,037			98,545			7,629			—			106,174
Operating loss		(63,508	)		(954	)		(64,462	)		(7,629	)		—			(72,091	)
Other income (expense):
Interest income		16,267			—			16,267			2,036			(147	)		18,156
Interest expense		(39,068	)		—			(39,068	)		(172	)		147			(39,093	)
Impairment of investment in TerreStar Networks		—			—			—			(34,520	)		—			(34,520	)
Other income, net		602			303			905			(1,207	)		—			(302	)
Loss before income taxes and minority interest		(85,507	)		(651	)		(86,358	)		(41,492	)		—			(127,850	)
Benefit for income taxes		—			333			333			—			—			333
Minority interest in loss of subsidiary		—			—			—			—			3,961			3,961
Net income (loss)	$	(85,707	)	$	(318	)	$	(86,025	)	$	(41,492	)	$	3,961		$	(123,556	)

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	Year ended December31, 2006 In Thousands
	Next Generation			Current Generation			Total SkyTerra LP			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	26,922		$	26,922		$	—		$	—	$	26,922
Equipment sales		—			6,984			6,984			—			—		6,984
Other revenues		—			948			948			—			—		948
Total revenues		—			34,854			34,854			—			—		34,854
Operating expenses:
Cost of equipment sold		—			5,738			5,738			—			—		5,738
Operations and cost of services (exclusive of depreciation and amortization)		5,132			14,664			19,796			—			—		19,796
Sales and marketing		1,708			2,505			4,213			—			—		4,213
Research and development (exclusive of depreciation and amortization)		5,127			—			5,127			—			—		5,127
General and administrative		20,168			6,882			27,050			3,488			—		30,538
Depreciation and amortization		5,585			6,116			11,701			—			—		11,701
Total operating expenses		37,720			35,905			73,625			3,488			—		77,113
Operating loss		(37,720	)		(1,051	)		(38,771	)		(3,488	)		—		(42,259	)
Other income (expense):
Interest income		20,411			—			20,411			106			—		20,517
Interest expense		(43,735	)		—			(43,735	)		(5	)		—		(43,740	)
Other income, net		1,331			552			1,883			50			—		1,933
Loss before income taxes and minority interest		(59,713	)		(499	)		(60,212	)		(3,337	)		—		(63,549	)
Provision for income taxes		—			(1,255	)		(1,255	)		—			—		(1,255	)
Minority interest in loss of subsidiary		—			—			—			—			7,704		7,704
Net income (loss)	$	(59,713	)	$	(1,754	)	$	(61,467	)	$	(3,337	)	$	7,704	$	(57,100	)

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Consolidated Results - Comparison of the years ended December31, 2008, 2007 and 2006

Revenues and cost of equipment sold

All revenues and cost of equipment sold are attributable to the Company’s Current Generation segment. See “Current Generation - Comparison of the years ended December 31, 2008, 2007 and 2006” for a discussion of revenues.

Operating Expenses (excluding cost of equipment sold)

The table below sets forth the Company’s operating expenses and percentage changes for the periods indicated (in thousands). See “Next Generation - Comparison of the years ended December 31, 2008, 2007 and 2006,” “Current Generation - Comparison of the years ended December 31, 2008, 2007 and 2006,” and “SkyTerra Corporate - Comparison of the years ended December 31, 2008, 2007 and 2006” for a detailed discussion, by segment, of the Company’s operating expenses.

	Year ended December31,						% Change In 2008		% Change In 2007
	2008		2007		2006
Operations and cost of services (exclusive of depreciation and amortization)	$	32,310	$	25,030	$	19,796	29.1	%	26.4	%
Sales and marketing		8,452		7,559		4,213	11.8	%	79.4	%
Research and development (exclusive of depreciation and amortization)		15,557		10,568		5,127	47.2	%	106.1	%
General and administrative		35,431		29,643		30,538	19.5	%	(2.9	)%
Depreciation and amortization		32,688		29,129		11,701	12.2	%	148.9	%
Impairment of goodwill		10,389		—		—	100	%	—
Total operating expenses, excluding cost of equipment sold	$	134,827	$	101,929	$	71,375	32.3	%	42.8	%

Operations and Cost of Services

Operations and cost of services expenses include compensation costs of MSS operations employees, and other expenses related to the operation of the Company’s satellite network, new product development relating to next generation product offerings, costs of telemetry, tracking, and control, facility costs, and historically, the cost of G2 product development.

Operations and cost of services expenses increased during 2008, as compared to 2007, with 66% of the increase due to costs associated with the engineering of chipsets for next generation network devices and 27% due to increases in compensation costs, staffing levels and facilities costs.

Operations and cost of services expenses increased during 2007, as compared to 2006 due to increases in compensation costs, staffing levels and facilities costs, increased expenses relating to maintenance of ground segment equipment, and increases in third-party consulting costs to upgrade the Company’s enterprise software.

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 increased during 2008, as compared to 2007, due to increased compensation costs in the first half of 2008, increases in equity-based compensation related to the February 2008 modifications to outstanding options, and costs related to the design of a prototype device (shell for purposes of look and feel design) for the next generation network. Those increases were offset by decreased compensation costs and staffing levels during the second half of 2008, and a reduction in consulting and professional fees related to market analysis incurred in 2007.

Sales and marketing expenses increased during 2007, as compared to 2006, due to increases in compensation costs and staffing levels, increases in third-party consulting expenses and increased marketing expenses.

Research and Development

Research and development expenses include the compensation costs of employees working on next generation products, and other development costs of the next generation network.

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Research and development expenses increased during 2008, as compared to 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.

Research and development expenses increased during 2007, as compared to 2006 with 91% of the increase related to third-party consulting expenses, and other increases related to compensation costs and staffing levels. These increases were offset by decreases in legal expenses.

General and Administrative

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

General and administrative expenses increased during the 2008, as compared to 2007. The increase was primarily attributable to legal fees associated with the July 2008 Harbinger Contribution and Support Agreement, and 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.

General and administrative expenses decreased during 2007, as compared to 2006, due to reduced equity-based compensation costs in 2007 as compared to 2006 due to the accelerated vesting of SkyTerra LP options resulting from the 2006 SkyTerra LP Exchange Transaction in September 2006, and the expense related to modification of an executive’s options in 2006. In addition, other decreases consist of a reduction of legal and regulatory expenses in 2007. In 2006 the Company wrote off a $2.3 million performance bond with the FCC as a result of the relinquishment of its South American satellite license. These decreases were offset by increases in other non-equity based compensation costs and increases in consulting, audit, and legal expenses.

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 2008, as compared to 2007, due primarily to an increase in intangible assets resulting from the TerreStar Corporation Exchange Transactions that occurred in February and November 2007.

Depreciation and amortization expenses increased during 2007, as compared to 2006 due to the significant increase in intangible assets resulting from the BCE and TerreStar Corporation Exchange Transactions, offset by the effect of an increase in the useful life of certain intangible assets from 15 years to 20 years.

Impairment of Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the Company tests goodwill for impairment annually, or when an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. During the fourth quarter of 2008, the Company performed its annual goodwill impairment test. As result of this analysis the Company determined its goodwill was impaired and recorded an impairment charge of $10.4 million in 2008.

Other Income, Other Expenses and Extraordinary Gain

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

	Year ended December31,									% Change In 2008		% Change In 2007
	2008			2007			2006
Interest income	$	6,805		$	18,156		$	20,517		(62.5	)%	(11.5	)%
Interest expense		(40,242	)		(39,093	)		(43,740	)	2.9	%	(10.6	)%
Management fees from TerreStar		589			602			1,331		(2.2	)%	(54.8	)%
Impairment of investment in TerreStar Networks		(70,730	)		(34,520	)		—		104.9	%	100	%
Other income (expense)		(1,538	)		(904	)		602		70.1	%	(250.2	)%
Benefit (provision) for income taxes		1,110			333			(1,255	)	233.3	%	126.5	%
Minority interest		572			3,961			7,704		(85.6	)%	(48.6	)%
Extraordinary gain on acquisition of minority interest		3,006			—			—		100	%	—

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Interest Income

Interest income is interest earned on cash, cash equivalents, restricted cash and short-term investments.

Interest income decreased during 2008, as compared to 2007 due to the decrease in average invested balances of cash, cash equivalents, and short-term investments, and a significant decrease in yields. Interest income decreased for 2007, as compared to 2006 due to the decrease in average invested balances of cash, cash equivalents, and short-term investments.

Interest Expense

Interest expense is comprised primarily of the amortization of the discount and debt issuance costs on Senior Secured Discount Notes, interest and amortization of the discount on the 16.5% Senior Unsecured Notes, and interest incurred on Notes Payable - Vendor, net of capitalized interest on the system under construction. Total and capitalized interest is as follows (in thousands):

	Year ended December31,
	2008		2007		2006
Capitalized interest	$	72,894	$	32,543	$	4,548
Interest expense		40,242		39,093		43,740
Total interest	$	113,136	$	71,636	$	48,288

Total interest increased during 2008, as compared to 2007, due to increased interest related to the 16.5% Senior Unsecured Notes, Senior Secured Notes, and Notes Payable – Vendor of $26.2 million, $11.3 million, and $4.0 million, respectively.

Total interest increased during 2007, as compared 2006, due to increased interest related to the Senior Secured Notes and Notes Payable – Vendor of $22.3 million and $1.0 million, respectively.

Impairment of Investment in TerreStar Networks

During 2008, the Company recorded an other-than-temporary impairment charge for its TerreStar Networks investment in the amount of $70.7 million.

During 2007, the Company recorded an other-than-temporary impairment charge for its TerreStar Networks investment in the amount of $34.5 million.

Other Income (Expense)

During 2008, the Company determined that one commercial paper investment had become “other-than-temporarily impaired” and recorded an impairment charge of $1.6 million to write down that investment to its estimated fair value. During 2007, the Company recorded a liability of $1.2 million related to tax withholding, penalties, and interest owed to taxing authorities by the SkyTerra foreign shareholders in connection with the distribution of Hughes Communications Inc. (HCI) shares in a taxable spin-off transaction in February 2006. The HCI spin-off occurred prior to the 2006 SkyTerra LP Exchange Transactions in which SkyTerra LP was deemed the accounting acquirer of SkyTerra. Other expense also includes realized gains and losses on foreign currency transactions.

Provision for Income Taxes

The Company’s effective tax rate differs from the Federal statutory rate of 34%, due primarily to a nearly full valuation allowance recorded on net deferred tax assets. Deferred tax assets in the Company’s consolidated variable interest entity, SkyTerra (Canada), are recognizable to the extent its 2006 taxable income can be offset by taxable loss carrybacks from subsequent years, and taxable losses were incurred in the next two tax years. Accordingly, for2008 and 2007, the Company recorded benefits of $1.1 million and $0.3 million, respectively, for income taxes attributable to SkyTerra Canada.

Extraordinary gain on acquisition of minority interest

On December 10, 2008, the Company issued 736,209  shares of non-voting common stock to the remaining minority limited partners and acquired all of the remaining limited partnership interests in SkyTerra LP it did not already own. As a result, the Company’s ownership of SkyTerra LP increased to 100%. This transaction was accounted for under the purchase

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method of accounting in accordance with SFAS No. 141. The valuation of securities issued was determined in accordance with EITF 99-12 based on the date when agreement as to terms had been reached and the transaction announced. Based on this valuation the purchase price was determined to be $1.5 million.  The fair value of the interest in the net assets acquired exceeded the fair value of the consideration resulting in "negative goodwill."  In accordance with SFAS No. 141, such negative goodwill was allocated on a pro rata basis to the interest in the long-lived assets acquired such that there was no net adjustment to the carrying amount of the long-lived assets.  After allocation of the negative goodwill against the fair value basis of the qualifying assets acquired, the remaining excess of $3.0 million was recognized as an extraordinary gain.  

Segment Results

Next Generation - Comparison of the years ended December31, 2008, 2007 and 2006

Operating Expenses

Next Generation operations relate to the planning, development, and building of a next generation satellite system complimented by ATC. The table below sets forth Next Generation operating expenses and percentage change for the following periods indicated (in thousands).

	Year ended December31,						% Change In 2008		% Change In 2007
	2008		2007		2006
Operations and cost of services (exclusive of depreciation and amortization)	$	16,243	$	8,044	$	5,132	101.9	%	56.7	%
Sales and marketing		4,508		3,957		1,708	13.9	%	131.7	%
Research and development (exclusive of depreciation and amortization)		15,557		10,568		5,127	47.2	%	106.1	%
General and administrative		16,009		14,268		20,168	12.2	%	(29.3	)%
Depreciation and amortization		30,083		26,671		5,585	12.8	%	377.6	%
Impairment of goodwill		10,389		—		—	100	%	—
Total operating expenses	$	92,789	$	63,508	$	37,720	46.1	%	68.4	%

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 2008, as compared to 2007, with 50% of the increase due to costs associated with the engineering of chipsets for next generation network devices, 17% of the increase due to increased staffing levels, 16% related to engineering fees associated with software for the telemetry, tracking and control of the next generation satellites, and 8% of the increase due to increases in equity-based compensation primarily related to the February 2008 modifications to outstanding options.

Operations expenses increased during 2007, as compared to 2006, with 98% of the increase due to an increase in compensation costs, staffing levels and facilities costs, which were offset by a reduction in consulting and development costs.

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 increased during 2008, as compared to 2007, due to increased compensation costs in the first half of 2008, increases in equity-based compensation related to the February 2008 modifications to outstanding options, and costs related to the design of a prototype device (shell for purposes of look and feel design) for the next generation network. Those increases were offset by decreased compensation costs and staffing levels in the second half of 2008.

           Sales and marketing expenses increased during 2007, as compared to 2006, with 89% of the increase due to an increase in compensation costs and staffing levels and 11% attributable to marketing and consulting expenses.

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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 Company’s next generation network.

Research and development expenses increased during 2008, as compared to 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.

Research and development expenses increased during 2007, as compared to 2006, with 91% of the increase related to third-party consulting expenses, and other increases related to compensation costs and staffing levels. These increases were offset by decreases in legal expenses.

General and Administrative

General and administrative expenses include the compensation costs of finance, legal, and human resources employees allocable to Next Generation development.

General and administrative expenses increased during 2008, as compared 2007. Increases in compensation costs and legal and professional fees associated with the July 2008 Harbinger Contribution and Support Agreement were partially offset by reductions in banking fees.

General and administrative expenses decreased during 2007, as compared to 2006, with 97% of the decrease relating to reduced equity-based compensation costs due to the accelerated vesting of SkyTerra LP options resulting from the 2006 SkyTerra LP Exchange Transactions in September 2006, and the expense related to modification of an executive’s options in 2006. In addition, other decreases consist of a reduction of legal and regulatory expenses, in part due to the 2006 write-off of the Company’s $2.3 million performance bond with the FCC as a result of the relinquishment of its South American satellite license. These decreases were offset by increases in other non-equity based compensation costs.

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 in 2008, as compared to 2007, due primarily to an increase in intangible assets resulting from the TerreStar Corporation Exchange Transactions that occurred in February and November 2007.

Depreciation and amortization expenses increased during 2007, as compared to 2006 due to a significant increase in intangible assets resulting from the BCE and TerreStar Corporation Exchange Transactions, offset by the effect of an increase in the useful life of certain intangible assets from 15 years to 20 years.

Impairment of Goodwill

In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, the Company tests goodwill for impairment annually. During the fourth quarter of 2008, the Company performed its annual goodwill impairment test. As result of this analysis the Company determined the goodwill of this reporting unit was fully impaired and recorded an impairment charge of $10.4 million.

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Current Generation - Comparison of the years ended December31, 2008, 2007 and 2006

Current Generation relate to its 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 Current Generation revenues and percentage changes for the periods indicated (in thousands):

	Year ended December31,						% Change In 2008		% Change In 2007
	2008		2007		2006
Revenues
Capacity	$	12,400	$	12,338	$	12,184	0.5	%	1.3	%
Telephony		12,771		12,508		12,186	2.1	%	2.6	%
Data		3,400		2,908		2,552	16.9	%	14.0	%
Equipment		5,025		5,265		6,984	(4.6	)%	(24.6	)%
Other		889		1,064		948	(16.4	)%	12.2	%
Total Revenues	$	34,485	$	34,083	$	34,854	1.2	%	(2.2	)%

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 SkyTerra LP 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 years ended December 31, 2008, 2007, and 2006 have not fluctuated significantly from year to year.

Telephony

The Company provides voice service to end users, including dispatch service, which 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. 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 over the included minutes is charged at a rate of $0.89 to $1.19.

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

	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		$	52.56	19,449		$	51.17	2.7	%	2.7	%
Additions	597				827				(27.8	)%
Deletions	(1,421	)			(711	)			99.9	%
Total subscribers, June 30	19,147		$	54.52	19,565		$	52.77	(2.1	)%	3.3	%
Additions	905				702				28.9	%
Deletions	(768	)			(605	)			26.9	%
Total subscribers, September 30	19,284		$	58.91	19,662		$	56.78	(1.9	)%	3.8	%
Additions	406				715				(43.2	)%
Deletions	(676	)			(511	)			32.3	%
Total subscribers, December 31	19,014		$	52.43	19,866		$	52.19	(4.3	)%	0.5	%
Average, for the year ended December 31	19,492		$	54.61	19,581		$	52.23	(0.5	)%	4.6	%
	2007		ARPU		2006		ARPU		Change Subscribers		Change ARPU
Total subscribers, January 1	19,133				19,413				(1.4	)%
Additions	760				1,639				(53.6	)%
Deletions	(444	)			(1,824	)			(75.7	)%
Total subscribers, March 31	19,449		$	51.17	19,228		$	51.34	1.1	%	(0.3	)%
Additions	827				907				(8.8	)%
Deletions	(711	)			(963	)			(26.2	)%
Total subscribers, June 30	19,565		$	52.17	19,172		$	52.57	2.0	%	(0.8	)%
Additions	702				881				(20.3	)%
Deletions	(605	)			(1,058	)			(42.8	)%
Total subscribers, September 30	19,662		$	56.78	18,995		$	57.19	3.5	%	(0.7	)%
Additions	715				859				(16.8	)%
Deletions	(511	)			(721	)			(29.1	)%
Total subscribers, December 31	19,866		$	52.19	19,133		$	50.63	3.8	%	3.1	%
Average, for the year ended December 31	19,581		$	52.23	19,201		$	52.93	2.0	%	(1.3	)%

Telephony revenues for 2008, as compared to the same period in 2007, increased slightly due to an increase in ARPU.

Telephony revenues for 2007, as compared to the same period in 2006, increased slightly due to an increase in the average number of subscribers.

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 2008, as compared to 2007 increased due to an increase of 7.3% in the average number of subscribers and an increase of 8.7% in average monthly revenue per subscriber unit.

Data revenues for 2007, as compared to 2006 increased due to an increase of 8.6% in the average number of subscribers and an increase of 5.0% in average monthly revenue per subscriber unit.

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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 their 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, the equipment promotion and pricing has not been used to increase customer activations or improve retention.

Equipment sales during 2008, decreased slightly as compared to 2007 due to decreased sales of mobile terminals.

Equipment sales deceased in 2007, as compared to 2006 as pent-up customer demand for the G2 mobile satellite voice terminal was realized in 2006.

Other Revenue

Other revenue consists of billing and administrative functions performed for customers, remote monitoring, and other fees.

Operating Expenses

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

	Year ended December31,						% Change In 2008		% Change In 2007
	2008		2007		2006
Cost of equipment sold	$	4,165	$	4,245	$	5,738	(1.9	)%	(26.0	)%
Operations and cost of services (exclusive of depreciation and amortization)		16,067		16,986		14,664	(5.4	)%	15.8	%
Sales and marketing		3,944		3,602		2,505	9.5	%	43.8	%
General and administrative		7,843		7,746		6,882	1.3	%	12.6	%
Depreciation and amortization		2,605		2,458		6,116	6.0	%	(59.8	)%
Total operating expenses	$	34,624	$	35,037	$	35,905	(1.2	)%	(2.4	)%

Although many of the costs incurred in the operation of the network are fixed in the short-term, other costs will fluctuate based on underlying business or development 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 handsets. The Company does not manufacture any of its own equipment, rather, all components are purchased from third parties. Also included in cost of equipment sold are the costs of warehousing and warehousing services.

Cost of equipment sold decreased during 2008 and 2007, as compared to 2007 and 2006, respectively, due to decreases in the amount of equipment sold to end users.

Operations and Cost of Service

Operations and costs of service expenses include compensation costs of satellite operations employees, and the 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 decreased during 2008, as compared to 2007, due primarily to reductions in expenses relating to maintenance on ground segment equipment.

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Operations and costs of service expenses increased during 2007, as compared to 2006, with 44% of the increase due to expenses relating to maintenance on ground segment equipment, 32% due to increases in third-party consulting costs to research and plan upgrades to enterprise software and 22% due to an increase in compensation and expansion of headquarters facilities.

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 increased during 2008, as compared to 2007, due primarily to increased compensation costs 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.

Sales and marketing expenses increased during 2007, as compared to 2006, with 71% of the increase due to an increase in compensation costs and staffing levels and 17% due to increases in third-party consulting expenses.

General and Administrative Expense

General and administrative expense includes the compensation costs of finance, legal, human resources and other corporate costs allocable to Current Generation. Those employees’ costs are reflected in operations and next generation expenses.

General and administrative expenses did not fluctuate significantly during 2008, as compared to 2007.

General and administrative expenses increased during 2007, as compared to 2006, due to increases in consulting, audit, and legal expenses.

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 2008, as compared to 2007, due primarily to the increase in intangible assets resulting from the TerreStar Corporation Exchange Transactions that occurred in February and November 2007.

The decrease during 2007 as compared to 2006 was a result of certain assets becoming fully depreciated during 2006.

SkyTerra Corporate - Comparison of the years ended December31, 2008, 2007 and 2006

Operating Expenses

The table below sets forth SkyTerra Corporate operating expenses and percentage change for the periods indicated (in thousands). Pursuant to the 2006 SkyTerra LP Exchange Transactions, SkyTerra LP is the accounting acquirer. Accordingly, the historical financial statements of the Company prior to September 25, 2006 are the historical financial statements of SkyTerra LP. SkyTerra’s results of operations were included in the consolidated statements subsequent to the 2006 SkyTerra LP Exchange Transactions in September 2006.

	Year ended December31,						% Change In 2008		% Change In 2007
	2008		2007		2006
General and administrative	$	11,579	$	7,629		3,488	51.8	%	118.7	%

General and Administrative Expense

General and administrative expense includes the Company’s corporate costs, including legal, audit, tax, insurance, and the compensation costs.

General and administrative expenses increased during 2008, as compared to 2007. The increase was primarily attributable to legal fees associated with the July 2008 Harbinger Contribution and Support Agreement. Equity-based compensation costs increased $1.1 million 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.

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General administrative expenses increased in 2007, as compared to 2006, primarily due to 12 months of activity recorded in 2007 versus 3 months of activity recorded in 2006 (due to reverse purchase accounting). Offsetting this impact, 2006 included $2.3 million in compensation expense associated with executive bonuses.

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 and equity securities, and vendor financing. Cash payments of interest on the Company’s debt portfolio begins in October 2010, with periodic interest coming due on the Senior Secured Discount Notes, and cash payment of principal due in full in April 2013. Cash payments of interest on the 16.5% Senior Unsecured Notes is required to begin in June 2012, and may be paid earlier at the Company’s option. In January 2009, the Company secured additional financing from Harbinger in the form of 18% Senior Unsecured Notes in an amount of $150 million (see below). Cash payment of interest on the 18% Senior Unsecured Notes is required to begin in July 2011.

The Company’s current operating assumptions and projections reflect management’s best estimate of future revenue, operating expenses, and capital commitments, and indicate that the Company’s current sources of liquidity, including the Harbinger committed financing discussed below, 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. Additional funds will be needed to complete the construction of the next generation network and fund operations beginning in the fourth quarter of 2010. Although the Company secured committed financing in July 2008, pursuant to an agreement with Harbinger, 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 effect.

Pursuant to the terms of the agreement with Harbinger, as amended, the Company has committed funding of $500 million through the sale of four tranches of 18% Senior Unsecured Notes. On January 7, 2009 the Company issued the first of four issuances of the 18% Senior Unsecured Notes in an aggregate principal amount of $150 million. The remaining $350 million of 18% Senior Unsecured Notes are scheduled to be issued in three tranches of $175 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively.

The remaining cost of carrying out the Company’s business plan will be significant, and is significantly more than the Company’s currently available and committed resources. If the Company fails to obtain necessary financing on a timely basis, its satellite construction, launch, or other events necessary to conduct the Company’s business could be materially delayed, or its costs could materially increase; the Company could default on its commitments to its satellite construction or launch contractors, creditors or other third parties, leading to termination of construction or inability to launch the Company’s satellites; the Company may not be able to complete its next generation integrated network as planned and may have to discontinue operations or seek a purchaser for its satellite business or assets. SkyTerra LP could lose its FCC or Industry Canada licenses or its international rights if it fails to achieve required performance milestones. The Company may not be able to continue as a going concern if it fails to obtain necessary financing on a timely basis.

The U.S. and worldwide financial markets have recently experienced unprecedented volatility, particularly in the financial services sector. No assurance can be given that Harbinger will satisfy its funding commitments to the Company in a timely manner, or at all. If Harbinger does not satisfy its funding commitments, the Company may pursue other means to extend its liquidity and raise capital. Those alternatives may include the sale of the investment in TerreStar Networks Inc. (TerreStar Networks), a capital infusion through an equity or debt investment with a strategic partner, a capital infusion through the sale of additional debt or equity, the renegotiation of vendor payment schedules to defer payments into the future, the postponement of certain discretionary spending, or some combination of these actions. The Company may be unable to find alternative financing sources, particularly in light of the current turmoil in the U.S. and worldwide financial markets.

The terms of the Company’s current and expected future indebtedness include significant limitations on additional debt, including amount, terms, access to security, duration, among other factors, and impose limitations on the structure of strategic transactions. In addition, the Master Agreement as amended includes significant limitations on the issuance by the Company of additional debt and equity securities. In addition to the contractual limitations described above, there currently is low trading activity in shares of the Company’s common stock, which limits our ability to raise funding through public equity issuances.

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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 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 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

SkyTerra LP 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 network, providing satellite launch support and other services related to mission operations and system training. Under the terms of the contract, the Company will purchase two satellites. Each satellite is contracted to have a mission life of 15 years with a portion of the contract value payable if certain performance incentives are met, over the expected 15-year 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.

As part of an agreement to amend the satellite construction contract with Boeing (see Note 6 to the Consolidated Financial Statements) SkyTerra LP agreed to extend the delivery date of the SkyTerra-2 satellite by four months, to July 11, 2010. SkyTerra LP 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.

In May 2007, SkyTerra LP entered into fixed price contracts with ILS International Launch Services, Inc. and Sea Launch Company, LLC, each of which were subsequently amended, to launch the next generation satellites SkyTerra-1 and SkyTerra-2. The aggregate amended cost for these services is $183.4 million, of which $145.5 million remains to be paid at December 31, 2008. If SkyTerra LP were to terminate both launch vehicle contracts prior to February 2010, the Company will be subject to termination liability charges that would range from $0.7 million to $49.0 million, depending on the date of termination. If SkyTerra LP were to terminate both launch vehicle contracts after February 2010, the Company would be entitled to receive a portion of previously made payments.

In November 2006, SkyTerra LP entered into an agreement with Hughes Network Systems, LLC (HNS), then a related party of the Apollo stockholders, to purchase four satellite base transceiver subsystems and air interface technology based on GMR-3G technology for a base price, as amended, of $43.7 million, of which $10.9 million remains to be paid at December 31, 2008. Pursuant to the terms of the agreement, the Company has the option to submit change orders to procure additional capabilities not included in the base price. Costs associated with these change orders are negotiated and agreed upon prior to the submission of the change order. The transceiver subsystems will integrate the satellite component of the next generation network.

In March 2008, SkyTerra LP entered into an agreement with Telesat Canada for joint operational services for the SkyTerra-1 and SkyTerra-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. SkyTerra LP 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 SkyTerra-1 and SkyTerra-2 reach their full mission life.

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In September 2008, SkyTerra LP entered into a 15-year agreement with Qualcomm Incorporated (Qualcomm) for the provision by Qualcomm of satellite-enabled mobile chipsets and satellite base station components built upon Qualcomm-adapted EV-DO technology to facilitate the development of mobile devices and network systems for use with the Company’s planned next generation network. The agreement with Qualcomm also contemplates that other operators (together with SkyTerra LP, each an Operator) may enter into similar arrangements with Qualcomm. Each Operator will fund a portion of the related non-recurring expenses (NRE) incurred in connection with the agreements, which will result in a further sharing of NRE if and when additional Operators enter into similar agreements with Qualcomm. The SkyTerra LP portion of the NRE to be paid to Qualcomm is expected to be in an amount not to exceed $10 million, subject to reduction based on the participation of other Operators with Qualcomm.

EV-DO Compatible Base Transceiver Subsystems

The Company is currently in negotiations with several vendors for the procurement of EV-DO compatible transceiver subsystems. The Company expects that it will enter into a material definitive contract for those subsystems during the first half of 2009.

Vendor Financing

SkyTerra LP has financed $60.9 million of satellite vendor payments with secured vendor notes payable (Notes Payable - Vendor) that bear interest at LIBOR plus 400 basis points combined with a 2% administrative fee. The Notes Payable - Vendor are secured by the satellites under construction.

On July 3, 2008, SkyTerra LP entered into an agreement with Boeing to amend its existing contract with respect to its satellite system procurement. The amendment provides SkyTerra LP 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 SkyTerra-2 satellite, currently planned for the second half of 2010. Prior to the amendment, SkyTerra LP 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 issued Boeing warrants exercisable for 0.6 million 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 SkyTerra-2 satellite was extended by four months to July 11, 2010, which is within the regulatory license milestone requirements. Finally, SkyTerra LP 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.

Senior Secured Discount Notes

In March 2006, SkyTerra LP 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 SkyTerra LP’s domestic subsidiaries jointly and severally guarantee the Senior Secured Discount Notes. SkyTerra LP 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%, 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 SkyTerra LP’s assets.

The terms of the Senior Secured Discount Notes require SkyTerra LP to comply with certain covenants that restrict some of SkyTerra LP’s corporate activities, including SkyTerra LP’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. SkyTerra LP may incur indebtedness beyond the specific baskets allowed under the Senior Secured Discount Notes, provided SkyTerra LP maintains a leverage ratio (as defined) of not more than 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

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insolvency, and nonpayment of principal, interest or fees when due. SkyTerra LP was in compliance with the covenants of the Senior Secured Discount Notes as of December 31, 2008.

16.5% 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 SkyTerra LP’s 16.5% Senior Unsecured Notes due 2013 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 16.5% Senior Unsecured Notes bear interest at a rate of 16.5%, payable in cash or in-kind, at SkyTerra LP’s option through December 15, 2011, and thereafter payable in cash. The 16.5% Senior Unsecured Notes mature on May 1, 2013.

In June 2008 and December 2008, the Company made its scheduled interest payment on the 16.5% Senior Unsecured Notes through the issuance of $10.9 million and $13.3 million, respectively of additional 16.5% Senior Unsecured Notes, which are included in the balance of 16.5% Senior Unsecured Notes in the accompanying balance sheet as of December 31, 2008.

The 16.5% 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 16.5% 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 16.5% Senior Unsecured Notes require SkyTerra LP to comply with certain covenants that restrict some of SkyTerra LP’s corporate activities, including SkyTerra LP’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 16.5% 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 16.5% 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. SkyTerra LP was in compliance with the covenants of the 16.5% Senior Unsecured Notes as of December 31, 2008.

18% Senior Unsecured Notes

On July 24, 2008, SkyTerra, SkyTerra LP, and SkyTerra Finance Co. entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which SkyTerra LP and SkyTerra Finance Co. agreed to issue Harbinger up to $500 million aggregate principal amount of 18% Senior Unsecured Notes due July 1, 2013 (the “18% Senior Unsecured Notes”) in four tranches. The proceeds of this funding commitment are expected to fund the Company’s business plan through the third quarter of 2010. As amended, the Securities Purchase Agreement provides that the 18% Senior Unsecured Notes bear interest at a rate of 18% per annum, and that, in conjunction with the issuance of the 18% Senior Unsecured Notes pursuant to the Securities Purchase Agreement, SkyTerra will issue to Harbinger warrants to purchase up to an aggregate of 32.5 million shares of voting or non-voting common stock of SkyTerra (at the option of the holder) at an exercise price of $0.01 per share of common stock. Harbinger’s purchase of the 18% Senior Unsecured Notes is not conditioned upon the commencement or consummation of a business combination with Inmarsat, as described above. Harbinger may not be required to purchase the 18% Senior Unsecured Notes under certain circumstances, including upon the occurrence of a material adverse effect.

On January 7, 2009 the Company issued the first of the four issuances of the 18% Senior Unsecured Notes to Harbinger under the Securities Purchase Agreement, in an aggregate principal amount of $150 million. In addition, at this closing the Company issued Harbinger ten-year warrants to purchase 7.5 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. The remaining $350 million of 18% Senior Unsecured Notes is scheduled to be issued to Harbinger in three tranches of $175 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively.

Inmarsat Cooperation Agreement

To improve the Company’s spectrum assets, in December 2007, SkyTerra, SkyTerra LP, and SkyTerra Canada (together the “SkyTerra Parties”) and Inmarsat Global Limited (“Inmarsat”) entered into a Cooperation Agreement relating to the use of L-band spectrum for both MSS and ATC services in North America. The Cooperation Agreement addresses a number of regulatory, technology and spectrum coordination matters involving L-band spectrum.

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Upon receipt of an investment of $100 million in SkyTerra LP by a third party for general corporate purposes and election by the SkyTerra Parties to trigger certain provisions, the SkyTerra 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 SkyTerra LP spectrum in a pre-agreed market. Simultaneously upon the election by the SkyTerra 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 SkyTerra 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 SkyTerra Parties and Inmarsat which would lead to additional spectrum contiguity and more relaxed operating rules for the Company. Over the transition period, the SkyTerra 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, the question remains open between Inmarsat and the SkyTerra Parties as to whether the closing of the 16.5% Senior Unsecured Notes or any of the funding under the 18% Senior Unsecured Notes will be designated by the SkyTerra 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. This matter has not been resolved and the Company has not designated a previous investment as a triggering investment, and therefore no accounting is required as of December 31, 2008. 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 SkyTerra 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 SkyTerra 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 SkyTerra LP at a cost of $115 million per year, increasing at 3% per year, resulting in substantially more spectrum to the benefit of SkyTerra 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 SkyTerra 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 SkyTerra LP to access additional spectrum for the benefit of SkyTerra LP 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 arrangements, other then operating leases in the normal course of business during 2008. As of December 31, 2008, the Company does not have any off-balance sheet arrangements that had or were reasonably likely to have a current or future impact on the Company’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Contractual Obligations

As of December 31, 2008, we and our consolidated subsidiaries were contractually obligated to make the following payments:

	Payments due by period
	Total		2009		1–3 years		3-5 years		More than 5 years
Operating Leases (1)	$	14,061	$	2,289	$	3,325	$	1,198	$	7,249
Notes payable		388		388		—		—		—
Boeing (2)		232,467		90,858		141,609		—		—
HNS		10,946		10,946		—		—		—
Launch Services (3)		145,533		40,744		104,789		—		—
Satellite operational services		25,083		2,884		3,318		2,868		16,013
Senior Secured Discount Notes		1,065,000		—		157,500		210,000		697,500
16.5% senior unsecured notes (related party) (4)		344,758		29,930		76,170		238,658		—
Qualcomm		8,625		3,875		4,750		—		—
Other		17,635		12,224		3,358		316		1,737
	$	1,864,496	$	194,138	$	494,819	$	453,040	$	722,499

(1)      The Company leases office space and computer 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.

(2)      The amounts exclude in-orbit incentives and potential interest associated with the incentives as discussed above.

(3)      Reflects payments based on contracts as amended subsequent to December 31, 2008.

(4)      Assumes semi-annual interest payments made “in-kind” through June 2011, with cash payment of interest beginning December 2011.

Cash Flow

Net Cash Used in Operating Activities. During 2008 and 2007, net cash used in operating activities increased $24.0 and $14.7 million, respectively as compared to 2007 and 2006, respectively 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 2008, net cash used in investing increased primarily due to sales and maturities of investments as compared to 2007. Additionally, during 2008 the Company made $37.0 million of payments related to tax liabilities assumed in the 2007 BCE Exchange Transaction. These increases were partially offset by reduced cash purchases of property and equipment of $63.4 million in 2008, as compared to 2007.

During 2007, net cash used in investing decreased primarily due to sales and maturities of investments as compared to 2006. This decrease was offset by increases in purchases of property and equipment of $140.6 million in 2007, as compared to 2006. . During 2006, net cash used in investing increased primarily due to purchase of investments and increased purchased of property and equipment of $98.8 million as compared to 2005.

Net Cash Provided by Financing Activities. During 2008, net cash provided by financing activities increased primarily as a result of proceeds from the issuance of senior unsecured notes of $150 million during 2008.

During 2007, net cash provided by financing activities was decreased primarily as a result of proceeds from the issuance of senior discount notes of $423.1 million during 2006.

Related Parties

Apollo Investment Fund IV L.P. and Affiliates

Apollo Advisors L.P. and its affiliates (Apollo) held a significant number of shares of SkyTerra common stock through April 2008. Two of the six Directors of SkyTerra were partners at Apollo through such time. As such, transactions with entities controlled by or affiliated with Apollo, through April 2008 are related party transactions.

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Hughes Network Systems LLC

Hughes Network Systems LLC (HNS) is a former subsidiary of SkyTerra and indirectly controlled by Apollo. SkyTerra LP acquired services and equipment from HNS in an amount of $21.5 million, $8.8 million and $8.4 million, during the years ended December 31, 2008, 2007 and 2006, respectively.

In October 2006, SkyTerra LP entered into a preferred provider agreement with HNS. Under this agreement, for a period of five years SkyTerra LP will grant preferred provider status to HNS for the provision of certain engineering and other services and the manufacture of certain equipment, in each case expected to be used by SkyTerra LP in developing and deploying its next generation integrated network. In November 2006, SkyTerra LP entered into an agreement with HNS to purchase four satellite base transceiver subsystems for a price, as amended of $43.7 million.

TerreStar Networks

TerreStar Corporation owns a controlling interest in TerreStar Networks. The Company owns 11.1% of TerreStar Networks. SkyTerra LP had granted options to purchase the common stock of TerreStar Networks to certain employees of SkyTerra LP prior to the spin-off of TerreStar Networks, which are vested and exercisable as of December 31, 2008. SkyTerra LP and TerreStar Networks operate under an intellectual property development sharing arrangement.

In May 2005, MSV and TerreStar Networks entered into a management services agreement whereby MSV provides technical and program management efforts associated with ATC network development as well as administrative support required to accomplish these tasks. In May 2006, MSV discontinued providing management services to TerreStar Networks, but continued to share intellectual property development.

According to publicly available information, the Company understands that Harbinger owns a significant investment in TerreStar Corporation.

 

Item7A. 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 existing 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 operating the Company’s current 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 (loss) unless the derivatives qualify as hedges of future cash flows. The Company has not followed hedge accounting for any derivative contracts during 2008, 2007, or 2006. As of December 31, 2008, the Company held derivative contracts with a notional value of $1.7 million. The Company recognized a gain of $0.2 million during 2007 and a loss of $0.1 million during 2008 related to derivative contracts.

Interest Rate Risk

Changes in interest rates affect the fair value of the Company’s fixed rate debt. The Company evaluated the fair value of its debt securities for disclosure purposes in accordance with FASB Statement No 157 (SFAS 157), Fair Value Measurements. Specifically, given there is limited active trading market in the Company’s debt securities, the estimated bid-side broker quote (as provided by third party sources) of the Company’s Senior Secured Discount Notes was obtained and was also used as the basis to estimate the fair value of the Company’s 16.5% Senior Unsecured Notes, resulting in an aggregate value of $229.6 million at December 31, 2008. Based on securities outstanding at December 31, 2008, a 1% increase or decrease in interest rates, assuming similar terms and similar assessment of risk by lenders, would change the estimated market value by $6.6 million and $6.0 million, respectively at December 31, 2008. The Company does not have cash flow exposure to changing interest rates on its 16.5% Senior Secured Discount Notes, 18% Senior Secured Discount Notes or Senior Unsecured Notes because the interest rate for these securities is fixed. This sensitivity analysis provides only

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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 may differ significantly from the impact 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 December 31, 2008 the Company had $60.9 million outstanding under its Vendor Notes with interest rates tied to changes in the LIBOR rate. Based on balances outstanding at December 31, 2008, a 1.0% increase or decrease in interest rates, assuming repayment of the Vendor Note in accordance with scheduled maturities, would change the Company’s annual interest expense for 2009 by $0.6 million.

 

Item8. Financial Statements and Supplementary Data

The financial statements and supplementary financial data required by this Item 8 are set forth in Item 15 of this report. All information which has been omitted is either inapplicable or not required.

 

Item9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

 

Item9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2008. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2008, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

Management’s Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Such internal control includes those policies and procedures that:

• Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;

• Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and

• Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2008. In making this assessment, our management used the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on its assessment, our management has determined that, as of December 31, 2008, our internal control over financial reporting is effective based on those criteria.

Ernst & Young LLP has issued an attestation report on our internal control over financial reporting as of December 31, 2008. This report is included in the report of independent registered public accounting firm herein.

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Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of SkyTerra Communications, Inc.

We have audited SkyTerra Communications, Inc.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). SkyTerra Communications, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, SkyTerra Communications, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of SkyTerra Communications, Inc. as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2008 of SkyTerra Communications, Inc. and our report dated February 28, 2009 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

McLean, Virginia

February 28, 2009

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Item9B. Other Information

None.

PART III

 

Item10. Directors, Executive Officers, and Corporate Governance.

Information relating to the Company’s executive officers and directors, and information regarding other corporate governance matters, including the Company’s audit committee and audit committee financial experts will be in the Company’s definitive Proxy Statement for its 2009 Annual Meeting of Shareholders to be held in the second quarter of 2009, which will be filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008 (the “2009 Proxy Statement”) and is incorporated herein by reference. If the Proxy Statement is not filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008, in accordance with the instructions to Form 10-K, this information will be filed by amendment to this Form 10-K by such date.

 

Item11. Executive Compensation.

Information relating to the Company’s executive officer and director compensation will be in the 2009 Proxy Statement and is incorporated herein by reference. If the Proxy Statement is not filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008, in accordance with the instructions to Form 10-K, this information will be filed by amendment to this Form 10-K by such date.

 

Item12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Information relating to security ownership of certain beneficial owners of the Company’s common stock and information relating to the security ownership of the Company’s management will be in the 2008 Proxy Statement and is incorporated herein by reference. If the Proxy Statement is not filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008, in accordance with the instructions to Form 10-K, this information will be filed by amendment to this Form 10-K by such date.

Information relating to compensation plans under which the Company’s equity securities are authorized for issuance will be in the 2008 Proxy Statement and is incorporated herein by reference. If the Proxy Statement is not filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008, in accordance with the instructions to Form 10-K, this information will be filed by amendment to this Form 10-K by such date.

 

Item13. Certain Relationships and Related Transactions, and Director Independence.

Information relating to certain relationships and related transactions of the company, and regarding director independence will be in the 2009 Proxy Statement and is incorporated herein by reference. If the Proxy Statement is not filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008, in accordance with the instructions to Form 10-K, this information will be filed by amendment to this Form 10-K by such date.

 

Item14. Principal Accountant Fees and Services.

Information relating to principal accountant fees and services will be in the 2009 Proxy Statement and is incorporated herein by reference. If the Proxy Statement is not filed within 120 days of the end of the Company’s fiscal year ended December 31, 2008, in accordance with the instructions to Form 10-K, this information will be filed by amendment to this Form 10-K by such date.

PART IV

 

Item15. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following is a list of certain documents filed as a part of this report:

(1) Financial Statements of the Registrant.

(i) Report of Independent Registered Public Accounting Firm.

(ii) Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006.

(iii) Consolidated Balance Sheets as of December 31, 2008 and 2007.

(iv) Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006.

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(v) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2008, 2007 and 2006.

(vi) Notes to Consolidated Financial Statements.

All other schedules specified in Item 8 or Item 15(d) of Form 10-K are omitted because they are not applicable or not required, or because the required information is included in the Financial Statements or notes thereto.

(b) The following sets forth those exhibits filed pursuant to Item 601 of Regulation S-K:

In reviewing the agreements included as exhibits or incorporated by reference to this report, please remember they are intended to provide you with information regarding their terms and are not to provide any other factual or disclosure information about the Company or the other parties thereto. Certain of the agreements contain representations and warranties of the parties named therein. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:

• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one or more of the parties if those statements prove to be inaccurate;

• have been qualified by disclosures that were made to the other party or parties in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;

• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

• were made only as of the date of the applicable agreement or such other date or dates as may be specified in such agreement and are subject to more recent developments.

Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about the Company may be found elsewhere in this report and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov. Please also see the section entitled “Available Information” in Part I, Item 1 of this report. 

Exhibit Number	Description
3.1	Restated Certificate of Incorporation of SkyTerra Communications, Inc., as amended on November 11, 2008.
3.2	Amended and Restated By-Laws of SkyTerra Communications, Inc., which was filed as Exhibit 4.2 to the Current Report on Form 8-K, filed on October 18, 2006 and is incorporated herein by reference.
4.1	Indenture, dated March 30, 2006, by and among Mobile Satellite Ventures LP and MSV Finance Co., the Guarantors named therein and the Bank of New York relating to the 14% Senior Secured Discount Notes due 2013, which was filed as Exhibit 4.1 to the Annual Report on Form 10-K on March 16, 2007, and is incorporated herein by reference.
4.2	Indenture by and among Mobile Satellite Ventures LP, Mobile Satellite Ventures Finance Co., the Guarantors named therein and The Bank of New York as Trustee, dated January 7, 2008 which was filed as Exhibit 10.2 to the Current Report on Form 8-K, filed on January 8, 2008, and is incorporated herein by reference.
4.3	First Supplemental Indenture, dated January 7, 2009, to the Indenture, dated January 7, 2008, by and among Mobile Satellite Ventures LP, Mobile Satellite Ventures Finance Co., the Guarantors named therein and The Bank of New York as Trustee.
4.4	Indenture by and among SkyTerra LP, SkyTerra Finance Co., the Guarantors named therein and The Bank of New York Mellon as Trustee, dated January 7, 2009.
4.5	Form of Series 1-A Warrant of SkyTerra Communications, Inc., which was filed as Exhibit 4.3 to the Current Report on Form 8-K filed on June 21, 1999, and is incorporated herein by reference.
4.6	Form of Series 2-A Warrant of SkyTerra Communications, Inc., which was filed as Exhibit 4.5 to the Current Report on Form 8-K filed on June 21, 1999, and is incorporated herein by reference.
4.7	Form of Warrant to Purchase shares of common stock, issued to Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Special Situations Fund, LP, which was filed as Exhibit 99.1 to the Current Report on Form 8-K, filed on December 18, 2007, and is incorporated herein by reference.

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4.8	Warrant to Purchase Shares of Voting Common Stock issued on August 18, 2008 to Boeing Satellite Systems, Inc., which was filed as Exhibit 10.14 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
4.9	Warrant to Purchase 5,625,000 Shares of Common Stock issued on January 7, 2009 to Harbinger Capital Partners Master Fund I, Ltd.
4.10	Warrant to Purchase 1,875,000 Shares of Common Stock issued on January 7, 2009 to Harbinger Capital Partners Special Situations Fund, L.P.
4.11	Registration Rights Agreement, dated December 20, 2007, by and between SkyTerra Communications, Inc. and Inmarsat Global Limited, which was filed as Exhibit 10.3 to the Current Report on Form 8-K, filed on December 21, 2007 and is incorporated herein by reference.
4.12	Registration Rights Agreement, dated August 18, 2008, by and between SkyTerra Communications, Inc. and Boeing Satellite Systems, Inc., which was filed as Exhibit 10.13 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
4.13	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., which was filed as Exhibit 10.6 to the Current Report on Form 8-K, filed on July 25, 2008, and is incorporated herein by reference.
4.14	Letter Agreement, dated August 22, 2008, amending the Registration Rights Agreement, dated July 24, 2008, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on August 25, 2008, and is incorporated herein and in Exhibit 10.51 by reference.
4.15	Registration Rights Agreement, dated September 15, 2008, by and between SkyTerra Communications, Inc. and Investors Listed on Schedule A thereto, which was filed as Exhibit 10.16 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
10.1	Amended and Restated 1998 Long-Term Incentive Plan of SkyTerra Communications, Inc., which was filed as Exhibit 4(d) to the Form S-8 filed on November 3, 2000 and is incorporated herein by reference.
10.2	Amended and Restated Limited Partnership Agreement, dated November 12, 2004, by and among MSV Investors, LLC, Mobile Satellite Ventures LP, et al. which was filed as Exhibit 10.1 to the Current Report on Form 8-K dated November 18, 2004 and is incorporated herein by reference.
10.3	Amendment No. 1 to the Amended and Restated Limited Partnership Agreement of Mobile Satellite Ventures LP, dated September 25, 2006, which was filed as Exhibit 10.2 to the Current Report on Form 8-K, filed on September 28, 2006, and is incorporated herein by reference.
10.4	Amendment No. 2 to the Amended and Restated Limited Partnership Agreement of Mobile Satellite Ventures LP, dated January 5, 2007, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on January 10, 2007, and is incorporated herein by reference
10.5	TerreStar Networks Inc. Amended and Restated Stockholders’ Agreement, which was filed as Exhibit 10.9 to the Current Report on Form 8-K, filed on May 11, 2006, and is incorporated herein by reference.
10.6	Amendment No. 3 to Amended and Restated Stockholders’ Agreement of Mobile Satellite Ventures GP Inc., which was filed as Exhibit 10.10 to the Current Report on Form 8-K, filed on May 11, 2006, and is incorporated herein by reference.
10.7	Amendment No. 4 to the Amended and Restated Stockholders’ Agreement of Mobile Satellite Ventures GP, Inc., dated September 25, 2006, which was filed as Exhibit 10.3 to the Current Report on Form 8-K, filed on September 28, 2006, and is incorporated herein by reference.
10.8	Form of Indemnification Agreement, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on December 19, 2006, and is incorporated herein by reference.
10.9	Restricted Stock Agreement, by and between Alexander H. Good and the Company, dated December 18, 2006, which was filed as Exhibit 99.1 to the Current Report on Form 8-K, filed on December 19, 2006, and is incorporated herein by reference.

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10.10	Restricted Stock Agreement, by and between Scott Macleod and the Company, dated December 18, 2006, which was filed as Exhibit 99.2 to the Current Report on Form 8-K, filed on December 19, 2006, and is incorporated herein by reference.
10.11	Contract for Design, Development and Supply of Satellite Base Transceiver Sub-System (“S-BTS”) between Mobile Satellite Ventures LP and Hughes Network Systems, LLC, dated November 3, 2006, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on November 8, 2006, and is incorporated herein by reference.
10.12	Amendment Agreement No. 1 to MSV Canada Shareholders Agreement by and among TMI Communications and Company, Limited Partnership, Mobile Satellite Ventures (Canada) Inc., Mobile Satellite Ventures Holdings (Canada) Inc. and Mobile Satellite Ventures LP, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on October 18, 2006, and is incorporated herein by reference.
10.13	Preferred Provider Agreement, dated October 16, 2006, by and between Hughes Network Systems, LLC and Mobile Satellite Ventures LP, which was filed as Exhibit 10.2 to the Current Report on Form 8-K, filed on October 18, 2006, and is incorporated herein by reference.
10.14	Non-Interference Agreement, dated October 6, 2006, by and among BCE Inc., Telesat Canada, Mobile Satellite Ventures (Canada) Inc., Mobile Satellite Ventures Holdings (Canada) Inc. and Mobile Satellite Ventures LP, which was filed as Exhibit 10.3 to the Current Report on Form 8-K, filed on October 18, 2006, and is incorporated herein by reference.
10.15	Preferred Provider Extension Agreement, dated October 6, 2006, by and among Telesat Canada, Mobile Satellite Ventures (Canada) Inc. and Mobile Satellite Ventures LP, which was filed as Exhibit 10.4 to the Current Report on Form 8-K, filed on October 18, 2006, and is incorporated herein by reference.
10.16	Contract, dated January 9, 2006, between Boeing Satellite Systems, Inc. and Mobile Satellite Ventures, LP for the MSV L-Bond Space-Based Network, which was filed as Exhibit 10.51 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.17	Amendment No. 1 to Contract between Boeing Satellite Systems, Inc. and Mobile Satellite Ventures, LP for the MSV L-Bond Space-Based Network, dated March 9, 2006, which was filed as Exhibit 10.52 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.18	Amendment No. 2 to Contract between Boeing Satellite Systems, Inc. and Mobile Satellite Ventures for the MSV L-Bond Space-Based Network, dated September 11, 2006, which was filed as Exhibit 10.53 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.19	Amendment No. 3 to Contract between Boeing Satellite Systems, Inc. and Mobile Satellite Ventures, LP for the MSV L-Band Space-Based Network, dated August 1, 2008, which was filed as Exhibit 10.12 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
10.20	Second Amended and Restated Intellectual Property Assignment and License Agreement , dated November 21, 2006 and effective October 1, 2006, between ATC Technologies LLC and TerreStar Networks Inc., which was filed as Exhibit 10.54 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.21	Letter Agreement, dated February 6, 2007, between Mobile Satellite Ventures, LP and Mobile Satellite Ventures (Canada) Inc., which was filed as Exhibit 10.55 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.22	Satellite Delivery Agreement, dated February 22, 2007, between Mobile Satellite Ventures LP and Mobile Satellite Ventures (Canada) Inc., which was filed as Exhibit 10.56 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.23	Amendment No. 1 Satellite Delivery Agreement between Mobile Satellite Ventures LP and Mobile Satellite Ventures (Canada) Inc., dated October 1, 2008.
10.24	Capacity Lease Agreement, dated November 26, 2001, between Mobile Satellite Ventures (Canada) Inc. and 3051361 Nova Scotia Unlimited Liability Company, which was filed as Exhibit 10.57 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.25	MSV Canada Shareholders Agreement, dated November 26, 2001 by and among TMI Communications and Company, Limited Partnership, Mobile Satellite Ventures (Canada) Inc., Mobile Satellite Ventures Holdings (Canada) Inc. and Mobile Satellite Ventures LP, which was filed as Exhibit 10.58 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.

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10.26	Mobile Satellite Ventures LP 2001 Unit Incentive Plan, as amended through October 11, 2005, which was filed as Exhibit 10.60 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.27	Amended Form of Nonqualified Unit Option Agreement under the Mobile Satellite Ventures LP 2001 Unit Incentive Plan, which was filed as Exhibit 99.3 to the Registration Statement on Form S-4, filed on March 11, 2008, and is incorporated herein by reference.
10.28	Form of Exchange Stock Option Agreement, which was filed as Exhibit 4.1 to the Registration Statement on Form S-4, filed on March 11, 2008, and is incorporated herein by reference.
10.29	Termination and Exchange Form and Offer by SkyTerra Communications, Inc. to Issue Options to Purchase Shares of Common Stock of SkyTerra Communications, Inc. in Exchange for the Termination of Outstanding Options to Purchase Limited Partnership Interests of Mobile Satellite Ventures LP, which was filed as Exhibit 99.1 to the Registration Statement on Form S-4, filed on March 11, 2008, and is incorporated herein by reference.
10.30	Employment Letter of Alexander H. Good, dated February 26, 2004, which was filed as Exhibit 10.62 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.31	Amendment Agreement to Amend Employment Letter of Alexander H. Good, dated April 3, 2006, between Mobile Satellite Ventures and Alexander H. Good, which was filed as Exhibit 10.63 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.32	Change of Control Agreement, dated February 29, 2004, between Mobile Satellite Ventures LP and Alex H. Good, which was filed as Exhibit 10.64 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.33	Confidentiality, Non-Competition and Non-Solicitation Agreement, dated February 24, 2005, between Mobile Satellite Ventures LP and Alexander H. Good, which was filed as Exhibit 10.65 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.34	Employment Letter of Scott Macleod, dated January 9, 2006, which was filed as Exhibit 10.66 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.35	Executive Change of Control Agreement, dated January 27, 2006, between Mobile Satellite Ventures LP and Scott Macleod, which was filed as Exhibit 10.67 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.36	Confidentiality, Non-Competition and Non-Solicitation Agreement, dated January 27, 2006, between Mobile Satellite Ventures LP and Scott Macleod, which was filed as Exhibit 10.68 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.37	Mobile Satellite Ventures LP 2001 Unit Incentive Plan (as amended) Phantom Unit Agreement, dated January 27, 2006, between Mobile Satellite Ventures LP and Scott Macleod, which was filed as Exhibit 10.69 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.38	SkyTerra Communication, Inc. 2006 Equity and Incentive Plan (incorporated by reference to Annex III to the Definitive Proxy Statement, filed on June 23, 2006), which was filed as Exhibit 10.70 to the Annual Report on Form 10-K, filed on March 16, 2007, and is incorporated herein by reference.
10.39	Amendment No. 1 to the 2006 SkyTerra Communications, Inc. Equity and Incentive Plan, which was filed as Exhibit 10.11 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.40	Stock Option Agreement, by and between James Wiseman and the Company, dated August 20, 2007, which was filed as Exhibit 99.1 to the Current Report on Form 8-K, filed on August 22, 2007, and is incorporated herein by reference.
10.41	Offer Letter between James Wiseman and Mobile Satellite Ventures LP, dated July 13, 2007, which was filed as Exhibit 99.2 to the Current Report on Form 8-K, filed on August 22, 2007, and is incorporated herein by reference.
10.42	Change of Control Agreement between James Wiseman and MSV, dated August 20, 2007, which was filed as Exhibit 99.3 to the Current Report on Form 8-K, filed on August 22, 2007, and is incorporated herein by reference.
10.43	Securities Purchase Agreement, dated December 15, 2007, by and among SkyTerra Communications, Inc., Mobile Satellite Ventures LP, Mobile Satellite Ventures Finance Co., Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Special Situations Fund, LP., which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on December 15, 2007, and is incorporated herein by reference.

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10.44	Amendment No. 1 to the Securities Purchase Agreement dated December 20, 2007, by and among SkyTerra Communications, Inc., Mobile Satellite Ventures LP, Mobile Satellite Ventures Finance Co., Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Special Situations Fund, LP, dated January 7, 2008, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on January 8, 2008, and is incorporated herein by reference.
10.45	Cooperation Agreement, dated December 20, 2007, by and among SkyTerra Communications, Inc., Mobile Satellite Ventures LP, Mobile Satellite Ventures (Canada) Inc. and Inmarsat Global Limited, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on December 21, 2007, and is incorporated herein by reference.
10.46	Subscription Agreement, dated December 20, 2007, by and between SkyTerra Communications, Inc. and Inmarsat Global Limited, which was filed as Exhibit 10.2 to the Current Report on Form 8-K, filed on December 21, 2007, and is incorporated herein by reference.
10.47	Phase 0 Block Loan Agreement, dated December 20, 2007, by and among Mobile Satellite Ventures LP, Mobile Satellite Ventures (Canada) Inc., SkyTerra Communications, Inc. and Inmarsat Global Limited, which was filed as Exhibit 10.4 to the Current Report on Form 8-K, filed on December 21, 2007, and is incorporated herein by reference.
10.48	Offer Letter, dated August 4, 2004, between Randy S. Segal and Mobile Satellite Ventures LP, which was filed as Exhibit 10.84 to the amended Annual Report on form 10-K/A, filed on April 29, 2008, and is incorporated herein by reference.
10.49	Executive Change of Control Agreement, dated September 20, 2004, by and between Randy S. Segal and Mobile Satellite Ventures LP, which was filed as Exhibit 10.85 to the amended Annual Report on form 10-K/A, filed on April 29, 2008, and is incorporated herein by reference.
10.50	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., which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on July 25, 2008, and is incorporated herein by reference.
10.51	Letter Agreement, dated August 22, 2008, amending the Master Contribution and Support Agreement, dated July 24, 2008, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on August 25, 2008, and is incorporated herein and in Exhibit 4.14 by reference.
10.52	Second Amendment, dated January 7, 2009, to the Master Contribution and Support Agreement, dated July 24, 2008,which was filed as Exhibit 10.2 to the Current Report on Form 8-K, filed on January 7, 2009, and is incorporated herein by reference.
10.53	Stock Purchase Agreement, dated July 24, 2008, between SkyTerra Communications, Inc. and Harbinger Co-Investment Fund, L.P., which was filed as Exhibit 10.2 to the Current Report on Form 8-K, filed on July 25, 2008, and is incorporated herein by reference.
10.54	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., which was filed as Exhibit 10.3 to the Current Report on Form 8-K, filed on July 25, 2008, and is incorporated herein by reference.
10.55	Amendment No. 1 to Securities Purchase Agreement dated July 24, 2008, dated January 7, 2009, which was filed as Exhibit 10.1 to the Current Report on Form 8-K, filed on January 7, 2009, and is incorporated herein by reference.
10.56	Executive Severance Agreement between SkyTerra Communications, Inc. and Randy Segal, which was filed as Exhibit 10.10 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.57	Letter Agreement, dated August 4, 2008, between the Company and Drew Caplan regarding certain employment matters, which was filed as Exhibit 10.12 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.58	Appendix A – Promissory Note, which was filed as Exhibit 10.13 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.59	Appendix B – Drew Caplan Restricted Stock Agreement, dated August 4, 2008, which was filed as Exhibit 10.14 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.

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10.60	Letter Agreement, dated February 23, 2009, between the Company and Marc Montagner regarding certain employment matters.
10.61	Agreement for Transfer and Exchange between SkyTerra Communications, Inc. and TerreStar Corporation, dated September 12, 2008, which was filed as Exhibit 10.15 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
10.62	Letter Agreement between SkyTerra Communications, Inc. and affiliates of Harbinger Capital Partners, dated September 12, 2008, which was filed as Exhibit 10.17 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
10.63	Letter Agreement between SkyTerra Communications, Inc. and affiliates of Harbinger Capital Partners, dated September 16, 2008, which was filed as Exhibit 10.14 to the Quarterly Report on Form 10-Q, filed on November 11, 2008, and is incorporated herein by reference.
10.64	Director Stock Option Grant Form of Award, which was filed as Exhibit 10.7 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.65	SkyTerra Communications, Inc./Mobile Satellite Ventures, LP Executive Employment Agreement for Alex H. Good, which was filed as Exhibit 10.8 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.66	SkyTerra Communications, Inc./Mobile Satellite Ventures, LP Executive Employment Agreement for Scott G. Macleod, which was filed as Exhibit 10.9 to the Quarterly Report on Form 10-Q, filed on August 5, 2008, and is incorporated herein by reference.
10.67	Exchange Agreement, dated December 10, 2008, by and among SkyTerra Communications, Inc., Walter V. Purnell, Jr., Rajendra Singh, Gerald Stevens-Kittner, Glenn Meyers, Elizabeth Tasker, Columbia ST Partners III, Inc., Dean & Company, inOvate Communications Group, LLC and WBS, LLC.
21	Subsidiaries of the Company are SkyTerra Investors Holdings Inc., a Delaware corporation, SkyTerra Rollup LLC, a Delaware corporation, SkyTerra Rollup Sub LLC, a Delaware corporation, SkyTerra Investors LLC, a Delaware corporation, TMI Communications Delaware Limited Partnership, a Delaware limited partnership, and SkyTerra LP, a Delaware limited partnership.
23.1	Consent of Ernst & Young LLP.
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.

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SIGNATURES

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

SKYTERRA COMMUNICATIONS, INC.
By:	/S/    ALEXANDER H. GOOD
Name:	Alexander H. Good
Title:	Chief Executive Officer and President

Dated: February 27, 2009

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Signature	Title	Date
/S/    ALEXANDER H. GOOD         Alexander H. Good	Chief Executive Officer, President and Chairman (Director) (Principal Executive Officer)	February 27, 2009
/S/    SCOTT MACLEOD         Scott Macleod	Executive Vice President and Chief Financial Officer (Principal Financial Officer)	February 27, 2009
/S/    JAMES A. WISEMAN         James A. Wiseman	Vice President and Corporate Controller (Principal Accounting Officer)	February 27, 2009
/S/    JOSE A. CECIN, JR. Jose A. Cecin, Jr.	Director	February 27, 2009
/S/    JEFFREY KILLEEN    Jeffrey Killeen	Director	February 27, 2009
/S/    PAUL S. LATCHFORD, JR. Paul S. Latchford, Jr.	Director	February 27, 2009
/S/    WILLIAM F. STASIOR         William F. Stasior	Director	February 27, 2009
/S/    MICHAEL D. WEINER         Michael D. Weiner	Director	February 27, 2009

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SkyTerra Communications, Inc.

Consolidated Financial Statements

Years ended December31, 2008, 2007 and 2006

Contents

Report of Independent Registered Public Accounting Firm	F-2
Consolidated Statements of Operations for the years ended December 31, 2008, 2007, and 2006	F-3
Consolidated Balance Sheets as of December 31, 2008 and 2007	F-4
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2008, 2007, and 2006	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007, and 2006	F-6
Notes to Consolidated Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders of

SkyTerra Communications, Inc.

We have audited the accompanying consolidated balance sheets of SkyTerra Communications, Inc. as of December 31, 2008 and 2007, and the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for each of the three years in the period ended December 31, 2008. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of SkyTerra Communications, Inc. at December 31, 2008 and 2007, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), SkyTerra Communications, Inc.’s internal control over financial reporting as of December 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2009 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

McLean, Virginia

February 28, 2009

F-2

SkyTerra Communications, Inc.

Consolidated Statements of Operations

(in thousands except share and per share data)

	Year ended December 31
	2008			2007			2006
Revenues:
Services and related revenues	$	28,571		$	27,754		$	26,922
Equipment sales		5,025			5,265			6,984
Other revenues		889			1,064			948
Total revenues		34,485			34,083			34,854
Operating expenses:
Cost of equipment sold		4,165			4,245			5,738
Operations and cost of services (exclusive of depreciation and amortization)		32,310			25,030			19,796
Sales and marketing		8,452			7,559			4,213
Research and development (exclusive of depreciation and amortization)		15,557			10,568			5,127
General and administrative		35,431			29,643			30,538
Depreciation and amortization		32,688			29,129			11,701
Impairment of goodwill		10,389			—			—
Total operating expenses		138,992			106,174			77,113
Operating loss		(104,507	)		(72,091	)		(42,259	)
Other income (expense):
Interest income		6,805			18,156			20,517
Interest expense		(40,242	)		(39,093	)		(43,740	)
Impairment of investment in TerreStar Networks		(70,730	)		(34,520	)		—
Other income (expense), net		(949	)		(302	)		1,933
Loss before income taxes, minority interest and extraordinary gain		(209,623	)		(127,850	)		(63,549	)
Benefit (provision) for income taxes		1,110			333			(1,255	)
Minority interest in loss of subsidiary		572			3,961			7,704
Loss before extraordinary gain		(207,941	)		(123,556	)		(57,100	)
Extraordinary gain on acquisition of minority interest		3,006			—			—
Net loss	$	(204,935	)	$	(123,556	)	$	(57,100	)
Loss per common share:
Loss before extraordinary gain	$	(1.96	)	$	(1.24	)	$	(1.24	)
Extraordinary gain	$	0.03		$	—		$	—
Basic and diluted loss per common share	$	(1.93	)	$	(1.24	)	$	(1.24	)
Basic and diluted weighted average common shares outstanding		106,134,481			100,037,720			46,222,570

See accompanying notes.

F-3

SkyTerra Communications, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

	December 31
	2008			2007
Assets
Current assets:
Cash and cash equivalents	$	65,721		$	127,905
Investments		46,659			97,764
Accounts receivable, net of allowance of $45 and $86, respectively		5,505			4,957
Inventory		2,058			2,531
Other current assets		7,079			3,811
Total current assets		127,022			236,968
Property and equipment, net		688,360			417,052
Intangible assets, net		523,562			539,057
Goodwill		85			12,435
Investment in TerreStar Networks		7,370			78,100
Other assets		14,303			11,423
Total assets	$	1,360,702		$	1,295,035
Liabilities and stockholders’ equity
Current liabilities:
Notes payable, current portion	$	372		$	15,745
Accounts payable		5,355			4,189
Accrued expenses and other current liabilities		18,759			49,445
Deferred revenue, current portion		3,474			3,319
Total current liabilities		27,960			72,698
Senior secured discount notes, net		629,759			552,719
16.5% senior unsecured notes (related party), net		147,119			—
Notes payable, net of current portion		60,940			36,302
Deferred revenue, net of current portion		12,383			16,333
Other long-term liabilities		11,188			257
Total liabilities		889,349			678,309
Commitments and contingencies
Minority interest		—			508
Stockholders’ equity:
Preferred stock, $0.01 par value. Authorized 10,000,000 shares; none issued.		—			—
Common stock, $0.01 par value. Authorized 200,000,000 shares; 48,822,787 and 34,265,663 shares issued and outstanding at December 31, 2008 and 2007, respectively		488			343
Non-voting common stock, $0.01 par value. Authorized 125,000,000 shares; 59,958,499 and 72,614,414 shares issued and outstanding at December 31, 2008 and 2007, respectively		600			726
Additional paid-in capital		1,014,981			952,520
Accumulated other comprehensive loss		(1,785	)		(1,855	)
Accumulated deficit		(542,931	)		(335,516	)
Total stockholders’ equity		471,353			616,218
Total liabilities and stockholders’ equity	$	1,360,702		$	1,295,035

See accompanying notes.

F-4

SkyTerra Communications, Inc.

Consolidated Statements of Changes in Stockholders’ Equity (Deficit)

(in thousands, except for share data)

	Common Stock				Non-voting Common Stock						Additional Paid-in			Deferred			Accumulated Other Comprehensive			Accumulated			Total Stockholders’			Comprehensive
	Shares		Amount		Shares			Amount			Capital			Compensation			(Loss) Income			Deficit			Equity (Deficit)			(Loss) Income
Balance, December 31, 2005		14,118,159	$	141		25,478,273		$	255		$	331,510		$	(4,420	)	$	(1,123	)	$	(145,103	)	$	181,260
Effect of adoption of SFAS No. 123(R)		—		—		—			—			(4,420	)		4,420			—			—			—
2006 SkyTerra LP Exchange Transactions		12,392,173		124		12,218,443			122			(336,360	)		—			—			77.547			(258,567	)
Recognition of change in fair value of minority interest redemption rights		—		—		—			—			3,069			—			—			—			3,069
Equity-based compensation		600,000		6		—			—			10,351			—			—			—			10,357
Exercise of SkyTerra LP options		—		—		—			—			454			—			—			—			454
Exercise of SkyTerra options		89,840		1		—			—			258			—			—			—			259
Exchange of voting for non-voting common stock by Apollo		6,044,846		60		(6,044,846	)		(60	)		—			—			—			—			—
Net loss		—		—		—			—			—			—			—			(57,100	)		(57,100	)	$	(57,100	)
Foreign currency translation adjustment		—		—		—			—			—			—			325			—			325			325
Balance, December 31, 2006		33,245,018		332		31,651,870			317			4,862			—			(798	)		(124,656	)		(119,943	)
Total, year ended December 31, 2006																										$	(56,775	)
BCE Exchange Transaction		176,250		2		22,533,745			225			392,781			—			(296	)		(44,878	)		347,834
TerreStar Corporation Exchange Transactions		—		—		18,855,144			188			523,582			—			(286	)		(42,426	)		481,058
Recognition of change in fair value of minority interest redemption rights		—		—		—			—			21,783			—			—			—			21,783
Exercise of SkyTerra LP options		—		—		—			—			535			—			—			—			535
Exercise of SkyTerra options		168,050		2		—			—			586			—			—			—			588
Equity-based compensation		250,000		3		—			—			8,391			—			—			—			8,394
Exchange of voting for non-voting common stock		426,345		4		(426,345	)		(4	)		—			—			—			—			—
Net loss		—		—		—			—			—			—			—			(123,556	)		(123,556	)	$	(123,556	)
Foreign currency translation adjustment		—		—		—			—			—			—			(475	)		—			(475	)		(475	)
Balance, December 31, 2007		34,265,663		343		72,614,414			726			952,520			—			(1,855	)		(335,516	)		616,218
Total, year ended December 31, 2007																										$	(124,031	)
Acquisition of minority interest		736,209		7								3,963			—			(14	)		(2,480	)		1,476
Issuance of warrants to purchase common stock		—		—		—			—			27,216			—			—			—			27,216
Exchange of SkyTerra LP unit options for SkyTerra options		—		—		—			—			19,333						—			—			19,333
Exercise of SkyTerra options		80,000		1		—			—			63			—			—			—			64
Equity-based compensation		1,085,000		11		—			—			11,886			—			—			—			11,897
Conversion of non-voting to voting common stock		12,655,915		126		(12,655,915	)		(126	)		—			—			—			—			—
Net loss		—		—		—			—			—			—			—			(204,935	)		(204,935	)		(204,935	)
Foreign currency translation adjustment		—		—		—			—			—			—			84			—			84			84
Balance, December 31, 2008		48,822,787	$	488		59,958,499		$	600		$	1,014,981			—		$	(1,785	)	$	(542,931	)	$	471,353
Total, year ended December 31, 2008																										$	(204,851	)

See accompanying notes.

F-5

SkyTerra Communications, Inc.

Consolidated Statements of Cash Flows

(In thousands)

	Year ended December 31
		2008		2007			2006
Operating activities
Net loss	$	(204,935	)	$	(123,556	)	$	(57,100	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		32,688			29,129			11,701
Amortization of debt issuance costs and debt discount		13,684			38,749			43,680
Equity-based compensation		11,365			8,134			10,444
Non-cash interest paid in-kind on Senior Unsecured Notes		24,208			—			—
Amortization of discount on investments		(1,110	)		(6,510	)		(3,609	)
Deferred income taxes		395			(1,650	)		944
Minority interest in loss of subsidiary		(572	)		(3,961	)		(7,704	)
Impairment of investment in TerreStar Networks		70,730			34,520			—
Impairment of goodwill		10,389			—			—
Impairment of investment securities		1,600			—			—
Extraordinary gain on acquisition of minority interest		(3,006	)		—			—
Loss on forfeiture of performance bond		—			—			2,250
Changes in operating assets and liabilities:
Accounts receivable		(969	)		40			(1,243	)
Management fee due from TerreStar Networks		—			10			642
Inventory		473			668			(2,489	)
Other assets		(7,623	)		(374	)		(1,218	)
Accounts payable, accrued expenses and other liabilities		5,631			3,352			(3,483	)
Deferred revenue		(268	)		(1,915	)		(1,467	)
Net cash used in operating activities		(47,320	)		(23,364	)		(8,652	)
Investing activities
Purchase of property and equipment		(177,101	)		(240,494	)		(99,063	)
Restricted cash		(69	)		1,509			1,638
Purchase of investments		(215,879	)		(274,810	)		(471,528	)
Maturity of investments		266,494			431,181			279,790
Cash received in 2006 SkyTerra LP Exchange Transaction		—			—			10,310
Cash received in BCE Exchange Transaction for assumed tax liabilities		—			37,000			—
Payments for assumed tax liabilities of entity acquired in BCE Exchange Transaction		(37,000	)		—			—
Investment in TerreStar Global		—			—			(653	)
Net cash used in investing activities		(163,555	)		(45,614	)		(279,506	)
Financing activities
Proceeds from issuance of Senior Secured Notes		—			—			423,052
Proceeds from issuance of 16.5% Senior Unsecured Notes and warrants (related party)		150,000			—			—
Proceeds from issuance of notes payable		—			1,058			—
Principal payments on notes payable		(910	)		(247	)		(225	)
Proceeds from exercise of SkyTerra stock options		64			588			259
Proceeds from exercise of SkyTerra LP unit options		—			535			454
Net cash provided by financing activities		149,154			1,934			423,540
Effect of exchange rates on cash and cash equivalents		(463	)		(68	)		(290	)
Net (decrease) increase in cash and cash equivalents		(62,184	)		(67,112	)		135,092
Cash and cash equivalents, beginning of period		127,905			195,017			59,925
Cash and cash equivalents, end of period	$	65,721		$	127,905		$	195,017
Supplemental information
Cash paid for interest	$	3,678		$	302		$	54
Cash paid for income taxes	$	1,027		$	602		$	—
Cash paid for income taxes related to Hughes distribution or Exchange transactions	$	37,000		$	518		$	6,131
Non-cash financing information
Non-cash investing and financing activities (vendor financing)	$	10,175		$	50,765		$	—

See accompanying notes.

F-6

SkyTerra Communications, Inc.

Notes to Consolidated Financial Statements

December31, 2008

1. Organization and Business

On December 8, 2008 the names of all SkyTerra subsidiaries that used “Mobile Satellite Ventures” in any part of their name were changed to replace the “Mobile Satellite Ventures” portion of the name with “SkyTerra,” including those listed in the table below which indicates the previous and current name of each subsidiary:

Former Name:	New Name:
Mobile Satellite Ventures GP Inc.	SkyTerra GP Inc.
Mobile Satellite Ventures LP	SkyTerra LP
Mobile Satellite Ventures (Canada) Inc.	SkyTerra (Canada) Inc.
Mobile Satellite Ventures Holdings (Canada) Inc.	SkyTerra Holdings (Canada) Inc.
MSV Finance Co.	SkyTerra Finance Co.

All SkyTerra Communications, Inc. (SkyTerra or the Company) operating and development activity is performed through its wholly owned consolidated subsidiary SkyTerra LP. SkyTerra LP is licensed by the United States government and SkyTerra (Canada) Inc. (SkyTerra Canada), a consolidated variable interest entity of SkyTerra LP, is licensed by the Canadian government to operate in the L-band spectrum that the Company has coordinated for its use. 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, SkyTerra-1 and SkyTerra-2 (formerly MSV-1 and MSV-2), that will serve as the core of its next generation network. The Company is working closely with Boeing, the satellite manufacturer of both SkyTerra-1 and SkyTerra-2, to carefully track, monitor and support the progress of the satellite construction program.  Based on Boeing’s most recent estimates, SkyTerra-1 will be available for launch in very late 2009.  To insure the availability of a launch window for SkyTerra-1, and accounting for the possibility of potential future construction or other delays that have occurred on other complex spacecraft, SkyTerra has selected a launch window that provides scheduled launch assurance in case the manufacturer’s construction schedule is delayed.

Specifically, SkyTerra has contracted for a launch window for SkyTerra-1 that opens in March of 2010 and continues through May 2010.  This date was selected carefully, to account for the possibility of future manufacturer construction delays as mentioned above.  If SkyTerra-1 construction does not deviate from its current schedule, SkyTerra may seek an earlier launch date from the launch service provider, including late 2009.  While there can be no guarantee of the availability of such earlier launch time, SkyTerra believes the launch service provider will work in good faith to accommodate an earlier launch. 

The launch of SkyTerra-2 is currently expected to occur in the fourth quarter of 2010 or the first quarter of 2011 and, similar to SkyTerra-1, within all regulatory milestones.

The Company also operates an existing satellite based network, and offers a range of currently available mobile satellite services that support the delivery of data, voice, fax and dispatch radio services.

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 also require substantial additional capital resources to construct its next generation integrated network.

The Company’s current operating assumptions and projections reflect management’s best estimate of future revenue, operating expenses, and capital commitments, and indicate that the Company’s current sources of liquidity, including the Harbinger committed financing discussed below, 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. Additional funds will be needed to complete the construction of the next generation integrated network and fund operations beginning in the fourth quarter of 2010. Although the Company secured committed financing in July 2008, pursuant to an agreement with Harbinger, Harbinger may not be required to fund the

F-7

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, as amended, the Company has committed funding of $500 million through the sale of four tranches of 18% Senior Unsecured Notes. On January 7, 2009 the Company issued the first of four issuances of the 18% Senior Unsecured Notes in an aggregate principal amount of $150 million. The remaining $350 million of 18% Senior Unsecured Notes are scheduled to be issued in three tranches of $175 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively.

The remaining cost of carrying out the Company’s business plan will be significant, and is significantly more than the Company’s currently available and committed resources. If the Company fails to obtain necessary financing on a timely basis, its satellite construction, launch, or other events necessary to conduct the Company’s business could be materially delayed, or its costs could materially increase; the Company could default on its commitments to its satellite construction or launch contractors, creditors or other third parties, leading to termination of construction or inability to launch the Company’s satellites; the Company may not be able to complete its next generation integrated network as planned and may have to discontinue operations or seek a purchaser for its satellite business or assets. SkyTerra LP could lose its FCC or Industry Canada licenses or its international rights if it fails to achieve required performance milestones. The Company may not be able to continue as a going concern beyond 2010 if it fails to obtain necessary financing on a timely basis.

The U.S. and worldwide financial markets have recently experienced unprecedented volatility, particularly in the financial services sector. No assurance can be given that Harbinger will satisfy its funding commitments to the Company in a timely manner, or at all. If Harbinger does not satisfy its funding commitments, the Company may pursue other means to extend its liquidity and raise capital. Those alternatives may include the sale of the investment in TerreStar Networks Inc. (TerreStar Networks), a capital infusion through an equity or debt investment with a strategic partner, a capital infusion through the sale of additional debt or equity, the renegotiation of vendor payment schedules to defer payments into the future, the postponement of certain discretionary spending, or some combination of these actions. The Company may be unable to find alternative financing sources, particularly in light of the current turmoil in the U.S. and worldwide financial markets.

In July 2008, the Company, SkyTerra LP and SkyTerra Subsidiary LLC entered into a Master Contribution and Support Agreement (the “Master Agreement”) and certain other agreements with Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund L.P., and Harbinger Capital Partners Fund I, L.P. (together “Harbinger”). The Master Agreement provides for the possible combination of SkyTerra and Inmarsat, subject to the receipt of required regulatory and antitrust clearances.

The terms of the Company’s current and expected future indebtedness include significant limitations on additional debt, including amount, terms, access to security, duration, among other factors, and impose limitations on the structure of strategic transactions. In addition, the Master Agreement as amended includes significant limitations on the issuance by the Company of additional debt and equity securities.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and include the accounts of the Company, SkyTerra LP, all wholly owned subsidiaries of the Company and SkyTerra LP, and all variable interest entities for which the Company or SkyTerra LP is the primary beneficiary. The results for the Company include the results of SkyTerra LP for all years presented and SkyTerra for the period beginning on September 25, 2006 (the closing date of the 2006 SkyTerra LP Exchange Transactions). The Company accounts for its investments in affiliates in which it owns less than 20% of the voting stock and does not possess significant influence over the operations of the investee under the cost method of accounting. All intercompany accounts are eliminated upon consolidation.

Use of Estimates

The preparation of consolidated financial statements requires the use of 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 equity-based compensation, the valuation of the investment in TerreStar Networks, valuation of intangible assets, the useful lives of long-lived assets, and judgments involved in evaluating asset impairments, among others, have a material impact on the financial statements. The Company bases estimates on historical experience and various other assumptions the Company believes are reasonable under the circumstances, the results of which form the basis for making

F-8

judgments about the carrying value of assets, liabilities and equity that are not readily apparent from other sources. Actual results and outcomes could differ from these estimates and assumptions.

Cash and Cash Equivalents

Cash equivalents include money market funds, commercial paper and demand deposit accounts. The Company generally considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Restricted Cash

Restricted cash of $0.9 million as of December 31, 2008 and 2007, relates to performance bonds held by regulatory governmental agencies and relate to the Company’s obligations to perform under certain regulatory requirements. These amounts are included in other assets in the accompanying consolidated balance sheets.

Fair Value Measurements and Investments

The Company adopted Statement of Financial Accounting Standards No. 157, Fair Value Measurements (SFAS No. 157), 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 fair 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.

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. These non-financial items include assets and liabilities such as non-financial assets and liabilities assumed in a business combination, reporting units measured at fair value in a goodwill impairment test and asset retirement obligations initially measured at fair value. Accordingly, the Company has not applied the provisions of SFAS No. 157 to non-financial assets and non-financial liabilities.

In October 2008, the FASB issued FSP No. 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active (FSP No. 157-3). FSP No. 157-3 clarifies the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. The provisions of FSP No. 157-3 were effective upon issuance and for financial statements not yet reported. The adoption of FSP No. 157-3 did not have a material impact on the Company’s consolidated financial statements.

The Company’s investments include commercial paper, certificates of deposit, municipal bonds and securities issued by government agencies or guaranteed by government agencies. Interest income is recognized when earned. Realized gains and losses for marketable securities are derived using the specific identification method. The classification of investments is determined at the time of purchase and re-evaluated at each balance sheet date. The Company holds investments classified as “held-to-maturity” that are reported at amortized cost. The Company holds one investment classified as “available-for-sale” that is reported at fair value, with changes in fair value reported within equity as a component of other comprehensive income. The Company holds no investments that are classified as “trading securities”.

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.

During the second half of 2008 the credit markets came under severe pressure from a confluence of events including the collapse of the sub-prime debt market, deterioration in the credit default swap market, and the near-standstill of the commercial paper market. As a result of these market conditions, the Company made adjustments to its cash and investment position in an effort to reduce exposure to principal loss. Specifically, several securities previously classified as “held-to-maturity” were sold resulting in insignificant realized gains or losses on those securities during 2008.

F-9

During 2008, the Company evaluated the fair value of its holdings using relevant and available indicators in order to determine if any of the Company’s investments were other-than-temporarily impaired. As result of the Company’s analysis it was determined that one commercial paper investment had become other-than-temporarily impaired in the amount of $1.6 million and was written down to its estimated fair value, with the impairment charge included in other expense in the 2008 statement of operations. This investment had previously been a Level 1 investment, but as a result of the bankruptcy of the investee, trading become sporadic, and as the market for this security deteriorated the Company considered the investment to be Level 3. The Company continues to classify the investment at Level 3 at December 31, 2008. There was no further impairment or change in fair value subsequent to the investment being transferred to Level 3.

The Company’s fair value measurements at December 31, 2008 were as follows (in thousands):

	Balance as of December 31, 2008			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Gains (losses)
Assets:
Cash equivalents	$	46,659		$	46,659		$	—	$	—	$	—
Available-for-sale investments		400			—			—		400		(1,600	)
Foreign currency contracts		(112	)		(112	)		—		—		(112	)
	$	46,947		$	46,547		$	—	$	400	$	(1,712	)

The proceeds from sales of available-for sale-securities were zero for the years ended December 31, 2008, and 2007, respectively. There are no net unrealized holding gains or losses on available-for-sale securities at December 31, 2008, and no amounts were reclassified out of accumulated other comprehensive income into earnings for the period. The Company’s available-for-sale security has matured, and the Company is attempting to collect on its investment through sale, or though bankruptcy proceedings of the investee to the extent the return may exceed its potential sale price.

The Company purchased $215.9 million of investments during 2008. During 2008, $252.6 million of investments matured and $13.9 million were sold prior to maturity. The weighted average maturities of the Company’s held-to-maturity investments is 1.85 months at December 31, 2008. The Company purchased $274.8 million of investments during 2007. During 2007, $431.2 million of investments matured and $0 were sold prior to maturity.

The carrying amount of the Company’s accounts receivable, accounts payable and accrued expenses approximates their fair value due to the short-term maturity of these instruments. Given there is limited active trading in the Company’s debt securities, the estimated bid-side broker quote (as provided by third party sources) of the Company’s Senior Secured Discount Notes was obtained and was also used as the basis to estimate the fair value of the Company’s 16.5% Senior Unsecured Notes, resulting in an aggregate $229.6 million fair value at December 31, 2008. The estimated fair value of the Company’s notes payable is $60.9 million at December 31, 2008.

Investments in TerreStar Networks

The Company owns 11.1% of TerreStar Networks (a consolidated privately-held subsidiary of TerreStar Corporation) that it accounts for under the cost method. Prior to September 12, 2008, TerreStar Corporation owned 29,926,074 million shares of the Company.

The Company evaluates impairment of such investments in accordance with FSP FAS 115-1/124-1, 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.

On September 12, 2008, the Company entered into a Transfer and Exchange Agreement with TerreStar Corporation. Pursuant to the agreement, transferees (but not the Company itself) will have the right until May 15, 2014 to exchange shares of TerreStar Networks for shares of TerreStar Corporation common stock at an exchange ratio of 4.37 shares of TerreStar Corporation common stock per TerreStar Networks share. The Agreement also provides for SkyTerra’s waiver of TerreStar Corporation’s obligation in the Exchange Agreement among SkyTerra, TerreStar and Motient Ventures Holding Inc., dated May 6, 2006, to use its commercially reasonable efforts to distribute 29,926,074 shares of non-voting common stock of SkyTerra (the “SkyTerra Shares”) to TerreStar Corporation’s stockholders. Throughout 2008, the observable quoted market price of TerreStar Corporation common stock continually 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.

F-10

Upon the adoption of SFAS No. 157, effective January 1, 2008, 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 (Market Method) that utilized observable quoted market inputs (Level 1 inputs) and observable other than quoted market inputs (Level 2 inputs), was at a higher level of the fair value hierarchy than other methods it had previously utilized. Accordingly, the Company used the Market Method to perform its assessment of impairment of the investment in TerreStar Networks at March 31, 2008, and June 30, 2008.

To perform its assessment of impairment as of September 30, 2008 and December 31, 2008, the Company updated its approach in light of the Transfer and Exchange Agreement with TerreStar Corporation and the exchange ratio agreed upon that would allow exchange of TerreStar Networks shares for TerreStar Corporation shares that are publicly traded (Exchange Method). The Company now uses that exchange ratio and the quoted market price of TerreStar Corporation common stock to determine the fair value of the TerreStar Networks shares. The Company believes that the previously used Market Method is a lower level in the fair value hierarchy due to the Exchange Method’s direct, rather than indirect, link to the publicly traded securities of TerreStar Corporation. The privately held investment in TerreStar Networks, in certain circumstances, may be worth more than its “as-if-exchanged” value.

At December 31, 2008, the investment in TerreStar Networks valued under the Exchange Method described above was $7.4 million. As a result, the Company determined that the TerreStar Networks investment is other-than-temporarily impaired. The investment was written down to estimated fair value, resulting in total impairment charges of $70.7 million for the year ended December 31, 2008.

Inventory

Inventory consists of finished communication devices that are stated at the lower of cost or market, using the average cost method. The Company periodically assesses the market value of its inventory, based on sales trends and forecasts and technological changes, and records a charge to current-period income when such factors indicate that a reduction in net realizable value has occurred.

Property and Equipment

Property and equipment are recorded at cost, net of accumulated depreciation. Property and equipment acquired in business combinations are recorded at their estimated fair value on the date of acquisition. Internally developed software costs, generally incurred as a component of the next generation network, are capitalized. Such costs include external direct material and service costs, employee payroll and payroll-related costs. Internally developed software is amortized using the straight-line method over the estimated useful life of the software.

Depreciation is computed using the straight-line method over estimated useful lives of the assets as follows:

Satellite system in service	9 years
Office equipment and furniture	3-5 years
Software	2-3 years
Leasehold improvements	Shorter of the useful life or lease term

Expenditures for maintenance and repairs are charged to expense as incurred. When assets are retired or sold, the cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is recognized in the results of operations.

Long-Lived Assets

The Company reviews long-lived assets, including amortizable intangible assets, for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. The impairment test is based on a comparison of the undiscounted cash flows to the recorded value of the asset. If an asset is impaired, the asset is written down by the amount by which the carrying value of the asset exceeds the related fair value of the asset. The Company has made significant investments in certain technology related to its next generation network, including development of a satellite air interface. If the Company were to utilize different technologies then those on which it has begun development work, it may realize significant impairment charges in the future.

Based on a deterioration in the economic environment and the goodwill impairment, the Company evaluated its next generation long-lived assets to assess recoverability as of December 31, 2008. The Company’s long-lived assets consist mainly of components of the Company’s planned next generation network. As such, to evaluate impairment, the Company compared the net undiscounted cash flows estimated to be generated by the next generation network to the recorded value of the assets. The net undiscounted cash flows estimated to be generated exceeded the recorded value of the assets, resulting in

F-11

no impairment as of December 31, 2008. The Company’s estimates of net undiscounted cash flows estimated were based upon historical results, projections of market and service growth, customer surveys, and market size estimates provided by industry experts.

Goodwill

Goodwill is not amortized, but rather is assessed for impairment at least annually. Goodwill impairment is determined using a two step process. The first step is to identify if a potential impairment exists by comparing the fair value of a reporting unit with its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered to have a potential impairment and the second step of the impairment test is not necessary. However, if the carrying amount of a reporting unit exceeds its fair value, the second step is performed to determine if goodwill is impaired and measure the amount of impairment loss to recognize, if any. The second step compares the implied fair value of goodwill with the carrying amount of goodwill. If the implied fair value of goodwill exceeds the carrying amount, then goodwill is not considered impaired. However, if the carrying amount of goodwill exceeds the implied fair value, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination. The fair value of the reporting unit is allocated to all the assets and liabilities, including any previously unrecognized intangible assets, as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. 

The Company performs its annual impairment assessment on November 30, however, the Company could be required to evaluate the recoverability of goodwill prior to the required annual assessment if the Company experiences indications of impairment. The Company has three reporting units, Current Generation, Next Generation and SkyTerra Corporate. As of the evaluation date, the Company carried goodwill of $10.4 million and $0.1 million at the Next Generation and Current Generation reporting units, respectively, as a result of SkyTerra LP’s acquisition of satellite businesses in previous years. The SkyTerra Corporate reporting unit has no goodwill.

The Company estimated the fair value of its reporting units using discounted cash flow analyses. The cash flow estimates required various judgmental assumptions about sales, operating margins, growth rates and discount rates. Assumptions about sales, operating margins and growth rates are based on the Company’s budgets, business plans, and economic projections.

The Current Generation reporting unit is a steady, long-term business that faces technological obsolescence and the retirement of its operating assets towards the end of 2010, when it plans to cease operations. To forecast cash flows of the Current Generation Reporting unit, the Company assumed operating margins in the next two years of network life consistent with or at lower levels then realized in the most current year due to expected customer defections as the current generation network approaches technological obsolescence and retirement. The Next Generation reporting unit has several different viable business plans that the Company is currently evaluating, including a plan that includes mobile satellite services only (and related costs), and a plan that includes both mobile satellite and ancillary terrestrial component services (and related costs). For purposes of its goodwill impairment analysis, the Company utilized the business plan that includes mobile satellite services only. Within the mobile satellite services only business plan the Company assumed operating margins applicable to a significantly broader range of services that will be available on the next generation network.

The Company compared the combined fair values of its reporting units with its market capitalization, adjusted for a control premium as demonstrated by large transactions in the Company’s stock. The Company’s estimated market value based on its average closing stock price over a relatively short period of time, plus control premium, approximated, the combined fair values of its reporting units determined through the discounted cash flow analysis.

The Company compared the estimated fair values of its reporting units with their carrying amounts, including goodwill. The estimated fair value the Current Generation reporting unit exceeded its carrying amounts that include goodwill of $0.1 million. As such, no goodwill impairment loss was recognized related to the Current Generation reporting unit. The estimated fair value the Next Generation reporting unit did not exceed its carrying amounts that include goodwill of $10.4 million. The fair value of the identifiable net assets of the Next Generation reporting unit, determined as if the reporting unit had been acquired in a business combination, when compared to the fair value of the reporting unit resulted in a determination that the implied fair value of goodwill was zero. As the $10.4 million carrying amount of Next Generation reporting unit goodwill exceeds the implied fair value of that goodwill (zero), an impairment loss was recognized in an amount equal to the full amount of goodwill carried in this reporting unit. Accordingly, at December 31, 2008 the remaining goodwill of $0.1 million relates to the Current Generation reporting unit.

F-12

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, investments, and accounts receivable. The Company’s investments are predominantly government agency and government agency guaranteed securities at December 31, 2008. The Company maintained cash balances at financial institutions that exceeded federally insured limits as of December 31, 2008. The Company maintains its cash and cash equivalents at high-credit-quality institutions, and as a result, the Company believes that credit risk related to its cash is not significant.

The Company generally grants credit to customers on an unsecured basis. The Company performs ongoing evaluations regarding collection of amounts owed to it. The Company records an allowance for doubtful accounts equal to the amount estimated to be uncollectible.

The Company’s significant customers, as measured by percentage of total revenues, were as follows:

	December 31
	2008		2007	2006
Customer A	12	%	*	*
Customer B	*		*	11	%

 The Company’s significant customers, as measured by percentage of total accounts receivable, were as follows:

	December 31
	2008		2007
Customer A	12	%	*
Customer C	14	%	14	%
Customer D	*		10	%

* Customer did not represent more than 10% for the period presented.

Revenue Recognition

The Company recognizes revenue from products and services in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements as amended by SAB No. 104 Revenue Recognition. Consistent with the requirements of SAB No.’s 101 and 104, revenue is recognized when: a) persuasive evidence of arrangement exists, b) delivery has occurred, c) the seller’s price to the buyer is fixed, and d) collectibility is reasonably assured.

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. Monthly network access revenue is recognized in the month of service to the end user. Variable usage revenue is recognized during the period of 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

F-13

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. 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 access fee for unlimited 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 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.

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 is as follows (in thousands):

	Year ended December 31,
	2008		2007		2006
Capitalized interest	$	72,894	$	32,543	$	4,548
Interest expense		40,242		39,093		43,740
Total interest	$	113,136	$	71,636	$	48,288

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 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. 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 existing deferred tax liabilities, projected future taxable income and tax planning strategies in evaluating whether it is more likely than not that deferred tax assets will be realized.

The Company conducts business in the U.S. and Canada and is subject to tax in those jurisdictions. As a result of its business activities, the Company files tax returns that are subject to examination by the respective federal, state, local and foreign tax authorities.

The Company recognizes interest and penalties accrued related to unrecognized tax benefits as a component of the income tax provision. For the year ended December 31, 2008, there have been no interest and penalties recorded as a component of the Company’s income tax provision.

Equity-Based Compensation

SkyTerra LP accounts for employee equity based compensation under SFAS No. 123(R), Share Based Payment. Share-based payment transactions are recognized when the Company receives goods or services in exchange for share-based payments. The costs associated with the goods or services received in the share-based payment transaction are recognized as the goods or services received are consumed or disposed of. Fair value is an integral concept in the accounting model applicable to instruments awarded in share-based payment transactions. Measurement of share-based payment transactions with employees are based on the estimated grant-date fair value of the equity instruments issued or the fair value of the liability incurred, as appropriate. See Note 7.

Foreign Currency and International Operations

The Company has operations in Canada. The functional currency of the related subsidiary and consolidated variable interest entity is the Canadian dollar. Accordingly, assets and liabilities of these subsidiaries are translated using exchange rates in effect at the end of the period and revenue and costs are translated using weighted average exchange rates for the

F-14

period. The related translation adjustments are reported in accumulated other comprehensive income in stockholders’ equity. Gains and losses arising from transactions denominated in a currency other than the functional currency of the entity involved are included in the results of operations. Foreign exchange transaction losses were $365,000 for the year ended December 31, 2008 and gains were $303,000 and $30,000, for the years ended December 31, 2007, and 2006, respectively.

Derivatives

The Company recognizes derivatives as assets or liabilities measured at fair value with changes in fair value of derivatives reflected in earnings The Company does not apply hedge accounting for any derivatives in its portfolio.

The Company is exposed to the impact of fluctuations in the exchange rate of the Canadian dollar and the Euro. The Company limits this risk by the use of forward and option contracts. The Company does not use derivatives for trading or speculative purposes. As of December 31, 2008, and 2007, the Company had contracts in place for portions of its forecasted expenses and equipment purchases, payable in Canadian dollars or Euros, totaling $1.7 million and $1.8 million, respectively. These forward and option contracts have varying maturities up to, but not exceeding, one year with cash settlements made at maturity based upon rates agreed to at contract inception.

The Company had unrealized losses of $112,000 and unrealized gains of $19,000 related to these contracts as of December 31, 2008 and 2007, respectively, that are reflected in other income (expense) in the accompanying consolidated statements of operation.

Other Comprehensive Income

Comprehensive income (loss) is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. Other comprehensive income (loss) includes revenue, expenses, gains, and losses that under U.S. generally accepted accounting principles are included in other comprehensive income (loss), but excluded from net income (loss). As of December 31, 2008 and 2007, accumulated other comprehensive loss consisted of foreign currency translation adjustments. There were no unrealized losses on available-for-sale securities as of December 31, 2008 or 2007.

Loss Per Common Share

Basic earnings per share is determined by dividing net loss attributable to common stockholders by the weighted average number of common shares and participating securities outstanding during the period. Participating securities are included in the basic earnings per share calculation when dilutive. Diluted earnings per share is determined by dividing the net loss attributable to common stockholders by the weighted average number of common shares and potential common shares outstanding during the period. Potential common shares are included in the diluted earnings per share calculation when dilutive. Potential common shares consisting of common stock issuable upon exercise of outstanding stock options and warrants are computed using the treasury stock method.

The Company’s restricted stock grants have been excluded from basic loss per common share until the shares vest. For the years ended December 31, 2008, 2007 and 2006, options, warrants, and unvested restricted stock aggregating 27,761,971, 5,145,821 and 4,341,035 shares, respectively, were excluded from the computation of diluted net loss per common share as the effect would have been anti-dilutive.  The Company also excluded the shares issuable to TerreStar Corporation in exchange for TerreStar Corporation’s interest in SkyTerra LP from the computation of diluted loss per common share in 2007 and 2006, as the effect would have been anti-dilutive.

Variable Interest Entities

The Company consolidates all variable interest entities in which it is the primary beneficiary. SkyTerra LP holds a 20% direct interest, and a 26.4% indirect interest in SkyTerra Canada. SkyTerra Canada is licensed by the Canadian government to operate in the L-band using spectrum that it has coordinated for its use. SkyTerra LP is obligated, by contract, to fund 100% of the cash needs of SkyTerra Canada. SkyTerra Canada holds a significant portion of the spectrum assets in use by the Company, and is obligated, by contract, to provide access to that spectrum to SkyTerra LP through services and capacity agreements. These agreements may terminate only upon written agreement between both SkyTerra LP and SkyTerra Canada, or upon one party becoming the beneficial owner of all of the shares of SkyTerra Canada. Based upon its funding obligations and its contractual rights to both the satellite capacity and satellite assets of SkyTerra Canada, SkyTerra LP determined that it is the primary beneficiary of SkyTerra Canada and consolidates SkyTerra Canada into its results. As a minority equity holder, the Company does not have the ability to make unilateral decisions regarding the operations of SkyTerra Canada.

F-15

SkyTerra Canada is subject to foreign ownership restrictions imposed by the Telecommunications Act (Canada) and the Radiocommunication Act (Canada) and regulations made pursuant to these Acts. Although the Company believes that SkyTerra Canada is in compliance with the relevant legislation, there can be no assurance that a future determination by Industry Canada or the Canadian Radio-television and Telecommunications Commission, or events beyond its control, will not result in SkyTerra Canada ceasing to comply with the relevant legislation. If such a development were to occur, the ability of SkyTerra Canada to operate as a Canadian carrier under the Telecommunications Act (Canada) or to maintain, renew or secure its Industry Canada authorizations could be jeopardized. In such a case, the Company’s business could be materially adversely affected through the loss of access and use to a significant amount of spectrum currently available to it. The Company’s exposure to loss as a result of its involvement with SkyTerra Canada may also be impacted by variances in the mobile satellite services and telecommunications business cycle.

The Company provided financial support to SkyTerra Canada to fund its operations in the amount of $2.0 million and $3.3 million, for the years ended December 31, 2008, and 2007, respectively, in the form of cash payments and services provided for which the Company has not yet collected cash payments. The Company did not provide financial or other support during the years ended December 31, 2008 and 2007 that it was not contractually obligated to provide. Creditors of SkyTerra Canada have no recourse to the assets or general credit of SkyTerra LP or the Company.

Loss Contingencies

The Company accrues loss contingencies that are believed to be probable and can be reasonably estimated. As events evolve and additional information becomes known, the Company reassesses its estimates related to loss contingencies.

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.

In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities (SFAS No. 161). SFAS No. 161 amends SFAS No. 133 by improving financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The provisions of SFAS No. 161 are effective for fiscal years beginning after November 15, 2008 and interim periods within those fiscal years. The Company is in the process of evaluating the impact, if any, that SFAS No. 161 will have on disclosures in its consolidated financial statements.

In June 2008, the FASB ratified EITF Issue No. 07-5, Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock (EITF 07-5). EITF 07-5 applies to any freestanding financial instrument or embedded feature that has all the characteristics of a derivative, as defined.  If an instrument, or an embedded feature, is not considered indexed to the issuer’s stock under EITF 07-5, that instrument is not eligible for equity classification and would be classified as an asset or liability and re-measured at fair value through earnings.  The Company will be required to adopt EITF 07-5 on January 1, 2009. The consensus must be applied to all instruments outstanding on the date of adoption and the cumulative effect of applying the consensus must be recognized as an adjustment to the opening balance of retained earnings at transition. The Company has outstanding warrants to purchase common stock that have been preliminarily evaluated as ineligible for equity classification under EITF 07-05 because of certain provisions that may result in an adjustment to the exercise price of the warrants. Accordingly, the adjustment feature may cause the warrant to fail to be indexed solely to the Company’s stock. The warrants would therefore be classified as liabilities and re-measured at fair value with changes in the fair value recognized in operating results. The Company has not completed its analysis of these instruments nor determined the effects of pending adoption, if any, on its financial statements.

Reclassifications

Certain prior year amounts previously presented as “service and related revenues” have been reclassified to “other revenue” to conform to the current year presentation.

F-16

3. Acquisitions

SkyTerra LP Exchange Transactions

On September 25, 2006, the Company issued 39.6 million shares of its voting and non-voting common stock to TerreStar Corporation and other partners in SkyTerra LP in exchange for limited partnership interests in SkyTerra LP (the “2006 SkyTerra LP Exchange Transactions”), resulting in SkyTerra owning 59% of SkyTerra LP as of the closing. Pursuant to the terms of these transactions, TerreStar Corporation agreed to use commercially reasonable efforts to distribute the 25.5 million shares of the Company’s common stock that it received to its common stockholders. Prior to any such distribution these shares were non-voting.

TerreStar Corporation also was given the right to exchange, until September 25, 2011, its remaining ownership interest in SkyTerra LP for 18.9 million shares of SkyTerra non-voting common stock, which was exchangeable for a like number of shares of SkyTerra voting common stock upon the disposition of any such shares by TerreStar Corporation. Following a change of control of SkyTerra, as defined in the agreement with TerreStar Corporation, SkyTerra had the right to require TerreStar Corporation to complete the exchange of its remaining SkyTerra LP interest. If TerreStar Corporation had not exchanged its remaining SkyTerra LP interests by September 25, 2011 and a change of control of SkyTerra had not subsequently occurred with SkyTerra exercising its right, such remaining interest would have been exchanged for shares of non-voting common stock of SkyTerra at an exchange ratio reflecting the fair market value of such interest and SkyTerra’s common stock on May 6, 2021.

Notwithstanding the possible earlier exchange of TerreStar Corporation’s remaining SkyTerra LP interest by TerreStar Corporation or SkyTerra, as an exchange would have occurred on May 6, 2021 at an exchange ratio determined by the then current respective fair values of the investment of the SkyTerra LP interest and SkyTerra common stock, the Company recorded TerreStar Corporation’s remaining minority interest in SkyTerra LP at fair value at the end of each reporting period. Accordingly, the Company recorded the fair value of the minority interest of $280.3 million on September 25, 2006, and adjusted the minority interest to its fair value as of each subsequent reporting period. Changes in the fair value of the SkyTerra LP interest held by TerreStar Corporation were recorded in minority interest, but had no impact on the Company’s results of operations or cash flows. On each date an exchange occurred, the Company eliminated any previous adjustments to minority interest and stockholders’ equity and accounted for the exchange as an acquisition of minority interests in SkyTerra LP under the purchase method of accounting.

Notwithstanding the legal form of the transactions, the 2006 SkyTerra LP Exchange Transactions were accounted for as a reverse acquisition, with SkyTerra LP being treated as the accounting acquirer of SkyTerra. Accordingly, the historical financial statements of the Company prior to September 25, 2006 are the historical financial statements of SkyTerra LP. The consolidated financial statements of SkyTerra LP were retroactively adjusted to reflect the recapitalization of SkyTerra LP with the 39.6 million shares of SkyTerra common stock issued to SkyTerra LP equity holders in the 2006 SkyTerra LP Exchange Transactions.

The reverse acquisition resulting from 2006 SkyTerra LP Exchange Transactions was accounted for under the purchase method of accounting under SFAS No. 141, Business Combinations (SFAS No. 141). The purchase price was determined based on the fair value of the equity instruments of SkyTerra outstanding as of September 25, 2006. More specifically, the purchase price in the MSV Exchange Transaction was $398.4 million, which consists of (i) the $381.5 million attributed to the 24.6 million shares of the Company’s common stock outstanding as of September 25, 2006, (ii) the $10.4 million attributed to outstanding options to purchase shares of the Company’s common stock exercisable as of September 25, 2006 and (iii) the $6.5 million estimated fair value attributed to the Company’s Series 1-A and Series 2-A warrants outstanding as of September 25, 2006. The fair value of the outstanding stock options and warrants were estimated using the Black-Scholes option pricing model.

The Series 1-A and Series 2-A warrants are exercisable at any time and expire on June 4, 2009. As of December 31, 2008, the Series 1-A warrants are exercisable for 681,838 shares of the SkyTerra’s common stock at an exercise price of $19.52 per share. As of December 31, 2008, the Series 2-A warrants are exercisable for 2,698,942 shares of SkyTerra’s common stock at an exercise price of $24.52 per share.

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             The $398.4 million purchase price was allocated to the acquired assets and liabilities based on their estimated fair value. The excess of the fair value of the net assets acquired over the purchase price has been reflected as a reduction of fair value, on a pro rata basis, of the investment in each of SkyTerra LP and TerreStar Networks. The following table presents the purchase price allocation (in thousands):

Current assets	$	11,591
Investment in MSV (a)		284,327
Investment in TerreStar Networks		111,967
Current liabilities		(9,516	)
	$	398,369

(a)       As MSV is treated as the accounting acquirer, the MSV limited partnership units held by SkyTerra prior to the MSV Exchange Transactions are deemed to be reacquired in a treasury stock transaction. Accordingly, the value allocated to such limited partnership interests was recorded as a reduction of additional paid-in capital.

On January 5, 2007, the Company acquired all of the equity interests in SkyTerra LP owned by BCE Inc. (BCE) through the purchase of a BCE wholly-owned subsidiary, TMI Communications Delaware Limited Partnership (TMI Delaware). The Company issued 22.5 million shares of non-voting common stock in exchange for limited partnership interests in SkyTerra LP (the “BCE Exchange Transaction”). These shares of non-voting common stock are exchangeable for a like number of shares of voting common stock upon a sale by BCE in the open market or to a person who will not beneficially own 10% or more of the Company’s voting common stock. In addition, the Company issued 176,250 shares of common stock to Winchester Development LLC, a company beneficially owned by a former director of SkyTerra LP. Such shares were issued in exchange for $0.4 million in cash and limited partnership interests of SkyTerra LP. This transaction, together with the BCE Exchange Transaction, resulted in the Company owning 81% of SkyTerra LP.

On February 12, 2007, the Company issued 14.4 million shares of common stock to TerreStar Corporation as a result of TerreStar Corporation exercising its option to exchange a portion of its remaining limited partnership interests in SkyTerra LP. As a result, the Company’s ownership of SkyTerra LP increased to 95%. On November 30, 2007, the Company issued 4.4 million shares of common stock to TerreStar Corporation as a result of TerreStar Corporation exercising its option to exchange the remaining limited partnership interests in SkyTerra owned by it. As a result, the Company’s ownership of SkyTerra LP increased to 99.3%.

The January 5, 2007, February 12, 2007 and November 30, 2007 transactions were accounted for under the purchase method of accounting. Valuations of securities issued were determined in accordance with Emerging Issues Task Force (EITF) 99-12, Determination of the Measurement Date for the Market Price of Acquirer Securities Issued in a Purchase Business Combination (EITF 99-12), based on the date when agreement as to terms had been reached and the transaction announced, or, in the case of the TerreStar Corporation transactions, the dates of exercise of its exchange option. The purchase prices were allocated to the acquired assets and liabilities based on their estimated fair values.

F-18

The allocation of the $493.7 million combined purchase price in the January 5, 2007, February 12, 2007, and November 30, 2007 acquisitions of additional SkyTerra LP equity interests ($319.1 million, $153.3 million, and $21.3 million, respectively) was as follows (in thousands):

Property and equipment	$	(14,170	)
Intangible assets		504,477
Other assets		(4,311	)
Senior secured discount notes		191
Deferred revenue		7,496
	$	493,683

On December 10, 2008, the Company issued 736,209  shares of voting common stock to the remaining minority limited partners and acquired all of the remaining limited partnership interests in SkyTerra LP it did not already own. As a result, the Company’s ownership of SkyTerra LP increased to 100%. This transaction was accounted for under the purchase method of accounting. The valuation of securities issued was determined in accordance with EITF 99-12 based on the date when agreement as to terms had been reached and the transaction announced. Based on this valuation the purchase price was determined to be $1.5 million.  The fair value of the interest in the net assets acquired exceeded the fair value of the consideration resulting in "negative goodwill."  In accordance with SFAS No. 141, such negative goodwill was allocated on a pro rata basis to the interest in the long-lived assets acquired such that there was no net adjustment to the carrying amount of the long-lived assets.  After allocation of the negative goodwill against the fair value basis of the qualifying assets acquired, the remaining excess was recognized as an extraordinary gain.  As a result the purchase price was allocated as follows:

	Fair Value		Allocation of Negative Goodwill			Purchase Price Allocation
Long-lived and other assets	$	17,733	$	(17,733	)	$	—
Long-term liabilities		4,482		—			4,482
Extraordinary gain		—		(3,006	)		(3,006	)
Fair value of net assets acquired	$	22,215	$	(20,739	)	$	1,476

Pro forma financial information:

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):

	December31
	2008			2007
Pro forma revenues, unaudited	$	34,485		$	34,083
Pro forma net loss, unaudited		(206,793	)(a)		(130,456	)(b)
Pro forma net loss per share – basic and diluted, unaudited	$	(1.94	)(a)	$	(1.22	)(b)

(a)       The pro forma net loss and pro forma loss per share include $70.7 million related to the write-down of investment in TerreStar Networks (see Note 2), $10.4 million goodwill impairment (see Note 2), and $3.0 extraordinary gain on acquisition of minority interest (see Note 3).

(b)      The pro forma net loss and pro forma loss per share include $34.6 million related to the write-down of the investment in TerreStar Networks.

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4. Intangible Assets

Identifiable intangible assets arising from acquisitions accounted for under the purchase method of accounting consisted of the following (in thousands):

	AsofDecember31,2008							AsofDecember31,2007
	GrossCarrying Amount		Accumulated Amortization			NetCarrying Amount		GrossCarrying Amount		Accumulated Amortization			NetCarrying Amount
Spectrum rights and next generation intellectual property	$	604,891	$	(83,899	)	$	520,992	$	590,433	$	(54,652	)	$	535,781
Customer contracts		21,672		(19,102	)		2,570		22,222		(18,946	)		3,276
	$	626,563	$	(103,001	)	$	523,562	$	612,655	$	(73,598	)	$	539,057

The Company amortizes its intangible spectrum assets over a period of 20 years (generally through 2026), the estimated period of time through which the Company’s current and under development networks are expected to be operational. Customer contracts are amortized over a period ranging from 4.5 to 7 years. The life of certain of the next generation intellectual property was increased from 15 to 20 years in January 2007, due to a re-evaluation of the useful life, which decreased amortization expense by $2.8 million and $2.7 million for the years ended December 31, 2008 and 2007, respectively, and decreased net loss per share by $0.03 and $0.03, respectively. The weighted average remaining life of the Company’s spectrum rights and next generation intellectual property was 17.7 years at December 31, 2008. The weighted average remaining life of the Company’s customer contracts was 5.4 years at December 31, 2008.

During the years ended December 31, 2008, 2007, and 2006, amortization expense was $29.8 million, $27.9 million, and $9.5 million, respectively.

Future amortization of intangible assets is as follows as of December 31, 2008 (in thousands):

2009	$	30,133
2010		30,133
2011		30,133
2012		30,133
2013		30,124
Thereafter		372,906
	$	523,562

5. Balance Sheet Details

Property and Equipment

Property and equipment consisted of the following (in thousands):

	December31
	2008			2007
Satellite system under construction	$	680,932		$	407,983
Satellite system in service		45,527			48,094
Office equipment and furniture, software, and leasehold improvements		7,214			6,086
		733,673			462,163
Accumulated depreciation		(45,313	)		(45,111	)
Property and equipment, net	$	688,360		$	417,052

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During the years ended December 31, 2008, 2007, and 2006, depreciation expense was $2.9 million, $2.2 million, and $1.2 million, respectively. The satellite system under construction includes $110.0 million and $37.1 million of capitalized interest as of December 31, 2008 and 2007, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

	December31
	2008		2007
Accrued expenses		8,436		5,160
Accrued taxes payable on behalf of BCE		1,836		36,818
Accrued compensation and benefits		6,734		5,741
Accrued interest		1,572		466
Other current liabilities		181		1,260
Total accounts payable and accrued expenses	$	18,759	$	49,445

6. Debt

Debt consists of the following (in thousands):

	December31
	2008			2007
Senior secured discount notes, net	$	629,759		$	552,719
16.5% senior unsecured notes (related party), net		147,119			—
Notes payable - vendor		60,940			50,765
Note payable - other		372			1,282
		838,190			604,766
Less: Current portion		(372	)		(15,745	)
Total debt	$	837,818		$	589,021

Senior Secured Discount Notes

In March 2006, SkyTerra LP 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. Beginning October 2010, interest will be payable semi-annually in arrears in cash at a rate of 14% per annum. The Senior Secured Discount Notes mature on April 1, 2013.

The Senior Secured Discount Notes are secured by substantially all of SkyTerra LP’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 SkyTerra LP 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. 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 SkyTerra LP to comply with certain covenants that restrict some of the Company’s corporate activities, including SkyTerra LP’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. SkyTerra LP may incur indebtedness beyond the specific baskets allowed under the Senior Secured Discount Notes, provided it maintains a leverage ratio (as defined) of not more than 6 to 1. Noncompliance with any of the covenants without cure or waiver would constitute an event of default under the Senior Secured Discount

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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. SkyTerra LP was in compliance with the covenants of the Senior Secured Discount Notes as of December 31, 2008.

16.5% Senior Unsecured Notes

On January 7, 2008, Harbinger purchased $150 million of SkyTerra LP’s 16.5 % 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 16.5% Senior Unsecured Notes bear interest at a rate of 16.5%, payable in cash or in-kind, at SkyTerra LP’s option, through December 15, 2011, and thereafter payable in cash. The 16.5 % 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 16.5 % 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 on the 16.5% Senior Unsecured Notes is amortized using the effective interest rate method over the term. The fair value of the 16.5 % Senior Unsecured Notes of $127.5 million was estimated based on then-current yields of comparable securities. 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 16.5 % Senior Unsecured Notes and the warrants was $122.8 million and $27.2 million, respectively.

In June 2008 and December 2008, the Company made its scheduled interest payment “in-kind” on the 16.5% Senior Unsecured Notes through the issuance of $10.9 million and $13.3 million, respectively of additional 16.5% Senior Unsecured Notes, which are included in the balance of 16.5% Senior Unsecured Notes in the balance sheet as of December 31, 2008.

The Securities Purchase Agreement governing the 16.5% 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 16.5% 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 16.5% 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 16.5% Senior Unsecured Notes require SkyTerra LP to comply with certain covenants that restrict some of SkyTerra LP’s corporate activities, including SkyTerra LP’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 16.5% 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 16.5% 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. SkyTerra LP was in compliance with the covenants of the 16.5% Senior Unsecured Notes as of December 31, 2008.

Notes Payable – Vendor

SkyTerra LP has financed$60.9 million of satellite vendor payments with secured vendor notes payable (Notes Payable - Vendor) that bear interest at 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, SkyTerra LP entered into an agreement with Boeing to amend its existing contract with respect to its satellite system procurement. The amendment provides SkyTerra LP 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 SkyTerra-2 satellite, currently planned for the second half of 2010. The interest rate on the Notes Payable – Vendor was 5.4% at December 31, 2008.

F-22

In exchange for the additional payment deferrals and extension of repayment date, SkyTerra issued 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 a term of 10 years, vesting on a proportional basis consistent with the drawdown against the additional deferral amounts. In addition, the delivery date for the SkyTerra-2 satellite was extended by four months, to July 11, 2010, which is within the regulatory license milestone requirements. Finally, SkyTerra LP agreed that in the event any liquidated damages would be owed to SkyTerra 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. As additional payment deferrals are taken, warrants that vest at that time will be accounted for pursuant to APB Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants.

18% Senior Unsecured Notes

On July 24, 2008, SkyTerra, SkyTerra LP, and SkyTerra Finance Co. entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which SkyTerra LP and SkyTerra Finance Co. agreed to issue Harbinger up to $500 million aggregate principal amount of 18% Senior Unsecured Notes due July 1, 2013 (the “18% Senior Unsecured Notes”) in four tranches. As amended, the Securities Purchase Agreement provides that the 18% Senior Unsecured Notes bear interest at a rate of 18% per annum, and that, in conjunction with the issuance of the 18% Senior Unsecured Notes pursuant to the Securities Purchase Agreement, SkyTerra will issue to Harbinger warrants to purchase up to an aggregate of 32.5 million shares of voting or non-voting common stock of SkyTerra (at the option of the holder) at an exercise price of $0.01 per share of common stock. Harbinger’s purchase of the 18% Senior Unsecured Notes is not conditioned upon the commencement or consummation of a business combination with Inmarsat (see Note 9). Harbinger may not be required to purchase the 18% Senior Unsecured Notes under certain circumstances, including upon the occurrence of a material adverse effect.

On January 7, 2009 the Company completed the first issuance of the 18% Senior Unsecured Notes in an aggregate principal amount of $150 million. At closing, the Company issued Harbinger ten-year warrants to purchase 7.5 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. The remaining $350 million of 18% Senior Unsecured Notes is scheduled to be issued to Harbinger in tranches of $175 million, $75 million and $100 million on April 1, 2009, July 1, 2009, and January 4, 2010, respectively.

Future minimum principal payments related to the Company’s debt agreements, described above, including Vendor Notes, but excluding any amounts related to the 18% Senior Unsecured Notes issued or to be issued in 2009 are as follows for the years ending December 31, as of December 31, 2008 (in thousands):

2009	$	372
2010		60,940
2011		—
2012		—
2013		174,934
Thereafter		750,000
Total future payments		986,246

7. Equity-Based Compensation

SkyTerra Equity-Based Compensation Plans

SkyTerra maintains the following plans for the purpose of granting of options and other equity-based awards:

• a long-term incentive plan (1998 Long-Term Incentive Plan; 2.3 million shares of common stock reserved for issuance), and

• an equity incentive plan (2006 Equity and Incentive Plan; 13 million shares reserved for issuance).

The number of available shares under the 2006 Equity and Incentive Plan is adjusted to maintain the number of shares outstanding or issuable at 12% of the Company’s outstanding common stock, up to a maximum of 15 million shares. Additionally, the Company awarded options in August 2008 pursuant to the terms of the exchange offer described below which are not otherwise part of an equity incentive plan.

F-23

SkyTerra generally issues stock option awards with an exercise price equal to the fair value of the underlying common stock on the date of grant, that vest ratably over 3 years of service, and have a term of ten years. The fair value of each option is estimated on the date of grant using the Black-Scholes option valuation model. The Company recognizes compensation expense on a straight-line basis over the requisite service period. 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 to reasonably estimate 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 the Company’s common stock. No SkyTerra option awards have been settled in cash.

Assumptions used in determining the fair value of SkyTerra options are as follows:

	Year ended December 31,
	2008	2007
Expected volatility	58%-70%	55%-59%
Expected term (years)	6	6
Expected dividends	0%	0%
Risk free rate	1.5%-3.6%	2.5%-5.0%

On August 6, 2008 the Company completed an offer to all SkyTerra LP option holders as of that date, to grant them new SkyTerra options, generally in exchange for surrender and termination of their SkyTerra LP options (the “Option Exchange”). All participating U.S. SkyTerra LP option holders received options to purchase shares of SkyTerra common stock pursuant to the terms of the Option Exchange at a ratio of 2.82 SkyTerra options for each SkyTerra LP option terminated, with an exercise price equal to the exercise price of the SkyTerra LP options terminated divided by 2.82. All participating Canadian SkyTerra LP option holders received the right to exchange SkyTerra LP options for SkyTerra options on the same terms in the future. Sale of all shares subject to the options received upon exchange is subject to restriction until May 1, 2010, with certain exceptions that could result in earlier release of the restrictions. Upon the release of these restrictions, Canadian SkyTerra LP option holders participating in the Option Exchange will have three business days to complete the exchange of their respective SkyTerra LP options for SkyTerra options, or their SkyTerra LP options will become unexercisable.

Upon consummation of the Option Exchange, 11.1 million SkyTerra options were issued in exchange for SkyTerra LP options held by U.S. SkyTerra LP option holders. Additionally, Canadian SkyTerra LP option holders received rights to receive 1.7 million SkyTerra options if they exchange their respective SkyTerra LP options for SkyTerra options in the future.

The exchange of vested options held by U.S. SkyTerra LP option holders that were outstanding at September 25, 2006, the date of the 2006 SkyTerra LP Exchange Transactions, and had not been subsequently modified, have been accounted for as the acquisition of minority interest under the purchase method of accounting.  The fair value of these SkyTerra options was determined using Monte Carlo simulations, and was estimated to be $19.3 million.

The $19.3 million purchase price was allocated to long-lived assets on a pro-rata basis based on their estimated relative fair values on August 6, 2008, the date of the Option Exchange, as follows (in thousands):

Property and equipment	$	4,777
Intangible assets - spectrum		12,977
Intangible assets – intellectual property		1,480
Intangible assets – customers		99
	$	19,333

Options that were granted to SkyTerra LP U.S. employees subsequent to September 25, 2006, or granted prior to September 25, 2006 and subsequently modified after that date (before the exchange), and exchanged on August 6, 2008, have been accounted for as modifications, pursuant to SFAS 123(R), Share-Based Payment. The rights granted to SkyTerra LP Canadian employees to exchange their options in the future have also been accounted for as modifications, pursuant to SFAS 123(R), as those option holders continue to hold and have the ability to exercise their respective SkyTerra LP options. The Company determined that there was no incremental compensation cost as a result of these modifications, based on estimated fair values determined by Monte Carlo simulations.

On February 22, 2008 the Boards of Directors of the Company and SkyTerra GP Inc., SkyTerra LP’s corporate general partner, approved a modification of certain outstanding options to purchase the Company’s common stock and SkyTerra LP’s Limited Investor Units, respectively, that decreased the exercise prices of certain options to an exercise price equal to the then

F-24

current fair market value of the underlying common stock and Limited Investor Units, respectively. As a result of this modification the Company recorded $2.4 million of additional compensation expense during 2008. This modification will result in the recognition of additional compensation expense in periods subsequent to December 31, 2008 totaling $0.5 million related to unvested options.

The activity under the SkyTerra Incentive Plans and the Option Exchange is as follows:

	Options to Acquire Units		Weighted- Average Exercise Price		Aggregate Intrinsic Value (inthousands)
Options outstanding at December 31, 2007	1,082,928		$	11.35
Granted	796,800			5.87
Issued in Option Exchange	11,144,640			3.67
Canceled	(188,217	)		7.78
Exercised	(80,000	)		0.80
Options outstanding at December 31, 2008	12,756,151			4.31	$	350
Options exercisable at December 31, 2008	10,770,706		$	3.85	$	349
Options exercisable and expected to vest at December 31, 2008	12,617,170		$	4.28	$	350

The following table provides information about SkyTerra stock options that are outstanding and exercisable as of December 31, 2008:

Exercise Price	Stock Options Outstanding						Stock Options Exercisable
	Numberof Shares		Weighted Average Exercise Price		Weighted Average Remaining Life		Numberof Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
$ 0.56		250,000	$	0.56		3.78		250,000	$	0.56		3.78
$ 1.18 - $ 2.65		8,381,570		2.28		4.47		8,243,155		2.28		4.39
$ 3.10 - $ 8.26		3,857,220		7.26		7.76		2,010,190		7.39		7.07
$ 19.34 - $82.00		267,361		28.90		3.79		267,361		28.90		3.79
		12,756,151	$	4.31		5.44		10,770,706	$	3.85		4.86

The weighted average remaining life of options exercisable and expected to vest as of December 31, 2008 was 5.41 years.

Equity-based compensation expense of $6.3 million, $4.8 million and $0.1 million related to the SkyTerra equity awards was recognized during the years ended December 31, 2008, 2007 and 2006, respectively. No tax benefits related to the exercise of options were recognized as the Company is in a taxable loss position.

The weighted average grant date fair value of options granted during the years ended December 31, 2007 and 2008 was $6.01 per share and $3.37 per share, respectively. No options were granted during the year ended December 31, 2006. The total intrinsic value of options exercised was $0.3 million, $1.5 million and $1.1 million during the years ended December 31, 2008, 2007 and 2006, respectively. As of December 31, 2008, the total compensation cost related to non-vested options not yet recognized was $3.0 million, which is expected to be recognized over a weighted-average period of 2.5 years.

During the years ended December 31, 2008, 2007 and 2006, the Company granted awards of 1,185,000, 250,000 and 600,000, respectively, of restricted shares of common stock to executives. As of December 31, 2008, the total estimated equity-based compensation expense related to non-vested restricted stock not yet recognized is $7.1 million, which is expected to be recognized over a period of 1.4 years. As of December 31, 2008, the Company has outstanding awards of 1,855,000 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.

F-25

A summary of the status of the Company’s nonvested shares is as follows:

	Shares		Weighted Average Grant Date Fair Value
Nonvested at December 31, 2007	850,000		$	9.49
Granted	1,185,000			7.64
Vested	(80,000	)		7.95
Forfeited	(100,000	)		7.23
Nonvested at December 31, 2008	1,855,000		$	8.49

SkyTerra LP Incentive Plans

SkyTerra LP maintains a unit option incentive plan (SkyTerra LP Unit Option Incentive Plan), that allows for the granting of options and other unit based awards to employees and directors upon approval by SkyTerra LP’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 SkyTerra LP is not sufficient to reasonably estimate 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.

SkyTerra LP generally issues stock option awards with an exercise price equal to the fair value on the date of grant, that vest ratably over 3 years of service, and carry a term of ten years. The Company recognizes compensation expense on a straight-line basis over the requisite service period. 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 LP is not sufficient to reasonably estimate 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 the Company’s common stock. No SkyTerra LP option awards have been settled in cash, other then as described below.

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. Beginning in 2008, SkyTerra LP used a 2.82 exchange ratio between the observable market trading price of SkyTerra and SkyTerra LP, to value a Limited Investor Unit, based on the ratio in the Option Exchange and other transactions. Prior to 2008, 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.

Assumptions used in determining the fair value of SkyTerra LP unit options are as follows:

	Year ended December 31,
	2008	2007
Expected volatility	60%	57%
Expected term (years)	6	6
Expected dividends	0%	0%
Risk free rate	2.1%-3.3%	2.4%-5.2%

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The activity under the SkyTerra LP Unit Option Incentive Plan is as follows:

	Options to Acquire Units		Weighted- Average Exercise Price		Aggregate Intrinsic Value (inthousands)
Options outstanding at December 31, 2007	4,708,250		$	13.33
Granted	19,000			20.94
Surrendered in exchange for SkyTerra options issued in Option Exchange	(3,952,000	)		10.76
Canceled	(62,833	)		14.31
Exercised	(10,000	)		6.45
Options outstanding at December 31, 2008	702,417		$	9.03	$	—
Options exercisable at December 31, 2008	696,831		$	8.94	$	—

The aggregate intrinsic value of all options outstanding was zero at December 31, 2008, as the exercise prices of those respective options exceeded the estimated fair value of a SkyTerra LP unit.

The following table provides information about unit options under the SkyTerra LP Unit Option Incentive Plan that are outstanding and exercisable as of December 31, 2007:

Exercise Price	Stock Options Outstanding						Stock Options Exercisable
	Numberof Shares		Weighted Average Exercise Price		Weighted Average Remaining Life		Numberof Shares		Weighted Average Exercise Price		Weighted Average Remaining Life
$ 6.45		577,167	$	6.45		3.94		577,167	$	6.45		3.94
$20.94		125,250		20.94		6.58		119,664		20.94		6.56
		702,417	$	9.03		4.41		696,831	$	8.94		4.39

The total equity-based compensation expense related to the SkyTerra LP Unit Option Incentive Plan recognized during the years ended December 31, 2008, 2007 and 2006 was $5.2 million, $3.3 million and $10.4 million, respectively. No tax benefits related to the exercise of options were recognized as the Company is in a taxable loss position. The total equity-based compensation capitalized as system under construction related to the SkyTerra LP Unit Option Incentive Plan during the year ended December 31, 2008, 2007 and 2006 was $0.5 million, $0.4 million and $0.2 million, respectively. As of December 31, 2008, the total unrecognized compensation related to SkyTerra LP equity-based compensation was $2.2 million, which will be recognized over a weighted-average period of 1.0 years.

Subsequent to the SkyTerra LP Unit Option Exchange described above, there were 702,417 SkyTerra LP unit options outstanding as of December 31, 2008, 602,417 of which were held by Canadian SkyTerra LP who participated in Option Exchange and have the right to exchange their SkyTerra LP options for SkyTerra options in the future, pursuant to the terms of the Option Exchange described above. No further SkyTerra LP Unit Option incentives are expected to be awarded in the future.

The weighted average grant date fair value of options granted during the years ended December 31, 2008, 2007 and 2006 was $4.90, $6.94 and $18.31, respectively. The total intrinsic value of options exercised was $0.1 million, $9.8 million and $2.4 million during the years ended December 31, 2008, 2007 and 2006, respectively.

As of December 31, 2008, the total compensation cost related to non-vested unit options not yet recognized was $2.1 million, which is expected to be recognized over a weighted-average period of 1.0 years. As of December 31, 2008, the Company expects all remaining unvested options to vest.

In 2006, SkyTerra LP granted 50,000 phantom Limited Investor Units to an executive. The Company recorded equity-based compensation expense of $0.2 million, zero and $0.3 million, during the years ended December 31, 2008, 2007 and 2006, respectively, for this grant. This restricted unit award has been paid in cash, and is recognized as a liability and included in accrued expenses in the accompanying consolidated balance sheets. This phantom unit award will vest over five years: 20,000 units vested in 2008 and 10,000 units will vest annually thereafter, subject to certain acceleration provisions. The weighted average fair value of the unit award made during 2006 was $30.24 per unit. As of December 31, 2008, the total estimated equity-based compensation expense related to non-vested units not yet recognized is $0.1 million, which is

F-27

expected to be recognized over a period of 2.1 years. This amount may increase or decrease based on the fair value of SkyTerra LP units, as the award is recorded at fair value at the end of each reporting period.

The Company’s equity-based compensation expense is included in the following captions in the consolidated statement of operations for the periods indicated (in thousands):

	Year ended December31, 2008						Year ended December31, 2007						Year ended December31, 2006
	SkyTerra LP		SkyTerra		Consolidated		SkyTerra LP		SkyTerra		Consolidated		SkyTerra LP		SkyTerra		Consolidated
Operations	$	2,274	$	—	$	2,274	$	1,463	$	—	$	1,463	$	621	$	—	$	621
General and administrative		2,915		5,023		7,938		2,155		3,938		6,093		9,111		84		9,195
Research and development		322		—		322		197		—		197		128		—		128
Sales and marketing		998		—		998		381		—		381		500		—		500
	$	6,509	$	5,023	$	11,532	$	4,196	$	3,938	$	8,134	$	10,360	$	84	$	10,444

8. Related Party Transactions

SkyTerra and Apollo Investment Fund IV L.P. and Affiliates

Apollo Advisors L.P. and its affiliates (Apollo) held significant SkyTerra common stock through April 2008. Two of the six Directors of SkyTerra were partners at Apollo through such time. As such, transactions with entities controlled by or affiliated with Apollo, through April 2008 are related party transactions.

Hughes Network Systems LLC

Hughes Network Systems LLC (HNS) is a former subsidiary of SkyTerra and indirectly controlled by Apollo. In October 2006, SkyTerra LP entered into a preferred provider agreement with HNS. Under this agreement, for a period of five years SkyTerra LP will grant preferred provider status to HNS for the provision of certain engineering and other services and the manufacture of certain equipment, in each case expected to be used by SkyTerra LP in developing and deploying its next generation integrated network. In November 2006, SkyTerra LP entered into an agreement with HNS to purchase four satellite base transceiver subsystems for a fixed price, as amended, of $43.7 million. SkyTerra LP acquired services and equipment from HNS in an amount of $21.5 million, $8.8 million and $8.4 million, during the years ended December 31, 2008, 2007 and 2006, respectively.

TerreStar Networks and TerreStar Corporation

TerreStar Corporation owns a controlling interest in TerreStar Networks. The Company owns 11.1% of TerreStar Networks. SkyTerra LP had granted options to purchase the common stock of TerreStar Networks to certain employees of SkyTerra LP prior to the spin-off of TerreStar Networks, which are vested and exercisable as of December 31, 2008. SkyTerra LP and TerreStar Networks operate under an intellectual property development sharing arrangement. In May 2005, SkyTerra LP and TerreStar Networks entered into a management services agreement whereby SkyTerra LP provides technical and program management efforts associated with ATC network development as well as administrative support required to accomplish these tasks. In May 2006, SkyTerra LP discontinued providing management services to TerreStar Networks, but continued to share intellectual property development.

According to publicly available information, the Company understands that Harbinger holds a significant investment in TerreStar Corporation.

9. Commitments and Contingencies

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 currently leases facilities located in Reston, Virginia (lease expires February 28, 2011), Ottawa, Ontario (Canada) (lease will expire January 30, 2024, occupying under a binding Offer to Lease and the final lease is pending signatures) and Calgary, Alberta (Canada) (lease expires June 30, 2010). The Company records rent expense using the straight-line method over the term of the lease agreement. Rent expense for the years ended December 31, 2008, 2007 and 2006 was $2.3 million, $2.3 million and $2.1 million, respectively.

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Boeing Contract

SkyTerra LP 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 network, providing satellite launch support and other services related to mission operations and system training. Under the terms of the contract, the Company will purchase two satellites. Each satellite is contracted to have a mission life of 15 years with a portion of the contract value payable if certain performance incentives are met, over the expected 15-year 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.

If SkyTerra LP elects to terminate the Boeing contract in whole, the Company will be subject to termination liability charges that would range from $215 million to $249 million, declining in Q2 2009. Similarly, an in part termination would result in charges from $102 million to $140 million. Future minimum contractual payments due under this contract that are disclosed below exclude all potential performance incentives which could total up to $96.7 million, interest payments on the performance incentives and deferred construction payments, and options.

Launch Contracts

In May 2007, SkyTerra LP entered into fixed price contracts with ILS International Launch Services, Inc. and Sea Launch Company, LLC, each of which were subsequently amended, to launch the next generation satellites SkyTerra-1 and SkyTerra-2. The aggregate amended cost for these services is $183.4 million, of which $145.5 million remains to be paid at December 31, 2008. If SkyTerra LP were to terminate both launch vehicle contracts prior to February 2010, the Company will be subject to termination liability charges that would range from $0.7 million to $49.0 million, depending on the date of termination. If SkyTerra LP were to terminate both launch vehicle contracts after February 2010, the Company would be entitled to receive a portion of previously made payments. 

HNS Contract

SkyTerra LP entered into an agreement with HNS to purchase four satellite base transceiver subsystems and air interface technology. The transceiver subsystems will integrate the satellite component into the Company’s next generation integrated network. The aggregate base cost, as amended, for these services is $43.7 million. Pursuant to the terms of the agreement, the Company has the option to submit change orders to procure additional capabilities not included in the base price. Costs associated with these change orders are negotiated and agreed upon prior to the submission of the change order. SkyTerra LP may incur significant liquidated damages if services are terminated by the Company.

Qualcomm Satellite Enabled Mobile Chipsets for Next Generation Network

In September 2008, SkyTerra LP entered into a 15-year agreement with Qualcomm Incorporated (Qualcomm) for the provision by Qualcomm of satellite-enabled mobile chipsets and satellite base station components built upon Qualcomm-adapted EV-DO technology to facilitate the development of mobile devices and network systems for use with the Company’s planned next generation network. A broad range of Qualcomm chipsets, to be available on a mass-market basis, will include satellite and L-band capabilities. The agreement contemplates that SkyTerra LP and Qualcomm will complete the detailed specifications for the first release of the technology, which will be sufficient to support voice and data services in an integrated, dual mode manner over SkyTerra’s satellites and terrestrial networks, including L-band ATC. The detailed specifications for the first release of the technology were completed as planned.

The agreement with Qualcomm also contemplates that other operators (together with SkyTerra LP, each an Operator) may enter into similar arrangements with Qualcomm. The termination by one Operator of its agreement with Qualcomm does not affect the agreement of any other Operator. The Company has been advised that ICO Satellite Services G.P. (ICO) has entered into a similar agreement with Qualcomm. Each Operator will fund a portion of the related non-recurring expenses (NRE) incurred in connection with the agreements, which will result in a further sharing of NRE if and when additional Operators (in addition to SkyTerra LP and ICP) enter into similar agreements with Qualcomm. The SkyTerra LP portion of the NRE to be paid to Qualcomm is expected to be in an amount not to exceed $10 million, subject to reduction based on the participation of other Operators with Qualcomm.

In connection with entering into the Qualcomm agreement, SkyTerra LP and ICO have entered into a mutual non-assertion agreement with ICO with respect to relevant aspects of their respective patent portfolios as well as certain other agreements related to the Qualcomm development effort.

F-29

EV-DO Compatible Base Transceiver Subsystems

The Company is currently in negotiations with several vendors for the procurement of EV-DO compatible transceiver subsystems. The Company expects that it will enter into a material definitive contract for those subsystems during the first half of 2009.

Inmarsat Cooperation Agreement

To improve the Company’s spectrum assets, in December 2007 SkyTerra, SkyTerra LP, and SkyTerra Canada (together the “SkyTerra Parties”) and Inmarsat Global Limited (“Inmarsat”) entered into a Cooperation Agreement relating to the use of L-band spectrum for both MSS 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 SkyTerra LP by a third party for general corporate purposes and election by the SkyTerra Parties to trigger certain provisions, the SkyTerra 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 SkyTerra LP spectrum in a pre-agreed market. Simultaneously upon the election by the SkyTerra 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 SkyTerra 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 SkyTerra Parties and Inmarsat which would lead to additional spectrum contiguity and more relaxed operating rules for the Company. Over the transition period, the SkyTerra 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, the question remains open between Inmarsat and the SkyTerra Parties as to whether the closing of the 16.5% Senior Unsecured Notes or any of the funding under the 18% Senior Unsecured Notes will be designated by the SkyTerra 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. This matter has not been resolved and the Company has not designated any previous investment as a triggering investment, therefore no accounting is required as of December 31, 2008. 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 day trading day period. The SkyTerra 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 SkyTerra 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 SkyTerra LP at a cost of $115 million per year, increasing at 3% per year, resulting in substantially more spectrum to the benefit of SkyTerra 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 SkyTerra Parties to exercise the Phase 2 Option on the same terms.

During 2008, the Company and Inmarsat exchanged certain spectrum rights. The Company has determined 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. As such no accounting was recorded for such exchanges.

F-30

Future minimum payments related to the Company’s commitments described in additional detail above, are as follows for the years ending December 31 (in thousands):

	Leases (a)		Boeing (b)			HNS		Launch Services (c)		Satellite Operational Services		Qualcomm		Other		Total
2009	$	2,289	$	86,521	$	10,946	$	40,744	$	2,884	$	3,875	$	12,224	$	159,483
2010		2,452		75,795		—		94,213		1,884		4,750		3,200		182,294
2011		873		938		—		10,576		1,434		—		158		13,979
2012		594		—		—		—		1,434		—		158		2,186
2013		604		—		—		—		1,434		—		158		2,196
Thereafter		7,249		—		—		—		16,013		—		1,737		24,999
	$	14,061	$	163,254	$	10,946	$	145,533	$	25,083	$	8,625	$	17,635	$	385,137

(a)       The Company leases office space and computer 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.

(b)      The amounts exclude in-orbit incentives and potential interest associated with the incentives as discussed above.

(c)      Reflects payments based on contracts as amended subsequent to December 31, 2008.

Litigation and Claims

The Company is periodically a party to litigation and claims in the normal course of business. While the outcome of the litigation 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. The Company recognizes a liability for these matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

10. Income Taxes

SkyTerra and its eligible subsidiaries file a consolidated United States federal income tax return. As a limited partnership, SkyTerra LP is not subject to U.S. Federal income tax directly. Rather, each limited partner, including SkyTerra, is subject to income taxation based on such partner’s portion of SkyTerra LP’s loss, as defined in the limited partnership agreement. SkyTerra LP’s Canadian subsidiary and SkyTerra Canada are each taxed as separate corporate entities in Canada.

The components of loss before income taxes, minority interest and extraordinary gain by country, are as follows (in thousands):

	Year ended December 31,
	2008			2007			2006
United States	$	(206,432	)	$	(126,517	)	$	(60,972	)
Canada		(3,191	)		(1,333	)		(2,577	)
Total loss before income taxes, minority interest and extraordinary gain	$	(209,623	)	$	(127,850	)	$	(63,549	)

The components of the income tax (benefit) provision, all of which relate to SkyTerra Canada, the Company’s variable interest entity, consisted of the following (in thousands):

	Year ended December 31,
	2008			2007			2006
Current (benefit) provision	$	(1,505	)	$	1,317		$	311
Deferred (benefit) provision		395			(1,650	)		944
Total income tax (benefit) provision	$	(1,110	)	$	(333	)	$	1,255

F-31

Taxes computed at the U.S. statutory federal income tax rate of 34% are reconciled to the Company’s effective rate as follows:

	Year ended December 31,
	2008			2007			2006
U.S. Federal taxes on loss before income tax, minority interest and extraordinary gain, at statutory rate (1)	$	(71,272	)	$	(43,469	)	$	(21,607	)
State taxes, net of U.S. Federal benefit		(7,286	)		(4,183	)		(2,439	)
Losses allocable to SkyTerra LP’s non-SkyTerra partners		88			1,576			19,649
Effect of Canadian operations		187			186			(57	)
Non-deductible interest		8,064			5,580			1,460
Other		(192	)		401			2,557
Valuation allowance		69,301			39,576			1,692
Income tax (benefit) provision	$	(1,110	)	$	(333	)	$	1,255
Income tax benefit (provision)		0.5	%		0.3	%		(2.0	)%

⁽¹⁾ No current tax on extraordinary gain.

Deferred tax assets (liabilities) consisted of the following (in thousands):

	December31
	2008			2007
Deferred tax assets, net:
Net operating loss carryforwards	$	55,494		$	25,034
Intangible assets		35,721			68,482
Senior secured discount note interest		16,844			11,695
Deferred revenue		8,854			7,360
Equity-based compensation		8,441			6,645
Depreciation and amortization of property and equipment		3,068			2,967
Tax credits		1,130			1,130
Other		1,313			1,340
		130,865			124,653
Less-valuation allowance		(127,279	)		(91,791	)
Deferred tax assets, net of valuation allowance		3,586			32,862
Deferred tax liabilities:
Depreciation and amortization of property and equipment		(469	)		—
Intangible assets		—			(2,336	)
Investment in TerreStar Networks		(2,784	)		(29,506	)
Other		(76	)		(368	)
Net deferred tax asset (liability)	$	257		$	652

The changes in the valuation allowance for 2006, 2007, and 2008 related to the respective years’ current activities and to the impact of the 2006 SkyTerra LP Exchange Transactions, the effect of 2007 acquisitions of the SkyTerra LP minority interest, and the effect of the 2008 Option Exchange.

For U.S. federal income tax purposes, SkyTerra has unused net operating loss (NOL) carryforwards of $203 million expiring from 2020 through 2028. The 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. In addition, Section 382 may limit the Company's tax depreciation or amortization of certain assets in certain circumstances. The Company believes an ownership change under Section 382 occurred in 2008. The Company believes the impact on its tax attributes from this ownership change would not be material to its financial position or results of operations as of December 31, 2008.

F-32

Based on additional ownership information recently obtained, the Company believes a subsequent ownership change could also have occurred in 2008. Such subsequent ownership change could significantly limit the Company’s ability to utilize its NOL carryforwards. Further, other tax attributes may also be limited based on a subsequent ownership change. The Company’s analysis cannot be completed until further information is received. Due to the Company’s valuation allowance on its U.S. consolidated net deferred tax assets, additional Section 382 limitations are not expected to materially impact the Company’s financial position or results of operations as of December 31, 2008. However, decreases in gross deferred tax assets may occur, and limitations on other Company deductions, such as depreciation and amortization, may result.

The exercise of stock options has generated income tax deductions in excess of amounts recorded for financial reporting purposes. In accordance with SFAS 123(R) the Company will not recognize a tax benefit with respect to the excess stock compensation deductions until those deductions actually reduce income tax liabilities. As such, the Company has not recorded a deferred tax asset related to the net operating losses resulting from the exercise of these stock options in the accompanying financial statements. At such time as the Company utilizes these net operating losses to reduce income tax payable, the tax benefit will be recorded as an increase in additional paid-in capital.

The Company adopted the provisions of FIN 48, Accounting for Uncertainty in Income Taxes, on January 1, 2007. Neither the adoption of FIN 48 nor activities in 2008 and 2007 subsequent to its adoption impacted the Company’s financial position or results of operations. The Company has concluded that there are no uncertain tax positions requiring recognition, pursuant to the provisions of FIN 48, in its consolidated financial statements as of December 31, 2008. The Company’s policy is to recognize interest and penalties on income tax matters in the income tax provision (benefit). No such items were recorded in 2008.

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 one Canadian province and by one U.S. state, but 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. The U.S. Federal Government’s audit of the Company’s 2005 return closed without adjustment.

Prior to the closing of the BCE Exchange Transaction in January 2007, TMI Delaware distributed to BCE and its affiliates all of the assets of TMI Delaware other than its limited partnership interests in SkyTerra LP and its common stock of SkyTerra 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 periods prior to the closing of the BCE Exchange Transaction, including taxes related to the distribution. At closing, BCE transferred $37 million to TMI Delaware to pay such taxes. Approximately $1.8 million of that amount is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet as of December 31, 2008.

Prior to the closing of the 2006 SkyTerra LP Exchange Transactions in September 2006, a minority stakeholder in MSV Investors distributed to its shareholders all of its assets other than its interest in MSV Investors. Under the terms of the merger agreement between SkyTerra and the shareholders of the minority stakeholder, such shareholders agreed to indemnify the Company for any taxes imposed on the minority stakeholder for any pre-merger period, including all taxes related to the distribution. At closing, such shareholders transferred $7.5 million to the Company to pay such taxes.  The remaining liability related to this arrangement was $1.5 million which is included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet as of December 31, 2008.

12. Retirement Plan

SkyTerra LP sponsors a benefit plan to provide retirement and incidental benefits for its employees, and participants may make voluntary contributions, not to exceed maximum allowable contribution amounts. SkyTerra LP may make discretionary contributions and matching contributions and has done so totaling $0.6 million, $0.5 million, and $0.3 million in the years ended December 31, 2008, 2007, and 2006, respectively. Employees vest immediately in SkyTerra LP contributions.

13. Segment and Geographic 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.

F-33

The Company has three reporting segments: Next Generation, Current Generation, and SkyTerra Corporate. The Next Generation segment relates to activities to deploy a next generation satellite system complemented by ATC. The Current Generation segment relates to SkyTerra LP’s provision of mobile satellite services that support the delivery of data, voice, fax and dispatch radio services using its existing in-orbit satellites. Management reviews the assets and financial position of Next Generation and Current Generation 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. The SkyTerra Corporate segment relates to activities related to the publicly traded holding company. Substantially all of the Company’s capital expenditures relate to SkyTerra LP. The measure of segment profit (loss) used by management to evaluate performance is operating income (loss), as presented in the accompanying statements of operations.

The following table presents results of operations for the Company’s reportable segments for the year ended December 31, 2008 (in thousands):

	Year ended December31, 2008
	Next Generation			Current Generation			Total SkyTerra LP			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	28,571		$	28,571		$	—		$	—	$	28,571
Equipment sales		—			5,025			5,025			—			—		5,025
Other revenues		—			889			889			—			—		889
Total revenues		—			34,485			34,485			—			—		34,485
Operating expenses:
Cost of equipment sold		—			4,165			4,165			—			—		4,165
Operations and cost of services (exclusive of depreciation and amortization)		16,243			16,067			32,310			—			—		32,310
Sales and marketing		4,508			3,944			8,452			—			—		8,452
Research and development (exclusive of depreciation and amortization)		15,557			—			15,557			—			—		15,557
General and administrative		16,009			7,843			23,852			11,579			—		35,431
Depreciation and amortization		30,083			2,605			32,688			—			—		32,688
Impairment of goodwill		10,389			—			10,389			—			—		10,389
Total operating expenses		92,789			34,624			127,413			11,579			—		138,992
Operating loss	$	(92,789	)	$	(139	)	$	(92,928	)	$	(11,579	)	$	—	$	(104,507	)

F-34

The following table’s presents results of operations for the Company’s reportable segments for the year ended December 31, 2007 (in thousands):

	Year ended December31, 2007 In Thousands
	Next Generation			Current Generation			Total SkyTerra LP			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	27,754		$	27,754		$	—		$	—	$	27,754
Equipment sales		—			5,265			5,265			—			—		5,265
Other revenues		—			1,064			1,064			—			—		1,064
Total revenues		—			34,083			34,083			—			—		34,083
Operating expenses:
Cost of equipment sold		—			4,245			4,245			—			—		4,245
Operations and cost of services (exclusive of depreciation and amortization)		8,044			16,986			25,030			—			—		25,030
Sales and marketing		3,957			3,602			7,559			—			—		7,559
Research and development (exclusive of depreciation and amortization)		10,568			—			10,568			—			—		10,568
General and administrative		14,268			7,746			22,014			7,629			—		29,643
Depreciation and amortization		26,671			2,458			29,129			—			—		29,129
Total operating expenses		63,508			35,037			98,545			7,629			—		106,174
Operating loss	$	(63,508	)	$	(954	)	$	(64,462	)	$	(7,629	)	$	—	$	(72,091	)

The following table’s presents results of operations for the Company’s reportable segments for the year ended December 31, 2006. SkyTerra amounts reflect the results of operations for the period following the September 25, 2006 SkyTerra LP Exchange Transactions through December 31, 2006 (in thousands):

	Year ended December31, 2006 In Thousands
	Next Generation			Current Generation			Total SkyTerra LP			SkyTerra Corporate			Eliminations		SkyTerra Consolidated
Revenues:
Services and related revenues	$	—		$	26,922		$	26,922		$	—		$	—	$	26,922
Equipment sales		—			6,984			6,984			—			—		6,984
Other revenues		—			948			948			—			—		948
Total revenues		—			34,854			34,854			—			—		34,854
Operating expenses:
Cost of equipment sold		—			5,738			5,738			—			—		5,738
Operations and cost of services (exclusive of depreciation and amortization)		5,132			14,664			19,796			—			—		19,796
Sales and marketing		1,708			2,505			4,213			—			—		4,213
Research and development (exclusive of depreciation and amortization)		5,127			—			5,127			—			—		5,127
General and administrative		20,168			6,882			27,050			3,488			—		30,538
Depreciation and amortization		5,585			6,116			11,701			—			—		11,701
Total operating expenses		37,720			35,905			73,625			3,488			—		77,113
Operating loss	$	(37,720	)	$	(1,051	)	$	(38,771	)	$	(3,488	)	$	—	$	(42,259	)

F-35

The following table presents balance sheet information for the Company’s reportable segments as of December 31, 2008 (in thousands):

	As of December 31, 2008
	Total SkyTerra LP		SkyTerra		Eliminations			SkyTerra Consolidated
Total assets	$	1,359,362	$	46,568	$	(45,228	)	$	1,360,702
Senior secured discount notes, net		629,759		—		—			629,759
Senior unsecured notes, net		147,119		—		—			147,119
Notes payable		61,312		18,013		(18,013	)		61,312
Total liabilities		885,542		21,820		(18,013	)		889,349
Total equity		473,820		24,749		(27,216	)	$	471,353

The following table presents balance sheet information for the Company’s reportable segments as of December 31, 2007 (in thousands):

	As of December 31, 2007
	Total SkyTerra LP		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

Geographic information

The Company sells its services in the United States and through foreign subsidiaries in Canada. The following table presents revenue attributable to each geographic region (in thousands):

	Year ended December 31,
	2008		2007		2006
United States	$	20,901	$	21,600	$	22,612
Canada		13,584		12,483		12,242
Total revenues	$	34,485	$	34,083	$	34,854

The following table presents information regarding total assets attributable to each geographic region (in thousands):

	December31
	2008		2007
United States	$	1,352,649	$	1,278,349
Canada		8,053		16,686
Total assets	$	1,360,702	$	1,295,035

F-36

14. Unaudited Interim Financial Information

The Company’s results were as follows (in thousands except per share data):

	Year ended December 31, 2008
	Q1			Q2			Q3			Q4
Revenues	$	8,593		$	8,808		$	9,450		$	7,634
Operating loss	$	(21,452	)	$	(20,826	)		(25,279	)		(36,500	)
Net loss	$	(37,210	) (1)	$	(36,654	) (2)		(76,651	) (3)		(54,420	) (4)
Basic and diluted loss per common share	$	(0.35	)	$	(0.35	)	$	(0.72	)	$	(0.51	)

(1)   Includes $8.4 million write down of Investment in TerreStar Networks (see Note 2)

(2)   Includes $8.4 million write down of Investment in TerreStar Networks (see Note 2)

(3)   Includes $42.9 million write down of Investment in TerreStar Networks (see Note 2)

(4)   Includes $11.0 million write down of Investment in TerreStar Networks (see Note 2), $10.4 million goodwill impairment (see Note 2), and $3.0 extraordinary gain on acquisition of minority interest (see Note 3)

	Year ended December 31, 2007
	Q1			Q2			Q3			Q4
Revenues	$	8,102		$	8,170		$	9,109		$	8,702
Operating loss		(15,460	)		(17,135	)		(18,346	)		(21,150	)
Net loss		(19,817	)		(21,804	)		(44,900	) (1)		(37,035	) (2)
Basic and diluted loss per common share	$	(0.21	)	$	(0.21	)	$	(0.44	)	$	(0.36	)

(1)   Includes $22.5 million write down of Investment in TerreStar Networks (see Note 2)

(2)   Includes $12.0 million write down of Investment in TerreStar Networks (see Note 2)

15. Subsequent Event

On January 7, 2009 the Company issued the first of the four issuances of the July 2013 Senior Unsecured Notes to Harbinger under the Securities Purchase Agreement, in an aggregate principal amount of $150 million. In addition, at this closing the Company issued Harbinger ten-year warrants to purchase 7.5 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. See Note 6 for additional details.

F-37

EX-4

FIRST SUPPLEMENTAL INDENTURE

dated as of January 7, 2009

among

SKYTERRA LP,

SKYTERRA FINANCE CO.,

THE GUARANTORS NAMED HEREIN

and

THE BANK OF NEW YORK MELLON

as Trustee

to the

INDENTURE

dated as of January 7, 2008

among

SKYTERRA LP

(formerly named MOBILE SATELLITE VENTURES LP),

SKYTERRA FINANCE CO.

(formerly named MSV FINANCE CO.),

THE GUARANTORS NAMED THEREIN

and

THE BANK OF NEW YORK MELLON

(formerly named THE BANK OF NEW YORK)

as Trustee

16.5% SENIOR NOTES DUE 2013

THIS FIRST SUPPLEMENTAL INDENTURE (the “First Supplemental Indenture”), dated as of January 7, 2009, among SkyTerra LP, a Delaware limited partnership (formerly named Mobile Satellite Ventures LP) (the “Company”), SkyTerra Finance Co., a Delaware corporation (formerly named MSV Finance Co.) (“Finance Co.”), the guarantors parties hereto (the “Guarantors”) and The Bank of New York Mellon, a New York banking corporation (formerly named The Bank of New York), as Trustee (the “Trustee”) under the Indenture referred to below.

W I T N E S S E T H:

WHEREAS, the Company and Finance Co. have heretofore executed and delivered an indenture dated as of January 7, 2008 (the “Indenture”), among the Company, Finance Co., each of the Guarantors and the Trustee, pursuant to which the Company and Finance Co. have issued their 16.5% Senior Notes due 2013 (the “Notes”) and the Guarantors have provided guarantees (the Notes together with the guarantees, the “Securities”);

WHEREAS, Section 8.02 of the Indenture provides that with the consent of the registered holders of a majority in aggregate principal amount of the Notes then outstanding, the Company, Finance Co., the Guarantors and the Trustee may make certain amendments to the Indenture;

WHEREAS, the Company, Finance Co. and the Guarantors desire to amend the Indenture as set forth herein;

WHEREAS, the holders of all of the Outstanding Notes have consented to the amendments contained herein and to the execution and delivery of this First Supplemental Indenture;

WHEREAS, the Company has requested the Trustee execute and deliver this First Supplemental Indenture and is delivering contemporaneously herewith to the Trustee (i) an Officers’ Certificate, (ii) an Opinion of Counsel, (iii) a Board Resolution of each of the Company, Finance Co. and the Guarantors authorizing the execution and delivery of this First Supplemental Indenture, and (iv) evidence of the consent of the holders as aforesaid, all in accordance with Sections 8.02, 8.05, 11.03 and 11.04 of the Indenture; and

WHEREAS, all conditions necessary to authorize the execution and delivery of this First Supplemental Indenture and to make this First Supplemental Indenture valid and binding have been complied with or have been done or performed.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company, Finance Co., the Guarantors and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders as follows:

ARTICLE I

CAPITALIZED TERMS

Section 1.01       General. Terms used herein but not defined shall have the meanings assigned to them in the Indenture.

ARTICLE II

AMENDMENTS AND WAIVERS

Section 2.01 Amendment to the Indenture. The Indenture is hereby amended as follows:

(a)        Section 4.06(b)(4) is hereby amended and restated in its entirety as follows: “(4) the Old Notes and Guarantees thereof and the Notes issued on the Issue Date and Guarantees thereof”;

(b) the last paragraph of Section 4.06 is hereby deleted in its entirety; and

(c)        Section 11.05 is hereby amended and restated in its entirety as follows: “In determining whether the holders of the required aggregate principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuers, any Guarantor or any other obligor on the Notes shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Notes and that the pledgee is not an Issuer, a Guarantor or any other obligor upon the Notes or any Affiliate of any of them.”

ARTICLE III

MISCELLANEOUS

Section 3.01 Ratification of Indenture; First Supplemental Indenture Part of Indenture.

(i) Except as expressly supplemented hereby, the Indenture is in all respects ratified and confirmed and all the terms, conditions and provisions thereof shall remain in full force and effect. This First Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of the Securities heretofore or hereafter authenticated and delivered shall be bound hereby. In the event of a conflict between the terms and conditions of the Indenture and the terms and conditions of this First Supplemental Indenture, then the terms and conditions of this First Supplemental Indenture shall prevail.

(ii) This First Supplemental Indenture shall become effective upon its execution and delivery by the Company, Finance Co., the Guarantors and the Trustee; provided, however, that the amendments contained in Section 2.01(a) and (b) will not become operative until the time that the Issuers issue $350 million aggregate principal amount of their 18% Senior Unsecured Notes due 2013 pursuant to that certain Securities Purchase Agreement dated as of July 24, 2008.

(iii) Upon the effectiveness of this First Supplemental Indenture, the Notes shall be deemed amended to incorporate each amendment referred to in Section 2.01 of this First Supplemental Indenture (each a “First Supplemental Amendment”) to the extent that the Notes include, by incorporation or express reference, a provision corresponding to a provision in the Indenture that is the subject of a First Supplemental Amendment, such amendment of the Notes to be deemed to occur at the time such First Supplemental Amendment became effective or shall become operative, as the case may be, pursuant to and in accordance with this First Supplemental Indenture.

Section 3.02 Governing Law.

THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO CONSTRUE THIS FIRST SUPPLEMENTAL INDENTURE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.

Section 3.03 Trustee Makes No Representation.

The recitals contained herein are those of the Company, Finance Co. and the Guarantors and not the Trustee, and the Trustee assumes no responsibility for the correctness of same. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture. All rights, protections, privileges, indemnities and benefits granted or afforded to the Trustee under the Indenture shall be deemed incorporated herein by this reference and shall be deemed applicable to all actions taken, suffered or omitted by the Trustee under this First Supplemental Indenture.

Section 3.04 Counterparts.

The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

Section 3.05 Effect of Headings.

The section headings herein are for convenience only and shall not effect the construction thereof.

Section 3.06         Severability. If any term, provision, covenant or restriction in this First Supplemental Indenture, or any part hereof, is held by a court of competent jurisdiction or any foreign, federal, state, county or local government or any other governmental, regulatory or administrative agency or authority to be invalid, void or unenforceable, or against public policy for any reason, the remainder of the terms, provisions, covenants and restrictions of this First Supplemental Indenture shall remain in full force and effect and in no way be affected, impaired or invalidated.

IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed as of the date first written above.

SKYTERRA LP, by its General Partner, SkyTerra
GP Inc.
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA FINANCE CO.
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

ATC TECHNOLOGIES, LLC
(a Delaware limited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA SUBSIDIARY LLC
(a Delaware limited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA INTERNATIONAL, LLC
(a Delaware limited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA INC. OF VIRGINIA (a Virginia
corporation)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA CORP.
(a Nova Scotia unlimited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA HOLDINGS (CANADA) INC. (an
Ontario corporation)
By:		/s/ Elizabeth A. Creary
	Name:	Elizabeth A. Creary
	Title:	Secretary

SKYTERRA (CANADA) INC.
(an Ontario corporation)
By:		/s/ Elizabeth A. Creary
	Name:	Elizabeth A. Creary
	Title:	Vice President, Corporate
		Counsel Secretary

The Bank of New York MELLON, as
Trustee
By:		/s/ Timothy Casey
	Name:	Timothy Casey
	Title:	Assistant Secretary

EX-4

Execution Version

SKYTERRA LP

and

SKYTERRA FINANCE CO.,

as Issuers,

the GUARANTORS named herein

and

The Bank of New York Mellon, as Trustee

_____________________

INDENTURE

Dated as of January 7, 2009

_____________________

18.0% Senior Notes due 2013

A-3-1

TABLE OF CONTENTS

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01	Definitions	- 1 -
Section 1.02	Other Definitions	-26-
Section 1.03	Incorporation by Reference of Trust Indenture Act	-27-
Section 1.04	Rules of Construction	-27-
ARTICLE II
THE NOTES
Section 2.01	Form and Dating	-28-
Section 2.02	Execution and Authentication	-29-
Section 2.03	Registrar and Paying Agent	-30-
Section 2.04	Paying Agent to Hold Money in Trust	-30-
Section 2.05	Holder Lists	-31-
Section 2.06	Transfer and Exchange	-31-
Section 2.07	Replacement Notes	-41-
Section 2.08	Outstanding Notes	-42-
Section 2.09	Temporary Notes	-42-
Section 2.10	Cancellation	-42-
Section 2.11	Defaulted Interest	-42-
Section 2.12	Deposit of Moneys	-43-
Section 2.13	CUSIP Number	-43-
ARTICLE III
REDEMPTION
Section 3.01	Notices to Trustee	-43-
Section 3.02	Selection by Trustee of Notes to Be Redeemed	-43-
Section 3.03	Notice of Redemption	-44-
Section 3.04	Effect of Notice of Redemption	-44-
Section 3.05	Deposit of Redemption Price	-44-
Section 3.06	Notes Redeemed in Part	-45-
ARTICLE IV
COVENANTS
Section 4.01	Payment of Notes	-45-
Section 4.02	SEC Reports	-45-
Section 4.03	Waiver of Stay, Extension or Usury Laws	-47-
Section 4.04	Compliance Certificate	-47-

A-3-2

Page

Section 4.05	Taxes	-47-
Section 4.06	Limitation on Indebtedness	-47-
Section 4.07	Limitation on Issuance or Sale of Capital Stock of Restricted Entities	-51-
Section 4.08	Limitation on Restricted Payments	-52-
Section 4.09	Limitation on Liens	-55-
Section 4.10	Limitation on Sale of Assets and Subsidiary Stock	-56-
Section 4.11	Limitation on Transactions with Affiliates	-59-
Section 4.12	Future Guarantors	-60-
Section 4.13	Limitation on Restrictions on Distributions from Restricted Subsidiaries and Restricted Entities	-61-
Section 4.14	Payments for Consent	-62-
Section 4.15	Corporate Existence	-62-
Section 4.16	Change of Control	-62-
Section 4.17	Maintenance of Office or Agency	-63-
Section 4.18	Maintenance of Insurance	-64-
Section 4.19	Limitation on Business Activities of Finance Co.	-65-
Section 4.20	Certain Matters in Connection with Licenses	-65-
Section 4.21	Limitation on Line of Business	-65-
Section 4.22	Calculation of Original Issue Discount	-65-
Section 4.23	Reimbursement Offer	-65-
ARTICLE V
SUCCESSOR CORPORATION
Section 5.01	Limitation on Consolidation, Merger and Sale of Property	-67-
Section 5.02	Substitution of Company	-68-
ARTICLE VI
DEFAULTS AND REMEDIES
Section 6.01	Events of Default	-69-
Section 6.02	Acceleration	-70-
Section 6.03	Other Remedies	-71-
Section 6.04	Waiver of Past Defaults and Events of Default	-71-
Section 6.05	Control by Majority	-71-
Section 6.06	Limitation on Suits	-72-
Section 6.07	Rights of Holders to Receive Payment	-72-
Section 6.08	Collection Suit by Trustee	-72-
Section 6.09	Trustee May File Proofs of Claim	-72-
Section 6.10	Priorities	-73-
Section 6.11	Undertaking for Costs	-73-
ARTICLE VII
TRUSTEE

A-3-3

Page

Section 7.01	Duties of Trustee	-73-
Section 7.02	Rights of Trustee	-75-
Section 7.03	Individual Rights of Trustee	-76-
Section 7.04	Trustee’s Disclaimer	-76-
Section 7.05	Notice of Defaults	-76-
Section 7.06	Reports by Trustee to Holders	-76-
Section 7.07	Compensation and Indemnity	-77-
Section 7.08	Replacement of Trustee	-78-
Section 7.09	Successor Trustee by Consolidation, Merger or Conversion	-79-
Section 7.10	Eligibility; Disqualification	-79-
Section 7.11	Preferential Collection of Claims Against Company	-79-
Section 7.12	Paying Agents	-79-
ARTICLE VIII
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01	Without Consent of Holders	-80-
Section 8.02	With Consent of Holders	-81-
Section 8.03	Revocation and Effect of Consents	-82-
Section 8.04	Notation on or Exchange of Notes	-82-
Section 8.05	Trustee to Sign Amendments, etc.	-82-
ARTICLE IX
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01	Discharge of Indenture	-83-
Section 9.02	Legal Defeasance	-83-
Section 9.03	Covenant Defeasance	-84-
Section 9.04	Conditions to Defeasance or Covenant Defeasance	-84-
Section 9.05	Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions	-85-
Section 9.06	Reinstatement	-86-
Section 9.07	Moneys Held by Paying Agent	-86-
Section 9.08	Moneys Held by Trustee	-86-
ARTICLE X
GUARANTEE OF SECURITIES
Section 10.01	Guarantee	-87-
Section 10.02	Execution and Delivery of Guarantees	-87-
Section 10.03	Limitation of Guarantee	-88-
Section 10.04	Additional Guarantors	-88-
Section 10.05	Release of Guarantor	-88-
Section 10.06	Waiver of Subrogation	-89-
Section 10.07	Taxes	-89-

A-3-4

Page

ARTICLE XI
MISCELLANEOUS
Section 11.01	Notices	-90-
Section 11.02	Communications by Holders with Other Holders	-91-
Section 11.03	Certificate and Opinion as to Conditions Precedent	-91-
Section 11.04	Statements Required in Certificate and Opinion	-91-
Section 11.05	When Treasury Notes Disregarded	-91-
Section 11.06	Rules by Trustee and Agents	-92-
Section 11.07	Legal Holidays	-92-
Section 11.08	Governing Law	-92-
Section 11.09	No Adverse Interpretation of Other Agreements	-92-
Section 11.10	No Recourse Against Others	-92-
Section 11.11	Successors	-92-
Section 11.12	Multiple Counterparts	-92-
Section 11.13	Table of Contents, Headings, etc.	-93-
Section 11.14	Separability	-93-
Section 11.15	Waiver of Jury Trial	-93-
Section 11.16	Force Majeure	-93-
Section 11.17	Currency of Account; Conversion of Currency; Foreign Exchange Restrictions	-93-
Section 11.18	Agent for Service	-95-
Section 11.19	Interest Act (Canada)	-95-
Section 11.20	Joint and Several Obligations	-95-
Exhibits
Exhibit A-1	Form of Face of Certificated Notes	A-1
Exhibit A-2	Form of Restricted Global Note	A-2
Exhibit A-3	Form of Regulation S Global Note	A-3
Exhibit A-4	Form of Reverse of Notes	A-4
Exhibit B	Form of Certificate of Transfer	B-1
Exhibit C	Form of Certificate of Transfer	C-1
Exhibit D	Form of Certificate of Acquiring Institutional	D-1
	Accredited Investors	D-1

iv

INDENTURE, dated as of January 7, 2009 (the “Indenture”), among SKYTERRA LP, a Delaware limited partnership (the “Company”), SKYTERRA FINANCE CO., a Delaware corporation (“Finance Co.” and, together with the Company, the “Issuers”), the GUARANTORS (as defined herein) parties hereto and THE BANK OF NEW YORK MELLON, a New York banking corporation, as Trustee (the “Trustee”).

Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the holders of the Issuers’ 18.0% Senior Notes due 2013 (collectively, the “Notes”): The term Notes shall include the Notes issued on the Issue Date, any Payment-in-Kind Notes and any Notes issued on a subsequent closing and funding date all considered as one series.

ARTICLE I

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01 Definitions.

“14% Senior Secured Notes” means the 14% Senior Secured Discount Notes due 2013 issued by the Issuers and the Guarantors thereof.

“144A Global Note” means a Global Note substantially in the form of Exhibit A2 and A4 hereto bearing the Global Note Legend and the Restricted Notes Legend and deposited with or on behalf of, and registered in the name of, the Depository or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes resold in reliance on Rule 144A.

“16.5% Senior Notes” means the 16.5% Senior Notes due 2013 issued by the Issuers and the Guarantors thereof.

“Additional Assets” means:

(1)       any property, plant, license, equipment or any other tangible asset or any improvement thereto (including improvements to existing assets) used or useful in a Related Business;

(2)       all or substantially all of the assets of, or the Capital Stock of a Person that becomes a Restricted Entity as a result of the acquisition of such Capital Stock by the Company or another Restricted Entity; or

(3)       Capital Stock constituting a minority interest in any Person that at such time is a Restricted Entity;

provided, however, that any such Restricted Entity described in clause (2) or (3) above is primarily engaged in a Related Business.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing. For purposes of Sections 4.08, 4.10 and 4.11 only (and for the avoidance of doubt, not Section 11.05), “Affiliate” shall also mean any beneficial owner of Capital Stock representing 20% or

1

more of the total voting power of the Voting Stock (on a fully diluted basis) of the General Partner or the Capital Stock of the Company or of rights or warrants to purchase such Capital Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof.

“Agent” means any Registrar, Paying Agent, co-registrar or agent for service of notices and demands.

“Applicable Currency Equivalent” means, with respect to any monetary amount in a currency other than U.S. Dollars, at any time for the determination thereof, the amount of U.S. Dollars obtained by converting such foreign currency involved in such computation into U.S. Dollars at the spot rate for the purchase of U.S. Dollars with the applicable foreign currency as quoted by Reuters at approximately 10:00 A.M. (New York time) on the date not more than two Business Days prior to such determination

“Applicable Premium” means, with respect to any Note on any redemption date, the greater of:

(1) 1.0% of the then outstanding principal amount of the Note; and

(2) the excess of:

(a)        the present value at such redemption date of the redemption price of the Note at January 1, 2011, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

(b) the then outstanding principal amount of the Note.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depository that apply to such transfer or exchange.

“Asset Disposition” means any sale, lease (other than an operating lease entered into in the ordinary course of business), transfer or other disposition (or series of related sales, leases, transfers or dispositions) by the Company or any Restricted Entity, including any disposition by means of a merger, consolidation or similar transaction (each referred to for the purposes of this definition as a “disposition”), of:

(1)       any shares of Capital Stock of a Restricted Entity (other than directors’ qualifying shares or shares required by applicable law to be held by a Person other than the Company or a Restricted Entity);

(2)       all or substantially all the assets of any division or line of business of the Company or any Restricted Entity; or

(3)       any other assets of the Company or any Restricted Entity outside of the ordinary course of business of the Company or such Restricted Entity;

other than, in the case of clauses (1), (2) and (3) above,

2

(A)       a disposition by a Restricted Entity to the Company or by the Company or a Restricted Entity to a Guarantor;

(B)       for purposes of Section 4.10 only, (i) a disposition that constitutes a Restricted Payment (or would constitute a Restricted Payment but for the exclusions from the definition thereof) or a Permitted Investment and that is not prohibited by Section 4.08, (ii) the making of an Asset Swap and (iii) a disposition of all or substantially all the assets of the Company in accordance with Article 5;

(C)       a disposition of assets in a transaction or series of related transactions with a fair market value of less than $10 million;

(D) a disposition of cash or Temporary Cash Investments;

(E)       the creation of a Lien permitted by this Indenture (but not the sale or other disposition of the property subject to such Lien);

(F)       the licensing or sublicensing of intellectual property or other general intangibles; provided, however, such licensing or sublicensing shall not interfere in any material respect with the Company’s continuing use of such intellectual property or other general intangibles in its business;

(G)       disposition of damaged, obsolete or worn out property in the ordinary course of business; or

(H) granting a Permitted Lien.

“Asset Swap” means the concurrent purchase and sale or exchange of Related Business Assets between the Company or any of the Restricted Entities and another Person.

“Attributable Debt” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate borne by the Notes, compounded annually) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended); provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation”.

“Average Life” means, as of the date of determination, with respect to any Indebtedness, the quotient obtained by dividing:

(1)       the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of or redemption or similar payment with respect to such Indebtedness multiplied by the amount of such payment by

(2) the sum of all such payments.

“Board of Directors” means the Board of Directors (or similar body) of the Company (or if the Company is a limited partnership, the general partner thereof) or any committee thereof duly authorized to act on behalf of such Board.

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“Board Resolution” means a resolution duly adopted by the Board of Directors, certified by the Secretary or an Assistant Secretary of the Company (or if the Company is a limited partnership, the General Partner) to have been duly adopted and to be in full force and effect on the date of such certification.

“Boeing Agreement” means the agreement between the Company and Boeing Satellite Systems, Inc. for the MSV L-Band Space Based Network, dated January 9, 2006, as amended March 9, 2006, September 11, 2006, July 3, 2008 (and the additional amendments contemplated thereby), and from time to time in a manner not materially more burdensome, taken as a whole, to the holders of the Notes.

“Business Day” means each day which is not a Legal Holiday.

“Canadian Guarantors” means the Canadian Joint Ventures and the Existing Canadian Subsidiary.

“Canadian Joint Ventures” means SkyTerra Holdings (Canada) Inc. and SkyTerra (Canada) Inc. and their successors.

“Capital Lease Obligation” means an obligation that is required to be classified and accounted for as a capital lease for financial reporting purposes in accordance with GAAP, and the amount of Indebtedness represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. For purposes of Section 4.09, a Capital Lease Obligation will be deemed to be secured by a Lien on the property being leased.

“Capital Stock” of any Person means any and all shares, interests (including partnership interests and membership interests in a limited liability company), rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible into such equity.

“Change of Control” means the occurrences of any of the following events:

(1)       any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders (individually or as a member of such group), is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause (1) such person or group shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of (a) more than 50% of the total voting power of the Voting Stock of the General Partner or (b) more than 50% of the total economic or voting power of the Capital Stock of the Company (for the purposes of this clause (1), such other person or group shall be deemed to beneficially own any Voting Stock or Capital Stock of a Person (the “specified person”) held by any other Person (including one or more Permitted Holders) (the “parent entity”), if such other person or group is the beneficial owner (as defined above in this clause (1)), directly or indirectly, of more than 50% of the voting power of the Voting Stock or 50% of the economic or voting power of the Capital Stock, as applicable, of such parent entity);

(2)       on and after the occurrence of any Public Offering, individuals who on the Issue Date constituted the Board of Directors (together with any new directors whose election by such Board of Directors or whose nomination for election by the shareholders of the Parent, the Com

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pany or the General Partner was approved by a vote of a majority of the directors of the Parent, the Company or the General Partner then still in office who were either directors on the Issue Date or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office;

(3)       the adoption of a plan relating to the liquidation or dissolution of the Company; or

(4)       the merger or consolidation of the Company or the General Partner with or into another Person (other than one or more Permitted Holders) or the merger of another Person (other than one or more Permitted Holders) with or into the Company or the General Partner, or the sale of all or substantially all the assets of the Company or the General Partner (determined on a consolidated basis) to another Person (other than one or more Permitted Holders) other than a transaction following which in the case of a merger or consolidation transaction, holders of securities that represented 100% of the Voting Stock of the General Partner and 100% of the Capital Stock of the Company immediately prior to such transaction (or other securities into which such securities are converted as part of such merger or consolidation transaction) own directly or indirectly at least a majority of the voting power of the Voting Stock of the surviving Person of the General Partner and at least a majority of the economic or voting power of the Capital Stock of the surviving Person or the Company (whether or not the surviving Person is in the same corporate form) in such merger or consolidation transaction immediately after such transaction.

Notwithstanding the foregoing, no Change of Control will be deemed to occur as a result of any reorganization of the Company or a Permitted Holder as contemplated in the MCSA.

“Code” means the Internal Revenue Code of 1986, as amended.

“Company” means the party named as such in the first paragraph of this Indenture until a successor replaces such party pursuant to Article 5 of this Indenture and thereafter means the successor.

“Company Request” means any written request signed in the name of the Company by the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Treasurer or the Secretary or any Assistant Secretary of the Company (or if the Company is a limited partnership, the general partner thereof) and delivered to the Trustee.

“Consolidated Income Tax Expense” means, with respect to the Company for any period, the provision for federal, state, local and foreign taxes based on income or profits (including franchise taxes) payable by the Company and the Restricted Entities for such period and any Permitted Tax Distributions for such period as determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Expense” means, for any period, the total interest expense of the Company and the Restricted Entities for such period, whether paid or accrued and whether or not capitalized (including amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations, the interest component of all payments associated with Capital Lease Obligations and Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or bankers’ acceptance financings), and net of the effect of all payments made or received pursuant to Hedging Obligations.

“Consolidated Leverage Ratio” as of any date of determination means the ratio of (x) the aggregate amount of Indebtedness of the Company and the Restricted Entities as of such date of determination to (y) Consolidated Operating Cash Flow for the most recent four consecutive fiscal quarters end

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ing prior to such date of determination for which financial information is available (the “Reference Period”); provided, however, that:

(1)       if the transaction giving rise to the need to calculate the Consolidated Leverage Ratio is an Incurrence of Indebtedness, the amount of such Indebtedness shall be calculated after giving effect on a pro forma basis to such Indebtedness;

(2)       if the Company or any Restricted Entity has repaid, repurchased, defeased or otherwise discharged any Indebtedness that was outstanding as of the end of such fiscal quarter or if any Indebtedness is to be repaid, repurchased, defeased or otherwise discharged on the date of the transaction giving rise to the need to calculate the Consolidated Leverage Ratio (other than, in each case, Indebtedness Incurred under any revolving credit agreement), the aggregate amount of Indebtedness shall be calculated on a pro forma basis and Consolidated Operating Cash Flow shall be calculated as if the Company or such Restricted Entity had not earned the interest income, if any, actually earned during the Reference Period in respect of cash or Temporary Cash Investments used to repay, repurchase, defease or otherwise discharge such Indebtedness;

(3)       if since the beginning of the Reference Period the Company or any Restricted Entity shall have made any Asset Disposition, the Consolidated Operating Cash Flow for the Reference Period shall be reduced by an amount equal to the Consolidated Operating Cash Flow (if positive) directly attributable to the assets which are the subject of such Asset Disposition for the Reference Period or increased by an amount equal to the Consolidated Operating Cash Flow (if negative) directly attributable thereto for the Reference Period;

(4)       if since the beginning of the Reference Period the Company or any Restricted Entity (by merger or otherwise) shall have made an Investment in any Restricted Entity (or any Person which becomes a Restricted Entity) or an acquisition of assets which constitutes all or substantially all of an operating unit of a business, Consolidated Operating Cash Flow for the Reference Period shall be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition had occurred on the first day of the Reference Period; and

(5)       if since the beginning of the Reference Period any Person (that subsequently became a Restricted Entity or was merged with or into the Company or any Restricted Entity since the beginning of such Reference Period) shall have made any Asset Disposition, any Investment or acquisition of assets that would have required an adjustment pursuant to clause (3) or (4) above if made by the Company or a Restricted Entity during the Reference Period, Consolidated Operating Cash Flow for the Reference Period shall be calculated after giving pro forma effect thereto as if such Asset Disposition, Investment or acquisition had occurred on the first day of the Reference Period.

For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith, the pro forma calculations shall be determined in accordance with GAAP in good faith by a responsible financial or accounting Officer of the Company. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness if such Hedging Obligation has a remaining term in excess of 12 months). If any Indebtedness is Incurred under a revolving credit facility and is being given pro forma effect, the interest on such Indebtedness shall be calculated based on the average daily balance of such Indebtedness for the four

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fiscal quarters subject to the pro forma calculation to the extent such Indebtedness was Incurred solely for working capital purposes.

“Consolidated Net Income” means, for any period, the net income of the Company and its consolidated Restricted Entities; provided, however, that there shall not be included in such Consolidated Net Income:

(1)       any net income of any Person (other than the Company) if such Person is not a Restricted Entity, except that:

(A)       subject to the exclusion contained in clauses (3), (4) and (5) below, the Company’s equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Entity as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to a Restricted Entity, to the limitations contained in clause (2) below); and

(B)       the Company’s equity in a net loss of any such Person for such period shall be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Company or a Restricted Entity;

(2)       any net income of any Restricted Entity if such Restricted Entity is subject to restrictions, directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Entity, directly or indirectly, to the Company, except that:

(A)       subject to the exclusion contained in clauses (3), (4) and (5) below, the Company’s equity in the net income of any such Restricted Entity for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Entity during such period to the Company or another Restricted Entity as a dividend or other distribution (subject, in the case of a dividend or other distribution paid to another Restricted Entity, to the limitation contained in this clause); and

(B)       the Company’s equity in a net loss of any such Restricted Entity for such period shall be included in determining such Consolidated Net Income;

(3)       any gain (or loss) realized upon the sale or other disposition of any assets of the Company or its consolidated Restricted Entities (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business and any gain (or loss) realized upon the sale or other disposition of any Capital Stock of any Person;

(4) extraordinary gains or losses;

(5) the cumulative effect of a change in accounting principles;

(6)       all deferred financing costs written off and premiums paid in connection with an early extinguishment of Indebtedness;

(7)       any non-cash compensation charge arising from any grant of stock, stock option, or other equity based awards; and

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(8) expenses related to the offering of Notes,

in each case, for such period. Notwithstanding the foregoing, (x) for the purposes of Section 4.08 only, there shall be excluded from Consolidated Net Income any repurchases, repayments or redemptions of Investments, proceeds realized on the sale of Investments or return of capital to the Company or a Restricted Entity to the extent such repurchases, repayments, redemptions, proceeds or returns increase the amount of Restricted Payments permitted under Section 4.08(a)(3)(D) and (y) Consolidated Net Income shall be reduced by the amount of Permitted Tax Distributions.

“Consolidated Operating Cash Flow” means, with respect to the Company and the Restricted Entities on a consolidated basis, for any period, an amount equal to Consolidated Net Income for such period increased (without duplication) by the sum of:

(a)        Consolidated Income Tax Expense accrued for such period to the extent deducted in determining Consolidated Net Income for such period;

(b)       Consolidated Interest Expense for such period to the extent deducted in determining Consolidated Net Income for such period;

(c)        transition costs for customers under contract in connection with migrating such customers’ end user equipment to end user equipment that functions on the Company’s planned network not to exceed $10.0 million in any fiscal year; and

(d)       depreciation, amortization and any other noncash items for such period to the extent deducted in determining Consolidated Net Income for such period (other than any noncash item which requires the accrual of, or a reserve for, cash charges for any future period) of the Company and the Restricted Entities (including amortization of capitalized debt issuance costs for such period), all of the foregoing determined on a consolidated basis in accordance with GAAP, and decreased by noncash items to the extent they increase Consolidated Net Income (including the partial or entire reversal of reserves taken in prior periods, but excluding reversals of accruals or reserves for cash charges taken in prior periods) for such period.

“Consolidated Revenues” means, for any period, the consolidated net revenue of the Company and the Restricted Entities for such period determined in accordance with GAAP.

“Consolidated Total Assets” means the total assets of the Company and its consolidated Restricted Entities, as shown on the most recent balance sheet of the Company, determined on a consolidated basis in accordance with GAAP.

“Coop Agreement” means that certain Cooperation Agreement, dated as of December 20, 2007, by and among the Company, SkyTerra (Canada) Inc., SkyTerra Communications, Inc. and Inmarsat Global Limited, as the same may be amended from time to time.

“Corporate Trust Office” means the office of the Trustee at which at any particular time its corporate trust business shall be principally administered, which office at the date of execution of this Indenture is located at: 101 Barclay Street, 8W, New York, New York 10286, Attention: Corporate Trust Division — Corporate Finance Unit, or such other address as the Trustee may designate from time to time by notice to the Noteholders and the Company, or the principal corporate trust office of any successor Trustee (or such other address as such successor Trustee may designate from time to time by notice to the Noteholders and the Company).

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“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the name of the holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibits A-1 and A-4 hereto and such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“Depository” means, with respect to the Notes issued in the form of one or more Global Notes, The Depository Trust Company or another Person designated as Depository by the Company, which Person must be a clearing agency registered under the Exchange Act.

“Designated Equity Contributions” means Net Cash Proceeds received by the Company or the Parent (to the extent the net proceeds thereof are contributed to the equity capital of the Company (other than in the form of Disqualified Stock) or are used to purchase Capital Stock of the Company (other than Disqualified Stock)) from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date and designated in an Officer’s Certificate as Designated Equity Contributions executed by the principal financial officer of the Company.

“Designated Equity Election” means the delivery to the Trustee of an Officer’s Certificate stating that the Company elects to include Designated Equity Contributions under Section 4.08(a)(3)(B).

“Designated Noncash Consideration” means the fair market value of noncash consideration received by the Company or a Restricted Entity in connection with an Asset Disposition that is so designated as Designated Noncash Consideration pursuant to an Officer’s Certificate, setting forth the basis of such valuation, executed by the principal financial officer of the Company, less the amount of cash or cash equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.

“Disqualified Stock” means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable at the option of the holder) or upon the happening of any event:

(1)       matures or is mandatorily redeemable (other than redeemable only for Capital Stock of such Person which is not itself Disqualified Stock) pursuant to a sinking fund obligation or otherwise;

(2)       is convertible or exchangeable at the option of the holder for Indebtedness or Disqualified Stock; or

(3)       is mandatorily redeemable or must be purchased upon the occurrence of certain events or otherwise (including, without limitation, at the option of the holder thereof), in whole or in part;

in each case on or prior to the date that is 91 days after the Stated Maturity of the Notes; provided, however, that any Capital Stock that would not constitute Disqualified Stock but for provisions thereof giving holders thereof the right to require such Person to purchase or redeem such Capital Stock upon the occurrence of an “asset sale” or “change of control” shall not constitute Disqualified Stock if:

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(A)       the “asset sale” or “change of control” provisions applicable to such Capital Stock are not more favorable, taken as a whole, to the holders of such Capital Stock than the terms applicable to the Notes and under Sections 4.10 and 4.16; and

(B)       any such requirement only becomes operative after compliance with such terms applicable to the Notes, including the purchase of any Notes tendered pursuant thereto.

The amount of any Disqualified Stock that does not have a fixed redemption, repayment or repurchase price will be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or repurchased on any date on which the amount of such Disqualified Stock is to be determined pursuant to this Indenture; provided, however, that if such Disqualified Stock could not be required to be redeemed, repaid or repurchased at the time of such determination, the redemption, repayment or repurchase price will be the book value of such Disqualified Stock as reflected in the most recent financial statements of such Person.

“Equity Offering” means a primary public or private offering of Capital Stock (other than Disqualified Stock) of the Company or the Parent ((to the extent the net proceeds thereof are contributed to the equity capital of the Company (other than in the form of Disqualified Stock) or are used to purchase Capital Stock (other than Disqualified Stock) of the Company)) other than offerings with respect to the Company’s or Parent’s Capital Stock or options, warrants or rights registered on Form S-4 or S-8.

“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.

“Existing Canadian Subsidiary” means SkyTerra Corp., a Nova Scotia unlimited liability company, and its successors.

“FCC” means the Federal Communications Commission or any successor agency thereto.

“FCC License Subsidiary” means SkyTerra Subsidiary LLC, a wholly owned Subsidiary of the Company that owns all of the Company’s FCC Licenses in the United States.

“FCC Licenses” means broadcasting and other licenses, authorizations, waivers and permits which are issued from time to time by the FCC.

“Full In-Orbit Insurance” means insurance coverage of satellites following the period of time that is customarily covered by launch insurance and provides coverage against partial losses, constructive total losses and complete losses.

“GAAP” means generally accepted accounting principles in the United States of America as in effect as of the Original Issue Date, including those set forth in:

(1)       the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants;

(2)       statements and pronouncements of the Financial Accounting Standards Board;

(3)       such other statements by such other entity as approved by a significant segment of the accounting profession; and

(4)       the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in periodic reports required to be filed pursuant

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to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC.

“General Partner” means SkyTerra GP Inc. and its successors.

“Global Note Legend” means the legend set forth in Section 2.06(g)(ii), which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes, substantially in the form of Exhibits A2 through A4 hereto, issued in accordance with Section 2.01, 2.06(b)(vi) or 2.06(d)(iii) hereof.

“Governmental Authority” means any Federal, state, provincial, local, foreign or other governmental, quasi-governmental or administrative (including self-regulatory) body, instrumentality, department, agency, authority, board, bureau, commission, office of any nature whatsoever or other subdivision thereof, or any court, tribunal, administrative hearing body, arbitration panel or other similar dispute-resolving body, whether now or hereafter in existence, or any officer or official thereof, having jurisdiction over either of the Issuers.

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1)       to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions or otherwise); or

(2)       entered into for the purpose of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of business. The term “Guarantee” used as a verb has a corresponding meaning.

“Guarantor” means each Subsidiary of the Company and the Canadian Joint Ventures that guarantee the Notes under Article 10.

“Hedging Obligations” of any Person means the obligations of such Person under:

(1)       currency exchange or interest rate swap agreements, currency exchange or interest rate cap agreements or currency exchange or interest rate collar agreements; or

(2)       other agreements or arrangements designed to protect such Person against fluctuations in currency exchange or interest rate prices.

“holder” or “Noteholder” means the Person in whose name a Note is registered on the register kept by the Registrar pursuant to Section 2.03 hereof.

“Immaterial Subsidiary” means any Subsidiary of the Company that owns less than 1.0% of the Consolidated Total Assets and generates less than 1.0% of the Consolidated Revenues for the latest

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four quarters then ended for which financial statements are available and which does not guarantee and is not an obligor under any other Indebtedness of the Company and the Restricted Entities.

“Incur” means issue, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness of a Person existing at the time such Person becomes a Restricted Entity (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred by such Person at the time it becomes a Restricted Entity. The term “Incurrence” when used as a noun shall have a correlative meaning. Solely for purposes of determining compliance with Section 4.06:

(1)       except in respect of Indebtedness Incurred under Section 4.06(b)(1) (under which any amortization of debt discount or accretion of principal will be deemed an Incurrence), amortization of debt discount or the accretion of principal with respect to a non-interest bearing or other discount security;

(2)       the payment of regularly scheduled interest in the form of additional Indebtedness of the same instrument (such as PIK Interest) or the payment of regularly scheduled dividends on Capital Stock in the form of additional Capital Stock of the same class and with the same terms; and

(3)       the obligation to pay a premium in respect of Indebtedness arising in connection with the issuance of a notice of redemption or making of a mandatory offer to purchase such Indebtedness

will not be deemed to be the Incurrence of Indebtedness.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1)       the principal in respect of (A) indebtedness of such Person for money borrowed and (B) indebtedness evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, including, in each case, any premium on such indebtedness to the extent such premium has become due and payable;

(2)       all Capital Lease Obligations of such Person and all Attributable Debt in respect of Sale/ Leaseback Transactions entered into by such Person;

(3)       all obligations of such Person issued or assumed as the deferred purchase price of property, all conditional sale obligations of such Person and all obligations of such Person under any title retention agreement (but excluding any accounts payable or other liability to trade creditors arising in the ordinary course of business), in each case only if and to the extent due more than 12 months after the delivery of property;

(4)       the principal component of all obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or similar credit transaction (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1) through (3) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed no later than the tenth Business Day following payment on the letter of credit);

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(5)       the principal component of the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock of such Person or, with respect to any Preferred Stock of any Restricted Entity of such Person, the principal amount of such Preferred Stock to be determined in accordance with this Indenture (but excluding, in each case, any accrued dividends);

(6)       all obligations of the type referred to in clauses (1) through (5) of other Persons and all dividends of other Persons for the payment of which, in either case, such Person is responsible or liable, directly or indirectly, as obligor, guarantor or otherwise, including by means of any Guarantee;

(7)       all obligations of the type referred to in clauses (1) through (6) of other Persons secured by any Lien on any property or asset of such Person (whether or not such obligation is assumed by such Person), the amount of such obligation being deemed to be the lesser of the fair market value of such property or assets and the amount of the obligation so secured; and

(8)       to the extent not otherwise included in this definition, Hedging Obligations of such Person.

Notwithstanding the foregoing, in connection with the purchase by the Company or any Restricted Entity of any business, the term “Indebtedness” will exclude post-closing payment adjustments to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that, at the time of closing, the amount of any such payment is not determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter.

The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all obligations as described above; provided, however, that in the case of Indebtedness sold at a discount, the amount of such Indebtedness at any time will be the accreted value thereof at such time.

“Indenture” means this Indenture, as defined in the first paragraph hereof, as may be amended from time to time in accordance with the terms hereof.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Industry Canada” means the Canadian Federal Minister of Industry and his or her designees, including the Department of Industry and its successors.”

“Industry Canada Licenses” means all licenses, approvals in principle, permits or authorizations issued by Industry Canada to the Canadian Joint Ventures or the Existing Canadian Subsidiary for purposes of carrying on their respective businesses in Canada.

“Institutional Accredited Investor” means an institution that is an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act (or an entity in which all of the equity owners are the foregoing) and that is not also a QIB.

“Interest Payment Date” means the Stated Maturity of an installment of interest on the Notes.

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“Investment” by any Person in any other Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of the lender) or other extensions of credit (including by way of Guarantee or similar arrangement) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by such Person. If the Company or any Restricted Entity issues, sells or otherwise disposes of any Capital Stock of a Person that is a Restricted Entity such that, after giving effect thereto, such Person is no longer a Restricted Entity, any Investment by the Company or any Restricted Entity in such Person remaining after giving effect thereto will be deemed to be a new Investment at such time. Except as otherwise provided for herein, the amount of an Investment shall be its fair market value at the time the Investment is made and without giving effect to subsequent changes in value; provided that none of the following will be deemed to be an Investment:

(1)       Hedging Obligations entered into in the ordinary course of business and in compliance with this Indenture; and

(2)       endorsements of negotiable instruments and documents in the ordinary course of business; and

(3)       any transaction to the extent that the consideration provided by the Company or a Restricted Entity consists of Capital Stock of the Company or the Parent (other than Disqualified Stock).

For purposes of the definition of “Unrestricted Entity”, Section 4.08 and the definition of “Restricted Payment”, “Investment” shall include:

(1)       the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Entity; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent “Investment” in an Unrestricted Entity equal to an amount (if positive) equal to (A) the Company’s “Investment” in such Subsidiary at the time of such redesignation less (B) the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and

(2)       any property transferred to or from an Unrestricted Entity shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors.

“Issue Date” means the first date that the Notes are issued pursuant to this Indenture.

“Issuers” has the meaning given such term in the first introductory paragraph hereto.

“L-Band Spectrum” means capacity or other right to use, for a satellite and/or ATC network, using the frequency band residing at 1626.5-1660.5 MHz (Earth to space), 1668-1675 MHz (Earth to space) and 1518-1559 MHz (space to Earth) as allocated for mobile satellite services by the International Telecommunications Union.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York.

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“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof).

“Maturity Date” means July 1, 2013.

“MCSA” means the Master Contribution and Support Agreement dated July 24, 2008 among Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situation Fund, L.P., Harbinger Co-Investment Fund I, L.P., SkyTerra Communications, Inc. the Company and the FCC License Subsidiary, as such agreement may be amended from time to time.

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

“Net Available Cash” from an Asset Disposition means cash payments received by the Company or a Restricted Entity therefrom (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and proceeds from the sale or other disposition of any securities received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to such properties or assets or received in any other non-cash form), in each case net of:

(1)       all legal, title, accounting, broker and recording tax expenses, commissions and other fees and expenses Incurred, and all Federal, state, provincial, foreign and local taxes required to be accrued as a liability under GAAP, as a consequence of such Asset Disposition;

(2)       all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition pursuant to a Lien that is permitted by this Indenture prior to any Lien on such assets securing the Notes, in accordance with the terms of any Lien upon or other security agreement of any kind with respect to such assets;

(3)       all distributions and other payments required to be made to minority interest holders in Restricted Subsidiaries as a result of such Asset Disposition;

(4)       the deduction of appropriate amounts provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the property or other assets disposed in such Asset Disposition and retained by the Company or any Restricted Entity after such Asset Disposition; and

(5)       any portion of the purchase price from an Asset Disposition placed in escrow, whether as a reserve for adjustment of the purchase price, for satisfaction of indemnities in respect of such Asset Disposition or otherwise in connection with that Asset Disposition; provided, however, that upon the termination of that escrow, Net Available Cash will be increased by any portion of funds in the escrow that are released to the Company or any Restricted Entity.

“Net Available Reimbursement Proceeds”, means the cash proceeds of any rights offering of any parent of the Issuers required pursuant to Article XIX of the MCSA, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually incurred or payable in connection with such offering.

“Net Cash Proceeds”, with respect to any issuance or sale of Capital Stock or Indebtedness, means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, under

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writers’ or placement agents’ fees, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof.

“Non-U.S. Person” means a Person who is not a U.S. Person as defined in Regulation S.

“Notes” has the meaning given such term in the second introductory paragraph hereto.

“Obligations” means, with respect to any Indebtedness, all obligations for principal, premium, interest, penalties, fees, indemnifications, reimbursements and other amounts payable pursuant to the documentation governing such Indebtedness.

“Officer” means the Chairman of the Board, the President, any Vice President, the Treasurer or the Secretary of the Company (or if the Company is a limited partnership, of the general partner).

“Officer’s Certificate” means a certificate signed by any Officer and delivered to the Trustee.

“Old Indentures” means the indentures, dated as of March 30, 2006 and January 7, 2008, by and among the Issuers, the Guarantors and the Trustee, as the same may be modified, supplemented, amended, refinanced, renewed or replaced.

“Old Notes” means (i) the 14% Senior Secured Notes and the Guarantees thereof and any “Additional Notes” as defined in and issued pursuant to Article 2, and in compliance with, Sections 4.06 and 4.09, of the indenture, dated as of March 30, 2006, by and among the Issuers, the Guarantors and the Trustee, after the March 30, 2006 issue date, and (ii) the 16.5% Senior Notes and the Guarantees thereof. The 16.5% Senior Notes will continue to constitute Old Notes following any amendment that subordinates such Notes to other Indebtedness of the Issuer, including, the 14% Senior Secured Notes.

“Opinion of Counsel” means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be an employee of or counsel to the Company.

“Original Issue Date” means March 30, 2006.

“Parent” means SkyTerra Communications, Inc., or any other direct or indirect parent company of the Company.

“Pari Passu Indebtedness” means the Old Notes and any other Indebtedness of the Company or a Guarantor that is pari passu in right of payment (and not expressly subordinated) to the Notes or, in the case of a Guarantor, that is pari passu in right of payment (and not expressly subordinated) to its Guarantee.

“Participant” means, with respect to the Depository, a Person who has an account with the Depository.

“Payment-in-Kind Notes” means additional Notes issued under this Indenture on the same terms and conditions as the Notes issued on the Issue Date in connection with PIK Interest. For purposes of this Indenture, all references to “Notes” shall include any related Payment-in-Kind Notes.

“Permitted Holder Change of Control” means, with respect to a Permitted Holder, the occurrence of a Change of Control of such Permitted Holder (with references in the definition of Change

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of Control (and other defined terms referenced therein) to the General Partner or the Company being deemed to be references to such Permitted Holder).

“Permitted Holders” means each of (i) Harbert Management Corporation, Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situation Fund, L.P. and their Affiliates, (ii) SkyTerra Communications, Inc. so long as a Permitted Holder Change of Control with respect to SkyTerra Communications, Inc. shall not have occurred; and (iii) any group (as such term is used in Section 13(d) and 14(d) of the Exchange Act) if the owner of a majority of the shares of Voting Stock of the General Partner beneficially owned by such group consist of one or more persons identified in the foregoing clauses.

“Permitted Investment” means an Investment by the Company or any Restricted Entity in:

(1)       the Company, a Guarantor or a Person that will, upon the making of such Investment, become a Guarantor; provided, however, that the primary business of such Guarantor is a Related Business;

(2)       another Person if, as a result of such Investment, such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Guarantor; provided, however, that such Person’s primary business is a Related Business;

(3)       a Restricted Entity that is not organized in the United States of America or any State thereof or the District of Columbia in an amount outstanding not to exceed $15 million since the Issue Date;

(4) cash and Temporary Cash Investments;

(5)       receivables owing to the Company or any Restricted Entity if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Company or any such Restricted Entity deems reasonable under the circumstances;

(6)       payroll, travel and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(7)       loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Entity not to exceed $2.5 million at any time outstanding;

(8)       stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Entity or in satisfaction of judgments or pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of a debtor or foreclosure of a Lien;

(9)       any Person to the extent such Investment represents the non-cash portion of the consideration received for (A) an Asset Disposition as permitted pursuant to Section 4.10 or (B) a disposition of assets not constituting an Asset Disposition;

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(10)      any Person where such Investment was acquired by the Company or any of its Restricted Subsidiaries (A) in exchange for any other Investment or accounts receivable held by the Company or any such Restricted Entity in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or (B) as a result of a foreclosure by the Company or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(11)      any Person to the extent such Investments consist of prepaid expenses, negotiable instruments held for collection and lease, utility and workers’ compensation, performance and other similar deposits made in the ordinary course of business by the Company or any Restricted Entity;

(12)      any Person to the extent such Investments consist of Hedging Obligations otherwise permitted under Section 4.06;

(13)      any Person to the extent such Investment exists on the Issue Date, and any extension, modification or renewal of any such Investments existing on the Issue Date, but only to the extent not involving additional advances, contributions or other Investments of cash or other assets or other increases thereof (other than as a result of the accrual or accretion of interest or original issue discount or the issuance of pay-in-kind securities, in each case, pursuant to the terms of such Investment as in effect on the Issue Date);

(14)      any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (14) that are still outstanding, do not exceed $10.0 million in any calendar year and $60.0 million in the aggregate since the Issue Date;

(15)      Investments in Persons for the purpose of using or selling satellite capacity in Mexico or Latin America that is not being used by the Company or its Restricted Subsidiaries, which Investments are in the form of transfers to such Persons of such unutilized satellite capacity for fair market value not to exceed $25.0 million at any time outstanding under this clause; and

(16)      Investments consisting of nonexclusive licensing of intellectual property pursuant to joint marketing arrangements with other Persons, for which license or contribution the Company and the Restricted Entities receives fair market value.

“Permitted Liens” means, with respect to any Person:

(1)       pledges or deposits by such Person under worker’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case Incurred in the ordinary course of business;

(2)       Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings and

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as to which the Company or any of its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP so long as any forfeiture (foreclosure) of collateral proceedings are stayed, Liens arising solely by virtue of any statutory or common law provision relating to banker’s Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a creditor depository institution; provided, however, that (A) such deposit account is not a dedicated cash collateral account and is not subject to restrictions against access by the Company in excess of those set forth by regulations promulgated by the Federal Reserve Board and (B) such deposit account is not intended by the Company or any Restricted Entity to provide collateral to the depository institution;

(3)       judgment Liens not giving rise to an Event of Default so long as such Lien is adequately bonded and any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been previously terminated or the period within which such proceeding may be initiated shall not have expired;

(4)       Liens for taxes, assessments or other governmental charges not yet subject to penalties for non-payment or which are being contested in good faith by appropriate proceedings and as to which the Company or any of its Restricted Subsidiaries shall have set aside on its books such reserves as may be required pursuant to GAAP so long as any forfeiture (foreclosure) of collateral proceedings are stayed;

(5)       Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; provided, however, that such letters of credit do not constitute Indebtedness;

(6)       minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes or zoning or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value or marketability of said properties or materially impair their use in the operation of the business of such Person at the real property affected thereby;

(7)       Liens securing Indebtedness permitted by Section 4.06(b)(13) incurred to finance the construction, purchase or lease of, or repairs, improvements or additions to, property, plant or equipment of such Person; provided, however, that the Lien may not extend to any other property owned by such Person or any of their Restricted Subsidiaries at the time the Lien is Incurred (other than assets and property affixed or appurtenant thereto), and the Indebtedness (other than any interest thereon) secured by the Lien may not be Incurred more than 180 days after the later of the acquisition, completion of construction, repair, improvement, addition or commencement of full operation of the property subject to the Lien;

(8)       Liens on L-Band Spectrum in North America leased under Capital Lease Obligations or purchased with Purchase Money Indebtedness permitted to be incurred under Section 4.06(b)(12) and securing only such Indebtedness;

(9)       Liens existing on the Original Issue Date or incurred after the Original Issue Date and prior to the Issue Date in compliance with the terms of the Old Indentures;

(10)      Liens on property or shares of Capital Stock of another Person at the time such other Person becomes a Restricted Entity; provided, however, that the Liens may not extend to

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any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);

(11)      Liens on property at the time such Person or any of its Restricted Subsidiaries acquires the property, including any acquisition by means of a merger or consolidation with or into such Person or a Subsidiary of such Person; provided, however, that the Liens may not extend to any other property owned by such Person or any of its Restricted Subsidiaries (other than assets and property affixed or appurtenant thereto);

(12)      Liens securing Hedging Obligations so long as such Hedging Obligations are permitted to be Incurred under this Indenture;

(13)      leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) which do not materially interfere with the ordinary conduct of the business of the Company or any of its Restricted Subsidiaries;

(14)      Liens securing Indebtedness permitted to be Incurred under Section 4.06(b)(1), including Guarantees thereof;

(15) Liens securing obligations in respect of the Old Notes;

(16)      Liens arising from Uniform Commercial Code financing statement filings regarding operating leases entered into by the Company and its Restricted Subsidiaries in the ordinary course of business;

(17)      Liens on any ownership interest of the Company or any Restricted Entity in satellites and related assets that are being produced by Boeing to secure amounts owing to Boeing (including under Section 4.06(b)(18)) and that do not restrict the granting of a Lien on such satellite and related assets to secure the Notes and the Guarantees; provided that upon the risk of loss with respect to a satellite and related assets passing to the Company, if the Company is current in its payment of all construction deferrals and other payments payable with respect to the satellite being released at such time, the Lien on such satellite and related work shall be automatically released; and

(18)      Liens to secure any Refinancing (or successive Refinancings) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clause (7), (9), (10), (11) or (15); provided, however, that:

(A)       such new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(B)       the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (i) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clause (7), (9), (10), (11) or (15) at the time the original Lien became a Permitted Lien and (ii) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement.

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Notwithstanding the foregoing, “Permitted Liens” will not include any Lien described in clause (7), (10) or (11) above to the extent such Lien applies to any Additional Assets acquired directly or indirectly with Net Available Cash pursuant to Section 4.10. For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.

Notwithstanding the foregoing, with respect to any property subject to any mortgages, “Permitted Liens” will not include the Liens described in clause (1) above.

“Permitted Tax Distributions” means dividends or distributions permitted by Section 4.08(b)(11).

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“PIK Interest” means interest paid with respect to the Notes in the form of Payment-in-Kind Notes.

“Preferred Stock”, as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.

“Principal” of a Note means the then outstanding principal amount of the Note plus the premium, if any, payable on the Note which is due or overdue or is to become due at the relevant time.

“Public Offering” means any Equity Offering pursuant to an effective registration statement filed with the SEC.

“Purchase Money Indebtedness” means Indebtedness:

(1)       consisting of the deferred purchase price of an asset, conditional sale obligations, obligations under any title retention agreement and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and

(2)       Incurred to finance the acquisition, lease or construction by the Company or a Restricted Entity of such asset, including additions and improvements;

provided, however, that such Indebtedness is Incurred within 180 days after the acquisition by the Company or such Restricted Entity of such asset.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“Redemption Date” means any date on which Notes are to be redeemed pursuant to paragraph 5 of the Notes and the terms of this Indenture.

“Refinance” means, in respect of any Indebtedness, to refinance, extend, renew, refund, repay, prepay, purchase, redeem, defease or retire, or to issue other Indebtedness in exchange or replacement for, such Indebtedness. “Refinanced” and “Refinancing” shall have correlative meanings.

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“Refinancing Indebtedness” means Indebtedness that Refinances any Indebtedness of the Company or any Restricted Entity existing on the Issue Date or Incurred in compliance with this Indenture, including Indebtedness that Refinances Refinancing Indebtedness; provided, however, that:

(1)       such Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being Refinanced or, if such Refinancing Indebtedness is a Subordinated Obligation, no earlier than 91 days after the Stated Maturity of the Notes;

(2)       such Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is Incurred that is equal to or greater than the Average Life of the Indebtedness being Refinanced or, if such Refinancing Indebtedness is a Subordinated Obligation, equal to or greater than the then remaining Average Life of the Notes;

(3)       such Refinancing Indebtedness has an aggregate principal amount (or if Incurred with original issue discount, an aggregate issue price, and including any additional Indebtedness actually issued in satisfaction of payment in kind interest (such as Payment-in-Kind Notes)), that is equal to or less than the aggregate principal amount (or if Incurred with original issue discount, the aggregate accreted value including and any additional Indebtedness actually issued in satisfaction of payment in kind interest (such as Payment-in-Kind Notes)) then outstanding (plus fees and expenses, including any premium and defeasance costs) under the Indebtedness being Refinanced; and

(4)       if the Indebtedness being Refinanced is subordinated in right of payment to the Notes, such Refinancing Indebtedness (a) is subordinated in right of payment to the Notes at least to the same extent as the Indebtedness being Refinanced, (b) has a Stated Maturity that is at least 91 days after the later of (x) the Stated Maturity of the Notes and (y) the Stated Maturity of the Indebtedness being Refinanced and (c) has an Average Life at the time such Refinancing Indebtedness is Incurred that is greater than (x) the Average Life of the Notes and (y) the Average Life of the Indebtedness being Refinanced;

provided further, however, that Refinancing Indebtedness shall not include (A) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or (B) Indebtedness of the Company or a Restricted Entity that Refinances Indebtedness of an Unrestricted Entity.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means the Global Note in the form of Exhibits A3 and A4 hereto representing the Notes offered and sold outside the United States in reliance on Regulation S.

“Reimbursement Event” has the meaning set forth in the MCSA.

“Related Business” means any business in which the Issuers or any of the Restricted Subsidiaries was engaged on the Issue Date and the Company’s next generation business and any business related, ancillary or complementary to such business or which is a reasonable extension thereof or any business the assets of which, in the good faith determination of the Board of Directors, are useful or may be used in any such business.

“Related Business Assets” means assets used or useful in a Related Business (including acquisition of Capital Stock of another entity that will become a Restricted Entity that only owns assets that are used or useful in a Related Business).

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“Responsible Officer,” when used with respect to the Trustee, means any officer assigned to the Corporate Trust Division — Corporate Finance Unit of the Trustee (or any successor unit or department of the Trustee) located at the Corporate Trust Office of the Trustee who has direct responsibility for the administration of this Indenture and, for the purposes of Section 7.01(c)(2) and the second sentence of Section 7.05, shall also include any officer of the Trustee to whom any matter is referred because of such officer’s knowledge of and familiarity with the particular subject.

“Restricted Definitive Note” means a Definitive Note bearing the Restricted Notes Legend.

“Restricted Entity” means any Restricted Subsidiary and any of the Canadian Joint Ventures.

“Restricted Global Note” means a Global Note bearing the Restricted Notes Legend.

“Restricted Notes Legend” means the legend set forth in Section 2.06(g)(i) to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

“Restricted Payment” with respect to any Person means:

(1)       the declaration or payment of any dividends or any other distributions of any sort in respect of its Capital Stock (including any payment in connection with any merger or consolidation involving such Person) or similar payment to the direct or indirect holders of its Capital Stock (other than (A) dividends or distributions payable solely in its Capital Stock (other than Disqualified Stock), (B) dividends or distributions payable solely to the Issuers or a Restricted Entity and (C) pro rata dividends or other distributions made by a Subsidiary or a Canadian Joint Venture that is not a Wholly Owned Subsidiary to minority stockholders (or owners of an equivalent interest in the case of a Subsidiary that is an entity other than a corporation));

(2)       the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Capital Stock of the Company held by any Person (other than by a Restricted Entity) or of any Capital Stock of a Restricted Entity held by any Affiliate of the Company (other than by a Restricted Entity), including in connection with any merger or consolidation and including the exercise of any option to exchange any Capital Stock (other than into Capital Stock of the Company that is not Disqualified Stock);

(3)       the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment of any Subordinated Obligations (other than (A) from the Company or a Guarantor or (B) the purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of such purchase, repurchase, redemption, defeasance or other acquisition or retirement); or

(4) the making of any Investment (other than a Permitted Investment) in any Person.

“Restricted Period” means the 40 consecutive days beginning on and including the later of (i) the commencement of the offering of the Notes to persons other than distributors (as defined in Regulation S) in reliance on Regulation S and (ii) the date of the original issuance of the Notes (which may include issuances after the Issue Date).

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“Restricted Subsidiary” means any Subsidiary of the Company that is not an Unrestricted Entity.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 501” means Rule 501(a)(1), (2), (3) or (7) promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“Sale/Leaseback Transaction” means an arrangement relating to property owned by the Company or a Restricted Entity on the Issue Date or thereafter acquired by the Company or a Restricted Entity whereby the Company or a Restricted Entity transfers such property to a Person and the Company or a Restricted Entity leases it from such Person.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the U.S. Securities Act of 1933, as amended.

Securities Purchase Agreement” means the Securities Purchase Agreement dated July 24, 2008 by and between the Issuers and Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situation Fund, L.P. , as such agreement may be amended from time to time.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “Significant Subsidiary” of the Issuers within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.

“Standard & Poor’s” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

“Stated Maturity” means, with respect to any security or any installment of interest thereon, the date specified in such security as the fixed date on which the final payment of principal of such security, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency unless such contingency has occurred) or such installment of interest is due and payable.

“Subordinated Obligation” means, with respect to the Company or a Guarantor, any Indebtedness of such Person (whether outstanding on the Issue Date or thereafter Incurred) which is subordinate or junior in right of payment to the Notes (or the Guarantee of such Guarantor, as applicable) pursuant to a written agreement to that effect.

“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Voting Stock is at the time owned or controlled, directly or indirectly, by:

(1) such Person;

(2) such Person and one or more Subsidiaries of such Person; or

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(3) one or more Subsidiaries of such Person.

“Temporary Cash Investments” means any of the following:

(1)       any investment in direct obligations of the United States of America or any agency thereof or obligations guaranteed by the United States of America or any agency thereof;

(2)       investments in demand and time deposit accounts, certificates of deposit and money market deposits maturing within 365 days of the date of acquisition thereof issued by a bank or trust company which is organized under the laws of the United States of America, any State thereof or any foreign country recognized by the United States of America, and which bank or trust company has capital, surplus and undivided profits aggregating in excess of $50.0 million (or the foreign currency equivalent thereof) and has outstanding debt which is rated “A” (or such similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) or any money-market fund sponsored by a registered broker dealer or mutual fund distributor;

(3)       repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (1) above entered into with a bank meeting the qualifications described in clause (2) above;

(4)       investments in commercial paper, maturing not more than 365 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Issuers) organized and in existence under the laws of the United States of America or any foreign country recognized by the United States of America with a rating at the time as of which any investment therein is made of “P-2” (or higher) according to Moody’s or “A-2” (or higher) according to Standard & Poor’s;

(5)       investments in securities with maturities of twelve months or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States of America, or by any political subdivision or taxing authority thereof, and rated at least “A” by Standard & Poor’s or “A” by Moody’s; and

(6)       investments in money market funds that, in the aggregate, have at least $1,000 million in assets.

“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15(519) that has become publicly available at least two business days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to April 1, 2011; provided, however that if the period from the redemption date to April 1, 2011 is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

“Trust Indenture Act” or “TIA” means the Trust Indenture Act of 1939 (15 U.S.C. §§ 77aaa-77bbbb) as in effect on the Issue Date.

“Trustee” means The Bank of New York Mellon, as trustee, until a successor replaces it and, thereafter, means the successor.

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“Unrestricted Definitive Note” means one or more Definitive Notes that do not bear and are not required to bear the Restricted Notes Legend.

“Unrestricted Entity” means:

(1)       any Subsidiary of the Company (other than Finance Co.) that at the time of determination shall be designated an Unrestricted Entity by the Board of Directors in the manner provided below; and

(2) any Subsidiary of an Unrestricted Entity.

The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary) to be an Unrestricted Entity unless such Subsidiary or any of its Subsidiaries owns any Capital Stock or Indebtedness of, or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated; provided, however, that either (A) the Subsidiary to be so designated has total assets of $1,000 or less or (B) if such Subsidiary has assets greater than $1,000, such designation would be permitted under Section 4.08; provided further that neither the FCC License Subsidiary nor the Canadian Joint Ventures nor any other Subsidiary that holds or owns a similar telecommunications license nor Finance Co. may be designated an Unrestricted Entity.

The Board of Directors may designate any Unrestricted Entity to be a Restricted Entity; provided, however, that immediately after giving effect to such designation the Consolidated Leverage Ratio is equal to or better than the Consolidated Leverage Ratio immediately prior to such transaction. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the resolution of the Board of Directors giving effect to such designation and an Officer’s Certificate certifying that such designation complied with the foregoing provisions.

“Unrestricted Global Note” means a permanent Global Note substantially in the form of Exhibits A2 through A4 attached hereto that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, and that is deposited with or on behalf of and registered in the name of the Depository, representing a series of Notes that do not bear the Restricted Notes Legend.

“U.S. Government Obligations” means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable at the issuer’s option.

“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof.

“Wholly Owned Subsidiary” means a Restricted Entity all the Capital Stock of which (other than directors’ qualifying shares) is owned by the Issuers or one or more other Wholly Owned Subsidiaries.

Section 1.02 Other Definitions.

The definitions of the following terms may be found in the sections indicated as follows:

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Term	Defined in Section
“Affiliate Transaction”	4.11
“Bankruptcy Law”	6.01
“Change of Control Offer”	4.17
“Covenant Defeasance”	9.03
“Custodian”	6.01
“Event of Default”	6.01
“IAI Global Note”	2.01
“Legal Defeasance”	9.02
“Offer”	4.10(c)
“Offer Amount”	4.10(c)
“Offer Period”	4.10(c)
“Paying Agent”	2.03
“Purchase Date”	4.10(c)
“Reimbursement Offer”	4.23(a)
“Reimbursement Offer Amount”	4.23(a)
“Reimbursement Offer Period”	4.23(a)
“Reimbursement Offer Period	4.23(a)
“Reimbursement Purchase Price”	4.23(a)
“Registrar”	2.03

Section 1.03 Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, the portion of such provision referred to is incorporated by reference in and made a part of this Indenture as if and to the extent this Indenture were qualified under the TIA. The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Notes.

“indenture securityholder” means a Noteholder.

“indenture to be qualified” means this Indenture (it being understood that this Indenture shall not be qualified under the TIA).

“indenture trustee” or “institutional trustee” means the Trustee.

“obligor on the indenture securities” means the Company, the Guarantors or any other obligor on the Notes.

All other terms used in this Indenture that are defined by the TIA, defined in the TIA by reference to another statute or defined by SEC rule have the meanings therein assigned to them.

Section 1.04 Rules of Construction.

Unless the context otherwise requires:

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(1)       a term has the meaning assigned to it herein, whether defined expressly or by reference;

(2)       an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4)       words in the singular include the plural, and in the plural include the singular;

(5) words used herein implying any gender shall apply to every gender;

(6)       the term “aggregate principal amount” or “principal amount” means in each case “aggregate principal amount at maturity” or “principal amount at maturity”;

(7)       the words “herein,” “hereof,” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision; and

(8)       references to sections herein are references to Sections of this Indenture, unless the context otherwise requires.

ARTICLE II

THE NOTES

Section 2.01 Form and Dating.

(a)        General. The Notes and the Trustee’s certificate of authentication shall be substantially in the form of Exhibits A1-A4 hereto. The Notes will be offered and sold by the Issuers pursuant to the Securities Purchase Agreement. The Securities Purchase Agreement contemplates the issuance of (i) $150 million aggregate principal amount of Notes on the Issue Date, (ii) $175 million aggregate principal amount of Notes on April 1, 2009, (iii) $75 million aggregate principal amount of Notes on July 1, 2009, and (iv) $100 million aggregate principal amount of Notes on January 4, 2010, or at such other times as more fully described in the Securities Purchase Agreement. The Notes will initially be issued as Restricted Definitive Notes. Upon request of any of the holders of the outstanding Restricted Definitive Notes and in accordance with the provisions set forth in Section 2.06(d), the Restricted Definitive Notes may be exchanged in whole for one or more Global Notes, registered in the name of the Depository or its nominee; provided, however, if any Notes are not “fungible” under applicable federal tax or securities laws, they will be represented by separate Global Notes. The Trustee shall have no responsibility to determine whether or not any Notes are or are not “fungible” under any applicable tax or securities laws or to take any action in respect thereof unless and until the Trustee shall have been furnished by the Company with an Officer’s Certificate stating that any particular Notes are or are not so “fungible.” The Trustee shall have no duty in inquire into any such certificate and may conclusively presume its correctness and shall be protected in relying thereon. Following the Issue Date, all such Notes may be transferred to, among others, QIBs, purchasers in reliance on Regulation S and, as set forth below, Institutional Accredited Investors. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note shall be dated the date of its authentication. The Notes shall be in denominations of $1,000 and integral multiples thereof, or, in the case of Payment-in-Kind Notes, such other denominations as may be required.

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The terms and provisions contained in the Notes shall constitute, and are hereby expressly made, a part of this Indenture and the Issuers and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b)       Global Notes. Any Notes subsequently issued in global form, without interest coupons, shall be substantially in the form of Exhibits A2-A4 attached hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto).

(i)        Following the Issue Date and the exchange of the Restricted Definitive Notes for Global Notes in the manner set forth herein, the Notes resold or otherwise transferred to QIBs in reliance on Rule 144A shall be issued in the form of one or more 144A Global Notes, which shall be deposited with, or on behalf of, the Depository or will remain in the custody of the Trustee, as custodian, pursuant to an agreement between the Depository and the Trustee.

(ii)       Following the Issue Date and the exchange of the Restricted Definitive Notes for Global Notes in the manner set forth herein, the Notes resold or otherwise transferred in reliance on Regulation S shall be issued in the form of one or more Regulation S Global Notes, which shall be deposited with, or on behalf of, the Trustee as custodian for the Depository.

(iii)      Following the Issue Date and the exchange of the Restricted Definitive Notes for Global Notes in the manner set forth herein, Notes resold or otherwise transferred to Institutional Accredited Investors, may be exchanged for a separate note in registered form, without interest coupons (the “IAI Global Note”), which will be deposited with, or on behalf of, a custodian for the Depository, as described in (i) and (ii) above.

(iv)      Following the Issue Date and the exchange of the Restricted Definitive Notes for Global Notes in the manner set forth herein, Unrestricted Global Notes shall be issued in accordance with Sections 2.06(b)(vi), 2.06(d)(ii) and 2.06(d)(iii) and shall be deposited, duly executed by the Issuers and authenticated by the Trustee as hereinafter provided.

(v)       Notes issued in definitive form shall be substantially in the form of Exhibit A-1 and A-4 attached hereto (without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto).

Each Global Note shall represent such of the outstanding Notes as shall be specified therein and each shall provide that it shall represent the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby shall be made by the Trustee or the custodian, at the direction of the Trustee, in accordance with instructions given by the holder thereof as required by Section 2.06 hereof.

Section 2.02 Execution and Authentication.

The Notes shall be executed on behalf of the Issuers by two Officers of each Issuer or an Officer and an Assistant Secretary of each Issuer. Such signature may be either manual or facsimile.

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If an Officer whose signature is on a Note no longer holds that office at the time the Trustee authenticates the Note, the Note shall be valid nevertheless.

A Note shall not be valid until the Trustee manually signs the certificate of authentication on the Note. Such signature shall be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee shall authenticate (i) Notes for original issue in an amount not to exceed $500,000,000 aggregate principal amount upon one or more Company Requests and pursuant to the dates and amounts set forth in the Securities Purchase Agreement and herein, and (ii) any Payment-in-Kind Notes as a result of PIK Interest for an aggregate principal amount specified in such Company Request for such Payment-in-Kind Notes issued hereunder. Each such Company Request shall specify the amount of Notes to be authenticated and the date on which the Notes are to be authenticated, whether the Notes are to be Payment-in-Kind Notes and whether the Notes or Payment-in-Kind Notes, as applicable, are to be issued as Definitive Notes or Global Notes or such other information as the Trustee may reasonably request.

The Trustee may appoint an authenticating agent to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same right as an Agent to deal with the Issuers or an Affiliate.

The Trustee shall have the right to decline to authenticate and deliver any Notes under this Section if the Trustee, being advised by counsel, reasonably determines that such action may not lawfully be taken, if its own rights, duties or immunities under the Notes and this Indenture are affected in a manner that is not reasonably acceptable to the Trustee or if the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing Noteholders.

Section 2.03 Registrar and Paying Agent.

The Issuers shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“Registrar”), an office or agency located in the Borough of Manhattan, The City of New York, State of New York where Notes may be presented for payment (“Paying Agent”) and an office or agency where notices and demands to or upon the Issuers in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuers may have one or more co-registrars and one or more additional paying agents. Neither the Company nor any Affiliate of the Company may act as Paying Agent. The Issuers may change any Paying Agent, Registrar or co-registrar without notice to any Noteholder.

The Issuers shall enter into an appropriate agency agreement with any Registrar or Paying Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuers shall notify the Trustee of the name and address of any such Agent. If the Issuers fail to maintain a Registrar or Paying Agent, or agent for service of notices and demands, or fail to give the foregoing notice, the Trustee shall act as such. The Issuers initially appoint the Trustee as Registrar, Paying Agent, and agent for service of notices and demands in connection with the Notes.

Section 2.04 Paying Agent to Hold Money in Trust.

On or before each due date of the principal of and interest on any Notes, the Issuers shall deposit with the Paying Agent a sum sufficient to pay such principal and interest so becoming due. The Issuers at any time may require a Paying Agent to pay all money held by it to the Trustee and the Trustee

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may at any time during the continuance of any Default, upon written request to a Paying Agent, require such Paying Agent to forthwith pay to the Trustee all sums so held in trust by such Paying Agent together with a complete accounting of such sums. Upon doing so, the Paying Agent shall have no further liability for the money.

Section 2.05 Holder Lists.

The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Noteholders and shall otherwise comply with TIA § 312(a). If the Trustee is not the Registrar, the Issuers shall furnish to the Trustee at least seven Business Days before each Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the holders of Notes and the Issuers shall otherwise comply with TIA § 312(a).

Section 2.06 Transfer and Exchange.

(a)        Transfer and Exchange of Global Notes. A Global Note may not be transferred as a whole except by the Depository to a nominee of the Depository, by a nominee of the Depository to the Depository or to another nominee of the Depository, or by the Depository or any such nominee to a successor Depository or a nominee of such successor Depository. Global Notes will be exchanged by the Issuers for Definitive Notes if, and only if, (i) the Company delivers to the Trustee notice from the Depository that it is unwilling or unable to continue to act as Depository or that it ceases to be a clearing agency registered under the Exchange Act and, in either case, a successor Depository is not appointed by the Company, (ii) the Company, at its option, notifies the Trustee in writing that it elects to cause the issuance of the Definitive Notes or (iii) an Event of Default has occurred or is continuing and the Registrar has received a request from the Depository to issue Definitive Notes. Upon the occurrence of any of the preceding events in clauses (i), (ii) or (iii) above, Definitive Notes shall be issued in such names as the Depository shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.09 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.09 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a); however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) hereof.

(b)       Transfer and Exchange of Beneficial Interests in the Global Notes. The transfer and exchange of beneficial interests in the Global Notes shall be effected through the Depository, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes shall be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also shall require compliance with subparagraphs (i) through (v) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(i)        Transfer of Beneficial Interests in the Same Global Note. Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Restricted Notes Legend. Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(i).

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(ii)       All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(i) above, the transferor of such beneficial interest must deliver to the Registrar either (A)(1) a written order from a Participant given to the Depository in accordance with the Applicable Procedures directing the Depository to credit or cause to be credited a beneficial interest in another Global Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase or (B)(1) a written order from a Participant or an Indirect Participant given to the Depository in accordance with the Applicable Procedures directing the Depository to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged and (2) instructions given by the Depository to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above. Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(h) hereof. Transfers by an owner of a beneficial interest in the Rule 144A Global or the IAI Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note, shall be made only upon receipt by the Trustee of a certification from the transferor to the effect that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act. In the case of a transfer of a beneficial interest in either the Regulation S Global Note or the Rule 144A Global Note for an interest in the IAI Global Note, the transferee must furnish to the Trustee a signed letter substantially in the form of Exhibit D.

(iii) Restrictions on Transfer of Regulation S Global Note.

(A)       Prior to the expiration of the Restricted Period, transfers by an owner of a beneficial interest in the Regulation S Global Note to a transferee who takes delivery of such interest through the 144A Global Note or the IAI Global Note shall be made only in accordance with Applicable Procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in the form provided by Exhibit B or as otherwise provided by the Issuers in accordance with applicable law to the effect that such transfer is being made to (i) a person whom the transferor reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A or (ii) an IAI purchasing for its own account, or for the account of such an IAI. Such written certification shall not be required after the expiration of the Restricted Period. In the case of a transfer of a beneficial interest in the Regulation S Global Note for an interest in the IAI Global Note, the transferee must furnish to the Trustee a signed letter substantially in the form of Exhibit D.

(B)       Upon the expiration of the Restricted Period, beneficial ownership interests in the Regulation S Global Note shall be transferable in accordance with applicable law and the other terms of this Indenture.

(iv)      Other Transfer of Beneficial Interests to Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(ii) above and the transferor delivers a certificate in the form of Exhibit B hereto.

(v)       Transfer and Exchange of Beneficial Interests in Global Notes to Definitive Notes. In the event that a Global Note is exchanged for Restricted Definitive Notes in accordance

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with the terms of this Indenture, such Notes may be exchanged only in accordance with such procedures as are substantially consistent with the provisions of Sections 2.06(c), (d) and (e) (including the certification requirements set forth therein intended to ensure that such transfers comply with Rule 144A, Regulation S or such other applicable exemption from registration under the Securities Act, as the case may be) and such other procedures as may from time to time be adopted by the Issuers reasonably necessary to comply with applicable law.

(vi)      Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(ii) above and the Registrar receives the following:

(1)       if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(2)       if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and if the Company or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Notes Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of a Company Request in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests so transferred.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.

(i)        Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, if such exchange complies with Section 2.06(a), and upon receipt by the Registrar of the following documentation:

(A)       if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

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(B)       if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C)       if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction and in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D)       if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E)       if such beneficial interest is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable;

(F)       if such beneficial interest is being transferred to the Issuers or any of their Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G)       if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depository and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(i) shall bear the Restricted Notes Legend and shall be subject to all restrictions on transfer contained therein.

(ii)       Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note if such transfer and exchange complies with Section 2.06(a) and if the Registrar receives the following:

(1)       if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Definitive Note that does not bear the Restricted Notes Legend, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(2)       if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a De

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finitive Note that does not bear the Restricted Notes Legend, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and if the Company or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Company and the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Notes Legend are no longer required in order to maintain compliance with the Securities Act.

(iii)      Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, if such transfer and exchange complies with Section 2.06(a) and, upon satisfaction of the conditions set forth in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(h) hereof, and the Issuers shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depository and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(iii) shall not bear the Restricted Notes Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(i)        Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A)       if the holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B)       if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C)       if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction and in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D)       if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E)       if such Restricted Definitive Note is being transferred to an Institutional Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act

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other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3)(d) thereof, if applicable;

(F)       if such Restricted Definitive Note is being transferred to the Issuers or any of their Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G)       if such Restricted Definitive Note is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cancel the Restricted Definitive Note and increase or cause to be increased the aggregate principal amount of the Restricted Global Note; provided, however, if any such exchange or transfer from a Definitive Note to a beneficial interest in a Restricted Global Note is effected at a time when a Restricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of a Company Request in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Restricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred; provided, further, that the Trustee shall have no duty to take any action to secure eligibility of the Restricted Global Note for deposit with the Depository.

(ii)       Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. If and to the extent permitted by, and upon compliance with, the Applicable Procedures, a holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:

(1)       if the holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(2)       if the holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and if the Issuers or the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Notes Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of this Section 2.06(d)(ii), the Trustee shall cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(iii)      Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. If and to the extent permitted by, and upon compliance with, the Applicable Procedures, a holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a

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request for such an exchange or transfer, the Trustee shall cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (ii) or (iii) above at a time when an Unrestricted Global Note has not yet been issued, the Issuers shall issue and, upon receipt of a Company Request in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred;provided, however, that the Trustee shall have no duty to take any action to secure eligibility of the Unrestricted Global Note for deposit with the Depository.

(e)        Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a holder of Definitive Notes and such holder’s compliance with the provisions of this Section 2.06(e), the Registrar shall register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting holder shall present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such holder or by its attorney, duly authorized in writing. In addition, the requesting holder shall provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e):

(i)        Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A)       if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B)       if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C)       if the transfer will be made pursuant to any other exemption, including any such transfer to an Institutional Accredited Investor, from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(ii)       Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

(1)       if the holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(2)       if the holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

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and if the Issuers or the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Issuers to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Restricted Notes Legend are no longer required in order to maintain compliance with the Securities Act.

(iii)      Unrestricted Definitive Notes to Unrestricted Definitive Notes. A holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the holder thereof.

(f) [intentionally omitted]

(g)       Legends. The following legends shall appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

(i) Restricted Notes Legend.

(A)       Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

“THE NOTES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE ‘‘SECURITIES ACT’’). BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 (a)(1), (2), (3), OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (OR AN ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE THE FOREGOING) (AN “INSTITUTIONAL ACCREDITED INVESTOR”) OR (C) IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT. THIS NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A)(1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE TRANSFEREE TO THE COMPANY AND TRUSTEE AND, IF REQUESTED BY THE COMPANY, AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, (4)

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PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THIS SECURITY AGREES THAT IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES, LEGAL OPINIONS AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT TRANSFER TO IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS AND APPLICABLE SECURITIES LAWS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2)(a) PURCHASING FROM A PERSON NOT PARTICIPATING IN THE INITIAL DISTRIBUTION OF THIS SECURITY (OR ANY PREDECESSOR SECURITY), (b) AN INSTITUTION THAT IS AN ‘‘ACCREDITED INVESTOR’’ AS DEFINED UNDER THE SECURITIES ACT AND (c) HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (k)(2)(i) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.”

(B)       Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraph (b)(vi), (c)(ii), (c)(iii), (d)(ii), (d)(iii), (e)(ii) or (e)(iii) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) shall not bear the Restricted Notes Legend.

(ii)       Global Note Legend. Each Global Note shall bear a legend in substantially the following form:

THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.01(a) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

(h)       Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for Definitive Notes or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note shall be returned to or retained and canceled by the Trustee in accordance with Section 2.10 hereof. At any time

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prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note shall be reduced accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depository at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note shall be increased accordingly and an endorsement shall be made on such Global Note by the Trustee or by the Depository at the direction of the Trustee to reflect such increase.

(i) General Provisions Relating to Transfers and Exchanges.

(i)        To permit registrations of transfers and exchanges to the extent permitted hereunder, the Issuers shall execute and the Trustee shall authenticate Global Notes and Definitive Notes upon the Company’s order or at the Registrar’s request.

(ii)       No service charge shall be made to a holder of a beneficial interest in a Global Note or to a holder of a Definitive Note for any registration of transfer or exchange, but the Issuers may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.09, 4.10, 4.16, 4.18 and 8.04 hereof).

(iii)      The Registrar shall not be required to register the transfer of or exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part.

(iv)      All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes shall be the valid obligations of the Issuers, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(v)       The Issuers shall not be required (A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection or (B) to register the transfer of or to exchange a Note between a record date and the next succeeding Interest Payment Date.

(vi)      Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Issuers may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Issuers shall be affected by notice to the contrary.

(vii)     The Trustee shall authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.

(viii)    All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile.

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(ix)      The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Note (including any transfers between or among Participants or beneficial owners of interests in any Global Note) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof.

(x)       None of the Trustee or any Agent shall have any responsibility or obligation to any beneficial owner in a Global Note, a member of, or a Participant in the Depository or other Person with respect to the accuracy of the records of the Depository or its nominee or of any Participant or member thereof, with respect to any ownership interest in the Notes or with respect to the delivery to any Participant, member, beneficial owner or other Person (other than the Depository) of any notice (including any notice of redemption) or the payment of any amount, under or with respect to such Notes. All notices and communications to be given to the Noteholders and all payments to be made to Noteholders under the Notes and this Indenture shall be given or made only to or upon the order of the registered holders (which shall be the Depository or its nominee in the case of the Global Note). The rights of beneficial owners in the Global Note shall be exercised only through the Depository subject to the Applicable Procedures. The Trustee and each Agent shall be entitled to rely and shall be fully protected in relying upon information furnished by the Depository with respect to its members, Participants and any beneficial owners. The Trustee and each Agent shall be entitled to deal with any depositary (including the Depository), and any nominee thereof, that is the registered holder of any Global Note for all purposes of this Indenture relating to such Global Note (including the payment of principal, premium, if any, and interest and additional amounts, if any, and the giving of instructions or directions by or to the owner or holder of a beneficial ownership interest in such Global Note) as the sole holder of such Global Note and shall have no obligations to the beneficial owners thereof. None of the Trustee or any Agent shall have any responsibility or liability for any acts or omissions of any such depositary with respect to such Global Note, for the records of any such depositary, including records in respect of beneficial ownership interests in respect of any such Global Note, for any transactions between such depositary and any Participant in such depositary or between or among any such depositary, any such Participant and/or any holder or owner of a beneficial interest in such Global Note, or for any transfers of beneficial interests in any such Global Security.

Notwithstanding the foregoing, with respect to any Global Note, nothing herein shall prevent the Issuers, the Trustee, or any agent of the Issuers or the Trustee (including any Agent), from giving effect to any written certification, proxy or other authorization furnished by any depositary (including the Depository), as a Noteholder, with respect to such Global Note or impair, as between such depositary and owners of beneficial interests in such Global Note, the operation of customary practices governing the exercise of the rights of such depositary (or its nominee) as Holder of such Global Note.

Section 2.07 Replacement Notes.

If a mutilated Note is surrendered to the Trustee or if the holder of a Note presents evidence to the satisfaction of the Issuers and the Trustee that the Note has been lost, destroyed or wrongfully taken, the Issuers shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the New York Uniform Commercial Code as in effect on the date of this Indenture are met. An indemnity bond or other security shall be required that is sufficient in the judgment of the Issuers and the Trustee to protect the Issuers, the Trustee or any Agent from any loss which any of them may suffer if a Note is replaced. In every case of destruction, loss or theft, the applicant shall also furnish to the Issuers and to the Trustee evidence to their satisfaction of the destruction, loss or theft of

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such Note and the ownership thereof. The Issuers and the Trustee may charge for their expenses in replacing a Note. Every replacement Note is an additional obligation of the Issuers.

Section 2.08 Outstanding Notes.

Notes outstanding at any time are all Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, and those described in this Section 2.08 as not outstanding.

If a Note is replaced pursuant to Section 2.07, it ceases to be outstanding until the Issuers and the Trustee receive proof satisfactory to each of them that the replaced Note is held by a bona fide purchaser.

If a Paying Agent holds on a Redemption Date or Maturity Date money sufficient to pay the principal of, premium, if any, and accrued interest on Notes payable on that date, then on and after that date such Notes cease to be outstanding and interest on them ceases to accrue.

Subject to Section 11.05, a Note does not cease to be outstanding solely because the Issuers or an Affiliate holds the Note.

Section 2.09 Temporary Notes.

Until certificates representing Notes are ready for delivery, the Issuers may prepare and the Trustee shall authenticate temporary Notes. Temporary Notes shall be substantially in the form, and shall carry all rights, of Definitive Notes but may have variations that the Issuers consider appropriate for temporary Notes. Without unreasonable delay, the Issuers shall prepare and the Trustee shall authenticate Definitive Notes in exchange for temporary Notes presented to it.

Section 2.10 Cancellation.

The Issuers at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange or payment. The Trustee shall cancel and retain in accordance with its normal practice or, upon written request of the Issuers, may return to the Issuers, all Notes surrendered for transfer, exchange, payment or cancellation. Subject to Section 2.07 hereof, the Issuers may not issue new Notes to replace Notes in respect of which it has previously paid all principal, premium and interest accrued thereon, or delivered to the Trustee for cancellation.

Section 2.11 Defaulted Interest.

If the Issuers default in a payment of interest on the Notes, they shall pay the defaulted amounts, plus any interest payable on defaulted amounts pursuant to Section 4.01 hereof, to the persons who are holders on a subsequent special record date. The Issuers shall fix the special record date and payment date in a manner satisfactory to the Trustee and provide the Trustee at least 20 days notice of the proposed amount of default interest to be paid and the special payment date. At least 15 days before the special record date, the Issuers shall mail or cause to be mailed to each holder a notice that states the special record date, the payment date (which shall be not less than five nor more than ten days after the special record date), and the amount to be paid. In lieu of the foregoing procedures, the Issuers may pay defaulted interest in any other lawful manner satisfactory to the Trustee.

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Section 2.12 Deposit of Moneys.

Prior to 10:00 a.m., New York City time, on each Interest Payment Date (other than an Interest Payment Date for which PIK Interest shall be paid), each Redemption Date and the Maturity Date, the Issuers shall have deposited with the Paying Agent in immediately available funds money sufficient to make cash payments, if any, due on such Interest Payment Date, Redemption Date or Maturity Date, as the case may be, in a timely manner which permits the Trustee to remit payment to the holders on such Interest Payment Date or Maturity Date, as the case may be.

Section 2.13 CUSIP Number  

The Issuers in issuing the Notes (including any Notes issued as a result of any Notes not being fungible under applicable federal tax or securities laws) may, but shall not be obligated to, use one or more “CUSIP,” “ISIN” or other similar number(s), and if so, the Trustee shall use the CUSIP, ISIN or other similar number(s) in notices of redemption or exchange as a convenience to holders, provided that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP, ISIN or other similar number(s) printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuers shall promptly inform the Trustee of any change in the CUSIP, ISIN or other similar number(s). The Trustee shall have no responsibility to determine whether or not any Notes are or are not “fungible” under any applicable tax or securities laws or to take any action in respect thereof unless and until the Trustee shall have been furnished by the Company with an Officer’s Certificate stating that any particular Notes are or are not so “fungible.” The Trustee shall have no duty in inquire into any such certificate and may conclusively presume its correctness and shall be protected in relying thereon.

ARTICLE III

REDEMPTION

Section 3.01 Notices to Trustee.

If the Issuers elect to redeem Notes pursuant to paragraph 5 of the Notes, (i) at least 45 days prior to the Redemption Date in the case of a partial redemption, (ii) at least 45 days prior to the Redemption Date in the case of a total redemption or (iii) during such other period as the Trustee may agree to, the Issuers shall notify the Trustee in writing of the Redemption Date, the principal amount of Notes to be redeemed and the redemption price, and deliver to the Trustee an Officer’s Certificate stating that such redemption will comply with the conditions contained in paragraph 5 of the Notes.

Section 3.02 Selection by Trustee of Notes to Be Redeemed.

In the event that fewer than all of the Notes are to be redeemed, the Trustee shall select the Notes to be redeemed on either a pro rata basis or by lot, or such other method as it shall deem fair and equitable. The Trustee shall promptly notify the Issuers of the Notes selected for redemption and, in the case of any Notes selected for partial redemption, the principal amount thereof to be redeemed. The Trustee may select for redemption portions of the principal of Notes that have denominations larger than $1,000. Notes and portions thereof the Trustee selects shall be redeemed in amounts of $1,000 or whole multiples of $1,000 and, if Payment-in-Kind Notes are issued, a minimum of $1.00 and an integral multiple of $1.00 (in aggregate principal amount). For all purposes of this Indenture unless the context otherwise requires, provisions of this Indenture that apply to Notes called for redemption also apply to portions of Notes called for redemption.

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Section 3.03 Notice of Redemption.

At least 30 but not more than 60 days before a Redemption Date, the Issuers shall mail, or cause to be mailed, a notice of redemption by first-class mail to the Trustee and to each holder of Notes to be redeemed at its address as the same appears on the registry books maintained by the Registrar pursuant to Section 2.03 hereof.

The notice shall identify the Notes to be redeemed (including the CUSIP number(s) thereof) and shall state:

(1) the Redemption Date;

(2) the redemption price;

(3)       if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued;

(4) the name and address of the Paying Agent;

(5)       that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(6)       that unless the Issuers default in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

(7)       the subparagraph of the Notes pursuant to which the Notes are being redeemed; and

(8) the aggregate principal amount of Notes that are being redeemed.

At the Issuers’ request (and upon at least five (5) days prior written notice), the Trustee shall give the notice of redemption in the Issuers’ names and at the Issuers’ sole expense.

Section 3.04 Effect of Notice of Redemption.

Once the notice of redemption described in Section 3.03 is mailed, Notes called for redemption become due and payable on the Redemption Date and at the redemption price, including any premium, plus interest accrued to the Redemption Date, if any. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, including any premium, plus interest accrued to the Redemption Date, if any; provided that if the Redemption Date is after a regular interest payment record date and on or prior to the Interest Payment Date, the accrued interest shall be payable to the holder of the redeemed Notes registered on the relevant record date, and provided, further, that if a Redemption Date is a Legal Holiday, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day.

Section 3.05 Deposit of Redemption Price.

On or prior to 10:00 A.M., New York City time, on each Redemption Date, the Issuers shall deposit with the Paying Agent in immediately available funds money sufficient to pay the redemption price of and accrued interest on all Notes to be redeemed on that date other than Notes or portions

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thereof called for redemption on that date which have been delivered by the Issuers to the Trustee for cancellation.

On and after any Redemption Date, if money sufficient to pay the redemption price of and accrued interest on Notes called for redemption shall have been made available in accordance with the preceding paragraph, the Notes called for redemption will cease to accrue or accrete interest and the only right of the holders of such Notes will be to receive payment of the redemption price of and, subject to the first proviso in Section 3.04, accrued and unpaid interest on such Notes to the Redemption Date. If any Note called for redemption shall not be so paid, interest will be paid, from the Redemption Date until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case, at the rate and in the manner provided in the Notes.

Section 3.06 Notes Redeemed in Part.

Upon surrender of a Note that is redeemed in part, the Trustee shall authenticate for a holder a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

ARTICLE IV

COVENANTS

Section 4.01 Payment of Notes.

The Issuers shall pay the principal of and interest on the Notes on the dates and in the manner provided in the Notes and this Indenture. An installment of principal of or interest on the Notes shall be considered paid on the date it is due if the Trustee or any Paying Agent holds on that date money designated for and sufficient to pay the installment. PIK Interest shall be considered paid on the date due, unless interest is otherwise paid in cash, if the Trustee is directed on or prior to such date to issue Payment-in-Kind Notes in an amount equal to the amount of the applicable PIK Interest. Interest will be computed on the basis set forth in the Notes.

The Issuers shall pay interest on overdue principal (including post-petition interest in a proceeding under any Bankruptcy Law), and overdue interest, to the extent lawful, at the rate specified in the Notes.

No provision of this Section 4.01 shall be deemed to impose any duty or obligation on the Trustee to calculate the installment of principal of or interest on the Notes on any Interest Payment Date or to monitor the calculation thereof by the Issuers.

Section 4.02 SEC Reports.

(a)        If and for so long as the Company is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and any Notes are outstanding, the Company shall file with the SEC and provide the Trustee and holders of Notes with such annual reports and such information, documents and other reports as are specified in Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. person subject to such Sections, such information, documents and reports to be so filed and provided at the times specified for the filing of such information, documents and reports under such Sections; provided, however, that (i) the Company shall not be so obligated to file such information, documents and reports with the SEC if the SEC does not permit such filings and (ii) the Company shall not be required to include the separate financial statements of any Guarantor in any such filing.

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(b)       At any time when the Company is not subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act and any Notes are outstanding, the Company will provide to the Trustees and the holders of Notes:

(1)       within 90 days after the end of the Company’s fiscal year, financial statements and a Management’s Discussion and Analysis of Financial Condition and Results of Operations substantially equivalent to that which would be required to be included in an Annual Report on Form 10-K of the Company were the Company subject to an obligation to file such a report under the Exchange Act;

(2)       within 45 days after the end of each of the first three fiscal quarters in each fiscal year of the Company, financial statements and a Management’s Discussion and Analysis of Financial Condition and Results of Operations substantially equivalent to that which would be required to be included in a Quarterly Report on Form 10-Q of the Company were the Company subject to an obligation to file such a report under the Exchange Act; and

(3)       within the time periods required by the SEC for issuers subject to the reporting requirements of Section 13(d) or 15(d) of the Exchange Act, the information that would be required to be filed with the SEC in Current Reports on Form 8-K (other than in respect of Items 1.01, 2.02, 3.01, 3.02, 3.03, 5.02 (in the case of entry into material definitive agreements, management compensation and similar agreements only), 5.03, 5.04, 5.05, 7.01, 8.01 and 9.01 (or any successor items) under Form 8-K) if the Company were subject to such reporting requirements;

provided, however, that the reports set forth in clauses (1), (2) and (3) above shall not be required to: (a) contain any certification required by any such form or the Sarbanes-Oxley Act of 2002, (b) include the separate financial statements of any Guarantor in any such filing or (c) include any exhibit. Additionally, substantially concurrently with the delivery to the Trustee and the holders of the Notes of the reports specified in (1), (2) and (3) above, the Company shall (i) post copies of such reports on its website and (ii) in the case of clauses (1) and (2) above, commencing with the report covering the fiscal quarter ending March 31, 2009, hold a conference call with holders of Notes covering such matters as are reasonably customary for companies with publicly traded debt or equity securities. For the avoidance of doubt, the financial statements required herein may be financial statements of the Parent if the Parent holds no other material assets other than cash and the Capital Stock of the Issuers and equity securities in any Person that Parent does not control and whose financial results are not consolidated with the Parent, including the Common Stock of TerreStar Networks, Inc., and such financial statements are accompanied by an explanation as to the differences between the Parent’s financial statements and the financial statements that would have been provided by the Company.

(c)        The Company shall cause information, documents and reports required to be provided to the Trustee and to the holders to be mailed at the Company’s expense to the Trustee at its address set forth in this Indenture and to the holders at their addresses appearing in the register of Notes maintained by the Registrar.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer’s Certificates).

(d)       For so long as any Notes remain outstanding, the Company shall make available upon request, to any holder, any holder of a beneficial interest in a Note and, upon request of any holder

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or any such holder, any prospective purchaser of a Note or a beneficial interest therein, the information required pursuant to Rule 144A(d)(4) under the Securities Act during any period in which the Company is not subject to Section 13 or 15(d) of the Exchange Act.

Section 4.03 Waiver of Stay, Extension or Usury Laws.

The Issuers and the Guarantors covenant (to the extent that they may lawfully do so) that they will not at any time insist upon, or plead (as a defense or otherwise) or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law which would prohibit or forgive the Issuers or the Guarantors from paying all or any portion of the principal of, premium, if any, and/or interest on the Notes, as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture; and (to the extent that they may lawfully do so) the Issuers and the Guarantors hereby expressly waive all benefit or advantage of any such law, and covenant that they will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

Section 4.04 Compliance Certificate.

(a)        The Company shall deliver to the Trustee, within 120 days after the end of each fiscal year, an Officer’s Certificate stating that a review of the activities of the Company and its Subsidiaries during such fiscal year has been made under the supervision of the signing Officers with a view to determining whether each has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge each has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions hereof and thereof (or, if a Default or Event of Default shall have occurred, describing all of such Defaults or Events of Default of which he or she may have knowledge and what action each is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action each is taking or proposes to take with respect thereto.

(b)       The Company will, so long as any of the Notes are outstanding, deliver to the Trustee, forthwith within 30 days after any event which would constitute a Default or Event of Default, an Officer’s Certificate specifying such Default or Event of Default, its status and what action the Company is taking or proposes to take with respect thereto.

Section 4.05 Taxes.

The Company shall, and shall cause each of the Restricted Subsidiaries to, and the Restricted Entities shall, pay prior to delinquency all material taxes, assessments, and governmental levies except as contested in good faith and by appropriate proceedings.

Section 4.06 Limitation on Indebtedness.

(a)        The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, Incur, directly or indirectly, any Indebtedness; provided, however, that the Issuers and the Guarantors shall be entitled to Incur Indebtedness if, on the date of such Incurrence and after giving effect thereto on a pro forma basis, the Consolidated Leverage Ratio would be less than 6.00 to 1.

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(b)       Notwithstanding the foregoing paragraph (a), the Company and the Restricted Entities shall be entitled to Incur any or all of the following Indebtedness:

(1)       Indebtedness Incurred by the Issuers or any Guarantor under this clause (1) that, after giving effect to any such Incurrence and assuming all amortization of debt discount, accretion of principal and payment of interest in kind over the life of such Indebtedness has occurred at the time of initial Incurrence, does not exceed $250.0 million in principal amount at any one time outstanding; provided that, prior to any Incurrence of Indebtedness under this clause (1), the Company shall have received at least $1.0 billion of Net Cash Proceeds after the Original Issue Date from the issue or sale of Capital Stock of the Company or cash contributed to the capital of the Company (in each case other than proceeds of Disqualified Stock or sales of Capital Stock to the Company or any of its Subsidiaries); provided, further, however, that any Net Cash Proceeds received by the Company or cash contributions to the Company’s capital and used to Incur Indebtedness pursuant to this clause (1) shall be excluded from the calculation of amounts under Section 4.08(a)(3)(B);

(2)       Indebtedness Incurred by the Issuers or any Guarantor in an aggregate principal amount which, when taken together with all other Indebtedness Incurred pursuant to this clause (2) and then outstanding, does not exceed the greater of (a) $500 million and (b) an amount equal to 125% of the Net Cash Proceeds received by the Company since the Original Issue Date from the issue or sale of Capital Stock of the Company or cash contributed to the capital of the Company (in each case other than proceeds of Disqualified Stock or sales of Capital Stock to the Company or any of its Subsidiaries); provided, however, that, any Indebtedness Incurred under this clause (2) shall have a weighted Average Life that is greater than the then remaining weighted Average Life of the Notes; provided further, however, that any Net Cash Proceeds received by the Company or cash contributions to the Company’s capital and used to Incur Indebtedness pursuant to this clause (2) shall be excluded from the calculation of amounts under Section 4.08(a)(3)(B);

(3)       Indebtedness owed to and held by the Company or a Restricted Entity (including intercompany indebtedness); provided, however, that (A) any subsequent issuance or transfer of any Capital Stock which results in any such Restricted Entity ceasing to be a Restricted Entity or any subsequent transfer of such Indebtedness (other than to the Company or a Restricted Entity) shall be deemed, in each case, to constitute the Incurrence of such Indebtedness by the obligor thereon and (B) if the Company or Finance Co. is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Notes and if a Guarantor is an obligor under such Indebtedness or such Indebtedness is owed to a Restricted Entity that is not a Guarantor, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the Guarantee of such Guarantor;

(4)       the Old Notes and Guarantees thereof (including any future guarantees thereof);

(5) Indebtedness outstanding on the Issue Date;

(6)       Indebtedness of a Restricted Entity Incurred and outstanding on or prior to the date on which such Restricted Entity was acquired by the Company or a Restricted Entity (other than Indebtedness Incurred in connection with, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Subsidiary became a Subsidiary or was acquired by the Company); provided, however, that on the date of such acquisition and after giving pro forma effect thereto, the Company

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would have been entitled to Incur at least $1.00 of additional Indebtedness pursuant to paragraph (a) of this Section 4.06;

(7)       Refinancing Indebtedness in respect of Indebtedness Incurred pursuant to paragraph (a) or pursuant to clause (4), (5) or (6) or this clause (7); provided, however, that such Refinancing Indebtedness shall not include Refinancing Indebtedness of the Issuers or a Guarantor that refinances Indebtedness of a Subsidiary that is not a Guarantor or co-issuer of the Notes;

(8)       Hedging Obligations entered into in the ordinary course of business and not for speculative purposes;

(9)       obligations with respect to letters of credit and bank guarantees, including without limitation, letters of credit in respect of workers’ compensation claims, health, disability or other benefits to former employees or their families or property, casualty or liability or self-insurance obligations, performance, bid and surety bonds and completion guarantees provided by the Company or any Restricted Entity in the ordinary course of business;

(10)      Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of its Incurrence;

(11)      Subordinated Obligations Incurred by the Issuers or any of the Guarantors to finance the purchase, lease or improvement of property (real or personal) or equipment that is used or useful in a Related Business (whether through the direct purchase of assets or the Capital Stock of any Person owning such assets) within 180 days of such purchase, lease or improvement, and any Refinancing Indebtedness Incurred to Refinance such Indebtedness, which, when added together with the amount of all other Subordinated Obligations Incurred pursuant to this clause (11) and then outstanding, does not exceed $250 million; provided, however, that any Indebtedness Incurred under this clause (11) shall have a weighted Average Life that is greater than the then remaining weighted Average Life of the Notes and a final maturity date that is later than the date that is 91 days after the Stated Maturity of the Notes;

(12)      Capital Lease Obligations or Purchase Money Indebtedness of the Company or any Guarantor Incurred to finance the lease or purchase of L-Band Spectrum in North America; provided that in the case of Capital Lease Obligations, the rights of the lessor under such Capital Lease Obligations shall be limited to the L-Band Spectrum leased and, in the case of Purchase Money Indebtedness, the lenders of such Purchase Money Indebtedness shall only have recourse to the L-Band Spectrum purchased and shall have no other claim against the Company and the Restricted Entities; provided, further, that the Company shall have received at least $500.0 million of Designated Equity Contributions prior to any Incurrence under this clause (12) and shall not have made a Designated Equity Election;

(13)      Purchase Money Indebtedness and Capital Lease Obligations of the Company or any Guarantor in an aggregate principal amount not in excess of $50 million outstanding at any time;

(14)      Indebtedness arising from agreements of the Company or any of the Restricted Entities providing for indemnification, adjustment of purchase price or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or Capital Stock of a Restricted Entity, provided, however, the maximum aggregate liability in respect of

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all such Indebtedness shall at no time exceed the gross proceeds actually received by the Company and the Restricted Entities in connection with such disposition;

(15)      Indebtedness of the Company or of any of the Restricted Entities in an aggregate principal amount which, when taken together with all other Indebtedness of the Company and the Restricted Entities Incurred pursuant to this clause (15) and then outstanding does not exceed $50 million;

(16)      Guarantees by the Issuers or any Guarantor of Indebtedness of the Issuers or the Guarantors so long as such Indebtedness is otherwise permitted to be incurred hereunder;

(17)      Indebtedness representing the financing of installments of insurance premiums; and

(18)      Indebtedness of the Company and the Guarantors to Boeing Satellite Systems, Inc. (“Boeing”) and its Affiliates incurred to finance the purchase of one or more satellites from Boeing or such Affiliate in an aggregate principal amount not to exceed at any one time $110.0 million.

(c)        Notwithstanding the foregoing, neither the Issuers nor any Guarantor shall be entitled to Incur any Indebtedness (1) senior in right of payment to the Notes or pari passu in right of payment to the Notes, but without limiting the ability to Incur any Indebtedness pursuant to clauses (4), (5), (6), (7) (insofar as the indebtedness being refinanced was senior or pari passu in right of payment to the Notes), (8), (9), (10), (12), (13), (14), (16) (insofar as the indebtedness being Guaranteed was senior or pari passu in right of payment to the Notes, (17) and (18) of paragraph (b) above; or (2) pursuant to the foregoing paragraph (b) if the proceeds thereof are used, directly or indirectly, to Refinance any Subordinated Obligations unless such Indebtedness shall be subordinated to the Notes or the Guarantee of such Guarantor, as applicable, to at least the same extent as such Subordinated Obligations. The foregoing shall not prevent the Issuers from Issuing additional Notes or the Guarantors from guaranteeing such Notes after the Issue Date in accordance with the Securities Purchase Agreement. Additionally, notwithstanding anything to the contrary contained herein, clause (1) of this paragraph shall cease to be of further effect in the event the Notes contemplated to be issued on the Second Closing Date (as such term is defined in the Securities Purchase Agreement) are not issued in accordance with the terms of the Securities Purchase Agreement, except pursuant to a failure by the Parent, the Issuers or their Subsidiaries to act in good faith to satisfy the closing conditions specified in the Securities Purchase Agreement for the First Closing Date or the Second Closing Date.

(d) For purposes of determining compliance with this Section 4.06:

(1)       in the event that an item of Indebtedness (or any portion thereof) meets the criteria of more than one of the types of Indebtedness described above, the Company, in its sole discretion, will classify such item of Indebtedness (or any portion thereof) at the time of Incurrence and will only be required to include the amount and type of such Indebtedness in one of the above clauses;

(2)       the Company will be entitled to divide and classify (and later reclassify) an item of Indebtedness in more than one of the types of Indebtedness described above, including under paragraph (a) above;

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(3)       Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness which is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

(4)       the principal amount of any Disqualified Stock of the Company or Preferred Stock of a Restricted Entity, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof; and

(5)       increases in the amount of Indebtedness outstanding solely as a result of fluctuations in the exchange rate of currencies shall not be deemed to be an Incurrence of Indebtedness for purposes of this covenant.

For purposes of this Section 4.06, all outstanding Indebtedness under the Notes and the Guarantees thereof issued on the Issue Date and the Notes and the Guarantees thereof subsequently issued in accordance with the Securities Purchase Agreement will be deemed to have been Incurred pursuant to clause (2) of paragraph (b) of this Section 4.06.

Section 4.07 Limitation on Issuance or Sale of Capital Stock of Restricted Entities.

The Company:

(a)        shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, sell, lease, transfer or otherwise dispose of any Capital Stock of any Restricted Entity to any Person (other than the Company or a Wholly Owned Subsidiary; provided that Capital Stock owned by the Company or a Guarantor may only be issued or transferred to the Company or another Guarantor), and

(b)       shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, issue any of its Capital Stock (other than, if necessary, shares of its Capital Stock constituting directors’ or other legally required qualifying shares) to any Person (other than to the Company or a Wholly Owned Subsidiary; provided that Capital Stock owned by the Company or a Guarantor may only be issued or transferred to the Company or another Guarantor),

unless:

(1)       immediately after giving effect to such issuance, sale or other disposition, neither the Company nor any of their Subsidiaries own any Capital Stock of such Restricted Entity; or

(2)       such issuance, sale or other disposition is treated as an Asset Disposition and immediately after giving effect to such issuance, sale or other disposition, such Restricted Entity would continue to be a Restricted Entity; or

(3)       immediately after giving effect to such issuance, sale or other disposition, such Restricted Entity would no longer constitute a Restricted Entity and any Investment in such Person remaining after giving effect thereto is treated as a new Investment by the Company and such Investment would be permitted to be made under Section 4.08 if made on the date of such issuance, sale or other disposition.

For purposes of this Section 4.07, the creation of a Lien on any Capital Stock of a Restricted Entity to secure Indebtedness of the Company or any of its Restricted Subsidiaries shall not be

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deemed to be a violation of this Section 4.07; provided, however, that any sale or other disposition by the secured party of such Capital Stock following foreclosure of its Lien shall be subject to this Section 4.07.

Section 4.08 Limitation on Restricted Payments.

(a)        The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, directly or indirectly, make a Restricted Payment if at the time the Company or such Restricted Entity makes such Restricted Payment:

(1) a Default shall have occurred and be continuing (or would result therefrom);

(2)       the Company is not entitled to Incur an additional $1.00 of Indebtedness pursuant to Section 4.06(a) after giving effect, on a pro forma basis, to such Restricted Payment; or

(3)       the aggregate amount of such Restricted Payment and all other Restricted Payments since the Original Issue Date would exceed the sum of (without duplication):

(A)       100% of Consolidated Operating Cash Flow accrued during the period (treated as one accounting period) from the beginning of the first fiscal quarter during which the Company generates positive Consolidated Operating Cash Flow following the Original Issue Date to the end of the most recent fiscal quarter for which internal financial statements are available less 1.4 times the Consolidated Interest Expense for the same period (if such amount in this clause (A) is a negative amount, minus the amount by which such amount is less than zero); plus

(B)       100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Original Issue Date (other than an issuance or sale to a Subsidiary of the Company or to the Canadian Joint Ventures and other than an issuance or sale to an employee stock ownership plan) and 100% of any cash capital contribution received by the Company subsequent to the Original Issue Date; provided, however, that there shall be excluded from the calculation of Net Cash Proceeds and cash capital contributions under this clause (B) any Net Cash Proceeds received by the Company from the issue or sale of its Capital Stock or cash capital contributions received by the Company and which is deemed to be used to Incur Indebtedness pursuant to Section 4.06(b)(1) or (b)(2) until and to the extent any such Indebtedness Incurred pursuant to Section 4.06(b)(1) or (b)(2) in respect of such Net Cash Proceeds or cash capital contributions has been redesignated to another subclause of Section 4.06(b) or Section 4.06(a); provided, further, however, that Designated Equity Contributions shall not be permitted to be included in this clause (3)(B) unless the Company has made a Designated Equity Election, in which case the amount by which such Designated Equity Contributions exceeds the net present value of all payments to be made under Capital Lease Obligations and Purchase Money Indebtedness Incurred pursuant to Section 4.06(b)(12) shall be permitted to be included in this clause (3)(B); plus

(C)       the amount by which Indebtedness of the Company or any Restricted Entity is reduced on the Company’s balance sheet upon the conversion or exchange subsequent to the Original Issue Date of any Indebtedness convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company (less the amount of any cash, or the fair value of any other property, distributed by the Company upon such conversion or exchange); plus

(D)       an amount equal to the sum of (i) the net reduction in the Investments (other than Permitted Investments) made by the Company or any Restricted Entity in any Person resulting from repurchases, repayments or redemptions of such Investments by such Person, proceeds real

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ized on the sale of such Investment and proceeds representing the return of capital (excluding dividends and distributions to the extent included in Consolidated Operating Cash Flow), in each case received by the Company or any Restricted Entity, and (ii) to the extent such Person is an Unrestricted Entity, the portion (proportionate to the Company’s equity interest in such Subsidiary) of the fair market value of the net assets of such Unrestricted Entity at the time such Unrestricted Entity is designated a Restricted Entity; provided, however, that the foregoing sum shall not exceed, in the case of any such Person or Unrestricted Entity, the amount of Investments (excluding Permitted Investments) previously made (and treated as a Restricted Payment) by the Company or any Restricted Entity in such Person or Unrestricted Entity.

(b) The preceding provisions shall not prohibit:

(1)       any Restricted Payment in an amount equal to the Net Cash Proceeds of the substantially concurrent sale of, or made by exchange for, Capital Stock of the Company (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary of the Company or a Canadian Joint Venture or an employee stock ownership plan) or a substantially concurrent cash capital contribution received by the Company; provided, however, that (A) such Restricted Payment shall be excluded from subsequent calculations of the amount of Restricted Payments and (B) the Net Cash Proceeds from such sale or such cash capital contribution (to the extent so used for such Restricted Payment) shall be excluded from the calculation of amounts under clause (3)(B) of paragraph (a) above and shall be excluded from the calculation of amounts under Section 4.06(b)(2);

(2)       any purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of Subordinated Obligations made by exchange for, or out of the proceeds of the substantially concurrent Incurrence of, Subordinated Obligations that are permitted to be Incurred pursuant to Section 4.06 that have, at the time of Incurrence, a weighted Average Life that is greater than the then remaining weighted Average Life of the Notes and a Stated Maturity that is later than the date that is 91 days after the Stated Maturity of the Notes; provided, however, that such purchase, repurchase, redemption, defeasance or other acquisition or retirement for value shall be excluded from subsequent calculations of the amount of Restricted Payments;

(3)       dividends paid within 60 days after the date of declaration thereof if at such date of declaration such dividend would have complied with this covenant; provided, however, that such dividend shall be included in subsequent calculations of the amount of Restricted Payments;

(4)       so long as no Default has occurred and is continuing, the purchase, redemption or other acquisition of shares of Capital Stock of the Company or any of its Subsidiaries from employees, former employees, consultants, directors or former directors of the Company or any of its Subsidiaries (or permitted transferees of such employees, former employees, former consultants, directors or former directors), pursuant to the terms of the agreements (including employment agreements) or plans (or amendments thereto) under which such individuals purchase or sell or are granted the option to purchase or sell, shares of such Capital Stock; provided, however, that the aggregate amount of such Restricted Payments (excluding amounts representing cancellation of Indebtedness) shall not exceed $2.5 million in the aggregate since the Original Issue Date; provided further, however, that such repurchases and other acquisitions shall be excluded from subsequent calculations of the amount of Restricted Payments;

(5)       the declaration or payment of dividends on Disqualified Stock issued in compliance with Section 4.06; provided, however, that at the time of declaration of such dividend, no Default shall have occurred and be continuing (or result therefrom); provided further, however,

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that such dividends shall be excluded from subsequent calculations of the amount of Restricted Payments;

(6)       repurchases of Capital Stock deemed to occur upon exercise of options to purchase limited partnership interests, stock options, warrants or other convertible securities if such Capital Stock represents a portion of the exercise price thereof; provided, however, that such Restricted Payments shall be excluded from subsequent calculations of the amount of Restricted Payments;

(7)       cash payments not to exceed $2.5 million since the Original Issue Date in lieu of the issuance of fractional shares in connection with a reverse stock split of the Capital Stock of the Company or the exercise of warrants, options, or other securities convertible into or exchangeable for Capital Stock of the Company; provided, however, that any such cash payment shall not be for the purpose of evading the limitation of the covenant described under this subheading; provided further, however, that such payments shall be excluded in subsequent calculations of the amount of Restricted Payments;

(8)       in the event of a Change of Control or to the extent permitted by Section 4.10, and if no Default shall have occurred and be continuing, the payment, purchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations, in each case, at a purchase price not greater than 101% of the principal amount of such Subordinated Obligations, plus any accrued and unpaid interest thereon; provided, however, that prior to such payment, purchase, redemption, defeasance or other acquisition or retirement, the Issuers (or a third party to the extent permitted by this Indenture) have made a Change of Control Offer, or sale of assets offer, with respect to the Notes and has repurchased all Notes validly tendered and not withdrawn in connection with such Change of Control Offer, or sale of assets offer; provided further, however, that such payments, purchases, redemptions, defeasances or other acquisitions or retirements shall be excluded from subsequent calculations of the amount of Restricted Payments;

(9)       payments of intercompany subordinated Indebtedness, the Incurrence of which was permitted under Section 4.06(b)(3); provided, however, that such payments shall be excluded from subsequent calculations of the amount of Restricted Payments;

(10)      other Restricted Payments in an amount not to exceed $5.0 million in the aggregate since the Original Issue Date; provided, however, that no Default has occurred and is continuing or would otherwise result therefrom; provided further, however, that such payments shall be excluded from subsequent calculations of the amount of Restricted Payments;

(11)      the payment of dividends, or distributions or amounts by the Company to its direct parents or to the limited partners or the General Partner in amounts required to pay the tax obligations of any such direct parent, limited partners or the General Partner that are solely attributable to the income of the Company and its Subsidiaries by virtue of the Company being a pass-through entity for Federal, state or foreign income tax purposes; provided, however, that (a) the amount of dividends or distributions paid pursuant to this clause (11) to enable any of the Company’s direct parents, limited partners or the General Partner to pay Federal, state or foreign income taxes at any time will not exceed the amount of such Federal, state or foreign income taxes actually owing by any such direct parent or the General Partner or the Company’s limited partners at such time for the respective period (excluding any tax liability or tax benefit of any such direct parent or the General Partner or the Company’s limited partners not attributable to the Company or its Subsidiaries) (provided that the Company may make periodic payments based on an estimate of such tax liability with an annual reconciliation at the end of each tax year) and

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(b) any refunds received by or on behalf of, or any overpayment based on the annual reconciliation to, any of the Company’s direct parents, limited partners or the General Partner attributable to the Company and its Subsidiaries shall promptly be returned by any such direct parent or the General Partner or the Company’s limited partners to the Company; and provided further, however, that such payments shall be excluded from subsequent calculations of the amount of Restricted Payments;

(12)      the dividend or distribution of all of the shares of SkyTerra International, LLC to the equity holders of the Company or the designation of SkyTerra International, LLC as an Unrestricted Entity; provided that all Investments in SkyTerra International, LLC made since the Original Issue Date and all payments made under the Boeing Agreement on behalf of any satellite to be transferred or assigned to SkyTerra International, LLC shall have either been reimbursed in cash in full to the Company or be deemed to be a permanent Investment by the Company in SkyTerra International, LLC (provided that such Investment is otherwise permitted by this Indenture); provided, however, that no Default has occurred and is continuing or would otherwise result therefrom; and provided further, however, that such dividend or distribution shall be excluded from subsequent calculations of the amount of Restricted Payments;

(13)      the payment of dividends or distributions by the Company to Parent or the making of loans by the Company to Parent for Parent to pay fees and expenses related to (a) Parent’s corporate existence and expenses of Parent as a public company, and (b) general corporate overhead expense of Parent and customary compensation payable to officers, employees and directors of Parent in the case of (b) to the extent such fees and expenses relate to the ownership of the Company; provided, however, that amounts paid under this clause (13) shall not exceed $2.5 million during any calendar year, provided, further, however, that no Default has occurred and is continuing or would otherwise result therefrom; provided further, however, that such payments shall be excluded from subsequent calculations of the amount of Restricted Payments;

(14)      the payment of costs and expenses incurred by the General Partner on behalf of the Company or the Restricted Entities in the ordinary course of business and administrative and corporate fees and expenses of the General Partner in the ordinary course of business not to exceed in the aggregate under this clause (14) $1.0 million per year; provided further, however, that such payments shall be excluded from subsequent calculations of the amount of Restricted Payments; and

(15)      the distribution, as a dividend or otherwise, of shares of Capital Stock of, or Indebtedness owed to, the Company or a Restricted Entity by, an Unrestricted Entity.

The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Company or such Restricted Entity, as the case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount and any non-cash Restricted Payment shall be determined conclusively by the Board of Directors acting in good faith.

Section 4.09 Limitation on Liens.

The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, directly or indirectly, Incur or permit to exist any Lien of any nature whatsoever on any of its properties (including Capital Stock of a Subsidiary), whether owned at the Issue Date or thereafter acquired, securing any Indebtedness, other than Permitted Liens, unless:

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(1)       in the case of Liens securing Subordinated Obligations of the Company or a Guarantor, the Notes are or such Guarantor’s Guarantee is, as the case may be, secured by a Lien on such property that is senior in priority to such Liens; and

(2)       in all other cases, the Notes are or such Guarantor’s Guarantee is, as the case may be, equally and ratably secured by a Lien on such property.

Section 4.10 Limitation on Sale of Assets and Subsidiary Stock.

(a)        The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, directly or indirectly, consummate any Asset Disposition unless:

(1)       the Company or such Restricted Entity receives consideration at the time of such Asset Disposition at least equal to the fair market value (including as to the value of all non-cash consideration), as determined in good faith by the Board of Directors, of the shares and assets subject to such Asset Disposition;

(2)       at least 75% of the consideration thereof received by the Company or such Restricted Entity is in the form of cash, Temporary Cash Investments or Designated Noncash Consideration; provided, however, that the amount of any Designated Noncash Consideration received by the Company or any Restricted Entity in such Asset Disposition having an aggregate fair market value, taken together with all other Designated Noncash Consideration received pursuant to this clause (2) at the time of determination, shall not exceed an amount equal to the greater of (x) $25 million and (y) 2.5% of Consolidated Total Assets at the time of the receipt of such Designated Noncash Consideration, with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value; provided further that the amount of:

(a)        any liabilities of the Company or any Restricted Entity of the Issuer (other than Subordinated Obligations) that are assumed by the transferee of any such assets,

(b)       any notes or other obligations or other securities or assets received by the Company or such Restricted Entity of the Company from such transferee that are converted by the Company or such Restricted Entity of the Company into cash within 180 days of the receipt thereof (to the extent of the cash received), and

(c)        any Indebtedness of a Restricted Entity (other than Subordinated Obligations) that is no longer a Restricted Entity as a result of the Asset Disposition

shall be deemed to be cash for the purposes of this provision;

(3)       an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company or such Restricted Entity, as the case may be:

(A)       first, to the extent the Company or such Restricted Entity elects, to acquire Additional Assets or improve Additional Assets within one year from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; provided, however, that the Company shall have an additional six months to apply such Net Available Cash pursuant to this clause (A) if it shall have entered into a binding acquisition or purchase contract in respect of Additional Assets prior to the expiration of such one-year period; provided further that if the Net Available

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Cash from any Asset Disposition of an FCC License, Industry Canada License or any similar telecommunications license or any Capital Stock of the FCC License Subsidiary, SkyTerra Canada Inc. or any other entity holding a telecommunications license is in excess of $10.0 million, the Net Available Cash from such Asset Disposition may not be applied as provided in this clause (A) and shall be immediately applied as required in clause (b) below; and

(B)       second, to the extent of the balance of such Net Available Cash after application in accordance with clause (A) above:

(1)       to the extent required by the terms of the 14% Senior Secured Notes or any other secured Indebtedness of either Issuer or any Restricted Entity, make an offer to the holders of the 14% Senior Secured Notes and the holders of such other secured Indebtedness that requires such an offer to purchase, prepay or repay the 14% Senior Secured Notes and such other secured Indebtedness pursuant to the terms thereof; and

(2)       to the extent that such Net Available Cash is remaining after application in accordance with Section 4.10(a)(3)(B)(1) above, to make an offer to holders of the Notes (and to holders of other Pari Passu Indebtedness that requires such an offer) to purchase Notes (and such other Pari Passu Indebtedness that require such an offer) pursuant to and subject to the conditions contained in this Indenture; provided, that such offer to holders of Notes is for no less than the Noteholders’ pro rata amount of such Net Available Cash (based on the then outstanding principal amount of the Notes outstanding and the principal amount (or accreted value if issued with discount) of such other Pari Passu Indebtedness);

provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to clause (3)(B) above, the Issuers or such Restricted Entity shall permanently retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased; provided, however, that the prior proviso shall not affect the ability of the Company of the Restricted Entities to incur Indebtedness under Section 4.06(b).

Pending application of Net Available Cash pursuant to this covenant, such Net Available Cash shall be invested in Temporary Cash Investments or applied to temporarily reduce revolving credit indebtedness, unless required to do otherwise pursuant to the terms of the 14% Senior Secured Notes or any other outstanding secured Indebtedness of either Issuer or Restricted Entity.

(b)       In the event of an Asset Disposition that requires the Issuers to make an offer to purchase the Notes (and other Indebtedness) pursuant to Section 4.10(a)(3)(B)(2) the Issuers shall purchase Notes tendered pursuant to an offer by the Issuers for the Notes (and such other Indebtedness) (the “Offer”) at a purchase price of 100% of their then outstanding principal amount (such other Indebtedness at a purchase price of 100% of its principal amount or, in the event such other Indebtedness was issued with significant original issue discount, 100% of the accreted value thereof) without premium, plus accrued but unpaid interest (or, in respect of such other Indebtedness, such lesser price, if any, as may be provided for by the terms of such Indebtedness) in accordance with the procedures set forth in Section 4.10(c). If the aggregate purchase price of the Notes (and such other Indebtedness) tendered exceeds the Net Available Cash allotted to their purchase, the Trustee will select the Notes and such other Indebtedness to be purchased on a pro rata basis but in round denominations, which in the case of the Notes will be denominations of $1,000 principal amount or multiples thereof. The Company shall not be required to make such an Offer to purchase Notes (and other Indebtedness) pursuant to Section 4.10(a)(3)(B)(2) if the Net Available Cash available therefrom is less than $15.0 million (which lesser amount shall be carried

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forward for purposes of determining whether such an Offer is required with respect to the Net Available Cash from any subsequent Asset Disposition). To the extent that the aggregate amount of Notes and other Indebtedness tendered is less than the Net Available Cash required to be used to make an Offer to the holders of Notes and such Indebtedness, the Company may use such excess Net Available Cash for any other purpose not prohibited by this Indenture.

(c)        Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer pursuant to Section 4.10(a)(3)(B)(2), the Company shall deliver to the Trustee and send, by first-class mail to each holder, a written notice stating that the holder may elect to have its Notes purchased by the Issuers either in whole or in part (subject to prorating as described in Section 4.10(b) in the event the Offer is oversubscribed) in integral multiples of $1,000 principal amount, at the applicable purchase price set forth in Section 4.10(b). The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the “Purchase Date”) and shall contain such information concerning the business of the Issuers which the Issuers in good faith believe will enable such holders to make an informed decision and all instructions and materials necessary to tender Notes pursuant to the Offer, together with the information contained in clause (3).

(1)       Not later than the date upon which written notice of an Offer is delivered to the Trustee as provided below, the Company shall deliver to the Trustee an Officer’s Certificate as to (A) the amount of the Offer (the “Offer Amount”), including information as to any Pari Passu Indebtedness included in the Offer, (B) the allocation of the Net Available Cash from the Asset Dispositions pursuant to which such Offer is being made and (C) the compliance of such allocation with the provisions of Section 4.10(a) and (b). On such date, the Company shall irrevocably deposit with the Trustee or with a Paying Agent in Temporary Cash Investments, maturing on the last day prior to the Purchase Date or on the Purchase Date if funds are immediately available by open of business, an amount equal to the Offer Amount to be held for payment in accordance with the provisions of this Section. If the Offer includes other Pari Passu Indebtedness, the portion of the deposit described in the preceding sentence that is applicable to such other Pari Passu Indebtedness may be made with any other paying agent pursuant to arrangements satisfactory to the Trustee. Upon the expiration of the period for which the Offer remains open (the “Offer Period”), the Company shall deliver to the Trustee for cancellation the Notes or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment (or cause the delivery of payment) to each tendering holder in the amount of the purchase price. In the event that the aggregate purchase price of the Notes delivered by the Company to the Trustee is less than the Offer Amount applicable to the Notes, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period for application in accordance with this Section 4.10.

(2)       Holders electing to have Notes purchased shall be required to surrender the Notes, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the Purchase Date. Holders shall be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the Purchase Date, a facsimile transmission or letter setting forth the name of the holder, the principal amount of the Notes which were delivered for purchase by the holder and a statement that such holder is withdrawing his election to have such Notes purchased. Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered.

(3)       At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officer’s Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section. Notes

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shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering holder.

(d)       The Company will not, and will not permit any Restricted Subsidiary to, and each Restricted Entity will not, engage in any Asset Swaps, unless:

(1)       at the time of entering into such Asset Swap and immediately after giving effect to such Asset Swap, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(2)       the Related Business Assets that are the subject of such Asset Swap have a substantially comparable fair market value;

(3)       in the event such Asset Swap involves the transfer by the Company or any Restricted Entity of assets having an aggregate fair market value, as determined by the Board of Directors in good faith, in excess of $10 million, the terms of such Asset Swap have been approved by a majority of the members of the Board of Directors; and

(4) any cash received shall be applied in accordance with Section 4.10(a)(3).

(e)        To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.10, the Issuers will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations hereunder and this Section 4.10 by virtue of its compliance with such securities laws or regulations.

Section 4.11 Limitation on Transactions with Affiliates.

(a)        The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, enter into or permit to exist any transaction (including the purchase, sale, lease or exchange of any property, employee compensation arrangements or the rendering of any service) with, or for the benefit of, any Affiliate of the Company (an “Affiliate Transaction”) involving (together with any related Affiliate Transactions) aggregate consideration in excess of $10 million, unless:

(1)       the terms of the Affiliate Transaction are not materially less favorable taken as a whole to the Company or such Restricted Entity than those that could be obtained at the time of the Affiliate Transaction in arm’s-length dealings with a Person who is not an Affiliate; and

(2)       if such Affiliate Transaction (together with any related Affiliate Transactions) involves an amount in excess of $15.0 million, the terms of the Affiliate Transaction are set forth in writing and a majority of the non-employee directors of the General Partner disinterested with respect to such Affiliate Transaction have determined in good faith that the criteria set forth in clause (1) are satisfied and have approved the relevant Affiliate Transaction.

(b) The provisions of the preceding paragraph (a) shall not prohibit:

(1)       Restricted Payments, in each case permitted to be made pursuant to Section 4.08, and Permitted Investments;

(2)       any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors;

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(3)       loans or advances to employees in the ordinary course of business in accordance with the past practices of the Company or the Restricted Entities, but in any event not to exceed $2.5 million in the aggregate outstanding at any one time;

(4)       the payment of reasonable and customary fees to, and indemnity provided on behalf of, officers, directors, employees or consultants of the Company or the Restricted Entities;

(5) transactions between or among the Company and the Restricted Entities;

(6)       the issuance or sale of any Capital Stock (other than Disqualified Stock) of the Company and the granting and the performance of registration rights;

(7)       any agreement as in effect on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time (so long as any amendment, modification, supplement, extension or renewal is not materially less favorable, taken as a whole, to the Company and the Restricted Entities) and the transactions evidenced or contemplated thereby or as these agreements may be extended or renewed in accordance with this clause (7);

(8)       transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are fair to the Company and the Restricted Entities, in the reasonable determination of the Board of Directors or the senior management of the Company, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party;

(9)       the entering into agreements with equity holders of the Company including, without limitation, the entering into and performance of shareholder agreements and registration rights agreements and amendments to existing similar agreements;

(10)      Affiliate Transactions with a Person solely in its capacity as a holder of debt or equity securities where such Person is treated no more favorably in such transaction than any other security holders who are not Affiliates; and

(11)      Transactions pursuant to, contemplated by or in connection with (i) the Coop Agreement, (ii) the MCSA, and/or (iii) the Securities Purchase Agreement.

Section 4.12 Future Guarantors.

If the Company or any of the Restricted Entities acquires or creates another domestic Subsidiary after the date of this Indenture, then that newly acquired or created domestic Subsidiary shall become a Guarantor and execute a supplemental indenture within 10 Business Days of the date on which it was acquired or created; provided that all Subsidiaries that are Immaterial Subsidiaries or that have properly been designated as Unrestricted Entities under this Indenture shall not become Guarantors for so long as they continue to constitute Immaterial Subsidiaries or Unrestricted Entities, as the case may be. Additionally, the Company shall deliver to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such supplemental Indenture complies with the applicable provisions of this Indenture, that all conditions precedent in this Indenture relating to such transaction have been satisfied and that such supplemental Indenture is enforceable, subject to customary qualifications.

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Section 4.13 Limitation on Restrictions on Distributions from Restricted Subsidiaries and Restricted Entities.

The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Entity to (a) pay dividends or make any other distributions on its Capital Stock to the Company or a Restricted Entity or pay any Indebtedness owed to the Company or any Restricted Entity, (b) make any loans or advances to the Company or any Restricted Entity or (c) transfer any of its property or assets to the Company or any Restricted Entity, except:

(1) with respect to clauses (a), (b) and (c),

(A)       any encumbrance or restriction pursuant to an agreement in effect at or entered into on the Issue Date;

(B)       any encumbrance or restriction with respect to a Restricted Entity pursuant to an agreement relating to any Capital Stock or Indebtedness Incurred by such Restricted Entity on or prior to the date on which such Restricted Entity was acquired by the Company (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Entity became a Restricted Entity or was acquired by the Company) and outstanding on such date;

(C)       any encumbrance or restriction pursuant to an agreement effecting a Refinancing of Indebtedness Incurred pursuant to an agreement referred to in clause (A) or (B) of clause (1) of this Section 4.13 or this clause (C) or contained in any amendment supplement, restatement, renewal or modification to an agreement referred to in clause (A) or (B) of clause (1) of this Section 4.13 or this clause (C); provided, however, that the encumbrances and restrictions with respect to such Restricted Entity contained in any such refinancing agreement or amendment are not materially more restrictive, taken as a whole, to the Company and the Restricted Entities than encumbrances and restrictions with respect to such Restricted Entity contained in such predecessor agreements on the Issue Date or the date such Restricted Entity became a Restricted Entity, whichever is applicable;

(D)       any encumbrance or restriction with respect to a Restricted Entity (or any of its property or assets) imposed pursuant to an agreement entered into for the sale or disposition of all or substantially all the Capital Stock or assets of such Restricted Entity (or the property or assets that are subject to such restriction) pending the closing of such sale or disposition;

(E)       any encumbrance or restriction consisting of net worth provisions in leases and other agreements entered into by the Company or any Restricted Entity in the ordinary course of business;

(F)       any encumbrance or restriction consisting of customary provisions in joint venture agreements relating to joint ventures that are not Restricted Entities and other similar agreements entered into in the ordinary course of business;

(G)       customary non-assignment provisions in contracts, licenses and leases entered into in the ordinary course of business; and

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(H)       restrictions contained in any agreement related to property acquired after the Issue Date and which is not applicable to any other property and which were not put in place in contemplation of the acquisition of such property;

(2) with respect to clause (c) only,

(A)       any encumbrance or restriction consisting of customary nonassignment provisions in leases governing leasehold interests to the extent such provisions restrict the assignment or transfer of the lease or the property leased thereunder; and

(B)       Liens securing Indebtedness that are permitted hereunder that limit the right of the debtor to dispose of the assets subject to such Lien.

Section 4.14 Payments for Consent.

The Company shall not, and shall not permit any Restricted Subsidiary or Affiliate to, and each Restricted Entity and Affiliate shall not, directly or indirectly, pay or cause to be paid any consideration, whether by way of cash, securities, interest, fee or otherwise, to any holder of any Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid or agreed to be paid to all holders of the Notes which so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement.

Section 4.15 Corporate Existence.

Subject to Article 5 hereof, the Company and each Restricted Entity shall do or cause to be done all things necessary to preserve and keep in full force and effect (i) its existence in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company and each Restricted Entity and the rights (charter and statutory), licenses and franchises of the Company and its Restricted Entities; provided, however, that, except as otherwise required by this Indenture, the Company and each Restricted Entity shall not be required to preserve any such right, license or franchise, or the corporate, partnership or other existence of any of its Restricted Entities, if the Board of Directors shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Restricted Entities, taken as a whole. Notwithstanding anything to the contrary contained in this Section 4.15 the Company or any Restricted Entity may change its partnership, corporate or other existence to another form of existence; provided, that for so long as the Company or any successor or obligor under the Notes is a limited liability company, partnership or trust there shall be a co-issuer of the Notes that is a Wholly Owned Subsidiary of the Company and that is a corporation organized and existing under the laws of the United States or any state thereof or the District of Columbia.

Section 4.16 Change of Control.

(a)        Upon the occurrence of a Change of Control, each holder shall have the right to require that the Issuers repurchase such holder’s Notes at a purchase price in cash equal to 101% of the then outstanding principal amount thereof on the date of purchase plus accrued and unpaid interest, if any, to (but excluding) the date of purchase (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), in accordance with the terms contemplated in this Section 4.16.

(b)       Within 30 days following any Change of Control, the Company shall mail a notice to each holder with a copy to the Trustee (the “Change of Control Offer”) stating:

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(1)       that a Change of Control has occurred and that such holder has the right to require us to purchase such holder’s Notes at a purchase price in cash equal to 101% of the then outstanding principal amount thereof on the date of purchase, plus accrued and unpaid interest, if any, to (but excluding) the date of purchase (subject to the right of holders of record on the relevant record date to receive interest on the relevant interest payment date);

(2) the circumstances and relevant facts regarding such Change of Control;

(3)       the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and

(4)       the instructions, as determined by the Company, consistent with this Section 4.16 that a holder must follow in order to have its Notes purchased.

(c)        Holders electing to have Notes purchased will be required to surrender the Notes, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than one Business Day prior to the purchase date, a telegram, facsimile transmission or letter setting forth the name of the holder, the principal amount of the Notes which was delivered for purchase by the holder and a statement that such holder is withdrawing his election to have such Notes purchased.

(d)       On the purchase date, all Notes purchased by the Issuers under this Section shall be delivered by the Company to the Trustee for cancellation, and the Issuers shall pay the purchase price specified in paragraph (a) plus accrued and unpaid interest, if any, to the holders entitled thereto.

(e)        Notwithstanding the foregoing, the Issuers shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.16 applicable to a Change of Control Offer made by us and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer. In addition, the Issuers shall not be required to make a Change of Control Offer following a Change of Control if the Issuers have exercised their right to redeem all, but not less than all, of the Notes.

(f)        The Issuers will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of this Section 4.16, the Issuers will comply with the applicable securities laws and regulations and will be deemed not to have breached its obligations under this Section 4.16 by virtue of such compliance.

Section 4.17 Maintenance of Office or Agency.

The Issuers shall maintain an office or agency where Notes may be surrendered for registration of transfer or exchange or for presentation for payment and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Issuers shall give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Issuers shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee as set forth in Section 11.01.

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The Issuers may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuers shall give prompt written notice to the Trustee of such designation or rescission and of any change in the location of any such other office or agency.

The Issuers hereby initially designate the Corporate Trust Office of the Trustee set forth in Section 11.01 as such office of the Company.

Section 4.18 Maintenance of Insurance.

(a)        The Company shall obtain, and shall cause the Restricted Subsidiaries to obtain, and the Restricted Entities shall obtain, prior to the launch of each satellite and shall maintain launch insurance with respect to each satellite launch covering the period from the launch to 180 days following the launch of each satellite on such terms (including coverage period, exclusions, limitations on coverage, co-insurance, deductibles and coverage amount) as is customary in the industry for similar persons at the time of such launch. In the event that the Company constructs a spare satellite (“ground spare”), the amount of coverage may be reduced if it is in the best interest of the Company, but in no event to an amount less than the cost to launch and insure the launch for the ground spare.

(b)       The Company shall, and shall cause the Restricted Subsidiaries to, and the Restricted Entities shall, procure and maintain Full In-orbit Insurance, with respect to each satellite they own (other than satellites that were in orbit as of the Original Issue Date) unless at the time of securing such Full In-Orbit Insurance there has occurred and is continuing a material adverse change in market conditions for the obtaining of Full In-orbit Insurance since the Issue Date such that it would be commercially unreasonable for the Company and the Restricted Entities to maintain such Full In-orbit Insurance. Such Full In-Orbit Insurance shall be on such terms (including exclusions, limitations on coverage, coinsurance, deductibles and coverage amount) as is customary in the industry for similar persons at the time of procurement; provided, however, that with the exception of the initial procurement of Full In-Orbit Insurance for a satellite that experienced a loss that either occurred during the launch insurance coverage period or was otherwise covered by launch insurance, in no event shall the coverage amount be less than the net book value of the satellite, assuming straight-line depreciation over the life of the satellite, as adjusted for impairment. In the event that the expiration and non-renewal of Full In-Orbit Insurance for such a satellite resulting from a claim of loss under such policy causes a failure to comply with the proviso to the immediately preceding sentence the Company shall be deemed to be in compliance with the proviso to the immediately preceding sentence for the 120 days immediately following such expiration or non-renewal, provided that the Company procures such Full In-Orbit Insurance as necessary to comply with the preceding proviso within 120 day period.

Insurance policies obtained or renewed after the Issue Date required by the foregoing paragraphs (a) and (b) shall:

(1)       contain no exclusions other than exclusions as may be customary for policies of such type and such other exclusions or limitations of coverage as may be applicable to a substantial portion of satellites of the same model or relating to systemic failures or anomalies as are then customary in the satellite insurance market; and

(2) provide coverage for all risks of loss and damage to the satellite.

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Section 4.19 Limitation on Business Activities of Finance Co.

Finance Co. shall not hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than the issuance of its Capital Stock to the Company or any Wholly Owned Subsidiary, the Incurrence of Indebtedness as a co-obligor or guarantor of Indebtedness Incurred by the Company, including the Notes and the Old Notes, that is permitted to be Incurred by the Company under Section 4.06 and activities incidental thereto. For so long as the Company or any successor or obligor under the Notes is a limited liability company, partnership or trust there shall be a co-issuer of the Notes that is a Wholly Owned Subsidiary of the Company and that is a corporation organized and existing under the laws of the United States or any state thereof or the District of Columbia.

Section 4.20 Certain Matters in Connection with Licenses.

The Company shall maintain direct ownership of all of the Capital Stock of the FCC License Subsidiary. All FCC Licenses in existence on the Issue Date or acquired after the Issue Date shall be held by the FCC License Subsidiary except as required by law or administrative action; provided that SkyTerra International LLC is permitted to own the FCC License with respect to the operation of a satellite in Latin America that it owned as of the Original Issue Date. The Company shall not transfer or dispose of any Capital Stock it directly or indirectly owns in SkyTerra (Canada) Inc. All Industry Canada Licenses in existence on the Issue Date or acquired after the Issue Date shall be held by SkyTerra Corp. or SkyTerra (Canada) Inc., as the case may be, except as required by law or administrative action.

Section 4.21 Limitation on Line of Business.

The Company shall not, and shall not permit any Restricted Subsidiary to, and each Restricted Entity shall not, engage in any business other than a Related Business.

Section 4.22 Calculation of Original Issue Discount.

The Company shall file with the Trustee promptly at the end of each calendar year (i) a written notice specifying the amount of original issue discount (including daily rates and accrual periods) accrued on outstanding Notes as of the end of such year and (ii) such other specific information relating to such original issue discount as may be required to be provided to the Trustee or to the holders of the Notes pursuant to the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.

Section 4.23 Reimbursement Offer.

(a)        In the event of a Reimbursement Event, the Issuers shall make an offer to holders of the Notes (a “Reimbursement Offer”) to purchase the Notes tendered pursuant to the Reimbursement Offer at a purchase price of 100% of their then outstanding principal amount plus accrued and unpaid interest to the date of the purchase (collectively, the “Reimbursement Purchase Price”), in accordance with the procedures set forth in Section 4.23(b). If the aggregate Reimbursement Purchase Price of the Notes tendered exceeds the Net Available Reimbursement Proceeds, the Trustee will select the Notes to be purchased on a pro rata basis, in minimum denominations of $1,000 principal amount and multiples of $1,000 principal amount in excess thereof, in such principal amounts such that the aggregate Reimbursement Purchase Price of such Notes to be purchased is the maximum aggregate Reimbursement Purchase Price that can be obtained without exceeding the Net Available Reimbursement Proceeds applicable to such Reimbursement Offer. To the extent that the aggregate Reimbursement Purchase Price of Notes required to be purchased pursuant to a Reimbursement Offer is less than the Net Available Reimbursement Proceeds applicable to a Reimbursement Offer, the Trustee shall remit any Net Available Reimbursement

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Proceeds in excess of such aggregate Reimbursement Purchase Price to the Company, and the Company may use such excess Net Available Reimbursement Proceeds for any other purpose not prohibited by this Indenture.

(b)       Promptly, and in any event within 10 days after the Company becomes obligated to make a Reimbursement Offer pursuant to Section 4.23, the Company shall deliver to the Trustee and send, by first-class mail to each holder, a written notice stating that the holder may elect to have its Notes purchased by the Issuers either in whole or in part (subject to prorating as described in Section 4.23(a) in the event the Reimbursement Offer is oversubscribed) in integral multiples of $1,000 principal amount, at the applicable Reimbursement Purchase Price set forth in Section 4.23(a). The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the “Reimbursement Purchase Date”) and shall contain all instructions and materials necessary to tender Notes pursuant to the Reimbursement Offer, together with the information contained in clause (3).

(1)       Not later than the date upon which written notice of a Reimbursement Offer is delivered to the Trustee as provided below, the Company shall deliver to the Trustee an Officer’s Certificate as to the amount of the Reimbursement Offer (the “Reimbursement Offer Amount”). On the Reimbursement Purchase Date, the Company shall irrevocably deposit with the Trustee or with a Paying Agent in Temporary Cash Investments, maturing on the last day prior to the Reimbursement Purchase Date or on the Reimbursement Purchase Date if funds are immediately available by open of business, an amount equal to the Reimbursement Offer Amount to be held for payment in accordance with the provisions of this Section. Upon the expiration of the period for which the Reimbursement Offer remains open (the “Reimbursement Offer Period”), the Company shall deliver to the Trustee for cancellation the Notes or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Reimbursement Purchase Date, mail or deliver payment (or cause the delivery of payment) to each tendering holder in the amount of the Reimbursement Purchase Price. In the event that the aggregate Reimbursement Purchase Price of the Notes delivered by the Company to the Trustee is less than the Reimbursement Offer Amount applicable to the Notes, the Trustee shall deliver the excess to the Company immediately after the expiration of the Reimbursement Offer Period for application in accordance with this Section 4.23.

(2)       Holders electing to have Notes purchased shall be required to surrender the Notes, with an appropriate form duly completed, to the Company at the address specified in the notice at least three Business Days prior to the Reimbursement Purchase Date. Holders shall be entitled to withdraw their election if the Company receives not later than one Business Day prior to the Reimbursement Purchase Date, a facsimile transmission or a letter setting forth the name of the holder, the principal amount of the Notes which were delivered for purchase by the holder and a statement that such holder is withdrawing his election to have such Notes purchased. Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered.

(3)       At the time the Company delivers Notes to the Trustee which are to be accepted for purchase, the Company shall also deliver an Officer’s Certificate stating that such Notes are to be accepted by the Company pursuant to and in accordance with the terms of this Section. Notes shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering holder.

(c)        To the extent that the provisions of any securities laws or regulations conflict with provisions of this Section 4.23, the Issuers will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations hereunder and this Section 4.23 by virtue

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of its compliance with such securities laws or regulations. Notwithstanding the foregoing, the Issuers shall not be required to make a Reimbursement Offer following a Reimbursement Event if a third party makes the Reimbursement Offer in a manner, at the times and otherwise in compliance with this Section 4.23.

ARTICLE V

SUCCESSOR CORPORATION

Section 5.01 Limitation on Consolidation, Merger and Sale of Property.

(a)        The Company shall not consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all of its assets to, any Person, unless:

(1)       the resulting, surviving or transferee Person (the “Successor Company”) shall be a Person organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and the Successor Company (if not the Company) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of the Company under the Notes and this Indenture;

(2)       immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of the Successor Company or any Subsidiary as a result of such transaction as having been Incurred by such Successor Company or such Subsidiary at the time of such transaction), no Default shall have occurred and be continuing;

(3)       immediately after giving pro forma effect to such transaction, the Successor Company would have a Consolidated Leverage Ratio equal to or better than immediately prior to the transaction; and

(4)       the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture;

provided, however, that clause (3) will not be applicable to (A) a Restricted Entity consolidating with, merging into or transferring all or part of its properties and assets to the Company (so long as no Capital Stock of the Company is distributed to any Person) or (B) the Company merging with an Affiliate of the Company solely for the purpose and with the sole effect of reincorporating the Company in another jurisdiction.

For purposes of this Section 5.01, the sale, lease, conveyance, assignment, transfer or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Company or Canadian Joint Ventures, which properties and assets, if held by the Company instead of such Subsidiaries or Canadian Joint Ventures, would constitute all or substantially all of the properties and assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company.

The Successor Company will be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture, and the

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predecessor Company, except in the case of a lease, shall be released from the obligation to pay the principal of and interest on the Notes.

(b)       No Guarantor shall consolidate with or merge with or into, or convey, transfer or lease, in one transaction or a series of transactions, directly or indirectly, all or substantially all its assets to, any Person, unless:

(1)       the Person formed by, resulting from or surviving any such consolidation or merger (if other than such Guarantor):

(a)        expressly assumes, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, all the obligations of such Guarantor under its Guarantee and this Indenture; and

(b)       delivers to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indenture (if any) comply with this Indenture; and

(2)       immediately after giving pro forma effect to such transaction (and treating any Indebtedness which becomes an obligation of such Person as a result of such transaction as having been Incurred by such Person at the time of such transaction), no Default shall have occurred and be continuing. The provisions of this Section 5.01(b) shall not apply to the merger of any Guarantors with or into each other or with or into the Company, provided, however, that such transaction shall otherwise comply with this Indenture.

Upon any consolidation or merger, or any transfer of all or substantially all of the assets of any Guarantor in accordance with Section 5.01(b), the successor Person formed by such consolidation or into which the such Guarantor is merged or to which such transfer (other than by way of lease) is made shall succeed to, and be substituted for, and may exercise every right of, such Guarantor under this Indenture with the same effect as if such successor Person had been named as such Guarantor herein, and thereafter the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Notes.

Section 5.02 Substitution of Company.

The Company may substitute the Parent in respect of all of the Company’s obligations under the Notes and this Indenture on an unsecured and unsubordinated basis if:

(1)       the Parent shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all the obligations of the Company under the Notes and this Indenture;

(2)       immediately after giving pro forma effect to such substitution (and assuming the covenants of this Indenture would apply to the Parent on the same basis that they apply to the Company immediately prior to such substitution and treating all Indebtedness of the Parent and its Subsidiaries as Incurred at the time of substitution), no Default shall have occurred and be continuing;

(3)       immediately after giving pro forma effect to such substitution, the Parent would have a Consolidated Leverage Ratio equal to or better than that of the Company immediately prior to such substitution;

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(4) the Parent shall comply with Section 4.12; and

(5)       the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such substitution and such supplemental indenture comply with this Indenture and stating that this Indenture and the Notes are the legal valid and binding obligation of the Parent and enforceable against the Parent in accordance with their terms.

In the event the Parent is substituted for the Company pursuant to the terms hereof, the Parent will be the successor to the Company and shall succeed to, and be substituted for, and may exercise every right and power of, and will be subject to all of the obligations and covenants of, the Company and the General Partner under this Indenture, all obligations of the Guarantors under this Indenture and the Guarantees shall remain unchanged and the Company shall be deemed a Restricted Subsidiary of the Parent and shall immediately become a Guarantor hereunder.

ARTICLE VI

DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

Each of the following is an Event of Default (each, an “Event of Default”):

(1)       a default in the payment of any interest on any Note when the same becomes due and the default continues for a period of 30 days;

(2)       a default in the payment of any principal of, or premium, if any, on the Notes when the same becomes due at its Stated Maturity, upon any optional redemption, upon required repurchase, upon declaration of acceleration or otherwise;

(3)       the Issuers or any Guarantor defaults in the observation or performance of its obligations under the provisions of Article 5 above;

(4)       the Issuers or any Guarantor defaults in the observance or performance of any other covenant or agreement in the Notes or this Indenture (other than a default that is the subject of the foregoing clauses (1), (2) or (3)) for 60 days after the Company receives written notice thereof specifying the default from the Trustee, or the Company and the Trustee receive written notice thereof specifying the default from the holders of not less than 25% of the aggregate principal amount of the Notes then outstanding;

(5)       Indebtedness of the Issuers or any Restricted Entity is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default and the total amount of such Indebtedness unpaid or accelerated exceeds $10 million;

(6)       any final, nonappealable judgment or decree for the payment of money which, when taken together with all other final, nonappealable judgments or decrees for the payment of money, causes the aggregate amount of such judgments or decrees entered against the Issuers or any Restricted Entity to exceed $10 million (net of any amounts with respect to which a reputable and creditworthy insurance company has acknowledged liability), remains outstanding for a period of 60 consecutive days following such judgment and is not discharged, waived or stayed;

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(7)       either Issuer or any Significant Subsidiary or any Canadian Joint Venture that would constitute a Significant Subsidiary if such entity was a Subsidiary of the Company pursuant to or within the meaning of any Bankruptcy Law:

(A) commences a voluntary case,

(B) consents to the entry of an order for relief against it in an involuntary case,

(C)       consents to the appointment of a Custodian of it or for all or substantially all of its property,

(D) makes a general assignment for the benefit of its creditors, or

(E) generally is not paying its debts as they become due;

(8)       a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(A)       is for relief against either Issuer or any Significant Subsidiary or any Canadian Joint Venture that would constitute a Significant Subsidiary if such entity was a Subsidiary of the Company in an involuntary case or comparable involuntary bankruptcy proceeding,

(B)       appoints a Custodian of either Issuer or any Significant Subsidiary or any Canadian Joint Venture that would constitute a Significant Subsidiary if such entity was a Subsidiary of the Company or for all or substantially all of the property of either Issuer or any Significant Subsidiary or any Canadian Joint Venture that would constitute a Significant Subsidiary if such entity was a Subsidiary of the Company, or

(C)       orders the liquidation of either Issuer or any Significant Subsidiary or any Canadian Joint Venture that would constitute a Significant Subsidiary if such entity was a Subsidiary of the Company,

and the order or decree remains unstayed and in effect for 60 days; or

(9)       any Guarantee of a Guarantor that is a Significant Subsidiary or Canadian Joint Venture that would constitute a Significant Subsidiary if such entity was a Subsidiary of the Company ceases to be in full force and effect or becomes unenforceable or invalid or is declared null and void (other than in accordance with the terms of such Guarantee) or any Guarantor denies or disaffirms its obligations under its Guarantee.

The term “Bankruptcy Law” means Title 11, U.S. Code, the Bankruptcy and Insolvency Act (Canada), Companies Creditors’ Arrangements Act (Canada) and the Winding-Up and Restructuring Act (Canada) or any similar Federal, state or non-U.S. law or statute for the supervision, administration or relief of debtors, including, without limitation, bankruptcy or insolvency laws. The term “Custodian” means any receiver, trustee, assignee, liquidator or similar official under any Bankruptcy Law.

Section 6.02 Acceleration.

If an Event of Default occurs and is continuing, the Trustee, by notice to the Issuers, or the holders of not less than 25% in aggregate principal amount of the Notes, by written notice to the Issuers and the Trustee, may declare to be immediately due and payable the outstanding principal amount of

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all the Notes then outstanding, plus premium, if any, and accrued but unpaid interest to the date of acceleration, in which event such amounts shall become immediately due and payable. In case an Event of Default specified in Section 6.01(7) or (8) with respect to either Issuer occurs, such then outstanding principal amount, premium, if any, and interest with respect to all of the Notes shall be due and payable immediately without any declaration or other act on the part of the Trustee or the holders of the Notes. After any such acceleration but before a judgment or decree based on acceleration is obtained by the Trustee, the holders of a majority in aggregate principal amount of outstanding Notes by notice to the Trustee may rescind and cancel such acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of accelerated then outstanding principal amount, premium, if any, or interest that has become due solely because of the acceleration, have been cured or waived, (ii) to the extent the payment of such interest is lawful, interest (at the same rate specified in the Notes) on overdue installments of interest and overdue then outstanding principal amount, premium, if any, or interest, which has become due otherwise than by such declaration of acceleration, has been paid, (iii) the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee its expenses, disbursements and advances, (iv) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (v) in the event of the cure or waiver of a Default or Event of Default described in Section 6.01(7) or (8), the Trustee has received an Officer’s Certificate and an Opinion of Counsel that such Default or Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

Section 6.03 Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy by proceeding at law or in equity to collect the payment of then outstanding principal amount or premium, if any, and interest on the Notes or to enforce the performance of any provision of the Notes or this Indenture and may take any necessary action requested of it as Trustee to settle, compromise, adjust or otherwise conclude any proceedings to which it is a party.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any holder of Notes in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative.

Section 6.04 Waiver of Past Defaults and Events of Default.

Subject to Sections 6.02, 6.07 and 8.02 hereof, the holders of a majority in aggregate principal amount of the Notes then outstanding have the right to waive any existing Default or Event of Default or compliance with any provision of this Indenture or the Notes. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereto.

Section 6.05 Control by Majority.

The holders of a majority in aggregate principal amount of the Notes then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee by this Indenture. The Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines may be unduly prejudicial to the rights of another holder not taking part in such direction, and the Trustee shall have the right to decline to follow any such direction if the Trustee, being advised by counsel, determines

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that the action so directed may not lawfully be taken or if the Trustee in good faith shall, by a Responsible Officer, determine that the proceedings so directed may involve it in personal liability; provided that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction.

Section 6.06 Limitation on Suits.

Subject to Section 6.07 below, a holder may not institute any proceeding with respect to this Indenture, or for the appointment of a receiver or trustee, or pursue any remedy with respect to this Indenture or the Notes unless:

(1)       such holder has previously given to the Trustee written notice of a continuing Event of Default;

(2)       the registered holders of at least 25% in aggregate principal amount of the Notes then outstanding, have made written request and offered indemnity to the Trustee reasonably satisfactory to the Trustee to institute such proceeding as trustee; and

(3)       the Trustee shall not have received from the registered holders of a majority in aggregate principal amount of the Notes then outstanding a direction inconsistent with such request and shall have failed to institute such proceeding within 60 days.

A holder may not use this Indenture to prejudice the rights of another holder or to obtain a preference or priority over another holder.

Section 6.07 Rights of Holders to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any holder of a Note to receive payment of principal of or premium, if any, and interest on the Note on or after the respective due dates expressed in the Note, or to bring suit for the enforcement of any such payment on or after such respective dates, is absolute and unconditional and shall not be impaired or affected without the consent of the holder.

Section 6.08 Collection Suit by Trustee.

If an Event of Default in payment of principal, premium or interest specified in Section 6.01(l) or (2) hereof occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Issuers or the Guarantors (or any other obligor on the Notes) for the whole amount of unpaid principal, premium and accrued interest remaining unpaid, together with interest on overdue principal, premium and, to the extent that payment of such interest is lawful, interest on overdue installments of interest, in each case at the rate then borne by the Notes, and such further amounts as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the holders allowed in any judicial proceedings relative to the Issuers or the Guarantors (or any other obligor upon the Notes), its creditors or its property and the Trustee shall be entitled and empowered to collect and re

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ceive any monies or other property payable or deliverable on any such claims and to distribute the same after deduction of its charges and expenses to the extent that any such charges and expenses are not paid out of the estate in any such proceedings and each custodian in any such judicial proceeding is hereby authorized by each holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any holder thereof, or to authorize the Trustee to vote in respect of the claim of any holder in any such proceeding.

Section 6.10 Priorities.

Any money collected by the Trustee pursuant to this Article 6, or, after an Event of Default, any money or other property distributable in respect of the Issuers’ or Guarantors’ obligations under this Indenture, shall be paid in the following order:

(1) FIRST: to the Trustee for all amounts due under Section 7.07 hereof;

(2)       SECOND: to Noteholders for due and unpaid amounts of principal, premium, if any, and interest on the Notes, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes held by each holder;

(3) THIRD: to the Company or as a court of competent jurisdiction may direct.

The Trustee may fix a record date and payment date for any payment to holders pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a holder pursuant to Section 6.07 hereof or a suit by holders of more than 10% in aggregate principal amount of the Notes then outstanding.

ARTICLE VII

TRUSTEE

Section 7.01 Duties of Trustee.

(a)        If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise under the same circumstances in the conduct of such person’s own affairs.

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(b) Except during the continuance of an Event of Default:

(1)       The Trustee need perform those duties and only those duties that are specifically set forth in this Indenture and no others shall be inferred or implied, nor shall any implied covenants or obligations be read into this Indenture against the Trustee.

(2)       In the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to it and conforming to the applicable requirements of this Indenture but, in the case of any such certificates or opinions which by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts, or the statements or opinions stated therein).

(c)        The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1)       This paragraph does not limit the effect of paragraphs (b) and (d) of this Section 7.01.

(2)       The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that such Person was negligent in ascertaining the pertinent facts.

(3)       The Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.02 or 6.05 hereof.

(d)       Notwithstanding anything to the contrary contained herein, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity satisfactory to it against such risk or liability is not reasonably assured to it.

(e)        The Trustee may refuse to perform any duty or exercise any right or power unless it receives indemnity reasonably satisfactory to it against any loss, liability, expense or fee.

(f)        The Trustee shall not be liable for interest on, or for the investment of, any money or other property received by it except as the Trustee may agree in writing with the Company, Finance Co. or any Guarantor. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

(g)       No provision of this Indenture shall be deemed to impose any duty or obligation on the Trustee to perform any act or acts, receive or obtain any interest in property or exercise any interest in property, or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts, to receive or obtain any such interest in property or to exercise any such right, power, duty or obligation; and no permissive or discretionary power or authority available to the Trustee shall be construed to be a duty.

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(h)       Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section.

Section 7.02 Rights of Trustee.

Subject to Section 7.01 hereof:

(1)       The Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or any other document reasonably believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document.

(2)       Any request or direction of the Issuers mentioned herein shall be sufficiently evidenced by a Company Request or an Officer’s Certificate and any resolution of the Board of Directors of the applicable Issuer or any committee thereof (or committee of officers or other representatives of the Issuers, to the extent any such committee or committees have been so authorized by the Board of Directors) may be sufficiently evidenced by a certified copy thereof.

(3)       Before the Trustee acts or refrains from acting, it may require an Officer’s Certificate or an Opinion of Counsel, or both, which shall conform to the provisions of Section 11.04 hereof. The Trustee shall be protected and shall not be liable for any action it takes or omits to take in good faith in reliance on such certificate or opinion.

(4)       The Trustee may act through agents and counsel and shall not be responsible for the misconduct or negligence of any agent or counsel appointed by it with due care.

(5)       The Trustee shall not be liable for any action it takes, suffers or omits to take in good faith which it reasonably believes to be authorized or within its discretion, rights or powers.

(6)       The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection from liability in respect of any action taken, omitted or suffered by the Trustee hereunder in good faith and in reliance thereon.

(7)       The Trustee shall be under no obligation to exercise any of the rights or powers vested in the Trustee by this Indenture at the request or direction of any of the holders of Notes pursuant to this Indenture, unless such holders shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by the Trustee in compliance with such request or direction.

(8)       The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, appraisal, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company, and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation.

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(9)       The Trustee shall not be deemed to have notice or be charged with knowledge of any Default or Event of Default unless a Responsible Officer of the Trustee has received at the Corporate Trust Office of the Trustee from an Issuer, any Guarantor or any Noteholder written notice of such Default or Event of Default, and such notice references the Notes and this Indenture.

(10)      The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, the Trustee’s right to be indemnified, are extended to, and shall be enforceable by, the Trustee in such capacity hereunder, and each agent (including each Agent), custodian and other Person employed to act hereunder.

(11)      The Trustee may request that the Company deliver an Officer’s Certificate setting forth the names of individuals and titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officer’s Certificate may be signed by any person authorized to sign an Officer’s Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded.

(12)      In no event shall the Trustee be responsible or liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.

Section 7.03 Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may make loans to, accept deposits from, perform services for or otherwise deal with any Issuer or any Guarantor, or any Affiliates thereof, with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. The Trustee, however, shall be subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

The Trustee does not make any representation as to the validity or adequacy of this Indenture or the Notes, and the Trustee shall not be accountable for the Issuers’ use of the proceeds from the sale of Notes or any money paid to the Issuers pursuant to the terms of this Indenture or be responsible for any statement in the Notes other than its certificate of authentication.

Section 7.05 Notice of Defaults.

If a Default occurs and is continuing and if it is known to a Responsible Officer of the Trustee, the Trustee shall mail to each holder notice of the Default within 60 days after the Trustee first has knowledge of such Default. Except in the case of a Default in payment of principal of, or premium, if any, or interest on any Note, the Trustee may withhold the notice if and so long as the executive committee or any trust committee of the board of directors of the Trustee and/or its Responsible Officers in good faith determine(s) that withholding the notice is in the interests of the holders.

Section 7.06 Reports by Trustee to Holders.

If required by TIA § 313(a), within 60 days after May 15 of any year, commencing the May 15 following the date of this Indenture, the Trustee shall mail to each holder a brief report dated as

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of such May 15 that complies with TIA § 313(a). The Trustee also shall comply with TIA § 313(b)(2). The Trustee shall also transmit by mail all reports as required by TIA § 313 (c) and TIA § 313(d).

Reports pursuant to this Section 7.06 shall be transmitted by mail:

(a)        to all registered holders of Notes, as the names and addresses of such holders appear on the Registrar’s books; and

(b)       to such holder of Notes as have, within the two years preceding such transmission, filed their names and addresses with the Trustee for that purpose.

A copy of each report at the time of its mailing to holders shall be filed with the SEC to the extent the SEC will accept such filing.

Section 7.07 Compensation and Indemnity.

The Company and the Guarantors shall pay to the Trustee from time to time such compensation as shall be agreed in writing between the Company and the Trustee for its services hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company and the Guarantors shall also reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by the Trustee in connection with its duties under this Indenture, including the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

The Company and the Guarantors, jointly and severally, shall indemnify the Trustee and any predecessor Trustee and their respective officers, employees, directors and agents (each an “Indemnified Party”) for, and hold them harmless against, any and all loss, damage, claim, liability or reasonable expense, including taxes (other than taxes based on the income of the Trustee) incurred, arising out of or in connection with this Indenture, including in connection with the acceptance or administration of the trusts and the performance of their duties under this Indenture, including the reasonable costs and expenses of defending themselves against any claim or liability in connection with enforcement of this provision or the exercise or performance of any of their powers or duties hereunder or thereunder (including, without limitation, settlement costs). The Trustee shall notify the Company and the Guarantors in writing promptly of any claim asserted against the Trustee of which a Responsible Officer has received a written notice for which it may seek indemnity. However, the failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder except to the extent the Company is prejudiced thereby.

Notwithstanding the foregoing, the Company and the Guarantors need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by the Trustee through its own negligence or willful misconduct.

As security for the performance of the obligations of the Company and the Guarantors under this Section 7.07, the Trustee shall have a lien prior to the Notes upon all property and funds held or collected by the Trustee as such, except funds paid by the Issuer or any Guarantor and held in trust to pay principal of and interest on particular Notes for the benefit of the holders of particular Notes under this Indenture. The Trustee shall be entitled to file a proof of claim in any bankruptcy proceeding as a secured creditor for any indemnification costs and for its reasonable compensation, fees and expenses under this Section 7.07.

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In addition and without prejudice to the rights provided to the Trustee under any of the provisions of this Indenture, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 6.01(7) or Section 6.01(8), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable Bankruptcy Law or comparable expenses in the case of an Event of Default specified in Section 6.01(8).

The Company’s obligations under this Section 7.07 and the lien referred to in this Section 7.07 shall survive the resignation or removal of the Trustee, the satisfaction and discharge of this Indenture and/or the termination of this Indenture for any reason.

“Trustee” for purposes of this Section 7.07 shall include any co-trustee, separate trustee, and any predecessor Trustee and the Trustee in each of its capacities hereunder and to each agent, custodian and other Person employed to act hereunder; provided, however, that the negligence, bad faith or willful misconduct of any Trustee, co-trustee, separate trustee, or any such agent, custodian or other Person hereunder shall not affect the rights of any other Trustee or any such other agent, custodian or other Person hereunder.

Section 7.08 Replacement of Trustee.

The Trustee may resign by so notifying the Company and the Guarantors in writing. The holders of a majority in principal amount of the outstanding Notes may remove the Trustee by notifying the removed Trustee in writing and may appoint a successor Trustee with the Company’s written consent, which consent shall not be unreasonably withheld. The Company may remove the Trustee at its election if:

(1) the Trustee fails to comply with Section 7.10 hereof;

(2) the Trustee is adjudged bankrupt or insolvent;

(3) a receiver or other public officer takes charge of the Trustee or its property;

(4) the Trustee otherwise becomes incapable of acting; or

(5)       a successor corporation becomes successor Trustee pursuant to Section 7.09 below.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee.

If a successor Trustee does not take office within 30 days after such retiring Trustee resigns or is removed, the retiring Trustee (at the expense of the Company), the Company or the holders of a majority in principal amount of the outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10 hereof, any holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately following such delivery, the retiring Trustee shall, subject to its rights, including its lien, under Section 7.07 hereof and payment of its charges hereunder, transfer all

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property held by it as Trustee to its successor, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each holder. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the lien and the Company’s obligations under Section 7.07 hereof shall continue for the benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Consolidation, Merger or Conversion.

If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets to, another Person, subject to Section 7.10 hereof, the successor corporation without any further act shall be the successor Trustee.

Section 7.10 Eligibility; Disqualification.

This Indenture shall always have a Trustee that satisfies the requirements of TIA § 310(a)(1) and (2) in every respect. The Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition. The Trustee shall comply with TIA § 310(b), including the provision in § 310(b)(1).

If the Trustee has or shall acquire a conflicting interest within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee shall eliminate such interest within 90 days, apply to the SEC for permission to continue as trustee or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Indenture. To the extent permitted by such Act, the Trustee shall not be deemed to have a conflicting interest by virtue of being a trustee under this Indenture or under any other indenture or indentures under which other securities, or certificates of interest or participation in other securities, of the Issuers or any Guarantor are outstanding. Nothing herein shall prevent the Trustee from filing with the SEC the application referred to in the second to last paragraph of Section 310(b) of the Trust Indenture Act.

Section 7.11 Preferential Collection of Claims Against Company.

The Trustee shall comply with TIA § 311(a), excluding any creditor relationship listed in TIA § 311 (b). A Trustee who has resigned or been removed shall be subject to TIA § 311(a) to the extent indicated therein.

Section 7.12 Paying Agents.

The Company shall cause each Paying Agent other than the Trustee to execute and deliver to it and the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section 7.12:

(A)       that it will hold all sums held by it as agent for the payment of principal of, premium, if any, or interest on, the Notes (whether such sums have been paid to it by the Company or by any obligor on the Notes) in trust for the benefit of holders of the Notes or the Trustee;

(B)       that it will at any time during the continuance of any Event of Default, upon written request from the Trustee, deliver to the Trustee all sums so held in trust by it together with a full accounting thereof; and

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(C)       that it will give the Trustee written notice within three (3) Business Days of any failure of the Company (or by any obligor on the Notes) in the payment of any installment of the principal of, premium, if any, or interest on, the Notes when the same shall be due and payable.

ARTICLE VIII

AMENDMENTS, SUPPLEMENTS AND WAIVERS

Section 8.01 Without Consent of Holders.

The Company, Finance Co. and the Guarantors, when authorized by a Board Resolution of each of them and delivered to the Trustee, and the Trustee may amend or supplement this Indenture or the Notes or take any of the actions below without notice to or consent of any holder:

(1)       to cure any ambiguity, manifest error, omission, defect, mistake or inconsistency or, in the case of any provision or covenant herein (or any portion thereof) that is identical to the indenture, dated as of March 30, 2006, to conform this Indenture to the “Description of Notes” section in the Offering Memorandum, dated March 26, 2006, of the Issuers relating to the offering of the 14% Senior Secured Notes; (with such changes to reflect the fact that the Notes are unsecured, and to reflect the potential issuance of the Payment-in-Kind Notes).

(2)       to provide for the assumption by a successor corporation of the obligations of the Issuers or any Guarantor under this Indenture;

(3)       to provide for uncertificated Notes in addition to or in place of certificated Notes (provided that the uncertificated Notes are issued in registered form for purposes of Section 163(f) of the Code, or in a manner such that the uncertificated Notes are described in Section 163(f)(2)(B) of the Code);

(4)       to add Guarantees with respect to the Notes, including any subsidiary guarantees;

(5)       to add to the covenants of the Company or any of the Restricted Entities for the benefit of the holders of the Notes or to surrender any right or power conferred upon the Company or any of the Restricted Entities;

(6)       to make any change that does not materially adversely affect the rights, taken as a whole, of any holder of the Notes;

(7)       to comply with any requirement of the SEC in connection with the qualification of this Indenture under the Trust Indenture Act and to provide for a successor Trustee;

(8)       to make any amendment to the provisions of this Indenture relating to the transfer, exchange and legending of Notes; provided, however, that (a) compliance with this Indenture as so amended would not result in Notes being transferred in violation of the Securities Act or any other applicable securities law and (b) such amendment does not materially and adversely affect the rights of holders to transfer Notes;

(9)       to confirm and evidence the release, termination or discharge of any Guarantee or Lien with respect to or securing the Notes when such release, termination or discharge is provided for under this Indenture and to release a Guarantor from its obligations under its Guarantee or this Indenture in accordance with the applicable provisions of this Indenture; or

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(10)      to make any amendments to the provisions of this Indenture relating to the issuance of the Notes in the form of Definitive Notes and/or in the form of Global Notes or such other amendments as may be necessary to register the Notes in the name of the Depository or its successor or nominee.

Section 8.02 With Consent of Holders.

Subject to Section 6.04, the Company, Finance Co., the Trustee and the Guarantors, with the consent of the registered holders of a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a tender offer or exchange offer for the Notes), may amend this Indenture and may waive any past default or compliance with any provisions. Without the consent of each holder, however, an amendment, supplement or waiver, including a waiver pursuant to Section 6.04 may not:

(1) reduce the amount of Notes whose holders must consent to an amendment;

(2) reduce the rate of or extend the time for payment of interest on any Note;

(3) reduce the principal of or change the Stated Maturity of any Note;

(4)       reduce the amount payable upon the redemption of any Note or make earlier the time at which any Note may be redeemed under Article 3 hereto or paragraph 5 of the Notes;

(5) make any Note payable in money other than that stated in the Note;

(6)       impair the right of any holder of the Notes to receive payment of principal of and interest on such holder’s Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such holder’s Notes;

(7)       make any change in the amendment provisions which require each holder’s consent or in the waiver provisions;

(8)       make any change in the ranking or priority of any Note that would adversely affect the Noteholders; or

(9)       release any Guarantor from its Guarantee that is not otherwise permitted by this Indenture.

After an amendment, supplement or waiver under this Section 8.02 or Section 8.01 becomes effective, the Company shall mail to the holders notice briefly describing the amendment, supplement or waiver; provided, however, the failure to give such notice to all holders of the Notes, or any defect therein, will not impair or affect the validity of the amendment, supplement or waiver.

Upon the request of the Company, accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the receipt by the Trustee of evidence reasonably satisfactory to the Trustee of the consent of the holders as aforesaid and upon receipt by the Trustee of the documents described above or in Section 8.05 hereof, the Trustee shall join with the Issuers and the Guarantors in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee’s own rights, duties or immunities under this Indenture, in which case the Trustee may in its discretion, but shall not be obligated to, enter into such supplemental indenture.

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The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Persons entitled to consent to any indenture supplemental hereto. If a record date is fixed, the holders on such record date, or their duly designated proxies, and only such Persons shall be entitled to consent to such supplemental indenture, whether or not such holders remain holders after such record date; provided, that unless such consent shall have become effective by virtue of the requisite percentage having been obtained prior to the date which is 90 days after such record date, any such consent previously given shall automatically and without further action by any holder be canceled and of no further effect.

It shall not be necessary for the consent of the holders under this Section 8.02 to approve the particular form of any proposed amendment, supplement or waiver, but it shall be sufficient if such consent approves the substance thereof.

Section 8.03 Revocation and Effect of Consents.

Until an amendment, supplement, waiver or other action becomes effective, a consent to it by a holder of a Note is a continuing consent conclusive and binding upon such holder and every subsequent holder of the same Note or portion thereof, and of any Note issued upon the transfer thereof or in exchange therefor or in place thereof, even if notation of the consent is not made on any such Note. Any such holder or subsequent holder, however, may revoke the consent as to its Note or portion of a Note, if the Trustee receives the notice of revocation, before the date the amendment, supplement, waiver or other action becomes effective.

Subject to the approval requirements of Section 8.02, after an amendment, supplement, waiver or other action becomes effective, it shall bind every holder. In the case of any amendment, supplement or waiver specified in clauses (1) through (9) of the first paragraph of Section 8.02, the amendment, supplement, waiver or other action shall bind each holder of a Note who has consented to it and every subsequent holder of a Note or portion of a Note that evidences the same debt as the consenting holder’s Note.

Section 8.04 Notation on or Exchange of Notes.

If an amendment, supplement, or waiver changes the terms of a Note, the Trustee may request the holder of the Note to deliver it to the Trustee. In such case, the Trustee shall place an appropriate notation on the Note about the changed terms and return it to the holder. Alternatively, if the Company or the Trustee so determines, the Issuers in exchange for the Note shall issue and the Trustee shall authenticate a new security that reflects the changed terms. Failure to make the appropriate notation or issue a new Note shall not affect the validity and effect of such amendment, supplement or waiver.

Section 8.05 Trustee to Sign Amendments, etc.

The Trustee shall sign any amendment, supplement or waiver authorized pursuant to this Article 8 if the amendment, supplement or waiver does not affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, but need not, sign it. In signing or refusing to sign such amendment, supplement or waiver the Trustee shall be provided with and, subject to Section 7.01 hereof, shall be fully protected in relying upon an Officer’s Certificate and an Opinion of Counsel stating that such amendment, supplement or waiver is authorized or permitted by this Indenture. Neither Issuer nor any Guarantor may sign an amendment or supplement until the Board of Directors, the Board of Directors of Finance Co. or the Board of Directors or Board of Managers of such Guarantor, as appropriate, approves it.

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ARTICLE IX

DISCHARGE OF INDENTURE; DEFEASANCE

Section 9.01 Discharge of Indenture.

The Indenture will be discharged and will cease to be of further effect (except as to rights of registration of transfer or exchange of Notes which shall survive until all Notes have been canceled) as to all outstanding Notes when either

(i)        all Notes that have been authenticated and delivered (except lost, stolen or destroyed Notes which have been replaced or paid and any such Notes for the payment of which money has been deposited in trust or segregated and held in trust by the Issuers and thereafter repaid to the Issuers or discharged from this trust) have been delivered to the Trustee for cancellation, or

(ii) the following conditions are met:

(A)       all Notes not delivered to the Trustee for cancellation otherwise (i) have become due and payable, (ii) will become due and payable, or may be called for redemption, within one year or (iii) have been called for redemption pursuant to paragraph 5 of the Notes and, in any case, the Issuers have irrevocably deposited or caused to be deposited with the Trustee as trust funds, in trust solely for the benefit of the holders of outstanding Notes, U.S. legal tender, U.S. Government Obligations or a combination thereof, in such amounts as will be sufficient (without consideration of any reinvestment of interest) to pay and discharge the entire Debt (including all principal and accrued interest) on any Notes not theretofore delivered to the Trustee for cancellation,

(B) the Issuers have paid all sums payable with respect to the Notes,

(C)       the Issuers have delivered irrevocable instructions to the Trustee to apply the deposited money toward the payment of the Notes or on the date of redemption, as the case may be, and

(D)       the Company has delivered an Officer’s Certificate and an Opinion of Counsel to the Trustee stating that the conditions to satisfaction and discharge of this Indenture set forth above have been complied with.

After such delivery the Trustee upon request shall acknowledge in writing the discharge of the Issuers’ and the Guarantors’ obligations under the Notes, the Guarantees and this Indenture except for those surviving obligations specified below.

Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Issuers in Sections 7.07, 9.05 and 9.06 hereof shall survive such satisfaction and discharge.

Section 9.02 Legal Defeasance.

The Issuers may at their option, by Board Resolution delivered to the Trustee, be discharged from their obligations with respect to the Notes and the Guarantors discharged from their obligations under the Guarantees on the date the conditions set forth in Section 9.04 below are satisfied (hereinafter, “Legal Defeasance”). For this purpose, such Legal Defeasance means that the Issuers shall be

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deemed to have paid and discharged the entire indebtedness represented by the Notes and to have satisfied all its other obligations under such Notes and this Indenture insofar as such Notes are concerned (and the Trustee, at the expense of the Issuers, shall, subject to Section 9.06 hereof, execute proper instruments acknowledging the same), except for the following which shall survive until otherwise terminated or discharged hereunder: (A) the rights of holders of outstanding Notes to receive solely from the trust funds described in Section 9.04 hereof and as more fully set forth in such Section, payments in respect of the principal of, premium, if any, and interest on such Notes when such payments are due, (B) the Issuers’ obligations with respect to the Notes under Sections 2.1 through 2.10 hereof, Section 2.13 hereof and Section 4.17 hereof, (C) the rights, powers, trusts, duties, and immunities of the Trustee hereunder (including claims of, or payments to, the Trustee under or pursuant to Section 7.07 hereof) and (D) this Article 9. If the Issuers exercises their Legal Defeasance option, payment of the Notes may not be accelerated because of an Event of Default with respect thereto and each Guarantor will be released from all of its obligations under its Guarantee. Subject to compliance with this Article 9, the Issuers may exercise their option under this Section 9.02 with respect to the Notes notwithstanding the prior exercise of its option under Section 9.03 below with respect to the Notes.

Section 9.03 Covenant Defeasance.

At the option of the Company, pursuant to a Board Resolution delivered to the Trustee, the Issuers and the Guarantors shall be released from (A) their respective obligations under Sections 4.02, 4.04 through 4.14, inclusive, 4.16 and 4.18 through 4.21, inclusive, (B) the operation of Sections 6.01(5), (6), (7) and (8) (only as such clauses (7) and (8) apply to Significant Subsidiaries) and (9), and (C) the Company’s obligations under Section 5.01(a)(3) with respect to the outstanding Notes on and after the date the conditions set forth in Section 9.04 hereof are satisfied (hereinafter, “Covenant Defeasance”). For this purpose, such Covenant Defeasance means that the Issuers and the Guarantors may omit to comply with and shall have no liability in respect of any term, condition or limitation set forth in any such specified Section or portion thereof, whether directly or indirectly by reason of any reference elsewhere herein to any such specified section or portion thereof or by reason of any reference in any such specified Section or portion thereof to any other provision herein or in any other document, but the remainder of this Indenture and the Notes shall be unaffected thereby. If the Company exercises its Covenant Defeasance option, each Guarantor will be released from all its obligations under its Guarantee.

Section 9.04 Conditions to Defeasance or Covenant Defeasance.

The following shall be the conditions to application of Section 9.02 or Section 9.03 hereof to the outstanding Notes:

(1)       the Issuers shall irrevocably have deposited or caused to be deposited with the Trustee (or another trustee satisfying the requirements of Section 7.10 hereof who shall agree to comply with the provisions of this Article 9 applicable to it) as funds in trust for the purpose of making the following payments, specifically pledged as security for, and dedicated solely to, the benefit of the holders of the Notes, (A) money in an amount, or (B) U.S. Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount sufficient, in the opinion of a firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge, and which shall be applied by the Trustee (or other qualifying trustee) to pay and discharge, the principal of, premium, if any, and accrued interest on the outstanding Notes at the maturity date of such principal, premium, if any, or interest, or on dates for payment and redemption of such principal, premium, if any, and interest selected in accordance with the terms of this Indenture and of the Notes, without reinvestment on the deposited U.S. Government Obligations and without reinvestment of any deposited money;

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(2)       no Event of Default or Default with respect to the Notes shall have occurred and be continuing on the date of such deposit or after giving effect to such deposit, or shall have occurred and be continuing at any time during the period ending on the 123rd day after the date of such deposit or, if longer, ending on the day following the expiration of the longest preference period under any Bankruptcy Law applicable to the Issuers in respect of such deposit (it being understood that this condition shall not be deemed satisfied until the expiration of such period);

(3)       such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute default under any other agreement or instrument to which the Issuers is a party or by which it is bound;

(4)       in the case of an election under Section 9.02 above, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (i) the Company has received from, or there has been published by, the Internal Revenue Service a ruling to the effect that or (ii) there has been a change in any applicable Federal income tax law with the effect that, and such opinion shall confirm that, the holders of the outstanding Notes or persons in their positions will not recognize income, gain or loss for Federal income tax purposes as a result of such Legal Defeasance and will be subject to Federal income tax on the same amounts, in the same manner, and at the same times as would have been the case if such Legal Defeasance had not occurred;

(5)       in the case of an election under Section 9.03 hereof, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the holders of the outstanding Notes will not recognize income, gain or loss for Federal income tax purposes as a result of such Covenant Defeasance and will be subject to Federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(6)       the Company shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent provided for relating to either the Legal Defeasance under Section 9.02 above or the Covenant Defeasance under Section 9.03 hereof (as the case may be) have been complied with; and

(7)       the Company shall have paid or duly provided for payment under terms mutually satisfactory to the Company and the Trustee all amounts then due to the Trustee pursuant to Section 7.07 hereof.

Section 9.05 Deposited Money and U.S. Government Obligations to Be Held in Trust; Other Miscellaneous Provisions.

All money and U.S. Government Obligations (including the proceeds thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect of the outstanding Notes shall be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent as the Trustee may determine, to the holders of such Notes, of all sums due and to become due thereon in respect of principal, premium, if any, and accrued interest, but such money need not be segregated from other funds except to the extent required by law.

The Issuers and the Guarantors shall pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the U.S. Government Obligations deposited pursuant to Section 9.04 hereof or the principal, premium, if any, and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the holders of the outstanding Notes.

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Anything in this Article 9 to the contrary notwithstanding, the Trustee shall deliver or pay to the Company from time to time upon Company Request any money or U.S. Government Obligations held by it as provided in Section 9.04 hereof which, in the opinion of a nationally-recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, are in excess of the amount thereof which would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 9.06 Reinstatement.

If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Issuers’ and each Guarantor’s obligations under this Indenture, the Notes and the Guarantees shall be revived and reinstated as though no deposit had occurred pursuant to this Article 9 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with Section 9.01 hereof; provided, however, that if the Issuers or the Guarantors have made any payment of principal of, premium, if any, or accrued interest on any Notes because of the reinstatement of their obligations, the Issuers or the Guarantors, as the case may be, shall be subrogated to the rights of the holders of such Notes to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent.

Section 9.07 Moneys Held by Paying Agent.

In connection with the satisfaction and discharge of this Indenture, all moneys then held by any Paying Agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee, or if sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the Issuers (or, if such moneys had been deposited by the Guarantors, to such Guarantors), and thereupon such Paying Agent shall be released from all further liability with respect to such moneys.

Section 9.08 Moneys Held by Trustee.

Any moneys deposited with the Trustee or any Paying Agent or then held by the Issuers or the Guarantors in trust for the payment of the principal of or premium, if any, or interest on any Note that are not applied but remain unclaimed by the holder of such Note for two years after the date upon which the principal of, or premium, if any, or interest on such Note shall have respectively become due and payable shall be repaid to the Company (or, if appropriate, Finance Co. or the Guarantors) upon Company Request, or if such moneys are then held by the Issuers or the Guarantors in trust, such moneys shall be released from such trust; and the holder of such Note entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Issuers and the Guarantors for the payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Trustee or any such Paying Agent, before being required to make any such repayment, may, at the expense of the Company and the Guarantors, either mail to each holder affected, at the address shown in the register of the Notes maintained by the Registrar pursuant to Section 2.03 hereof, or cause to be published once a week for two successive weeks, in a newspaper published in the English language, customarily published each Business Day and of general circulation in The City of New York, New York, a notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such mailing or publication, any unclaimed balance of such moneys then remaining will be repaid to the Company. After payment to the Company, Finance Co. or the Guarantors or the release of any money held in trust by the Company, Finance Co. or any Guarantors, as the case may be, holders entitled to the money must look only to the Company and the

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Guarantors for payment as general creditors unless applicable abandoned property law designates another Person.

ARTICLE X

GUARANTEE OF SECURITIES

Section 10.01 Guarantee.

Subject to the provisions of this Article 10, each Guarantor hereby jointly and severally unconditionally guarantees to each holder and to the Trustee, on behalf of the holders, (i) the due and punctual payment of the principal, and, premium, if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of, and premium, if any, and interest on the Notes, including PIK Interest, to the extent lawful, and the due and punctual performance of all other Obligations of the Issuers to the holders or the Trustee all in accordance with the terms of this Indenture, and (ii) in the case of any extension of time of payment or renewal of the Notes or any of such other Obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise. Each Guarantor hereby agrees that its obligations hereunder shall be absolute and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any such Note or this Indenture, any failure to enforce the provisions of any such Note or this Indenture, any waiver, modification or indulgence granted to the Issuers with respect thereto by the holder of such Note or the Trustee, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or such Guarantor.

Each Guarantor hereby waives diligence, presentment, filing of claims with a court in the event of merger or bankruptcy of the Issuers, any right to require a proceeding first against the Issuers, protest or notice with respect to any such Note or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged as to any such Note except by payment in full of the principal thereof, premium if any, and interest thereon and as provided in Section 9.01 hereof. Each Guarantor further agrees that, as between such Guarantor, on the one hand, and the holders and the Trustee, on the other hand, (i) the maturity of the Obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Obligations guaranteed hereby, and (ii) in the event of any declaration of acceleration of such Obligations as provided in Article 6 hereof, such Obligations (whether or not due and payable) shall forthwith become due and payable by each Guarantor for the purpose of this Guarantee. In addition, without limiting the foregoing provisions, upon the effectiveness of an acceleration under Article 6 hereof, the Trustee shall promptly make a demand for payment on all Obligations under the Guarantee provided for in this Article 10 and not discharged.

The Guarantee set forth in this Section 10.01 shall not be valid or become obligatory for any purpose with respect to a Note until the certificate of authentication on such Note shall have been signed by or on behalf of the Trustee.

Section 10.02 Execution and Delivery of Guarantees.

To evidence the Guarantee set forth in this Article 10, each Guarantor hereby agrees that a notation of such Guarantee may be placed on each Note authenticated and made available for delivery by the Trustee and that this Guarantee shall be executed on behalf of each Guarantor by the manual or facsimile signature of an Officer of each Guarantor.

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Each Guarantor hereby agrees that the Guarantee set forth in Section 10.01 shall remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Guarantee.

If an Officer of a Guarantor whose signature is on the Guarantee no longer holds that office at the time the Trustee authenticates the Note on which the Guarantee is endorsed, the Guarantee shall be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, shall constitute due delivery of the Guarantee set forth in this Indenture on behalf of each Guarantor.

Section 10.03 Limitation of Guarantee.

The obligations of each Guarantor pursuant to Section 10.01 are limited to the maximum amount as will, after giving effect to all other contingent and fixed liabilities of such Guarantor and after giving effect to any collections from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under its Guarantee hereunder or pursuant to its contribution obligations under this Indenture, result in the obligations of such Guarantor under the Guarantee not constituting a fraudulent conveyance or fraudulent transfer under federal or state or provincial law. Each Guarantor that makes a payment or distribution under a Guarantee shall be entitled to a contribution from each other Guarantor and the Company in a pro rata amount based on the proportion that the net worth of the Company or the relevant Guarantor represents relative to the aggregate net worth of the Company and all of the Guarantors combined.

Section 10.04 Additional Guarantors.

Each of the Issuers covenants and agrees that it will cause any Person which becomes obligated to guarantee the Notes, pursuant to the terms of Section 4.12 hereof, to execute a supplemental indenture pursuant to which such Guarantor shall guarantee the obligations of the Company under this Indenture with respect to the Notes in accordance with this Article 10 with the same effect and to the same extent as if such Person had been named herein as a Guarantor.

Section 10.05 Release of Guarantor.

A Guarantor shall be released from all of its obligations under its Guarantee hereunder upon:

(i)        the sale, disposition or other transfer (including through merger, amalgamation or consolidation) of the Capital Stock (including any sale, disposition or other transfer following which an applicable Guarantor is no longer a Restricted Entity), or all or substantially all the assets, of the applicable Guarantor if such sale, disposition or other transfer is made in compliance with this Indenture;

(ii)       the Issuers designating a Guarantor to be an Unrestricted Entity in accordance with Section 4.08 and the definition of “Unrestricted Entity”; or

(iii)      the Issuers’ exercise of their legal defeasance option or covenant defeasance option set forth in Section 9.02 and Section 9.03, or if the Issuers’ obligations under the Indenture are discharged in accordance with the terms of the Indenture;

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and in each such case, the Guarantor delivering to the Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to such transactions have been complied with.

Notwithstanding the foregoing, upon designation of a Restricted Subsidiary as an Unrestricted Entity, such Restricted Subsidiary shall, by execution and delivery of a supplemental indenture, be released from any Guarantee previously made by such Restricted Subsidiary.

Section 10.06 Waiver of Subrogation.

Until this Indenture is discharged and all of the Notes are discharged and paid in full, each Guarantor hereby irrevocably waives and agrees not to exercise any claim or other rights which it may now or hereafter acquire against the Issuers that arise from the existence, payment, performance or enforcement of the Issuers’ obligations under the Notes or this Indenture and such Guarantor’s obligations under its Guarantee hereunder and this Indenture, in any such instance including, without limitation, any right of subrogation, reimbursement, exoneration, contribution, indemnification, and any right to participate in any claim or remedy of the holders against the Issuers, whether or not such claim, remedy or right arises in equity, or under contract, statute or common law, including, without limitation, the right to take or receive from the Issuers, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim or other rights. If any amount shall be paid to any Guarantor in violation of the preceding sentence and any amounts owing to the Trustee or the Noteholders under the Notes, this Indenture, or any other document or instrument delivered under or in connection with such agreements or instruments, shall not have been paid in full, such amount shall have been deemed to have been paid to such Guarantor for the benefit of, and held in trust for the benefit of, the Trustee or the Noteholders and shall forthwith be paid to the Trustee for the benefit of itself or such Noteholders to be credited and applied to the obligations in favor of the Trustee or the Noteholders, as the case may be, whether matured or unmatured, in accordance with the terms of this Indenture. Each Guarantor acknowledges that it will receive direct and indirect benefits from the financing arrangements contemplated by this Indenture and that the waiver set forth in this Section 10.06 is knowingly made in contemplation of such benefits.

Section 10.07 Taxes.

All payments by the Canadian Guarantors under their Guarantees hereunder will be made free and clear of and without deduction or withholding for any and all Taxes, unless such Taxes are required by applicable law to be deducted or withheld. If the Canadian Guarantors are required by applicable law to deduct or withhold any such Taxes from or in respect of any amount payable under its Guarantee (i) the amount payable shall be increased (and for greater certainty, in the case of interest, the amount of interest shall be increased) as may be necessary so that after making all required deductions or withholdings (including deductions or withholdings applicable to any additional amounts paid under this Section 10.07), the Noteholder receives an amount equal to the amount they would have received if no such deduction or withholding had been made, (ii) the Canadian Guarantors will make such deductions or withholdings, and (iii) the Canadian Guarantors will immediately pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law.

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ARTICLE XI

MISCELLANEOUS

Section 11.01 Notices.

Any notice or other communication shall be given in writing and delivered in person, sent by facsimile, delivered by commercial courier service or mailed by first-class mail, postage prepaid, addressed as follows:

If to the Issuers or any Guarantor:

SkyTerra LP

10802 Parkridge Boulevard

Reston, VA 20191-5416

Attention: Chief Financial Officer and General Counsel

Facsimile: (703) 390-2770

If to the Trustee:

The Bank of New York Mellon

101 Barclay Street, 8W

New York, NY 10286

Attention: Corporate Trust Division - Corporate Finance Unit

Facsimile: (212) 815-5707

Such notices or communications shall be effective when received and shall be sufficiently given if so given within the time prescribed in this Indenture.

The Issuers, the Guarantors or the Trustee by written notice to the others may designate additional or different addresses for subsequent notices or communications.

Any notice or communication mailed to a holder shall be mailed to him by first-class mail, postage prepaid, at his address shown on the register kept by the Registrar.

Failure to mail a notice or communication to a holder or any defect in it shall not affect its sufficiency with respect to other holders. If a notice or communication to a holder is mailed in the manner provided above, it shall be deemed duly given, whether or not the addressee receives it.

In case by reason of the suspension of regular mail service, or by reason of any other cause, it shall be impossible to mail any notice as required by this Indenture, then such method of notification as shall be made with the approval of the Trustee shall constitute a sufficient mailing of such notice.

Anything herein to the contrary notwithstanding, no notice or communication given to the Trustee shall be effective unless and until it is actually received by the Trustee at its Corporate Trust Office.

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Section 11.02 Communications by Holders with Other Holders.

Holders may communicate pursuant to TIA § 312(b) with other holders with respect to their rights under this Indenture or the Notes. The Issuers, the Guarantors, the Trustee, the Registrar and anyone else shall have the protection of TIA § 312(c).

Section 11.03 Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Issuers or any Guarantor to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

(1)       an Officer’s Certificate (which shall include the statements set forth in Section 11.04 below) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(2)       except in the case of the issuance of the Notes on the Issue Date or on a subsequent issue date as contemplated by the Securities Purchase Agreement or the Payment-in-Kind Notes on any Interest Payment Date, an Opinion of Counsel (which shall include the statements set forth in Section 11.04 below) stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

Section 11.04 Statements Required in Certificate and Opinion.

Each certificate and opinion with respect to compliance with a condition or covenant provided for in this Indenture shall include:

(1)       a statement that the Person making such certificate or opinion has read such covenant or condition;

(2)       a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3)       a statement that, in the opinion of such Person, it or he has made such examination or investigation as is necessary to enable it or him to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(4)       a statement as to whether or not, in the opinion of such Person, such covenant or condition has been complied with.

Section 11.05 When Treasury Notes Disregarded.

In determining whether the holders of the required aggregate principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuers, any Guarantor or any other obligor on the Notes shall be disregarded, except that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Notes so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to the Notes and that the pledgee is not an Issuer, a Guarantor or any other obligor upon the Notes.

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Section 11.06 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or meetings of holders. The Registrar and Paying Agent may make reasonable rules for their functions.

Section 11.07 Legal Holidays.

If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period.

Section 11.08 Governing Law.

THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO, AND THE HOLDERS BY THEIR ACCEPTANCE OF THE NOTES, AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.

Section 11.09 No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan, security or debt agreement of the Company or any Subsidiary thereof. No such indenture, loan, security or debt agreement may be used to interpret this Indenture.

Section 11.10 No Recourse Against Others.

No director, officer, employee, incorporator, shareholder, parent company, partner or controlling entities of the Company, Finance Co., the Guarantors, the General Partner, the Parent or any of their respective Subsidiaries (including, without limitation, 4371593 Canada Inc. and its successors and assigns) will have any liability for any obligations of the Issuers or any of their Subsidiaries under the Notes or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. Each holder of the Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the U.S. Federal securities laws, and it is the view of the SEC that such a waiver is against public policy.

Section 11.11 Successors.

All agreements of the Issuers and the Guarantors in this Indenture and the Notes shall bind their respective successors. All agreements of the Trustee, any additional trustee and any Paying Agents in this Indenture shall bind their successors.

Section 11.12 Multiple Counterparts.

The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent one and the same agreement.

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Section 11.13 Table of Contents, Headings, etc.

The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

Section 11.14 Separability.

Each provision of this Indenture shall be considered separable and if for any reason any provision which is not essential to the effectuation of the basic purpose of this Indenture or the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 11.15 Waiver of Jury Trial.

EACH OF THE ISSUERS, THE GUARANTORS, EACH HOLDER OF A NOTE BY ITS ACCEPTANCE THEREOF AND THE TRUSTEE HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE NOTES OR THE TRANSACTION CONTEMPLATED HEREBY.

Section 11.16 Force Majeure.

In no event shall the Trustee be responsible or liable for any failure or delay in the performance of its obligations hereunder arising out of or caused by, directly or indirectly, forces beyond its control, including, without limitation, strikes, work stoppages, accidents, acts of war or terrorism, civil or military disturbances, nuclear or natural catastrophes or acts of God, and interruptions, loss or malfunctions of utilities, communications or computer (software and hardware) services; it being understood that the Trustee shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

Section 11.17 Currency of Account; Conversion of Currency; Foreign Exchange Restrictions.

(a)        U.S. Dollars are the sole currency of account and payment for all sums payable by the Company and the Guarantors under or in connection with the Notes, the Guarantees of the Notes or this Indenture to the extent it relates to the Notes, including damages related thereto. Any amount received or recovered in a currency other than U.S. Dollars by a holder of Notes (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding-up or dissolution of the Issuers or otherwise) in respect of any sum expressed to be due to it from the Issuers shall only constitute a discharge to the Issuers to the extent of the U.S. Dollar amount, which the recipient is able to purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so). If that U.S. Dollar amount is less than the U.S. Dollar amount expressed to be due to the recipient under the Notes, the Issuers and the Guarantors shall indemnify it against any loss sustained by it as a result as set forth in Section 11.17(b). In any event, the Company and the Guarantors shall indemnify the recipient against the cost of making any such purchase. For the purposes of this Section 11.17, it will be sufficient for the holder of a Note to certify in a satisfactory manner (indicating sources of information used) that it would have suffered a loss had an actual purchase of U.S. Dollars been made with the amount so received in that other currency on the date of receipt or recovery (or, if a purchase of U.S. Dollars on such date had not been practicable, on the first date on which it would have been practicable, it being required that the need for a change of date be certified in the manner mentioned above). The in

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demnities set forth in this Section 11.17 constitute separate and independent obligations from other obligations of the Issuers and the Guarantors, shall give rise to a separate and independent cause of action, shall apply irrespective of any indulgence granted by any holder of the Notes and shall continue in full force and effect despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under the Notes.

(b)       The Issuers and the Guarantors, jointly and severally, covenant and agree that the following provisions shall apply to conversion of currency in the case of the Notes, the Guarantees and this Indenture:

(1)       (A)        If for the purpose of obtaining judgment in, or enforcing the judgment of, any court in any country, it becomes necessary to convert into a currency (the “Judgment Currency”) an amount due in any other currency (the “Base Currency”), then the conversion shall be made at the rate of exchange prevailing on the Business Day before the day on which the judgment is given or the order of enforcement is made, as the case may be (unless a court shall otherwise determine).

(B)       If there is a change in the rate of exchange prevailing between the Business Day before the day on which the judgment is given or an order of enforcement is made, as the case may be (or such other date as a court shall determine), and the date of receipt of the amount due, the Issuers and the Guarantors will pay such additional (or, as the case may be, such lesser) amount, if any, as may be necessary so that the amount paid in the Judgment Currency when converted at the rate of exchange prevailing on the date of receipt will produce the amount in the Base Currency originally due.

(2)       In the event of the winding-up of the Issuers or any Guarantor at any time while any amount or damages owing under the Notes, the Guarantees and this Indenture, or any judgment or order rendered in respect thereof, shall remain outstanding, the Issuers and the Guarantors shall indemnify and hold the Noteholders and the Trustee harmless against any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the Applicable Currency Equivalent of the amount due or contingently due under the Notes, the Guarantees and this Indenture (other than under this subsection (b)(2)) is calculated for the purposes of such winding-up and (ii) the final date for the filing of proofs of claim in such winding-up. For the purpose of this subsection (b)(2), the final date for the filing of proofs of claim in the winding-up of the Issuers or any Guarantor shall be the date fixed by the liquidator or otherwise in accordance with the relevant provisions of applicable law as being the latest practicable date as at which liabilities of the Issuers or such Guarantor may be ascertained for such winding-up prior to payment by the liquidator or otherwise in respect thereto.

(c)        The obligations contained in subsections (a), (b)(1)(B) and (b)(2) of this Section 11.17 shall constitute separate and independent obligations from the other obligations of the Issuers and the Guarantors under this Indenture, shall give rise to separate and independent causes of action against the Issuers and the Guarantors, shall apply irrespective of any waiver or extension granted by any Noteholder or the Trustee or either of them from time to time and shall continue in full force and effect notwithstanding any judgment or order or the filing of any proof of claim in the winding-up of the Issuers or any Guarantor for a liquidated sum in respect of amounts due hereunder (other than under subsection (b)(2) above) or under any such judgment or order. Any such deficiency as aforesaid shall be deemed to constitute a loss suffered by the Noteholders or the Trustee, as the case may be, and no proof or evidence of any actual loss shall be required by the Issuers or any Guarantor or the liquidator or otherwise or any of them. In the case of subsection (b)(2) above, the amount of such deficiency shall not be deemed to be

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reduced by any variation in rates of exchange occurring between the said final date and the date of any liquidating distribution.

(d)       The term “rate(s) of exchange” shall mean the rate of exchange quoted by Reuters at 10:00 a.m. (New York time) for spot purchases of the Base Currency with the Judgment Currency other than the Base Currency referred to in subsections (b)(1) and (b)(2) above and includes any premiums and costs of exchange payable.

Section 11.18 Agent for Service.

By the execution and delivery of this Indenture, each Canadian Guarantor (i) acknowledges that it has irrevocably designated and appointed CT Corporation System, 111 Eighth Avenue, New York, New York 10011 (and any successor entity) as its authorized agent upon which process may be served in any suit or proceeding arising out of or relating to this Indenture, the Notes and the Guarantees that may be instituted in any Federal or state court in the State of New York, The City of New York, the Borough of Manhattan or brought under Federal or state securities laws, and acknowledges that CT Corporation System has accepted such designation, (ii) irrevocably submits to the jurisdiction of any such court in any such suit or proceeding and (iii) agrees that service of process upon CT Corporation System and written notice of said service to the Canadian Guarantors in accordance with this Section 11.18 shall be deemed in every respect effective service of process upon the Canadian Guarantors, if any, in any such suit or proceeding. Each Canadian Guarantor further agrees to take any and all such action, including the execution and filing of any and all such documents and instruments as may be necessary to continue such designation and appointment of CT Corporation System in full force and effect so long as this Indenture shall be in full force and effect or any of the Notes shall be outstanding; provided, however, that any Canadian Guarantor may, by written notice to the Trustee, designate such additional or alternative agent for service of process under this Section 11.18 that (i) maintains an office located in the Borough of Manhattan, The City of New York, the State of New York, (ii) is a corporate service company which acts as agent for service of process for other Persons in the ordinary course of its business and (iii) agrees to act as agent for service of process in accordance with this Section 11.18. Such notice shall identify the name of such agent for process and the address of such agent for process in the Borough of Manhattan, The City of New York, the State of New York.

Section 11.19 Interest Act (Canada).

The Canadian Guarantors acknowledge that certain of the rates of interest applicable to their obligations may be computed on the basis of a year of 360 days or 365 days, as the case may be, and be paid for the actual number of days elapsed. For purposes of the Interest Act (Canada), whenever any interest is calculated using a rate based on a year of 360 days or 365 days, as the case may be, such rate determined pursuant to such calculation, when expressed as an annual rate, is equivalent to (i) the applicable rate based on a year of 360 days or 365 days, as the case may be, (ii) multiplied by the actual number of days in the calendar year in respect of which such interest is payable, and (iii) divided by 360 or 365, as the case may be.

Section 11.20 Joint and Several Obligations.

All of the obligations of the Issuers under the Notes shall be joint and several obligations of the Issuers.

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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date and year first written above.

SKYTERRA LP
(a Delaware limited partnership) by its general partner, SkyTerra GP, Inc.
By:		/s/ Scott Macleod
	Name:	Scott Macleod
	Title:	Executive Vice President and Chief Financial Officer

SKYTERRA FINANCE CO.
(a Delaware Corporation)
By:		/s/ Scott Macleod
	Name:	Randy Segal
	Title:	Executive Vice President and Chief Financial Officer,

ATC TECHNOLOGIES, LLC
(a Delaware limited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA SUBSIDIARY LLC
(a Delaware limited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA INTERNATIONAL, LLC
(a Delaware limited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal

Signature Page to Indenture

Title:	Senior Vice President,
	General Counsel and Secretary

SKYTERRA INC. OF VIRGINIA
(a Virginia corporation)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA CORP.
(a Nova Scotia unlimited liability company)
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

SKYTERRA HOLDINGS (CANADA) INC. (an
Ontario corporation)
By:		/s/ Elizabeth A. Creary
	Name:	Elizabeth A. Creary
	Title:	Secretary

SKYTERRA (CANADA) INC.
(an Ontario corporation)
By:		/s/ Elizabeth A. Creary
	Name:	Elizabeth A. Creary
	Title:	Vice President, Corporate Counsel and
		Secretary

The Bank of New York MELLON,
as Trustee
By:		/s/ Timothy Casey
	Name:	Timothy Casey
	Title:	Assistant Treasurer

Signature Page to Indenture

EXHIBIT A-1

FORM OF FACE OF CERTIFICATED NOTE

SKYTERRA LP

SKYTERRA FINANCE CO.

18.0% SENIOR NOTES DUE 2013

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED AT ANY TIME BEGINNING o BY WRITING TO: SKYTERRA LP OR SKYTERRA FINANCE CO., C/O SKYTERRA LP, 10802 PARKRIDGE BOULEVARD, RESTON, VIRGINIA 20191, ATTENTION: CHIEF FINANCIAL OFFICER.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE SECURITIES ACT), AND ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER

(1) REPRESENTS THAT:

(A)       IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); OR

(B)       IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 (a)(1), (2), (3), OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (OR AN ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE THE FOREGOING) (AN INSTITUTIONAL ACCREDITED INVESTOR); OR

(C)       IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; AND

(2)       AGREES THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(d) UNDER THE SECURITIES ACT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT:

(A)       TO SKYTERRA LP, SKYTERRA FINANCE CO. OR ANY SUBSIDIARY THEREOF;

(B)       INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT;

(C)       OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT;

(D)       PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;

A-1-1

(E)       PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE);

(F)       PURSUANT TO ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (PROVIDED THAT AS A CONDITION TO THE REGISTRATION OF TRANSFER OF ANY NOTES OTHERWISE THAN AS DESCRIBED HEREIN, THE COMPANY OR THE TRUSTEE MAY, IN CIRCUMSTANCES THAT ANY OF THEM DEEMS APPROPRIATE, REQUIRE EVIDENCE AS TO COMPLIANCE WITH ANY SUCH EXEMPTION); AND

(3)       AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.

A-1-2

No.

US$ o

SKYTERRA LP

SKYTERRA FINANCE CO.

18.0% SENIOR NOTES DUE 2013

Certificated Note

SkyTerra LP, a Delaware limited partnership, and SkyTerra Finance Co., a Delaware Corporation (the “Issuers”), for value received, hereby promise to pay to o upon surrender hereof the principal sum of o UNITED STATES DOLLARS (U.S. $ o) on July 1, 2013, or on such earlier date as the principal hereof may become due in accordance with the provisions hereof.

Interest Rate: 18.0% per annum.

Interest Payment Dates: July 1 and January 1 of each year, commencing [ ].

Interest Record Dates: June 15 and December 15.

PIK Period: On or prior to January 1, 2011, interest on the Notes will be payable semi-annually, at the election of the Issuers, in cash, in the form of Payment-in-Kind Notes in an amount reflecting the applicable PIK Interest, or in combination of cash and Payment-In-Kind Notes reflecting the applicable PIK Interest. After January 1, 2011, all payments of interest must be in cash for the remainder of the term of the Notes.

Reference is hereby made to the further provisions set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Note shall not be valid or obligatory until it shall have been duly signed by the Trustee acting under the Indenture.

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IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually or by facsimile by their duly authorized officers.

SKYTERRA LP by its general partner, SkyTerra GP, Inc.
By:
	Name:
	Title:
By:
	Name:
	Title:

SKYTERRA FINANCE CO.
By:
	Name:
	Title
By:
	Name:
	Title:

This is one of the Notes referred to

in the within-mentioned Indenture:

Dated: [ ], [ ]

,

as Trustee

By: __________________________________

Authorized Signatory

Signature Page to Indenture

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EXHIBIT A-2

FORM OF FACE OF RESTRICTED GLOBAL NOTE

SKYTERRA LP

SKYTERRA FINANCE CO.

18.0% SENIOR NOTES DUE 2013

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED AT ANY TIME BEGINNING [], 2009 BY WRITING TO: SKYTERRA LP OR SKYTERRA FINANCE CO., C/O SKYTERRA LP, 10802 PARKRIDGE BOULEVARD, RESTON, VIRGINIA 20191, ATTENTION: CHIEF FINANCIAL OFFICER.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER

(1) REPRESENTS THAT:

(A)       IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); OR

(B)       IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 (a)(1), (2), (3), OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (OR AN ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE THE FOREGOING) (AN “INSTITUTIONAL ACCREDITED INVESTOR”); OR

(C)       IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; AND

(2)       AGREES THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(d) UNDER THE SECURITIES ACT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT:

(A)       TO SKYTERRA LP, SKYTERRA FINANCE CO. OR ANY SUBSIDIARY THEREOF;

(B)       INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT;

(C)       OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT;

(D)       PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;

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(E)       PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE);

(F)       PURSUANT TO ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (PROVIDED THAT AS A CONDITION TO THE REGISTRATION OF TRANSFER OF ANY NOTES OTHERWISE THAN AS DESCRIBED HEREIN, THE COMPANY OR THE TRUSTEE MAY, IN CIRCUMSTANCES THAT ANY OF THEM DEEMS APPROPRIATE, REQUIRE EVIDENCE AS TO COMPLIANCE WITH ANY SUCH EXEMPTION); AND

(3)       AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.01(a) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

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No. 1	CUSIP:
	Common Code:
	ISIN Number:

SKYTERRA LP

SKYTERRA FINANCE CO.

RESTRICTED GLOBAL NOTE

US$ o

SKYTERRA LP

SKYTERRA FINANCE CO.

18.0% SENIOR NOTES DUE 2013

Restricted Global Note

SkyTerra LP, a Delaware limited partnership, and SkyTerra Finance Co., a Delaware corporation, (the “Issuers”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, upon surrender hereof the principal sum of UNITED STATES DOLLARS (U.S. $ o) on July 1, 2013, or on such earlier date as the principal hereof may become due in accordance with the provisions hereof.

Interest Rate: 18.0% per annum.

Interest Payment Dates: July 1 and January 1 of each year, commencing [ ].

Interest Record Dates: June 15 and December 15.

PIK Period: On or prior to January 1, 2011, interest on the Notes will be pay-able semi-annually, at the election of the Issuers, in cash, in the form of Payment-in-Kind Notes in an amount reflecting the applicable PIK Interest, or in combination of cash and Payment-In-Kind Notes reflecting the applicable PIK Interest. After January 1, 2011, all payments of interest must be in cash for the remainder of the term of the Notes.

Reference is hereby made to the further provisions set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Note shall not be valid or obligatory until it shall have been duly signed by the Trustee acting under the Indenture.

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IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually or by facsimile by their duly authorized officers.

SKYTERRA LP by its general partner, SkyTerra GP, Inc.
By:
	Name:
	Title:
By:
	Name:
	Title:

SKYTERRA FINANCE CO.
By:
	Name:
	Title
By:
	Name:
	Title:

This is one of the Notes referred to

in the within-mentioned Indenture:

Dated: [ ], [ ]

,

as Trustee

By: __________________________________

Authorized Signatory

A-2-4

EXHIBIT A-3

FORM OF FACE OF REGULATION S GLOBAL NOTE

SKYTERRA LP

SKYTERRA FINANCE CO.

18.0% SENIOR NOTES DUE 2013

THIS NOTE HAS BEEN ISSUED WITH ORIGINAL ISSUE DISCOUNT (“OID”) FOR UNITED STATES FEDERAL INCOME TAX PURPOSES. THE ISSUE PRICE, AMOUNT OF OID, ISSUE DATE AND YIELD TO MATURITY OF THIS NOTE MAY BE OBTAINED AT ANY TIME BEGINNING [], 2009 BY WRITING TO: SKYTERRA LP OR SKYTERRA FINANCE CO., C/O SKYTERRA LP, 10802 PARKRIDGE BOULEVARD, RESTON, VIRGINIA 20191, ATTENTION: CHIEF FINANCIAL OFFICER.

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND ACCORDINGLY, THIS NOTE MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER

(1) REPRESENTS THAT:

(A)       IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT); OR

(B)       IT IS AN INSTITUTIONAL “ACCREDITED INVESTOR” (AS DEFINED IN RULE 501 (a)(1), (2), (3), OR (7) OF REGULATION D UNDER THE SECURITIES ACT) (OR AN ENTITY IN WHICH ALL OF THE EQUITY OWNERS ARE THE FOREGOING) (AN “INSTITUTIONAL ACCREDITED INVESTOR”); OR

(C)       IT IS ACQUIRING THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; AND

(2)       AGREES THAT IT WILL NOT WITHIN THE TIME PERIOD REFERRED TO IN RULE 144(k) UNDER THE SECURITIES ACT RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT:

(A)       TO SKYTERRA LP, SKYTERRA FINANCE CO. OR ANY SUBSIDIARY THEREOF;

(B)       INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT;

(C)       OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT;

(D)       PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT;

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(E)       PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE);

(F)       PURSUANT TO ANY AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT (PROVIDED THAT AS A CONDITION TO THE REGISTRATION OF TRANSFER OF ANY NOTES OTHERWISE THAN AS DESCRIBED HEREIN, THE COMPANY OR THE TRUSTEE MAY, IN CIRCUMSTANCES THAT ANY OF THEM DEEMS APPROPRIATE, REQUIRE EVIDENCE AS TO COMPLIANCE WITH ANY SUCH EXEMPTION); AND

(3)       AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

IN CONNECTION WITH ANY TRANSFER OF THIS NOTE WITHIN THE TIME PERIOD REFERRED TO ABOVE, THE HOLDER MUST CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE.

AS USED HEREIN, THE TERMS “OFFSHORE TRANSACTION,” AND “UNITED STATES” HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (THE “DEPOSITORY”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS GLOBAL NOTE IS HELD BY THE DEPOSITORY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.01(a) OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITORY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

A-3-2

No. 2	CUSIP:
	Common Code:
	ISIN Number:

SKYTERRA LP

SKYTERRA FINANCE CO.

REGULATION S GLOBAL NOTE

US$ o

SKYTERRA LP

SKYTERRA FINANCE CO.

18.0% SENIOR NOTES DUE 2013

Regulation S Global Note

SkyTerra LP, a Delaware limited partnership, and SkyTerra Finance Co., a Delaware corporation (the “Issuers”), for value received, hereby promises to pay to CEDE & CO., or registered assigns, upon surrender hereof the principal sum of o UNITED STATES DOLLARS (U.S. $ o) on July 1, 2013, or on such earlier date as the principal hereof may become due in accordance with the provisions hereof.

Interest Rate: 18.0% per annum.

Interest Payment Dates: July 1 and January 1 of each year, commencing [ ].

Interest Record Dates: June 15 and December 15.

PIK Period: On or prior to January 1, 2011, interest on the Notes will be pay-able semi-annually, at the election of the Issuers, in cash, in the form of Payment-in-Kind Notes in an amount reflecting the applicable PIK Interest, or in combination of cash and Payment-In-Kind Notes reflecting the applicable PIK Interest. After January 1, 2011, all payments of interest must be in cash for the remainder of the term of the Notes.

Reference is hereby made to the further provisions set forth on the reverse hereof. Such further provisions shall for all purposes have the same effect as though fully set forth at this place.

This Note shall not be valid or obligatory until it shall have been duly signed by the Trustee acting under the Indenture.

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IN WITNESS WHEREOF, the Issuers have caused this Note to be signed manually or by facsimile by their duly authorized officers.

SKYTERRA LP by its general partner, SkyTerra GP, Inc.
By:
	Name:
	Title:
By:
	Name:
	Title:

SKYTERRA FINANCE CO.
By:
	Name:
	Title
By:
	Name:
	Title:

This is one of the Notes referred to

in the within-mentioned Indenture:

Dated: [ ], [ ]

,

as Trustee

By: __________________________________

Authorized Signatory

A-3-4

EXHIBIT A-4

[Reverse of Note]

18.0% Senior Notes due 2013

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Restricted Notes Legend, if applicable pursuant to the provisions of the Indenture]

Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

1.         Interest. The Issuers jointly and severally promise to pay interest on this Note at the rate of 18.0% per annum. For any interest period through January 1, 2011, the Issuers may elect to pay interest on the Notes, at their option, (a) in cash (“Cash Interest”), (b) by issuing new Notes (“Payment-in-Kind Notes”) in an amount equal to the amount of PIK Interest for the applicable interest period (rounded up to the nearest whole dollar) on the applicable interest payment date, or (c) in a combination of Cash Interest and Payment-in-Kind Notes. Payment of any Cash Interest on the relevant Interest Payment Date shall be made to the holder of this Note on the relevant record date. The Issuers shall elect the form of interest payment with respect to each interest period by giving notice to the Trustee at least five Business Days prior to the beginning of the applicable interest period. In the absence of such an election, interest will be payable in Payment-in-Kind Notes. The first interest payment shall be paid in the form of Payment-in-Kind Notes. After January 1, 2011, the Issuers must pay all interest on the Notes entirely in the form of cash.

The Issuers will pay interest semi-annually in arrears on July 1 and January 1 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date”). Interest on the Notes will accrue from the most recent Interest Payment Date to which interest has been paid, as Cash Interest, Payment-in-Kind Notes or a combination thereof, or, if no interest has been paid, from the date of issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be [], 2009. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Issuers shall pay interest on overdue principal at the rate borne by the Notes, and shall pay interest on overdue installments of Cash Interest at the same rate to the extent lawful.

2.         Method of Payment. The Issuers shall pay interest on the Notes to the Persons who are registered holders at the close of business on the June 15 and December 15 (whether or not a Business Day) next preceding the Interest Payment Date even if Notes are canceled after the record date and on or before the Interest Payment Date. The holders must surrender Notes to a Paying Agent to collect principal payments. The Issuers shall pay principal, premium, if any, and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. Payments in respect of the Notes represented by a Global Note (including principal, premium, if any, and interest) shall be made by wire transfer of immediately available funds to the accounts specified by the Depository. The Issuers will make all payments in respect of a certificated Note (including principal, premium, if any, and interest), at the office of each Paying Agent, except that, at the option of the Issuers, payment of interest may be made by mailing a check to the registered address of each holder thereof; provided, however, that payments on the Notes may also be made by wire transfer to a U.S. dollar

A-4-1

account maintained by the payee with a bank in the United States if such holder elects payment by wire transfer by giving written notice to the Trustee or a Paying Agent to such effect designating such account no later than 10 days immediately preceding the relevant due date for payment (or such other date as the Trustee may accept in its discretion).

3.         Paying Agent and Registrar. Initially, The Bank of New York Mellon, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change any Paying Agent or Registrar without notice to any holder. Neither the Company nor any of its Subsidiaries or Affiliates may act as Paying Agent but they may act as Registrar or co-registrar.

4.         Indenture; Guarantees; Restrictive Covenants. The Issuers issued the Notes under an Indenture dated as of [], 2009 (the “Indenture”), among the Company, Finance Co., the Guarantors and the Trustee. The Notes are treated as a single class of securities under the Indenture. The terms of this Note include those stated in the Indenture to be applicable by reference to the Trust Indenture Act of 1939 (15 U.S. Code §§ 77aaa-77bbbb) as in effect on the date of the Indenture. This Note is subject to all such terms, and the holder of this Note is referred to the Indenture for a statement of them.

The Indenture imposes certain limitations on, among other things, indebtedness, issuance and sale of capital stock of Restricted Entities, restricted payments, liens, asset sales, transactions with affiliates, and restrictions on distributions from Restricted Entities.

5. Optional Redemption.

After January 1, 2011, the Issuers are entitled to redeem all or, from time to time, a portion of the Notes upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed in percentages of then outstanding principal amount on the redemption date), plus accrued interest, if any, to the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), if redeemed during the 12-month period commencing on January 1 of the years set forth below:

Period	Redemption Price
2011	109.000%
2012	104.500%
2013 and thereafter	100.000%

Prior to January 1, 2011, the Issuers are entitled on one or more occasions to redeem Notes in an aggregate principal amount not to exceed 35% of the originally issued aggregate principal amount of the Notes (including any Payment-in-Kind Notes issued to the date of redemption) at a redemption price (expressed as a percentage of then outstanding principal amount on the redemption date) of 118.0%, plus accrued and unpaid interest thereon, if any, to (but excluding) the redemption date (subject to the right of holders of record on the relevant record date to receive interest due on the relevant interest payment date), with the net cash proceeds from one or more Equity Offerings by the Company or the Parent (to the extent the net proceeds thereof are contributed to the equity capital of the Company (other than in the form of Disqualified Stock) or are used to purchase Capital Stock of the Company (other than Disqualified Stock)); provided, however, that

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(1)       at least 65% of the originally issued aggregate principal amount of Notes remains outstanding immediately after the occurrence of each such redemption (other than Notes held, directly or indirectly, by the Issuers or its Affiliates); and

(2)       each such redemption occurs within 180 days after the closing of the related Equity Offering. The foregoing shall not impact the terms of any Reimbursement Offer.

At any time prior to January 1, 2011, the Issuers may also redeem on one or more occasions all or a portion of the Notes upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the then outstanding principal amount of Notes redeemed plus the Applicable Premium (calculated as of a date no more than three Business Days prior to the relevant redemption notice) as of the date of redemption.

On and after any Redemption Date, if money sufficient to pay the redemption price of and accrued interest on Notes called for redemption shall have been made available in accordance with the terms of the Indenture, the Notes called for redemption will cease to accrue interest and the only right of the holders of such Notes will be to receive payment of the redemption price of and, subject to the terms of the Indenture, accrued and unpaid interest on such Notes to the redemption date.

“Applicable Premium” means, with respect to any Note on any redemption date, the greater of:

(1) 1.0% of the then outstanding principal amount of the Note; and

(2) the excess of:

(a)        the present value at such redemption date of the redemption price of the Note at January 1, 2011, computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over

(b) the then outstanding principal amount of the Note.

6.         No Mandatory Redemption. The Company shall not be required to make mandatory redemption payments with respect to the Notes.

7.         Offers to Purchase. The Indenture requires that certain proceeds from Asset Dispositions be used, subject to further limitations contained therein, to make an offer to purchase certain amounts of Notes in accordance with the procedures set forth in the Indenture. The Company may also be required to make an offer to purchase Notes pursuant to Section 4.16 of the Indenture.

8.         Denominations; Transfer; Exchange. The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000, or, in the case of Payment-in-Kind Notes, such other denominations as may be required. A holder shall register the transfer or exchange of Notes in accordance with the Indenture. The Registrar may require a holder, among other things, to furnish appropriate endorsements and transfer documents and to pay certain transfer taxes or similar governmental charges in connection therewith as permitted by the Indenture. The Registrar need not register the transfer or exchange of any Notes during a period beginning 15 days before the mailing of a redemption notice for any Notes or portions thereof selected for redemption.

9.         Persons Deemed Owners. The registered holder of this Note shall be treated as the owner of it for all purposes.

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10.       Unclaimed Money. If money for the payment of principal, premium or interest on any Note remains unclaimed for two years, the Trustee and the Paying Agent will pay the money back to the Company at its request. After that, holders entitled to money must look to the Company for payment as general creditors unless an “abandoned property” law designates another person.

11.       Amendment, Supplement and Waiver. Subject to certain exceptions, the Indenture or the Notes may be modified, amended or supplemented by the Company, Finance Co., the Guarantors and the Trustee with the consent of the holders of at least a majority in principal amount of the Notes then outstanding and any existing default or compliance with any provision may be waived in a particular instance with the consent of the holders of a majority in principal amount of the Notes then outstanding. Without the consent of holders, the Company, Finance Co., the Guarantors and the Trustee may amend the Indenture for certain specified purposes including providing for uncertificated Notes in addition to or in place of certificated Notes, and curing any ambiguity, omission, defect or inconsistency, or making any other change that does not materially adversely affect the rights, taken as a whole, of any holder.

12.       Successor Entity. When a successor entity assumes all the obligations of its predecessors under the Notes and the Indenture and immediately before and thereafter no Default exists and certain other conditions are satisfied, the predecessor entity will be released from those obligations.

13.       Defaults and Remedies. Events of Default are set forth in the Indenture. If an Event of Default occurs and is continuing, the Trustee, by notice to the Issuers, or the holders of not less than 25% in aggregate principal amount of the Notes, by written notice to the Issuers and the Trustee, may declare to be immediately due and payable the principal amount of all the Notes then outstanding plus premium, if any, and accrued but unpaid interest to the date of acceleration and such amounts shall become immediately due and payable. In case an Event of Default specified in Section 6.01(7) or (8) with respect to either Issuer occurs, such principal, premium, if any, and interest with respect to all of the Notes shall be due and payable immediately without any declaration or other act on the part of the Trustee or the holders of the Notes. After any such acceleration but before a judgment or decree based on acceleration is obtained by the Trustee, the holders of a majority in aggregate principal amount of outstanding Notes (by notice to the Trustee) may rescind and cancel such acceleration and its consequences if (i) all existing Events of Default, other than the nonpayment of accelerated principal, premium, if any, or interest that has become due solely because of the acceleration, have been cured or waived, (ii) to the extent the payment of such interest is lawful, interest (at the same rate specified in the Notes) on overdue installments of interest and overdue outstanding principal amount, premium, if any, or interest, which has become due otherwise than by such declaration of acceleration, has been paid, (iii) the Company has paid the Trustee its reasonable compensation and reimbursed the Trustee its expenses, disbursements and advances, (iv) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction and (v) in the event of the cure or waiver of a Default or Event of Default described in Section 6.01(7) or (8), the Trustee has received an Officer’s Certificate and an Opinion of Counsel that such Default or Event of Default has been cured or waived. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

14.       Trustee Dealings with the Issuers. The Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Issuers, any Guarantor or their Affiliates, and may otherwise deal with the Issuers, any Guarantor or their Affiliates as if it were not Trustee.

15.       No Recourse Against Others. No director, officer, employee, incorporator, shareholder, parent company, partner or controlling entities of the Company, Finance Co., the Guarantors, the General Partner, the Parent or any of their respective Subsidiaries (including, without limitation, 4371593 Canada Inc. and its successors and assigns) will have any liability for any obligations of the Is

A-4-4

suers or any of their Subsidiaries under this Note or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation. The holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. Such waiver and release may not be effective to waive liabilities under the U.S. Federal securities laws, and it is the view of the SEC that such a waiver is against public policy.

16.       Defeasance and Covenant Defeasance. The Indenture contains provisions for defeasance of the entire debt represented by the Notes and for defeasance of certain covenants in the Indenture upon compliance by the Company in each case with certain conditions set forth in the Indenture.

17.       Abbreviations. Customary abbreviations may be used in the name of a holder of a Note or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors Act).

18.       CUSIP Numbers. The Company has caused CUSIP Numbers to be printed on the Notes, if applicable, and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to holders of the Notes. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.

19.       Governing Law. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE OR THE NOTES.

20.       Authentication. This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

The Company will furnish to any holder upon written request and without charge a copy of the Indenture. Requests may be made to:

SkyTerra LP

10802 Parkridge Boulevard

Reston, VA 20191-5416

Attention: Chief Financial Officer

A-4-5

ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:____________________________________________________

(Insert assignee’s legal name)

(Insert assignee’s soc. sec. or tax I.D. no.)

(Print or type assignee’s name, address and zip code)

and irrevocably appoint _________________________________________________________________

to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:____________

Your Signature: ________________________________________

(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:__________________

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-4-6

OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10, 4.16, or 4.23 of the Indenture, check the appropriate box below:

Section 4.10 [ ]Section 4.16 [ ]Section 4.23 [ ]

If you want to elect to have only part of this Note purchased by the Company pursuant to Section 4.10, 4.16, 4.18 or 4.23 of the Indenture, state the aggregate principal amount you elect to have purchased:

$_______________

Date:____________

Your Signature: _________________________________________

(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:__________________

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A-4-7

FORM OF NOTATION ON NOTE

RELATING TO GUARANTEE

Each Guarantor (a “Guarantor,” which term includes any successor Person under the Indenture) has unconditionally guaranteed, on a senior unsecured basis, jointly and severally, to the extent set forth in the Indenture and subject to the provisions of the Indenture, (a) the due and punctual payment of the principal, premium if any, and interest on the Notes when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of, premium, if any, and interest on the Notes, to the extent lawful, and the due and punctual performance of all other Obligations of the Company with respect to the Notes to the holders or the Trustee, all in accordance with the terms of the Notes and the Indenture, and (b) in the case of any extension of time for payment or renewal of any Notes or any of such other Obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise.

The obligations of each Guarantor to the holders and to the Trustee pursuant to such Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of such Guarantee.

This Guarantee shall not be valid or obligatory for any purpose until the certificate of authentication on the Note upon which such Guarantee is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized signatories.

ATC TECHNOLOGIES, LLC
(a Delaware limited liability company)
By:
	Name:
	Title:

SKYTERRA SUBSIDIARY LLC
(a Delaware limited liability company)
By:
	Name:
	Title:

SKYTERRA INTERNATIONAL, LLC
(a Delaware limited liability company)
By:
	Name:
	Title:

A-4-8

SKYTERRA INC. OF VIRGINIA
(a Virginia corporation)
By:
	Name:
	Title:

SKYTERRA CORP.
(a Nova Scotia unlimited liability company)
By:
	Name:
	Title:

SKYTERRA HOLDINGS (CANADA) INC.(an
Ontario corporation)
By:
	Name:
	Title:

SKYTERRA (CANADA) INC.
(an Ontario corporation)
By:
	Name:
	Title:

A-4-9

SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE¹

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange
Amount of decrease in Principal Amount of this Global Note
Amount of increase in Principal Amount of this Global Note Principal Amount of this Global Note following such decrease (or increase) Signature of authorized officer of Trustee or Note Custodian

_________________________

¹  schedule should be included only if the Note is issued in global form.

A-4-10

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

SkyTerra LP

10802 Parkridge Boulevard

Reston, VA 20191-5416

Attention: Treasurer

[Trustee]

as Trustee

Attention:

(SkyTerra LP and SkyTerra Finance Co.

18.0% Senior Notes due 2013)

Re: 18.0% Senior Notes due 2013

Reference is hereby made to the Indenture, dated as of [], 2009 (the “Indenture”), among SkyTerra LP, SkyTerra Finance Co., the Guarantors named therein and , as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

___________________ (the “Transferor”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $___________ in such Note[s] or interests (the “Transfer”), to ___________________________ (the “Transferee”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1.         [ ]        Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Definitive Note Pursuant to Rule 144A. The Transfer is being effected pursuant to and in accordance with Rule 144A under the United States Securities Act of 1933, as amended (the “Securities Act”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believed and believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the 144A Global Note and/or the Definitive Note and in the Indenture and the Securities Act.

2.         [ ]        Check if Transferee will take delivery of a beneficial interest in the Regulation S Global Note or Definitive Note pursuant to Regulation S. The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was

B-1

outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, and (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Restricted Notes Legend printed on the Regulation S Global Note and/or Definitive Note and in the Indenture and the Securities Act.

3.         [ ]        Check and complete if Transferee will take delivery of a beneficial interest in a Global Note or a Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S. The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a)        [ ]        such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

or

(b)       [ ]         such Transfer is being effected to the Company or a Subsidiary thereof;

or

(c)        [ ]        such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;

or

(d)       [ ]         such Transfer is being effected to an Institutional Accredited Investor for its own account or for the account of such an Institutional Accredited Investor, pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) an Opinion of Counsel satisfactory to the Company provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the Definitive Notes and in the Indenture and the Securities Act.

4.         [ ]        Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note.

(a)        [ ]        Check if Transfer is pursuant to Rule 144. (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the

B-2

transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b)       [ ]         Check if Transfer is Pursuant to RegulationS. (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(c)        [ ]        Check if Transfer is Pursuant to Other Exemption. (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Issuers.

[Insert Name of Transferor]
By:
	Name:
	Title:

Dated:

B-3

ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE]

(a) [ ] a beneficial interest in the:

(i) [ ] 144A Global Note (CUSIP _________________), or

(ii) [ ] IAI Global Note (CUSIP _________________), or

(iii) [ ] Regulation S Global Note (CUSIP ________________),

or

(iv) [ ] Unrestricted Global Note (CUSIP ________________), or

(b) [ ] a Restricted Definitive Note; or

(c) [ ] an Unrestricted Definitive Note,

2. After the Transfer the Transferee will hold:

[CHECK ONE]

(a) [ ] a beneficial interest in the:

(i) [ ] 144A Global Note (CUSIP _________________), or

(ii) [ ] IAI Global Note (CUSIP _________________), or

(iii) [ ] Regulation S Global Note (CUSIP ________________), or

(iv) [ ] Unrestricted Global Note (CUSIP ________________), or

(b) [ ] a Restricted Definitive Note; or

(c) [ ] an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.

B-4

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

SkyTerra LP

10802 Parkridge Boulevard

Reston, VA 20191-5416

Attention: Treasurer

[Trustee]

as Trustee

Attention:

(SkyTerra LP and SkyTerra Finance Co.

18.0% Senior Notes due 2013)

Re: 18.0% Senior Notes due 2013

Reference is hereby made to the Indenture, dated as of [], 2009 (the “Indenture”), among SkyTerra LP, SkyTerra Finance Co., the Guarantors named therein and , as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

__________________________ (the “Owner”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $____________ in such Note[s] or interests (the “Exchange”). In connection with the Exchange, the Owner hereby certifies that:

1.         Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note.

(a)        [ ]        Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the United States Securities Act of 1933, as amended (the “Securities Act”), (iii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b)       [ ]         Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act

C-1

and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c)        [ ]        Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d)       [ ]         Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note. In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Restricted Notes Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2.         Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes.

(a)        [ ]        Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b)       [ ]         Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note. In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in a Restricted Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Restricted Notes Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

C-2

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.

[Insert Name of Transferor]
By:
	Name:
	Title:

Dated:

C-3

EXHIBIT D

FORM OF CERTIFICATE FROM

ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR

SkyTerra LP

10802 Parkridge Boulevard

Reston, VA 20191-5416

Attention: Treasurer

[Trustee]

as Trustee

Attention:

(SkyTerra LP and SkyTerra Finance Co.

18.0% Senior Notes due 2013)

Re: 18.0% Senior Notes due 2013

Reference is hereby made to the Indenture, dated as of January 7, 2009 (the “Indenture”), among SkyTerra LP and SkyTerra Finance Co., the Guarantors named therein and , as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

In connection with our proposed purchase of $____________ aggregate principal amount of:

(a) [ ] a beneficial interest in a Global Note, or

(b) [ ] a Definitive Note,

we confirm that:

1.         We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the United States Securities Act of 1933, as amended (the “Securities Act”).

2.         We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any Subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144(k) under the Securities Act or (F) pursuant

D-1

to an effective registration statement under the Securities Act, and we further agree to provide to any person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3.         We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

4.         We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) or an entity in which all of the equity owners are the foregoing and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5.         We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

You and the Issuers are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.

[Insert Name of Transferor]
By:
	Name:
	Title:

Dated:

D-2

EX-4

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT, THE RULES AND REGULATIONS THEREUNDER AND THIS WARRANT.

Warrant No. 1

WARRANT

TO PURCHASE 5,625,000 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

OF

SKYTERRA COMMUNICATIONS, INC.

THIS IS TO CERTIFY THAT Harbinger Capital Partners Master Fund I, Ltd., or its registered assigns, is entitled, at any time prior to the Expiration Date (such term, and certain other capitalized terms used herein being hereinafter defined), to purchase from SKYTERRA COMMUNICATIONS, INC., a Delaware corporation (the "Company"), 5,625,000 shares of the Common Stock of the Company, (subject to adjustment as provided herein), at a purchase price of $.01 per share (the initial "Exercise Price", subject to adjustment as provided herein).

1. DEFINITIONS

As used in this Warrant, the following terms have the respective meanings set forth below:

"Affiliate" of any Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such Person. The term "control" (including the terms "controlled by" and "under common control with") as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

"April Warrants" shall mean warrants to be issued by the Company to Harbinger on April 1, 2009 (or such other time that the Company and Harbinger may agree) to purchase an aggregate of 21,250,000 shares of Common Stock, and all warrants issued upon transfer, division, or combination of, or in substitution of such warrants.

"Appraised Value" per share of Common Stock as of a date specified herein shall mean the value of such a share as of such date as determined by an investment bank of nationally recognized standing selected by the Majority Warrant Holders and reasonably acceptable to the Company. If the investment bank selected by the Majority Warrant Holders is not reasonably acceptable to the Company, and the Company and the Majority Warrant Holders cannot agree on a mutually acceptable investment bank, then the Company and the Majority Warrant Holders shall each choose one such investment bank and the respective chosen firms shall jointly select a third investment bank, which shall make the determination. The Company shall pay the costs and fees of each such investment bank (including any such investment bank selected by the Majority Warrant Holders), and the decision of the investment bank making such determination of Appraised Value shall be final and binding on the Company and all affected holders of Warrants or Warrant Stock. Such Appraised Value shall be determined as a pro rata portion of the value of the Company taken as a whole, based on the higher of (A) the value derived from a hypothetical sale of the entire Company as a going concern by a willing seller to a willing buyer (neither acting under any compulsion) and (B) the liquidation value of the entire Company. No discount shall be applied on account of (i) any Warrants or Warrant Stock representing a minority interest, (ii) any lack of liquidity of the Common Stock or the Warrants, (iii) the fact that the Warrants or Warrant Stock may constitute "restricted securities" for securities law purposes, (iv) the existence of any call option or (v) any other grounds.

"Business Day" shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.

"Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

"Common Stock" shall mean the Voting Common Stock or the Non-Voting Common Stock, as constituted on the Original Issue Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of shares of any Common Stock upon any reclassification thereof which is also not preferred as to dividends or liquidation over any other class of stock of the Company and which is not subject to redemption, and (ii) shares of common stock of any successor or acquiring corporation received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 4.3 hereof.

"Company" means SkyTerra Communications, Inc., a Delaware corporation, and any successor corporation.

"Current Market Price" shall mean as of any specified date the average of the daily market price of one share of the Common Stock for the shorter of (x) the twenty (20) consecutive Business Days immediately preceding such date or (y) the period commencing on the Business Day next following the first public announcement by the Company of any event giving rise to an adjustment of the Exercise Price pursuant to Section 5 below and ending on the date of such event. The "daily market price" of one share of Common Stock for each such Business Day shall be: (i) if the Common Stock is then listed on a national securities exchange, the last sale price of one share of Common Stock, regular way, on such day on the principal stock exchange

2

or market system on which such Common Stock is then listed or admitted to trading, or, if no such sale takes place on such day, the average of the closing bid and asked prices for one share of Common Stock on such day as reported on such stock exchange or market system or (ii) if the Common Stock is not then listed or admitted to trading on any national securities exchange but is traded over-the-counter, the average of the closing bid and asked prices for one share of Common Stock as reported on the Electronic Bulletin Board or in the National Daily Quotation Sheets, as applicable.

"Designated Office" shall have the meaning set forth in Section 10 hereof.

"Encumbrance" means any mortgage, pledge, hypothecation, claim, charge, security interest, encumbrance, option, lien, put or call right, right of first offer or refusal, proxy, voting right or other restrictions or limitations of any nature whatsoever in respect of any property or asset, whether or not filed, recorded or otherwise perfected under applicable law, other than (a) those resulting from Taxes which have not yet become delinquent or (b) minor liens and encumbrances that do not materially detract from the value of the property or asset, or materially impair the operations of SkyTerra LP or the Company or materially interfere with the use of such property or asset.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

"Exercise Date" shall have the meaning set forth in Section 2.1 hereof.

"Exercise Notice" shall have the meaning set forth in Section 2.1 hereof.

"Exercise Price" shall mean $0.01 per share of Common Stock, subject to adjustment as provided herein.

"Expiration Date" shall mean January 7, 2014.

"Fair Value" per share of Common Stock as of any specified date shall mean (A) if the Common Stock is publicly traded on such date, the Current Market Price per share, or (B) if the Common Stock is not publicly traded on such date, (1) the fair market value per share of Common Stock as determined in good faith by the Board of Directors of the Company and set forth in a written notice to each Holder or (2) if the Majority Warrant Holders object in writing to such price as determined by the Board of Directors within thirty (30) days after receiving notice of same, the Appraised Value per share as of such date. For the avoidance of doubt and notwithstanding the foregoing, the Fair Value per share of Voting Common Stock and Non-Voting Common Stock shall, at all times, be deemed to be the same. Fair Value with respect to property, services or other consideration shall be calculated in a similar manner.

"FCC" shall mean the Federal Communications Commission.

"Harbinger" shall mean Harbinger Capital Partners Master Fund I, Ltd. or Harbinger Capital Partners Special Situations Fund, L.P. or any of their respective Affiliates.

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"Holder" shall mean (a) with respect to this Warrant, the Person in whose name the Warrant set forth herein is registered on the books of the Company maintained for such purpose and (b) with respect to any other Warrant or shares of Warrant Stock, the Person in whose name such Warrant or Warrant Stock is registered on the books of the Company maintained for such purpose.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"January 2010 Warrants" shall mean warrants to be issued by the Company to Harbinger on January 4, 2010 (or such other time that the Company and Harbinger may agree) to purchase an aggregate of 3,750,000 shares of Common Stock, and all warrants issued upon transfer, division or combination of such warrants.

"Majority Warrant Holders", with respect to a given determination, shall mean the Holders of Warrants, April Warrants (to the extent issued) and January 2010 Warrants (to the extent issued) representing more than fifty percent (50%) of all Common Stock issuable upon exercise of all outstanding Warrants, April Warrants and January 2010 Warrants (taken together).

“Master Contribution Agreement” shall mean the Master Contribution and Support Agreement dated July 24, 2008, among Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., Harbinger Co-Investment Fund, L.P., the Company, SkyTerra LP and SkyTerra Subsidiary LLC (formerly named Mobile Satellite Ventures Subsidiary LLC).

"SkyTerra LP" shall mean SkyTerra LP, a Delaware limited partnership formerly named Mobile Satellite Ventures LP.

"Finance Co." shall mean SkyTerra Finance Co., a Delaware corporation formerly named MSV Finance Co.

"Non-Voting Common Stock" shall mean the non-voting common stock, par value $0.01 per share, of the Company.

"Notes" shall mean the 18.0% Senior Notes due 2013 of SkyTerra LP and Finance Co.

"Opinion of Counsel" means a written opinion of outside counsel experienced in Securities Act matters chosen by the Holder of this Warrant or Warrant Stock issued upon the exercise hereof and reasonably acceptable to the Company.

"Original Issue Date" shall mean January 7, 2009.

"Original Warrants" shall mean all of the Warrants issued by the Company to Harbinger on January 7, 2009 to purchase an aggregate of 7,500,000 shares of Common Stock.

"Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, whether Voting Common Stock or Non-Voting Common Stock, as the case may be, except shares then owned or held by or for the account of the Company or any Subsidiary, and shall

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include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock.

"Person" shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

"Restricted Common Stock" shall mean shares of Common Stock which are, or which upon their issuance on the exercise of this Warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 8.2(a) hereof.

"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

"Share Withholding Option" has the meaning set forth in Section 2.1 hereof.

"Subsidiary" shall mean any corporation, association or other business entity (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled directly or indirectly by the Company; or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such person.

“Tax” or “Taxes” means any and all taxes, charges, fees, levies, imposts, duties or other assessments of any kind whatsoever, imposed by or payable to any federal, state, provincial, local, or foreign tax authority, including any gross income, net income, alternative or add on minimum, franchise, profits or excess profits, gross receipts, estimated, capital, goods, services, documentary, use, transfer, ad valorem, business rates, value added, sales, customs, real or personal property, capital stock, license, payroll, withholding or back up withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, occupancy, transfer, gains taxes, together with any interest, penalties, additions to tax or additional amounts imposed with respect thereto.

"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of any interest therein, which would constitute a "sale" thereof or a transfer of a beneficial interest therein within the meaning of the Securities Act.

"Voting Common Stock" shall mean the voting common stock, par value $0.01 per share, of the Company.

"Warrant Price" shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 2.1 hereof, multiplied by (ii) the Exercise Price as of the date of such exercise.

"Warrants" shall mean the Original Warrants and all warrants issued upon transfer, division or combination of, or in substitution for, such Original Warrants. All Warrants shall at

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all times be identical as to terms and conditions, except as to the number of shares of Common Stock for which they may be exercised and their date of issuance.

"Warrant Stock" generally shall mean the shares of Common Stock issued, issuable or both (as the context may require) upon the exercise of Warrants.

2. EXERCISE OF WARRANT

2.1 Manner of Exercise.

(a)       From and after the Original Issue Date and until 5:00 P.M., New York time, on the Expiration Date, the Holder of this Warrant may, from time to time, exercise this Warrant, on any Business Day, for up to 5,625,000 shares of Common Stock. In order to exercise this Warrant, in whole or in part, the Holder shall (i) deliver to the Company at its Designated Office a written notice of the Holder's election to exercise this Warrant (an "Exercise Notice"), which Exercise Notice shall be irrevocable and specify the number of shares of Non-Voting Common Stock and/or Voting Common Stock to be purchased, together with this Warrant and (ii) pay to the Company the Warrant Price (the date on which both such delivery and payment shall have first taken place being hereinafter sometimes referred to as the "Exercise Date"). Such Exercise Notice shall be in the form of the subscription form appearing at the end of this Warrant as Annex A, duly executed by the Holder or its duly authorized agent or attorney. For the avoidance of doubt, subject to the other conditions set forth in Sections 2.1(b), 2.1(c) or elsewhere herein, the Holder may, at its sole discretion, exercise the Warrant for shares of Voting Common Stock, shares of Non-Voting Common Stock or any combination thereof.

(b)       Upon receipt by the Company of such Exercise Notice, Warrant and payment, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to Section 8 below, such other name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the Exercise Date. Notwithstanding the foregoing, in the event that the rules of any stock exchange or automatic quotation system on which the Company's Common Stock is then listed, traded or quoted requires shareholder approval prior to the issuance of any or all of the Warrant Stock (or the conversion of Non-Voting Common Stock into Voting Common Stock), the Company shall issue on the Exercise Date the maximum number of shares of Warrant Stock that can be issued without shareholder approval, without regard to any shares of Warrant Stock otherwise required to be issued in excess of such maximum number of shares of Warrant Stock, and shall promptly after receipt of such shareholder approval issue the balance of the number of shares of Warrant Stock for which this Warrant has been exercised. The Company shall use its reasonable best efforts to obtain such shareholder approval as soon as reasonably possible, including, without

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limitation, filing all proxy statements or information statements, necessary or convenient to obtain such consent.

(c)       Notwithstanding anything to the contrary contained herein, prior to the issuance of the Warrant Stock or, in the event that the Warrant Stock is Non-Voting Common Stock, the Voting Common Stock issuable upon exchange of such Warrant Stock, the Holder or its permitted assigns on the one hand, and the Company on the other hand, shall have satisfied any and all applicable legal or regulatory requirements for conversion, including compliance with the HSR Act and FCC requirements. The Company shall use its reasonable best efforts in cooperating with such Holder to obtain such legal or regulatory approvals to the extent its cooperation is necessary. The Company shall pay all necessary filing fees and reasonable out-of-pocket expenses to obtain such legal or regulatory approvals.

(d)       Payment of the Warrant Price shall be made at the option of the Holder by one or more of the following methods: (i) by delivery of a certified or official bank check in the amount of such Warrant Price payable to the order of the Company, (ii) by instructing the Company to withhold a number of shares of Warrant Stock then issuable upon exercise of this Warrant with an aggregate Fair Value equal to such Warrant Price (the "Share Withholding Option"), (iii) by surrendering to the Company, Notes previously acquired by the Holder with an aggregate fair market value equal to such Warrant Price; it being understood that the fair market value of the Note shall be its principal amount plus any accrued interest to that day, or (iv) by surrendering to the Company shares of Common Stock previously acquired by the Holder with an aggregate Fair Value equal to such Warrant Price. In the event of any withholding of Warrant Stock or surrender of Notes or Common Stock pursuant to clause (ii), (iii) or (iv) above where the number of shares whose Fair Value (as measured on the Exercise Date) is equal to the Warrant Price is not a whole number, the number of shares withheld by or surrendered to the Company shall be rounded up to the nearest whole share and the Company shall make a cash payment to the Holder based on the incremental fraction of a share being so withheld by or surrendered to the Company in an amount determined in accordance with Section 2.3 hereof. Notwithstanding any provision herein to the contrary, the Company shall not be required to register shares of Common Stock in the name of any Person who acquired this Warrant (or part hereof) or any shares of Warrant Stock otherwise than in accordance with this Warrant.

(e)       If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the shares of Common Stock being issued, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

(f)        Subject to Section 2.1(g), all Warrants delivered for exercise shall be canceled by the Company.

(g)       Notwithstanding anything to the contrary in this Warrant, if, at the time that the Holder of this Warrant elects to exercise this Warrant, in whole or in part, the Company does not have a sufficient number of authorized and issued shares of Non-Voting Common Stock sufficient to permit such Holder to receive a complete allotment of Non-Voting Common Stock pursuant its election under Section 2.1(a), such election shall be deemed to be for a number of

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shares of Non-Voting Common Stock equal to the number of shares of Non-Voting Common Stock then authorized but unissued by the Company.

2.2       Payment of Taxes. All shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued, fully paid and nonassessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all Encumbrances (other than any created by actions of the Holder). The Company shall pay all expenses in connection with, and all Taxes and other governmental charges that may be imposed with respect to, the issue or delivery thereof, unless such Tax or charge is imposed by law upon the Holder. The Company shall not, however, be required to pay any Tax or governmental charge which may be payable in respect of any Transfer involved in the issue and delivery of shares of Warrant Stock issuable upon exercise of this Warrant in a name other than that of the holder of the Warrants to be exercised, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such Tax, or has established to the satisfaction of the Company that such Tax has been paid. The Company shall not be required to reimburse the Holder or any other Person for any income, withholding, franchise, or similar Taxes or governmental charges (whether collected by withholding or otherwise and whether imposed on the gross amount of any payment or otherwise) paid by the Company or imposed on the Holder with respect to the exercise or issuance of the Warrant or issuance of any Warrant Stock or on or with respect to any payments made on or with respect to the Warrant or Warrant Stock.

2.3       Fractional Shares . The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant. As to any fraction of a share that the Holder of one or more Warrants, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash equal to such fraction multiplied by the Fair Value of one share of Common Stock on the Exercise Date.

3. TRANSFER, DIVISION AND COMBINATION

3.1       Transfer. Subject to compliance with Section 8 hereof, each transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with a written assignment of this Warrant in the form of Annex B hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer Taxes described in Section 2.2 in connection with the making of such transfer. Upon such surrender and delivery and, if required, such payment, the Company shall, subject to Section 8, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned and this Warrant shall promptly be cancelled. A Warrant, if properly assigned in compliance with Section 8, may be exercised by the new Holder for the purchase of shares of Common Stock without having a new Warrant issued.

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3.2       Division and Combination. Subject to compliance with the applicable provisions of this Warrant including, without limitation, Section 8, this Warrant may be divided or combined with other Warrants upon presentation hereof at the Designated Office, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with the applicable provisions of this Warrant as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

3.3       Expenses. The Company shall prepare, issue and deliver at its own expense any new Warrant or Warrants required to be issued under this Section 3 (other than pursuant to Section 2.2 and 3.1 hereof).

3.4       Maintenance of Books. The Company agrees to maintain, at the Designated Office, books for the registration and transfer of the Warrants.

4. ANTIDILUTION PROVISIONS

The Exercise Price shall be subject to adjustment from time to time as follows:

4.1       Upon Stock Dividends, Subdivisions or Splits. If, at any time after the Original Issue Date, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, or to be affected by such subdivision or split-up, the number of shares issuable upon exercise of the Warrant shall be proportionately increased by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock Outstanding immediately after such increase in Outstanding shares and the denominator of which is the number of shares of Common Stock Outstanding immediately prior to such increase.

4.2       Upon Combinations or Reverse Stock Splits. If, at any time after the Original Issue Date, the number of shares of Common Stock Outstanding is decreased by a combination or reverse stock split of the Outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, upon the record date to determine shares affected by such combination or reverse stock split, (a) the Exercise Price shall be increased by multiplying the Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock Outstanding immediately prior to such decrease and the denominator of which is the number of shares of Common Stock Outstanding immediately after such decrease in Outstanding shares, and (b) the number of shares issuable upon exercise of the Warrant shall be proportionately decreased by multiplying the same by the inverse of such fraction.

4.3       Upon Reclassifications, Reorganizations, Consolidations or Mergers. In the event of any capital reorganization of the Company, any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split up or combination of shares), or any consolidation or merger of the Company with or into another Person (where the

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Company is not the surviving Person or where there is a change in or distribution with respect to the Common Stock), each Warrant shall after such reorganization, reclassification, consolidation, or merger be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the successor Person resulting from such consolidation or surviving such merger, if any, to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon exercise of such Warrant would have been entitled upon such reorganization, reclassification, consolidation or merger. The provisions of this Section 4.3 shall similarly apply to successive reorganizations, reclassifications, consolidations, or mergers. The Company shall not effect any such reorganization, reclassification, consolidation or merger unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation or merger, shall assume, by written instrument, the obligation to deliver to the Holders of the Warrant such shares of stock, securities or assets, which, in accordance with the foregoing provisions, such Holders shall be entitled to receive upon such conversion.

5. NO IMPAIRMENT; REGULATORY COMPLIANCE AND COOPERATION; NOTICE OF EXPIRATION

(a)       The Company shall not by any action, including, without limitation, amending its charter documents or through any reorganization, reclassification, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other similar voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company shall take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, free and clear of all Encumbrances (other than any created by actions of the Holder), and shall use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)       The Company shall deliver to each Holder of Warrants after the 60^th day but before the 30^th day prior to the Expiration Date, advance notice of such Expiration Date. If the Company fails to fulfill in a timely manner the notice obligation set forth in the prior sentence, it shall provide such notice as soon as possible thereafter.

6. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY

From and after the Original Issue Date, the Company shall use its best efforts to reserve and keep available for issuance upon the exercise of the Warrants such number of its authorized but unissued shares of Non-Voting Common Stock and Voting Common Stock, as will be sufficient to permit the exercise in full of all outstanding Warrants; provided that if, at any time after the Original Issue Date, the Company does not have available for issuance

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authorized but unissued shares of Non-Voting Common Stock and Voting Common Stock, as will be sufficient to permit the exercise in full of all outstanding Warrants, and the Company shall pay a dividend (other than a dividend for which an adjustment is made pursuant to Section 4.1) or otherwise distribute to all holders of its shares of Common Stock cash, evidences of its indebtedness or assets, then the Holder shall be entitled to also receive such dividend or distribution on the date it is paid in an amount which it would have received if the Holder had exercised the Warrants held by the Holder immediately prior to the date of such dividend or distribution without duplication of any right of the Holder to receive such dividend or distribution pursuant to the Master Contribution Agreement.

All shares of Common Stock issuable pursuant to the terms hereof, when issued upon exercise of this Warrant with payment therefor in accordance with the terms hereof, shall be duly and validly issued and fully paid and nonassessable, not subject to preemptive rights and shall be free and clear of all Encumbrances (other than Encumbrances created by actions of a Holder). Before taking any action that would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction over such action. Subject to the provisos in Section 2.1(b) and (c) herein, if any shares of Common Stock required to be reserved for issuance upon exercise of Warrants require registration or qualification with any governmental authority under any federal or state law (other than under the Securities Act or any state securities law) before such shares may be so issued, the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered.

7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS

7.1 Notices of Corporate Actions.

In case:

(a)       the Company shall take an action or an event shall occur, that would require an Exercise Price adjustment pursuant to Section 4; or

(b)       the Company shall grant to the holders of its Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class; or

(c)       of any reclassification of the Common Stock (other than a subdivision or combination of the Outstanding shares of Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

(d)       of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or

(e)       the Company or any Subsidiary shall commence a tender offer for all or a portion of the Outstanding shares of Common Stock (or shall amend any such tender offer to

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change the maximum number of shares being sought or the amount or type of consideration being offered therefor);

then the Company shall cause to be filed at each office or agency maintained for such purpose, and shall cause to be mailed to all Holders at their last addresses as they shall appear in the stock register, at least 10 days prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record who will be entitled to such dividend, distribution, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of the amendment thereto). Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Exercise Price and the number and kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon exercise of the Warrants. Neither the failure to give any such notice nor any defect therein shall affect the legality or validity of any action described in clauses (a) through (e) of this Section 7.1.

7.2       Taking of Record. In the case of all dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of any Section hereof refers to the taking of a record of such holders, the Company will in each such case take such a record as of the close of business on a Business Day.

7.3       Closing of Transfer Books. The Company shall not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

8. TRANSFER RESTRICTIONS

The Holder, by acceptance of this Warrant, agrees to be bound by the provisions of this Section 8.

8.1       Restrictions on Transfers. Subject to this Section 8.1, Holder may transfer this Warrant or any shares of Restricted Common Stock or cause a portion of this Warrant to be transferred. Neither this Warrant, any portion hereof nor any shares of Restricted Common Stock issued upon the exercise hereof shall be transferred, sold, assigned, exchanged, mortgaged, pledged, hypothecated, or otherwise disposed of or encumbered without compliance with, and they are otherwise restricted by, the provisions of the Securities Act, the rules and

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regulations thereunder and this Warrant. Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon any such Transfer, other than in a public offering pursuant to an effective registration statement, shall bear the restrictive legend set forth in Section 8.2(a), and each Warrant issued upon such Transfer shall bear the restrictive legend set forth in Section 8.2(b), unless the Holder delivers to the Company an Opinion of Counsel to the effect that such legend is not required for the purposes of compliance with the Securities Act. Holders of the Warrants or the Restricted Common Stock, as the case may be, shall not be entitled to Transfer such Warrants or such Restricted Common Stock except in accordance with this Section 8.1.

8.2 Restrictive Legends.

(a)       Except as otherwise provided in this Section 8, each certificate for Warrant Stock initially issued upon the exercise of this Warrant, each certificate for Warrant Stock issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with two legends in substantially the following forms: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT AND THE RULES AND REGULATIONS THEREUNDER." "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO THE BENEFIT OF AND ARE SUBJECT TO CERTAIN OBLIGATIONS SET FORTH IN A CERTAIN WARRANT DATED JANUARY 6, 2009, ORIGINALLY ISSUED BY SKYTERRA COMMUNICATIONS, INC. (THE "WARRANT") PURSUANT TO THE EXERCISE OF WHICH SUCH SHARES WERE ISSUED. A COPY OF THE WARRANT IS AVAILABLE AT THE EXECUTIVE OFFICES OF SKYTERRA COMMUNICATIONS, INC."

(b)       Except as otherwise provided in this Section 8, each Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form: "NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OF OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT, THE RULES AND REGULATIONS THEREUNDER AND THIS WARRANT."

8.3       Termination of Securities Law Restrictions. Notwithstanding the foregoing provisions of this Section 8, the restrictions imposed by Section 8.1 upon the transferability of the Warrants and the Restricted Common Stock and the legend requirements of Section 8.2 shall terminate as to any particular Warrant or shares of Restricted Common Stock

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when the Company shall have received from the Holder thereof an Opinion of Counsel to the effect that such legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by Sections 8.1 and 8.2 shall terminate as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive from the Company, at the expense of the Company, a new Warrant not bearing the restrictive legend set forth in Section 8.2(b).

All Warrants issued upon registration of transfer, division or combination of, or in substitution for, any Warrant or Warrants entitled to bear such legend shall have a similar legend endorsed thereon. Whenever the restrictions imposed by this Section shall terminate as to any share of Restricted Common Stock, as hereinabove provided, the Holder thereof shall be entitled to receive from the Company, at the Company's expense, a new certificate representing such Common Stock not bearing the restrictive legend set forth in Section 8.2(a).

9. LOSS OR MUTILATION

Upon receipt by the Company from any Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and an indemnity reasonably satisfactory to it (it being understood that the written indemnification agreement of or affidavit of loss of the Holder, shall be a sufficient indemnity) and, in case of mutilation, upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to such Holder; provided, however, that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

10. OFFICE OF THE COMPANY

As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency, which may be the principal executive offices of the Company (the "Designated Office"), where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant. Such Designated Office shall initially be the office of the Company at 10802 Parkridge Boulevard, Reston, Virginia 20191. The Company may from time to time change the Designated Office to another office of the Company or its agent within the United States by notice given to all registered Holders at least ten (10) Business Days prior to the effective date of such change.

11. MISCELLANEOUS

11.1     Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Company or the Holder shall operate as a waiver of such right or otherwise prejudice the rights, powers or remedies of such Person.

11.2     Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or communication hereunder to be made pursuant to the provisions of this Warrant shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

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(a)       if to any Holder of this Warrant or of Warrant Stock issued upon the exercise hereof, at its last known address appearing on the books of the Company maintained for such purpose;

(b) if to the Company, at the Designated Office;

or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, or three (3) Business Days after the same shall have been deposited in the United States mail, or one (1) Business Day after the same shall have been sent by Federal Express or another recognized overnight courier service.

11.3     Indemnification. The Company shall indemnify, save and hold harmless the Holder hereof and the Holders of any Warrant Stock issued upon the exercise hereof from and against any and all liability, loss, cost, damage, reasonable attorneys' and accountants' fees and expenses, court costs and all other out of-pocket expenses incurred in connection with or arising from any default hereunder by the Company. This indemnification provision shall be in addition to the rights of such Holder or Holders to bring an action against the Company for breach of contract based on such default hereunder.

11.4     Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder to pay the Exercise Price for any Warrant Stock other than pursuant to an exercise of this Warrant or any liability as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

11.5     Remedies. Each Holder of Warrants and/or Warrant Stock, in addition to being entitled to exercise its rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights provided under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees, in an action for specific performance, to waive the defense that a remedy at law would be adequate.

11.6     Successors and Assigns. Subject to the provisions of Sections 3.1 and 8.1, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the permitted successors and assigns of the Holder hereof. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and to the extent applicable, all Holders of shares of Warrant Stock issued upon the exercise hereof (including transferees), and shall be enforceable by any such Holder.

11.7     Amendment. This Warrant and all other Warrants may be modified or amended or the provisions hereof waived with the written consent of the Company and the Majority Warrant Holders, provided that no such Warrant may be modified or amended to

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reduce the number of shares of Common Stock for which such Warrant is exercisable or to increase the price at which such shares may be purchased upon exercise of such Warrant (before giving effect to any adjustment as provided therein) without the written consent of the Holder thereof.

11.8     Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant.

11.9     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

11.10   GOVERNING LAW; JURISDICTION. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE. THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK, SHALL HAVE, EXCEPT AS SET FORTH BELOW, EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY AND THE HOLDER OF THIS WARRANT PERTAINING TO THIS WARRANT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, PROVIDED, THAT IT IS ACKNOWLEDGED THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and its corporate seal to be impressed hereon and attested by its Secretary or an Assistant Secretary.

SKYTERRA COMMUNICATIONS, INC.
By:		/s/ Scott Macleod
	Name:	Scott Macleod
	Title:	Executive Vice President,
		Chief Financial Officer and
		Treasurer

[SEAL]
Attest:
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

ANNEX A

SUBSCRIPTION FORM

[To be executed only upon exercise of Warrant]

The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of ______ shares of Voting Common Stock and ________ shares of Non-Voting Common Stock of SkyTerra Communications, Inc. and herewith makes payment therefor in __________, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the shares of such Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _________________ whose address is _______________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned.

Method of Payment of Exercise Price:

______________________________

(Name of Registered Owner)

(Signature of Registered Owner)

(Street Address)

(City) (State) (Zip Code)

NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

ANNEX B

ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the assignee named below all of the rights of the under signed under this Warrant, with respect to the number of shares of Common Stock set forth below:

Name and Address of Assignee No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint ________ _____________ attorney-in-fact to register such transfer onto the books of SkyTerra Communications, Inc. maintained for the purpose, with full power of substitution in the premises.

Dated:	Print Name:
Signature:
	Witness:

NOTICE: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

EX-4

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT, THE RULES AND REGULATIONS THEREUNDER AND THIS WARRANT.

Warrant No. 2

WARRANT

TO PURCHASE 1,875,000 SHARES OF COMMON STOCK

(SUBJECT TO ADJUSTMENT)

OF

SKYTERRA COMMUNICATIONS, INC.

THIS IS TO CERTIFY THAT Harbinger Capital Partners Special Situations Fund, L.P., or its registered assigns, is entitled, at any time prior to the Expiration Date (such term, and certain other capitalized terms used herein being hereinafter defined), to purchase from SKYTERRA COMMUNICATIONS, INC., a Delaware corporation (the "Company"), 1,875,000 shares of the Common Stock of the Company, (subject to adjustment as provided herein), at a purchase price of $.01 per share (the initial "Exercise Price", subject to adjustment as provided herein).

1. DEFINITIONS

As used in this Warrant, the following terms have the respective meanings set forth below:

"Affiliate" of any Person means any other Person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with such Person. The term "control" (including the terms "controlled by" and "under common control with") as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

"April Warrants" shall mean warrants to be issued by the Company to Harbinger on April 1, 2009 (or such other time that the Company and Harbinger may agree) to purchase an aggregate of 21,250,000 shares of Common Stock, and all warrants issued upon transfer, division, or combination of, or in substitution of such warrants.

"Appraised Value" per share of Common Stock as of a date specified herein shall mean the value of such a share as of such date as determined by an investment bank of nationally recognized standing selected by the Majority Warrant Holders and reasonably acceptable to the Company. If the investment bank selected by the Majority Warrant Holders is not reasonably acceptable to the Company, and the Company and the Majority Warrant Holders cannot agree on a mutually acceptable investment bank, then the Company and the Majority Warrant Holders shall each choose one such investment bank and the respective chosen firms shall jointly select a third investment bank, which shall make the determination. The Company shall pay the costs and fees of each such investment bank (including any such investment bank selected by the Majority Warrant Holders), and the decision of the investment bank making such determination of Appraised Value shall be final and binding on the Company and all affected holders of Warrants or Warrant Stock. Such Appraised Value shall be determined as a pro rata portion of the value of the Company taken as a whole, based on the higher of (A) the value derived from a hypothetical sale of the entire Company as a going concern by a willing seller to a willing buyer (neither acting under any compulsion) and (B) the liquidation value of the entire Company. No discount shall be applied on account of (i) any Warrants or Warrant Stock representing a minority interest, (ii) any lack of liquidity of the Common Stock or the Warrants, (iii) the fact that the Warrants or Warrant Stock may constitute "restricted securities" for securities law purposes, (iv) the existence of any call option or (v) any other grounds.

"Business Day" shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the State of New York.

"Commission" shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

"Common Stock" shall mean the Voting Common Stock or the Non-Voting Common Stock, as constituted on the Original Issue Date, and any capital stock into which such Common Stock may thereafter be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of shares of any Common Stock upon any reclassification thereof which is also not preferred as to dividends or liquidation over any other class of stock of the Company and which is not subject to redemption, and (ii) shares of common stock of any successor or acquiring corporation received by or distributed to the holders of Common Stock of the Company in the circumstances contemplated by Section 4.3 hereof.

"Company" means SkyTerra Communications, Inc., a Delaware corporation, and any successor corporation.

"Current Market Price" shall mean as of any specified date the average of the daily market price of one share of the Common Stock for the shorter of (x) the twenty (20) consecutive Business Days immediately preceding such date or (y) the period commencing on the Business Day next following the first public announcement by the Company of any event giving rise to an adjustment of the Exercise Price pursuant to Section 5 below and ending on the date of such event. The "daily market price" of one share of Common Stock for each such Business Day shall be: (i) if the Common Stock is then listed on a national securities exchange, the last sale price of one share of Common Stock, regular way, on such day on the principal stock exchange

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or market system on which such Common Stock is then listed or admitted to trading, or, if no such sale takes place on such day, the average of the closing bid and asked prices for one share of Common Stock on such day as reported on such stock exchange or market system or (ii) if the Common Stock is not then listed or admitted to trading on any national securities exchange but is traded over-the-counter, the average of the closing bid and asked prices for one share of Common Stock as reported on the Electronic Bulletin Board or in the National Daily Quotation Sheets, as applicable.

"Designated Office" shall have the meaning set forth in Section 10 hereof.

"Encumbrance" means any mortgage, pledge, hypothecation, claim, charge, security interest, encumbrance, option, lien, put or call right, right of first offer or refusal, proxy, voting right or other restrictions or limitations of any nature whatsoever in respect of any property or asset, whether or not filed, recorded or otherwise perfected under applicable law, other than (a) those resulting from Taxes which have not yet become delinquent or (b) minor liens and encumbrances that do not materially detract from the value of the property or asset, or materially impair the operations of SkyTerra LP or the Company or materially interfere with the use of such property or asset.

"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect from time to time.

"Exercise Date" shall have the meaning set forth in Section 2.1 hereof.

"Exercise Notice" shall have the meaning set forth in Section 2.1 hereof.

"Exercise Price" shall mean $0.01 per share of Common Stock, subject to adjustment as provided herein.

"Expiration Date" shall mean January 7, 2014.

"Fair Value" per share of Common Stock as of any specified date shall mean (A) if the Common Stock is publicly traded on such date, the Current Market Price per share, or (B) if the Common Stock is not publicly traded on such date, (1) the fair market value per share of Common Stock as determined in good faith by the Board of Directors of the Company and set forth in a written notice to each Holder or (2) if the Majority Warrant Holders object in writing to such price as determined by the Board of Directors within thirty (30) days after receiving notice of same, the Appraised Value per share as of such date. For the avoidance of doubt and notwithstanding the foregoing, the Fair Value per share of Voting Common Stock and Non-Voting Common Stock shall, at all times, be deemed to be the same. Fair Value with respect to property, services or other consideration shall be calculated in a similar manner.

"FCC" shall mean the Federal Communications Commission.

"Harbinger" shall mean Harbinger Capital Partners Master Fund I, Ltd. or Harbinger Capital Partners Special Situations Fund, L.P. or any of their respective Affiliates.

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"Holder" shall mean (a) with respect to this Warrant, the Person in whose name the Warrant set forth herein is registered on the books of the Company maintained for such purpose and (b) with respect to any other Warrant or shares of Warrant Stock, the Person in whose name such Warrant or Warrant Stock is registered on the books of the Company maintained for such purpose.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"January 2010 Warrants" shall mean warrants to be issued by the Company to Harbinger on January 4, 2010 (or such other time that the Company and Harbinger may agree) to purchase an aggregate of 3,750,000 shares of Common Stock, and all warrants issued upon transfer, division or combination of such warrants.

"Majority Warrant Holders", with respect to a given determination, shall mean the Holders of Warrants, April Warrants (to the extent issued) and January 2010 Warrants (to the extent issued) representing more than fifty percent (50%) of all Common Stock issuable upon exercise of all outstanding Warrants, April Warrants and January 2010 Warrants (taken together).

“Master Contribution Agreement” shall mean the Master Contribution and Support Agreement dated July 24, 2008, among Harbinger Capital Partners Master Fund I, Ltd., Harbinger Capital Partners Special Situations Fund, L.P., Harbinger Co-Investment Fund, L.P., the Company, SkyTerra LP and SkyTerra Subsidiary LLC (formerly named Mobile Satellite Ventures Subsidiary LLC).

"SkyTerra LP" shall mean SkyTerra LP, a Delaware limited partnership formerly named Mobile Satellite Ventures LP.

"Finance Co." shall mean SkyTerra Finance Co., a Delaware corporation formerly named MSV Finance Co.

"Non-Voting Common Stock" shall mean the non-voting common stock, par value $0.01 per share, of the Company.

"Notes" shall mean the 18.0% Senior Notes due 2013 of SkyTerra LP and Finance Co.

"Opinion of Counsel" means a written opinion of outside counsel experienced in Securities Act matters chosen by the Holder of this Warrant or Warrant Stock issued upon the exercise hereof and reasonably acceptable to the Company.

"Original Issue Date" shall mean January 7, 2009.

"Original Warrants" shall mean all of the Warrants issued by the Company to Harbinger on January 7, 2009 to purchase an aggregate of 7,500,000 shares of Common Stock.

"Outstanding" shall mean, when used with reference to Common Stock, at any date as of which the number of shares thereof is to be determined, all issued shares of Common Stock, whether Voting Common Stock or Non-Voting Common Stock, as the case may be, except shares then owned or held by or for the account of the Company or any Subsidiary, and shall

4

include all shares issuable in respect of outstanding scrip or any certificates representing fractional interests in shares of Common Stock.

"Person" shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

"Restricted Common Stock" shall mean shares of Common Stock which are, or which upon their issuance on the exercise of this Warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 8.2(a) hereof.

"Securities Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

"Share Withholding Option" has the meaning set forth in Section 2.1 hereof.

"Subsidiary" shall mean any corporation, association or other business entity (i) at least 50% of the outstanding voting securities of which are at the time owned or controlled directly or indirectly by the Company; or (ii) with respect to which the Company possesses, directly or indirectly, the power to direct or cause the direction of the affairs or management of such person.

“Tax” or “Taxes” means any and all taxes, charges, fees, levies, imposts, duties or other assessments of any kind whatsoever, imposed by or payable to any federal, state, provincial, local, or foreign tax authority, including any gross income, net income, alternative or add on minimum, franchise, profits or excess profits, gross receipts, estimated, capital, goods, services, documentary, use, transfer, ad valorem, business rates, value added, sales, customs, real or personal property, capital stock, license, payroll, withholding or back up withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, occupancy, transfer, gains taxes, together with any interest, penalties, additions to tax or additional amounts imposed with respect thereto.

"Transfer" shall mean any disposition of any Warrant or Warrant Stock or of any interest therein, which would constitute a "sale" thereof or a transfer of a beneficial interest therein within the meaning of the Securities Act.

"Voting Common Stock" shall mean the voting common stock, par value $0.01 per share, of the Company.

"Warrant Price" shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 2.1 hereof, multiplied by (ii) the Exercise Price as of the date of such exercise.

"Warrants" shall mean the Original Warrants and all warrants issued upon transfer, division or combination of, or in substitution for, such Original Warrants. All Warrants shall at

5

all times be identical as to terms and conditions, except as to the number of shares of Common Stock for which they may be exercised and their date of issuance.

"Warrant Stock" generally shall mean the shares of Common Stock issued, issuable or both (as the context may require) upon the exercise of Warrants.

2. EXERCISE OF WARRANT

2.1 Manner of Exercise.

(a)       From and after the Original Issue Date and until 5:00 P.M., New York time, on the Expiration Date, the Holder of this Warrant may, from time to time, exercise this Warrant, on any Business Day, for up to 1,875,000 shares of Common Stock. In order to exercise this Warrant, in whole or in part, the Holder shall (i) deliver to the Company at its Designated Office a written notice of the Holder's election to exercise this Warrant (an "Exercise Notice"), which Exercise Notice shall be irrevocable and specify the number of shares of Non-Voting Common Stock and/or Voting Common Stock to be purchased, together with this Warrant and (ii) pay to the Company the Warrant Price (the date on which both such delivery and payment shall have first taken place being hereinafter sometimes referred to as the "Exercise Date"). Such Exercise Notice shall be in the form of the subscription form appearing at the end of this Warrant as Annex A, duly executed by the Holder or its duly authorized agent or attorney. For the avoidance of doubt, subject to the other conditions set forth in Sections 2.1(b), 2.1(c) or elsewhere herein, the Holder may, at its sole discretion, exercise the Warrant for shares of Voting Common Stock, shares of Non-Voting Common Stock or any combination thereof.

(b)       Upon receipt by the Company of such Exercise Notice, Warrant and payment, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or, subject to Section 8 below, such other name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the Exercise Date. Notwithstanding the foregoing, in the event that the rules of any stock exchange or automatic quotation system on which the Company's Common Stock is then listed, traded or quoted requires shareholder approval prior to the issuance of any or all of the Warrant Stock (or the conversion of Non-Voting Common Stock into Voting Common Stock), the Company shall issue on the Exercise Date the maximum number of shares of Warrant Stock that can be issued without shareholder approval, without regard to any shares of Warrant Stock otherwise required to be issued in excess of such maximum number of shares of Warrant Stock, and shall promptly after receipt of such shareholder approval issue the balance of the number of shares of Warrant Stock for which this Warrant has been exercised. The Company shall use its reasonable best efforts to obtain such shareholder approval as soon as reasonably possible, including, without

6

limitation, filing all proxy statements or information statements, necessary or convenient to obtain such consent.

(c)       Notwithstanding anything to the contrary contained herein, prior to the issuance of the Warrant Stock or, in the event that the Warrant Stock is Non-Voting Common Stock, the Voting Common Stock issuable upon exchange of such Warrant Stock, the Holder or its permitted assigns on the one hand, and the Company on the other hand, shall have satisfied any and all applicable legal or regulatory requirements for conversion, including compliance with the HSR Act and FCC requirements. The Company shall use its reasonable best efforts in cooperating with such Holder to obtain such legal or regulatory approvals to the extent its cooperation is necessary. The Company shall pay all necessary filing fees and reasonable out-of-pocket expenses to obtain such legal or regulatory approvals.

(d)       Payment of the Warrant Price shall be made at the option of the Holder by one or more of the following methods: (i) by delivery of a certified or official bank check in the amount of such Warrant Price payable to the order of the Company, (ii) by instructing the Company to withhold a number of shares of Warrant Stock then issuable upon exercise of this Warrant with an aggregate Fair Value equal to such Warrant Price (the "Share Withholding Option"), (iii) by surrendering to the Company, Notes previously acquired by the Holder with an aggregate fair market value equal to such Warrant Price; it being understood that the fair market value of the Note shall be its principal amount plus any accrued interest to that day, or (iv) by surrendering to the Company shares of Common Stock previously acquired by the Holder with an aggregate Fair Value equal to such Warrant Price. In the event of any withholding of Warrant Stock or surrender of Notes or Common Stock pursuant to clause (ii), (iii) or (iv) above where the number of shares whose Fair Value (as measured on the Exercise Date) is equal to the Warrant Price is not a whole number, the number of shares withheld by or surrendered to the Company shall be rounded up to the nearest whole share and the Company shall make a cash payment to the Holder based on the incremental fraction of a share being so withheld by or surrendered to the Company in an amount determined in accordance with Section 2.3 hereof. Notwithstanding any provision herein to the contrary, the Company shall not be required to register shares of Common Stock in the name of any Person who acquired this Warrant (or part hereof) or any shares of Warrant Stock otherwise than in accordance with this Warrant.

(e)       If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the shares of Common Stock being issued, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

(f)        Subject to Section 2.1(g), all Warrants delivered for exercise shall be canceled by the Company.

(g)       Notwithstanding anything to the contrary in this Warrant, if, at the time that the Holder of this Warrant elects to exercise this Warrant, in whole or in part, the Company does not have a sufficient number of authorized and issued shares of Non-Voting Common Stock sufficient to permit such Holder to receive a complete allotment of Non-Voting Common Stock pursuant its election under Section 2.1(a), such election shall be deemed to be for a number of

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shares of Non-Voting Common Stock equal to the number of shares of Non-Voting Common Stock then authorized but unissued by the Company.

2.2       Payment of Taxes. All shares of Warrant Stock issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued, fully paid and nonassessable, issued without violation of any preemptive or similar rights of any stockholder of the Company and free and clear of all Encumbrances (other than any created by actions of the Holder). The Company shall pay all expenses in connection with, and all Taxes and other governmental charges that may be imposed with respect to, the issue or delivery thereof, unless such Tax or charge is imposed by law upon the Holder. The Company shall not, however, be required to pay any Tax or governmental charge which may be payable in respect of any Transfer involved in the issue and delivery of shares of Warrant Stock issuable upon exercise of this Warrant in a name other than that of the holder of the Warrants to be exercised, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Company the amount of any such Tax, or has established to the satisfaction of the Company that such Tax has been paid. The Company shall not be required to reimburse the Holder or any other Person for any income, withholding, franchise, or similar Taxes or governmental charges (whether collected by withholding or otherwise and whether imposed on the gross amount of any payment or otherwise) paid by the Company or imposed on the Holder with respect to the exercise or issuance of the Warrant or issuance of any Warrant Stock or on or with respect to any payments made on or with respect to the Warrant or Warrant Stock.

2.3       Fractional Shares. The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant. As to any fraction of a share that the Holder of one or more Warrants, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay to such Holder an amount in cash equal to such fraction multiplied by the Fair Value of one share of Common Stock on the Exercise Date.

3. TRANSFER, DIVISION AND COMBINATION

3.1       Transfer. Subject to compliance with Section 8 hereof, each transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with a written assignment of this Warrant in the form of Annex B hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer Taxes described in Section 2.2 in connection with the making of such transfer. Upon such surrender and delivery and, if required, such payment, the Company shall, subject to Section 8, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned and this Warrant shall promptly be cancelled. A Warrant, if properly assigned in compliance with Section 8, may be exercised by the new Holder for the purchase of shares of Common Stock without having a new Warrant issued.

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3.2       Division and Combination. Subject to compliance with the applicable provisions of this Warrant including, without limitation, Section 8, this Warrant may be divided or combined with other Warrants upon presentation hereof at the Designated Office, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with the applicable provisions of this Warrant as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

3.3       Expenses. The Company shall prepare, issue and deliver at its own expense any new Warrant or Warrants required to be issued under this Section 3 (other than pursuant to Section 2.2 and 3.1 hereof).

3.4       Maintenance of Books. The Company agrees to maintain, at the Designated Office, books for the registration and transfer of the Warrants.

4. ANTIDILUTION PROVISIONS

The Exercise Price shall be subject to adjustment from time to time as follows:

4.1       Upon Stock Dividends, Subdivisions or Splits. If, at any time after the Original Issue Date, the number of shares of Common Stock outstanding is increased by a stock dividend payable in shares of Common Stock or by a subdivision or split-up of shares of Common Stock, then, following the record date for the determination of holders of Common Stock entitled to receive such stock dividend, or to be affected by such subdivision or split-up, the number of shares issuable upon exercise of the Warrant shall be proportionately increased by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock Outstanding immediately after such increase in Outstanding shares and the denominator of which is the number of shares of Common Stock Outstanding immediately prior to such increase.

4.2       Upon Combinations or Reverse Stock Splits. If, at any time after the Original Issue Date, the number of shares of Common Stock Outstanding is decreased by a combination or reverse stock split of the Outstanding shares of Common Stock into a smaller number of shares of Common Stock, then, upon the record date to determine shares affected by such combination or reverse stock split, (a) the Exercise Price shall be increased by multiplying the Exercise Price by a fraction, the numerator of which is the number of shares of Common Stock Outstanding immediately prior to such decrease and the denominator of which is the number of shares of Common Stock Outstanding immediately after such decrease in Outstanding shares, and (b) the number of shares issuable upon exercise of the Warrant shall be proportionately decreased by multiplying the same by the inverse of such fraction.

4.3       Upon Reclassifications, Reorganizations, Consolidations or Mergers. In the event of any capital reorganization of the Company, any reclassification of the stock of the Company (other than a change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend or subdivision, split up or combination of shares), or any consolidation or merger of the Company with or into another Person (where the

9

Company is not the surviving Person or where there is a change in or distribution with respect to the Common Stock), each Warrant shall after such reorganization, reclassification, consolidation, or merger be exercisable for the kind and number of shares of stock or other securities or property of the Company or of the successor Person resulting from such consolidation or surviving such merger, if any, to which the holder of the number of shares of Common Stock deliverable (immediately prior to the time of such reorganization, reclassification, consolidation or merger) upon exercise of such Warrant would have been entitled upon such reorganization, reclassification, consolidation or merger. The provisions of this Section 4.3 shall similarly apply to successive reorganizations, reclassifications, consolidations, or mergers. The Company shall not effect any such reorganization, reclassification, consolidation or merger unless, prior to the consummation thereof, the successor Person (if other than the Company) resulting from such reorganization, reclassification, consolidation or merger, shall assume, by written instrument, the obligation to deliver to the Holders of the Warrant such shares of stock, securities or assets, which, in accordance with the foregoing provisions, such Holders shall be entitled to receive upon such conversion.

5. NO IMPAIRMENT; REGULATORY COMPLIANCE AND COOPERATION; NOTICE OF EXPIRATION

(a)       The Company shall not by any action, including, without limitation, amending its charter documents or through any reorganization, reclassification, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other similar voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company shall take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, free and clear of all Encumbrances (other than any created by actions of the Holder), and shall use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

(b)       The Company shall deliver to each Holder of Warrants after the 60^th day but before the 30^th day prior to the Expiration Date, advance notice of such Expiration Date. If the Company fails to fulfill in a timely manner the notice obligation set forth in the prior sentence, it shall provide such notice as soon as possible thereafter.

6. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY

From and after the Original Issue Date, the Company shall use its best efforts to reserve and keep available for issuance upon the exercise of the Warrants such number of its authorized but unissued shares of Non-Voting Common Stock and Voting Common Stock, as will be sufficient to permit the exercise in full of all outstanding Warrants; provided that if, at any time after the Original Issue Date, the Company does not have available for issuance

10

authorized but unissued shares of Non-Voting Common Stock and Voting Common Stock, as will be sufficient to permit the exercise in full of all outstanding Warrants, and the Company shall pay a dividend (other than a dividend for which an adjustment is made pursuant to Section 4.1) or otherwise distribute to all holders of its shares of Common Stock cash, evidences of its indebtedness or assets, then the Holder shall be entitled to also receive such dividend or distribution on the date it is paid in an amount which it would have received if the Holder had exercised the Warrants held by the Holder immediately prior to the date of such dividend or distribution without duplication of any right of the Holder to receive such dividend or distribution pursuant to the Master Contribution Agreement.

All shares of Common Stock issuable pursuant to the terms hereof, when issued upon exercise of this Warrant with payment therefor in accordance with the terms hereof, shall be duly and validly issued and fully paid and nonassessable, not subject to preemptive rights and shall be free and clear of all Encumbrances (other than Encumbrances created by actions of a Holder). Before taking any action that would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction over such action. Subject to the provisos in Section 2.1(b) and (c) herein, if any shares of Common Stock required to be reserved for issuance upon exercise of Warrants require registration or qualification with any governmental authority under any federal or state law (other than under the Securities Act or any state securities law) before such shares may be so issued, the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered.

7. NOTICE OF CORPORATE ACTIONS; TAKING OF RECORD; TRANSFER BOOKS

7.1 Notices of Corporate Actions.

In case:

(a)       the Company shall take an action or an event shall occur, that would require an Exercise Price adjustment pursuant to Section 4; or

(b)       the Company shall grant to the holders of its Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class; or

(c)       of any reclassification of the Common Stock (other than a subdivision or combination of the Outstanding shares of Common Stock), or of any consolidation, merger or share exchange to which the Company is a party and for which approval of any stockholders of the Company is required, or of the sale or transfer of all or substantially all of the assets of the Company; or

(d)       of the voluntary or involuntary dissolution, liquidation or winding up of the Company; or

(e)       the Company or any Subsidiary shall commence a tender offer for all or a portion of the Outstanding shares of Common Stock (or shall amend any such tender offer to

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change the maximum number of shares being sought or the amount or type of consideration being offered therefor);

then the Company shall cause to be filed at each office or agency maintained for such purpose, and shall cause to be mailed to all Holders at their last addresses as they shall appear in the stock register, at least 10 days prior to the applicable record, effective or expiration date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution or granting of rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record who will be entitled to such dividend, distribution, rights or warrants are to be determined, (y) the date on which such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, share exchange, sale, transfer, dissolution, liquidation or winding up, or (z) the date on which such tender offer commenced, the date on which such tender offer is scheduled to expire unless extended, the consideration offered and the other material terms thereof (or the material terms of the amendment thereto). Such notice shall also set forth such facts with respect thereto as shall be reasonably necessary to indicate the effect of such action on the Exercise Price and the number and kind or class of shares or other securities or property which shall be deliverable or purchasable upon the occurrence of such action or deliverable upon exercise of the Warrants. Neither the failure to give any such notice nor any defect therein shall affect the legality or validity of any action described in clauses (a) through (e) of this Section 7.1.

7.2       Taking of Record. In the case of all dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of any Section hereof refers to the taking of a record of such holders, the Company will in each such case take such a record as of the close of business on a Business Day.

7.3       Closing of Transfer Books. The Company shall not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

8. TRANSFER RESTRICTIONS

The Holder, by acceptance of this Warrant, agrees to be bound by the provisions of this Section 8.

8.1       Restrictions on Transfers. Subject to this Section 8.1, Holder may transfer this Warrant or any shares of Restricted Common Stock or cause a portion of this Warrant to be transferred. Neither this Warrant, any portion hereof nor any shares of Restricted Common Stock issued upon the exercise hereof shall be transferred, sold, assigned, exchanged, mortgaged, pledged, hypothecated, or otherwise disposed of or encumbered without compliance with, and they are otherwise restricted by, the provisions of the Securities Act, the rules and

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regulations thereunder and this Warrant. Each certificate, if any, evidencing such shares of Restricted Common Stock issued upon any such Transfer, other than in a public offering pursuant to an effective registration statement, shall bear the restrictive legend set forth in Section 8.2(a), and each Warrant issued upon such Transfer shall bear the restrictive legend set forth in Section 8.2(b), unless the Holder delivers to the Company an Opinion of Counsel to the effect that such legend is not required for the purposes of compliance with the Securities Act. Holders of the Warrants or the Restricted Common Stock, as the case may be, shall not be entitled to Transfer such Warrants or such Restricted Common Stock except in accordance with this Section 8.1.

8.2 Restrictive Legends.

(a)       Except as otherwise provided in this Section 8, each certificate for Warrant Stock initially issued upon the exercise of this Warrant, each certificate for Warrant Stock issued to any subsequent transferee of any such certificate, shall be stamped or otherwise imprinted with two legends in substantially the following forms: "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT AND THE RULES AND REGULATIONS THEREUNDER." "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE ENTITLED TO THE BENEFIT OF AND ARE SUBJECT TO CERTAIN OBLIGATIONS SET FORTH IN A CERTAIN WARRANT DATED JANUARY 6, 2009, ORIGINALLY ISSUED BY SKYTERRA COMMUNICATIONS, INC. (THE "WARRANT") PURSUANT TO THE EXERCISE OF WHICH SUCH SHARES WERE ISSUED. A COPY OF THE WARRANT IS AVAILABLE AT THE EXECUTIVE OFFICES OF SKYTERRA COMMUNICATIONS, INC."

(b)       Except as otherwise provided in this Section 8, each Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form: "NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW. THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, EXCHANGED, MORTGAGED, PLEDGED, HYPOTHECATED OF OTHERWISE DISPOSED OF OR ENCUMBERED WITHOUT COMPLIANCE WITH THE PROVISIONS OF, AND ARE OTHERWISE RESTRICTED BY THE PROVISIONS OF, THE ACT, THE RULES AND REGULATIONS THEREUNDER AND THIS WARRANT."

8.3       Termination of Securities Law Restrictions. Notwithstanding the foregoing provisions of this Section 8, the restrictions imposed by Section 8.1 upon the transferability of the Warrants and the Restricted Common Stock and the legend requirements of Section 8.2 shall terminate as to any particular Warrant or shares of Restricted Common Stock

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when the Company shall have received from the Holder thereof an Opinion of Counsel to the effect that such legend is not required in order to ensure compliance with the Securities Act. Whenever the restrictions imposed by Sections 8.1 and 8.2 shall terminate as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive from the Company, at the expense of the Company, a new Warrant not bearing the restrictive legend set forth in Section 8.2(b).

All Warrants issued upon registration of transfer, division or combination of, or in substitution for, any Warrant or Warrants entitled to bear such legend shall have a similar legend endorsed thereon. Whenever the restrictions imposed by this Section shall terminate as to any share of Restricted Common Stock, as hereinabove provided, the Holder thereof shall be entitled to receive from the Company, at the Company's expense, a new certificate representing such Common Stock not bearing the restrictive legend set forth in Section 8.2(a).

9. LOSS OR MUTILATION

Upon receipt by the Company from any Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and an indemnity reasonably satisfactory to it (it being understood that the written indemnification agreement of or affidavit of loss of the Holder, shall be a sufficient indemnity) and, in case of mutilation, upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to such Holder; provided, however, that, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

10. OFFICE OF THE COMPANY

As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency, which may be the principal executive offices of the Company (the "Designated Office"), where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant. Such Designated Office shall initially be the office of the Company at 10802 Parkridge Boulevard, Reston, Virginia 20191. The Company may from time to time change the Designated Office to another office of the Company or its agent within the United States by notice given to all registered Holders at least ten (10) Business Days prior to the effective date of such change.

11. MISCELLANEOUS

11.1     Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Company or the Holder shall operate as a waiver of such right or otherwise prejudice the rights, powers or remedies of such Person.

11.2     Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or communication hereunder to be made pursuant to the provisions of this Warrant shall be sufficiently given or made if in writing and either delivered in person with receipt acknowledged or sent by registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

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(a)       if to any Holder of this Warrant or of Warrant Stock issued upon the exercise hereof, at its last known address appearing on the books of the Company maintained for such purpose;

(b) if to the Company, at the Designated Office;

or at such other address as may be substituted by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, or three (3) Business Days after the same shall have been deposited in the United States mail, or one (1) Business Day after the same shall have been sent by Federal Express or another recognized overnight courier service.

11.3     Indemnification. The Company shall indemnify, save and hold harmless the Holder hereof and the Holders of any Warrant Stock issued upon the exercise hereof from and against any and all liability, loss, cost, damage, reasonable attorneys' and accountants' fees and expenses, court costs and all other out of-pocket expenses incurred in connection with or arising from any default hereunder by the Company. This indemnification provision shall be in addition to the rights of such Holder or Holders to bring an action against the Company for breach of contract based on such default hereunder.

11.4     Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of such Holder to pay the Exercise Price for any Warrant Stock other than pursuant to an exercise of this Warrant or any liability as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.

11.5     Remedies. Each Holder of Warrants and/or Warrant Stock, in addition to being entitled to exercise its rights granted by law, including recovery of damages, shall be entitled to specific performance of its rights provided under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees, in an action for specific performance, to waive the defense that a remedy at law would be adequate.

11.6     Successors and Assigns. Subject to the provisions of Sections 3.1 and 8.1, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the permitted successors and assigns of the Holder hereof. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant and to the extent applicable, all Holders of shares of Warrant Stock issued upon the exercise hereof (including transferees), and shall be enforceable by any such Holder.

11.7     Amendment. This Warrant and all other Warrants may be modified or amended or the provisions hereof waived with the written consent of the Company and the Majority Warrant Holders, provided that no such Warrant may be modified or amended to

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reduce the number of shares of Common Stock for which such Warrant is exercisable or to increase the price at which such shares may be purchased upon exercise of such Warrant (before giving effect to any adjustment as provided therein) without the written consent of the Holder thereof.

11.8     Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant.

11.9     Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

11.10   GOVERNING LAW; JURISDICTION. IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS WARRANT AND THE OBLIGATIONS ARISING HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE. THE COMPANY HEREBY CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN NEW YORK, SHALL HAVE, EXCEPT AS SET FORTH BELOW, EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE COMPANY AND THE HOLDER OF THIS WARRANT PERTAINING TO THIS WARRANT OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS AGREEMENT, PROVIDED, THAT IT IS ACKNOWLEDGED THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW YORK.

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IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed and its corporate seal to be impressed hereon and attested by its Secretary or an Assistant Secretary.

SKYTERRA COMMUNICATIONS, INC.
By:		/s/ Scott Macleod
	Name:	Scott Macleod
	Title:	Executive Vice President,
		Chief Financial Officer and
		Treasurer

[SEAL]
Attest:
By:		/s/ Randy Segal
	Name:	Randy Segal
	Title:	Senior Vice President,
		General Counsel and Secretary

ANNEX A

SUBSCRIPTION FORM

[To be executed only upon exercise of Warrant]

The undersigned registered owner of this Warrant irrevocably exercises this Warrant for the purchase of ______ shares of Voting Common Stock and ________ shares of Non-Voting Common Stock of SkyTerra Communications, Inc. and herewith makes payment therefor in __________, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the shares of such Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to _________________ whose address is _______________________________ and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned.

Method of Payment of Exercise Price:

______________________________

(Name of Registered Owner)

(Signature of Registered Owner)

(Street Address)

(City) (State) (Zip Code)

NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

ANNEX B

ASSIGNMENT FORM

FOR VALUE RECEIVED the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the assignee named below all of the rights of the under signed under this Warrant, with respect to the number of shares of Common Stock set forth below:

Name and Address of Assignee No. of Shares of Common Stock

and does hereby irrevocably constitute and appoint ________ _____________ attorney-in-fact to register such transfer onto the books of SkyTerra Communications, Inc. maintained for the purpose, with full power of substitution in the premises.

Dated:	Print Name:
Signature:
	Witness:

NOTICE: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

EX-10

AMENDING AGREEMENT NO. 1

TO SATELLITE DELIVERY AGREEMENT

THIS AGREEMENT (herein referred to as the “Amending Agreement No. 1”) is made effective as of October , 2008 (the “Amendment Effective Date”) by and between Mobile Satellite Ventures (Canada) Inc. (“MSV Canada”) and Mobile Satellite Ventures LP (“MSV LP”).

WHEREAS, MSV LP and MSV Canada are parties to a satellite delivery agreement dated as of February 22, 2007 (the “Satellite DeliveryAgreement”); and

WHEREAS, the parties to the Satellite Delivery Agreement desire to amend that agreement;

NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1. AMENDMENTS

(a)        The Satellite Delivery Agreement is hereby amended by adding the following definition after the definition of the term “Governmental Entity” in Section 1 of the Satellite Delivery Agreement:

“In-Orbit Test” or “IOT” has the meaning given to such term in the Satellite Construction Contract.”

(b)       The Satellite delivery Agreement is hereby amended to delete Section 2.2 thereof and to replace it with the following new Section 2.2:

“2.2     Transfer of Title. Subject to the receipt of all necessary governmental approvals, title to the MSV-2 Satellite shall be transferred from MSV LP to MSV Canada at such time as MSV LP and MSV Canada mutually agree upon in writing; provided that such transfer of title to the MSV-2 Satellite from MSV LP to MSV Canada shall occur: (a) no earlier than immediately after the point in time that title to the MSV-2 Satellite is transferred from the Satellite Vendor to MSV LP in accordance with Section 12.1 of the Satellite Construction Contract, subject to the provisions stated therein in the event of a “Terminated Ignition” and, (b) no later than the completion of the In-Orbit Test. Title to the MSV-2 Satellite shall be transferred from MSV LP to MSV Canada free and clear of all security interests, liens, encumbrances and similar interests, except liens on the Satellite that may exist (i) in connection with any financing with respect to which MSV Canada is a party, a guarantor or otherwise agrees to such security interests, liens, encumbrances or similar interests, including, without limitation those arising with respect to the 14% Senior Secured Discount Notes due 2013 (the “High Yield Liens”), and any subsequent amendments or extensions thereof, (ii) in connection with any financing relating to the Launch Services Agreement to which MSV Canada is a party or otherwise agrees, and (iii) in connection with any required transfer of title to the Satellite to insured interests for salvage in the event of a Total Loss of the Satellite (the liens set forth in clauses (i) through (iii) above, as well as the “Orbital Performance Incentives” being hereinafter referred to as “Permitted Liens”). Without limiting the generality of the foregoing, MSV LP shall ensure that all of its then-current obligations to the Satellite Vendor have been performed as of such date in order to ensure that any security interests,

Ex.10.23-Satellite Delivery Agreement Amend 1

liens, encumbrances or similar interests granted by MSV LP in the MSV-2 Satellite to the Satellite Vendor have been terminated, released and discharged.”

2. CONTINUATION OF SATELLITE DELIVERY AGREEMENT

All provisions of this Amending Agreement No. 1 shall be deemed to be incorporated in, and made a part of, the Satellite Delivery Agreement. The Satellite Delivery Agreement, as supplemented and amended by this Amending Agreement No. 1, shall be read, taken and construed as one and the same instrument, and except as expressly amended hereby, the remaining terms and conditions of the Satellite Delivery Agreement shall continue in full force and effect.

3. BINDING EFFECT

This Amending Agreement No. 1 shall enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.

4. COUNTERPARTS

To facilitate execution, this Amending Agreement No. 1 may be executed in as many counterparts as may be required. It shall not be necessary that the signatures of, or on behalf of, each party, or that the signatures of all persons required to bind any party, appear on each counterpart; but it shall be sufficient that the signature of, or on behalf of, each party, or that the signatures of the persons required to bind any party, appear on one or more of the counterparts. All counterparts shall collectively constitute a single agreement.

IN WITNESS WHEREOF, the parties hereto have duly executed this Amending Agreement No. 1 as of the Effective Date.

MOBILE SATELLITE VENTURES LP By: MOBILE SATELLITE VENTURES GP INC., its General Partner
By:	/s/ Randy Segal
	Name:  Randy Segal
	Title:    SVP and General Counsel

MOBILE SATELLITE VENTURES (CANADA) INC.
By:	/s/ Elizabeth A. Creary
	Name:  Elizabeth A. Creary
	Title:    VP and Corporate Counsel

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EX-10 8 dex10-60.htm MARC MONTAGNER LETTER AGREEMENT

Marc Montagner	February 23, 2009
3021 P Street, NW
Washington, DC 20007

Re: Offer of Employment

Dear Marc,

We are pleased to offer you employment with SkyTerra LP (the “Company”) at our Reston headquarters. This letter sets forth the terms and conditions of your employment.

1. Title and Responsibilities: Your initial position will be Executive Vice President, Strategy, Development and Distribution SkyTerra LP. You will be responsible for the overall management and direction of all strategy, development, distribution and mergers and acquisitions activities. This is a full time position, with a start date of February 23, 2009. Your initial objectives are detailed in Section 4 below and subject to modification by mutual agreement. You shall report to the CEO of the Company.

2. Salary: Your initial salary will be paid at the rate of $15,660.04 in bi-weekly installments which equates to $407,161.00 on an annualized basis, payable in accordance with the Company’s standard payroll practices.

3. Annual Bonus: You will also be eligible for an annual discretionary bonus equal to 75% of your base compensation, as determined by both corporate and individual performance.

4. Stock Option(s): Subject to approval of the SkyTerra Board of Directors (or its Compensation Committee) you will be granted stock options with respect to 300,000 shares of SkyTerra Communications, Inc. common stock pursuant to the attached SkyTerra Communications, Inc. 2006 Equity and Incentive Plan (the “Plan”) at an exercise price as of the fair market value as set forth in the Plan as of your start date (the “Grant Date”). The options shall vest in three annual installments beginning on the first anniversary of the Grant Date, and otherwise consistent with the SkyTerra Equity and Unit Incentive Agreement. You shall also be granted an additional 300,000 stock options, provided however that such additional stock options shall only vest, if at such time you are then an employee, upon the successful completion of one of the following: 1) the execution of an agreement with a strategic partner that either provides a) significant capital contribution of equity or debt of not less than $1,000,000,000, where vesting occurs upon the funding of such contribution, or b) a firm agreement to distribute units with ongoing annual commitments of not less than 250,000 units (or a comparable revenue with an assumed average wholesale arpu of not less than $25 where vesting occurs upon completion of the first year’s distribution); or 2) the closing of a transaction for the sale of Skyterra; or 3) the closing of the Inmarsat possible offer as contemplated by the Master Contract Service Agreement. In the alternative, 100,000 such options of the total 300,000 options shall begin a three year vesting schedule beginning upon the execution of an arrangement with respect to our next generation satellite services with identified carriers whereby said carrier would (i) commit to a substantial use our satellite for roaming services and make substantial marketing, advertising or and investment in the promotion of such services out of the ordinary course of our sales and marketing efforts for customers and products, or (ii) have substantial minimum commitments in terms of revenues to SkyTerra out of the ordinary course of our sales and marketing efforts for customers and products. For purposes of clarity, and not by way of limitation, in connection with the foregoing alternative vesting condition, the carrier commitment made would be expected to be on a carrier-wide basis and not on an individual sales opportunity for a user-group, business segment or similar sales opportunity that is of the type which the sales organization would achieve in the ordinary course and would not fairly be characterized as a strategic commitment at a carrier level.

5. Restricted Stock: In addition, upon the Grant Date, you will be granted 100,000 shares of Restricted Stock, which shares shall vest in three annual installments over three years, beginning on the first anniversary of the Grant Date, pursuant to the attached Restricted Equity Plan.

6. Termination Protections: Should the Company terminate you without Cause (as defined in Attachment A) or you leave for Good Reason (as defined below) you shall be entitled to (i) one year’s salary and target bonus (i.e., 75% of base salary), (ii) immediate vesting of all time and performance based Stock Options and all Restricted shares, and (iii) reimbursement or payment for COBRA costs for continuing health care insurance for you and your eligible dependents for 12 months following termination and (iv) reimbursement of reasonable business expenses incurred prior to your termination. Upon your termination as a result of your death or Disability (as defined below), you and/or your beneficiary(ies) shall receive the vesting of time based Stock Options and Restricted shares as set forth in (ii) above, the reimbursement for COBRA as set forth in (iii) above and reimbursement of reasonable business expenses as set forth in (iv) above. Good Reason shall mean any material adverse

change to this Agreement, including without limitation, (i) a material reduction of salary or bonus, (ii) a material reduction in your title and/or scope of responsibilities, or (iii) a relocation of your office to greater than 50 miles from the Reston office location. Upon receiving notice of termination for Good Reason, the Company will have 30 days to cure the stated issue prior to such Good Reason becoming effective. In addition, notwithstanding anything contained in Attachment B to the contrary, you shall have 30 days to cure the stated issue prior to Cause becoming effective.

In consideration of employment, including the grant of SkyTerra options and/or restricted stock, you will also enter into the following: 1) a Stock Option Agreement and Restricted Stock Agreement in the form provided; and 2) a Confidentiality, Non-Competition and Non-Solicitation Agreement in the form provided. In addition, on your date of hire, you will accept the Company’s standard employee agreements with respect to corporate policies and conduct, including the assignment to SkyTerra of any intellectual property/patents developed as an employee.

Your employment is subject to the Company’s personnel policies and procedures which are subject to change from time to time at the Company’s sole discretion. Your employment with the Company will be “at will” which means that either you or the Company may terminate your employment at any time for any reason. You will be eligible to participate in the benefit plans offered to Senior Executives, also subject to change from time to time at the Company’s sole discretion, including:

a) Health and Wellness plans including Medical and Dental Insurance as provided by the Company;

b) Tax deferred, company matching 401(k), or other available savings plan(s);

c) Life and Disability insurance;

d) Paid Time Off (“PTO”) accrual rate of 6.15 hours per pay period;

e) Standard company holidays.

In addition, you shall be covered by the Company’s directors’ and officers’ insurance coverage.

By signing this letter you represent that you have full authority to accept this position and perform the duties of the position without conflict with any other obligations and that you are not involved in any situation that might create, or appear to create, a conflict of interest with respect to your loyalty to or duties for the Company.

By signing this letter, you acknowledge the terms described in this letter, which supersede any prior representations or agreements, whether written or oral. There are no terms, conditions, representations, warranties or covenants other than those contained herein. Moreover, you warrant that you are not subject to an employment agreement or restrictive covenant preventing full performance of your duties to the Company.

This letter agreement shall be administered, interpreted and construed in a manner that does not result in the imposition of additional taxes or interest under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). If any amount to be paid to you on account of your separation of service while you are a “specified employee” (as defined under Section 409A of the Code) is “deferred compensation” (as defined under Section 409A of the Code, after giving effect to the exemptions thereunder), such amount shall be delayed until the first business day after the lapse of six months after separation of separation of service.

This Agreement may be executed in one or more counterparts each of which shall be deemed an original. If any part of this Agreement is found to be illegal or unenforceable, such determination shall not affect the enforceability of the remaining provisions which shall remain in effect. This letter agreement may be amended or modified only by a written instrument executed by both the Company and you. All notices shall be hand delivered to you at the address noted above, and such further address as you provide the company and if to the Company, by hand delivery to the CEO. This Agreement shall be governed by the laws of the Commonwealth of Virginia.

This is an exciting time for our business and for our industry. We look forward to your joining our team.

Respectfully,

/s/ Alexander H. Good

Alexander H. Good

Chairman, CEO and President

SkyTerra Communications

Date Executed:

Enclosures

SkyTerra LP

10802 Parkridge Boulevard, Reston, VA 20191-4334

T: +1 703 390 2700

www.skyterra.com

Cc: Applicant File

AGREED & ACCEPTED:
/s/ Marc Montagner	February 23, 2009
Marc Montagner	Date

Attachment A

For the purposes of this letter, "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 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. )

SkyTerra LP

10802 Parkridge Boulevard, Reston, VA 20191-4334

T: +1 703 390 2700

www.skyterra.com

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EXECUTION VERSION

EXCHANGE AGREEMENT

BY AND AMONG

SKYTERRA COMMUNICATIONS, INC.,

WALTER V. PURNELL, JR.,

RAJENDRA SINGH,

GERALD STEVENS-KITTNER,

GLENN MEYERS,

ELIZABETH TASKER,

COLUMBIA ST PARTNERS III, Inc.,

DEAN & COMPANY,

INOVATE COMMUNICATIONS GROUP, LLC

AND

WBS, LLC

Dated as of December 10, 2008

TABLE OF CONTENTS

Page

Section 1.1 Sale of MSV LP Units and SkyTerra Shares 1

Section 1.2 Closing 2

Section 1.3 Deliveries 2

Section 2.1 Organization; Related Entities 3

Section 2.2 Title to MSV LP Units 3

Section 2.3 Authority Relative to this Agreement 3

Section 2.4 Consents and Approvals; No Violations 3

Section 2.5 Purchase Entirely for Own Account 4

Section 2.6 Reliance Upon Holder’s Representations 4

Section 2.7 Receipt of Information 4

Section 2.8 Investor Status; etc 4

Section 2.9 Taxes 5

Section 2.10 Brokers or Finders 5

Section 2.11 Restricted Securities 5

Section 2.12 Legend 5

Section 3.1 Corporate Organization; Related Entities 6

Section 3.2 Capitalization 6

Section 3.3 Authority Relative to This Agreement 7

Section 3.4 Consents and Approvals; No Violations 7

Section 3.5 Reports and Financial Statements 7

Section 3.6 Brokers 8

Section 3.7 Purchase Entirely for Own Account 8

Section 3.8 Reliance Upon SkyTerra’s Representations 8

Section 3.9 Investor Status; etc 8

Section 3.10 Restricted Securities 8

Section 3.11 Issuances Exempt 9

Section 3.12 No Integrated Offering 9

Section 4.1 Blue Sky Laws 9

Section 4.2 Compliance with MSV Documents 9

Section 4.3 Standstill 10

i

Section 4.4 Commercially Reasonable Efforts 10

Section 5.1 Representations and Warranties 10

Section 5.2 Performance 10

Section 5.3 Certificates and Documents 10

Section 6.1 Representations and Warranties 11

Section 6.2 Performance 11

Section 6.3 Certificates and Documents 11

Section 7.1 Survival of Representations and Warranties 11

Section 7.2 Expenses 11

Section 7.3 Counterparts; Effectiveness 11

Section 7.4 Governing Law 12

Section 7.5 Notices 12

Section 7.6 Assignment; Binding Effect 13

Section 7.7 Severability 13

Section 7.8 Entire Agreement; Non-Assignability; Parties in Interest 13

Section 7.9 Headings 14

Section 7.10 Certain Definitions 14

Section 7.11 Amendments and Waivers 14

Section 7.12 Specific Performance 14

Section 7.13 Exclusive Jurisdiction 14

Section 7.14 Waiver of Jury Trial 15

Schedule 3.2 SkyTerra Disclosure Schedule

ii

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of December 10, 2008 by and among SkyTerra Communications, Inc., a Delaware corporation (“SkyTerra”), and Walter V. Purnell, Jr., Rajendra Singh, Gerald Stevens-Kittner, Glenn Meyers, Elizabeth Tasker, Columbia ST Partners III, Inc., a Delaware corporation, Dean & Company, a Virginia corporation, inOvate Communications Group, LLC, a California limited liability company, and WBS, LLC, a Delaware limited liability company (each, a “Holder,” and together, the “Holders”).

RECITALS:

WHEREAS, subject to the terms and conditions hereof, at the Closing (as defined below) the Holders intend to sell to SkyTerra an aggregate of 261,067 limited partnership units (the “MSV LP Units”) of SkyTerra LP, formerly known as Mobile Satellite Ventures LP (“MSV”), owned by the Holders in exchange for an aggregate of 736,209 shares (the “SkyTerra Shares”) of SkyTerra voting common stock, par value $0.01 per share (“SkyTerra Common Stock”), in each case as appropriately adjusted for any stock split, combination, reorganization, recapitalization, reclassification, stock dividend, stock distribution or similar event declared or effected prior to the Closing.

AGREEMENT:

NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

Section 1.1      Sale of MSV LP Units and SkyTerra Shares. Subject to the terms and conditions hereof and in reliance upon the representations, warranties and agreements contained herein, at the Closing (as defined below), each Holder will purchase from SkyTerra, and SkyTerra shall issue and sell to each Holder, the number of SkyTerra Shares specified immediately below, and SkyTerra will purchase from each Holder, and each Holder shall sell to SkyTerra, the number of MSV LP Units specified immediately below:

Holder	MSV LP Units	SkyTerra Shares
1. Walter V. Purnell, Jr.	62,500	176,250
2. Rajendra Singh	62,500	176,250
3. Glenn Meyers	40,000	112,800
4. Gerald Stevens-Kittner	25,000	70,500
5. Elizabeth Tasker	10,000	28,200
6. Columbia ST Partners III, Inc.	25,000	70,500
7. Dean & Company	6,250	17,625
8. inOvate Communications Group, LLC	4,817	13,584
9. WBS, LLC	25,000	70,500
Total	261,067	736,209

Section 1.2      Closing. The closing (the “Closing”) of the purchase and sale of the MSV LP Units in exchange for the SkyTerra Shares shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, NY 10036 on December 15, 2008 at 10:00 a.m., local time, or at such other time, date or place as the Holders and SkyTerra may agree in writing. The date on which the Closing occurs is hereinafter referred to as the “Closing Date.”

 

Section 1.3 Deliveries.  

(a)  At the Closing, each Holder shall deliver to SkyTerra (unless waived by SkyTerra) the following (collectively, the “Holder Closing Deliveries”):

(i)   a certificate or certificates registered in Holder’s name representing the MSV LP Units to be sold by Holder to SkyTerra pursuant to Section 1.1 or an affidavit of lost certificate with respect to any lost, missing or destroyed certificate in form reasonably satisfactory to SkyTerra; and

(ii)   a duly executed partnership unit power evidencing the transfer of the Holder’s MSV LP Units from Holderto SkyTerra in such form reasonably satisfactory to SkyTerra as shall be effective to vest in SkyTerra good and valid title to Holder’s MSV LP Units, free and clear of any Lien (as defined below) other than Securities Law Encumbrances (as defined below) or pursuant to the MSV Documents (as defined below).

(b)  SkyTerra shall deliver to each Holder(unless waived by such Holder) the following (collectively, the “SkyTerra Closing Deliveries”):

(i)   a certificate or certificates registered in Holder’s name representing the number of SkyTerra Shares sold to such Holder pursuant to Section 1.1; and

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(ii)   a copy of a certificate of good standing for SkyTerra from the Secretary of State of the State of Delaware.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF HOLDERS

Each Holder represents and warrants to SkyTerra, as follows:

Section 2.1      Organization; Related Entities. If Holder is an entity, Holder is duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, and has the requisite corporate power and authority to own or lease its properties and to carry on its businesses as is presently being conducted. If Holder is an entity, Holder is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except for failures, if any, to be so qualified which individually or in the aggregate have not had and could not reasonably be expected to have a Holder Material Adverse Effect. A "Holder Material Adverse Effect" means a material adverse effect respecting the ability of Holder to consummate the transactions contemplated by this Agreement or fulfill the conditions to Closing set forth herein.

Section 2.2      Title to MSV LP Units. As of the date hereof and at all times until and including at the Closing, Holder owns, of record and beneficially, the MSV LP Units attributed to such Holder in Section 1.1 free and clear of any and all option, call, contract, commitment, mortgage, pledge, security interest, encumbrance, lien, Tax (as defined below), claim or charge of any kind or right of others of whatever nature (collectively, a “Lien”) of any kind, other than pursuant to applicable securities laws (“Securities Law Encumbrances”) and the MSV Documents (as defined below). Upon the Closing, (x) SkyTerra shall be vested with good and valid title to the MSV LP Units, free and clear of any Liens of any kind (other than Securities Law Encumbrances or the MSV Documents) and (y) Holder shall not own, of record or beneficially, or have, by conversion, warrant, option or otherwise, any right to, interest in or agreement to acquire any MSV LP Units. “MSV Documents” means the Amended and Restated Limited Partnership Agreement of MSV, dated as of November 12, 2004, as amended on September 25, 2006, and January 5, 2007 (the "Partnership Agreement"), and, as incorporated by and into the Partnership Agreement, Section 8 of the Amended and Restated Stockholders’ Agreement of Mobile Satellite Ventures GP Inc., a Delaware corporation and the general partner of MSV, dated as of November 12, 2004, as amended on May 6, 2006 and September 25, 2006 (the “Stockholders’ Agreement”).

Section 2.3      Authority Relative to this Agreement. Holder has the requisite power, authority or capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Holder and, assuming the due authorization, execution and delivery thereof by SkyTerra, constitutes the valid and binding obligation of Holder, enforceable against it in accordance with its terms.

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Section 2.4      Consents and Approvals; No Violations. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby will, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under (i) any provision of the organizational documents of Holder, if Holder is an entity, or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Holder or its properties or assets, including, but not limited to, the MSV Documents. No consent, approval, order or authorization of, or registration, declaration or filing with, any federal, state, local or foreign court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory body, authority or administrative agency or commission (collectively, a “Governmental Entity”), is required by or with respect to Holder in connection with the execution and delivery of this Agreement by Holder or the consummation by Holder of the transactions contemplated hereby, except for such consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a Holder Material Adverse Effect.

Section 2.5      Purchase Entirely for Own Account. The SkyTerra Shares to be issued to Holder will be acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution that would require registration of the SkyTerra Shares or any part thereof under the Securities Act of 1933, as amended (the “Securities Act”), in violation of applicable securities laws, and Holder has no present intention of selling, granting any participation in, or otherwise distributing such SkyTerra Shares except in compliance with applicable securities laws.

Section 2.6      Reliance Upon Holder’s Representations. Holder understands that the SkyTerra Shares will not be registered for issuance to Holder under the Securities Act and the sale provided for in this Agreement and SkyTerra’s issuance of SkyTerra Shares hereunder will be made in reliance upon an exemption from registration under the Securities Act pursuant to Section 4(2) thereof, and that, in such case, SkyTerra’s reliance on such exemption will be based on Holder’s representations set forth herein.

Section 2.7      Receipt of Information. Holder has received all the information it considers necessary or appropriate for deciding whether to acquire SkyTerra Shares. Holder further represents that it has had an opportunity to ask questions and receive answers from SkyTerra regarding the terms and conditions of the offering of SkyTerra Shares and the business and financial condition of SkyTerra and to obtain additional information (to the extent SkyTerra possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access. The foregoing, however, does not limit or modify the representations or warranties of SkyTerra in this Agreement or the right of Holder to rely upon such representations or warranties. Holder has not received, nor is it relying on, any representations or warranties from SkyTerra, other than as provided herein; provided that the foregoing shall not affect any right Holder may have on account of fraud.

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Section 2.8      Investor Status; etc. Holder certifies and represents to SkyTerra that it is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act ("Accredited Investor") and was not organized for the purpose of acquiring SkyTerra Shares. Holder’s financial condition is such that it is able to bear the risk of holding the SkyTerra Shares for an indefinite period of time and the risk of loss of its entire investment. Holder has sufficient knowledge and experience in investing in companies similar to SkyTerra so as to be able to evaluate the risks and merits of its investment in SkyTerra. Upon written request of SkyTerra, Holder will provide any information reasonably requested by SkyTerra to verify its status as an Accredited Investor.

Section 2.9      Taxes. There are no Liens arising from or related to Taxes (as defined below) on or pending against Holder or any of its properties other than statutory Liens for Taxes that are not yet due and payable. “Taxes” means any and all federal, state, local, foreign or other tax of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Tax Authority (as defined below), including taxes on or with respect to income, alternative minimum, accumulated earnings, personal holding company, capital, transfer, stamp, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, unemployment, social security, workers’ compensation or net worth, and taxes in the nature of excise, withholding, ad valorem or value added. “Tax Authority” means any competent domestic or foreign national, state, provincial, municipal or other local judicial, legislative, executive, administrative or regulatory authority or any governmental or private body exercising any regulatory or taxing authority responsible for the determination, assessment or collection of Taxes.

Section 2.10    Brokers or Finders. Holder has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transaction contemplated hereby.

Section 2.11    Restricted Securities. Holder understands that the SkyTerra Shares may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the SkyTerra Shares or an available exemption from registration under the Securities Act, such SkyTerra Shares must be held indefinitely. In particular, Holder is aware that such SkyTerra Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of the rule are met. Among the conditions for use of Rule 144, under certain circumstances, is the availability to the public of current information about SkyTerra.

Section 2.12    Legend. It is understood that the certificates evidencing the SkyTerra Shares will bear the following legend:

“These securities have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the

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securities under such Act or an opinion of counsel or letters of representation satisfactory to SkyTerra Communications, Inc. that such registration is not required.”

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SKYTERRA

Except as otherwise specifically provided in the Disclosure Schedule of SkyTerra attached hereto and incorporated herein by reference (the “SkyTerra Disclosure Schedule”), SkyTerra represents and warrants to Holder, as follows:

Section 3.1      Corporate Organization; Related Entities. SkyTerra is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own or lease its properties and to carry on its business as it is presently being conducted. SkyTerra is duly qualified to do business as a foreign corporation, and is in good standing, in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except for failures, if any, to be so qualified which individually or in the aggregate have not had and could not reasonably be expected to have a SkyTerra Material Adverse Effect (as defined below). The copies of the certificate of incorporation and bylaws of SkyTerra on file with the Securities and Exchange Commission ("SEC") are complete and current copies of such instruments as presently in effect. A “SkyTerra Material Adverse Effect” means a material adverse effect respecting (a) the business, assets and liabilities (taken together) or financial condition of SkyTerra and its subsidiaries on a consolidated basis or (b) the ability of SkyTerra to consummate the transactions contemplated by this Agreement or fulfill the conditions to Closing set forth herein.

 

Section 3.2 Capitalization.

(a)  As of the date of this Agreement, the authorized capital stock of SkyTerra consists of (i) 200,000,000 shares of SkyTerra Common Stock, 48,086,578 of which are issued and outstanding, and (ii) 125,000,000 shares of non-voting common stock, par value $0.01 per share, 59,958,499 of which are issued and outstanding. SkyTerra has no designations of preferred stock. As of November 25, 2008, (1) 14,693,491 shares of SkyTerra Common Stock are reserved for issuance pursuant to SkyTerra’s stock option plans or otherwise, with an average weighted strike price of $3.97 per option, and (2) 13,139,696 shares of SkyTerra Common Stock are reserved for issuance upon the exercise of outstanding warrants to purchase shares of SkyTerra Common Stock (collectively, the “SkyTerra Permitted Issuances”). Except as set forth on Schedule 3.2 of the SkyTerra Disclosure Schedule, all the issued and outstanding shares of SkyTerra’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of statutory preemptive rights and contractual stockholder preemptive rights, with no personal liability attaching to the ownership thereof. Except for (i) the SkyTerra Permitted Issuances, (ii) as set forth on Schedule 3.2 of the SkyTerra Disclosure Schedule, and (iii) as disclosed in the reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act (collectively, the "SkyTerra SEC Reports"), SkyTerra (A) does not have and is not bound by any outstanding subscriptions,

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options, voting trusts, convertible securities, warrants, calls, commitments or agreements of any character or kind calling for the purchase, issuance or grant of any additional shares of its capital stock or restricting the transfer of its capital stock and (B) is not a party to any voting trust or other agreement or understanding with respect to the voting of the capital stock or other equity securities of SkyTerra.

(b)  The SkyTerra Shares have been duly and validly authorized, and, when issued upon the terms hereof, will be fully paid, nonassessable and free of statutory preemptive rights and contractual stockholder preemptive rights, with no personal liability attaching to the ownership thereof.

Section 3.3      Authority Relative to This Agreement. SkyTerra has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by SkyTerra and the consummation by SkyTerra of the transactions contemplated hereby have been duly authorized by SkyTerra’s Board of Directors, and no other corporate or stockholder proceedings on the part of SkyTerra are necessary to authorize this Agreement or for SkyTerra to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by SkyTerra and, assuming the due authorization, execution and delivery thereof by Holders, constitutes the valid and binding obligation of SkyTerra, enforceable against SkyTerra in accordance with its terms.

Section 3.4      Consents and Approvals; No Violations. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby will, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under (i) any provision of the organizational documents of SkyTerra, (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to SkyTerra or its properties or assets, including but not limited to the MSV Documents, except as would not have a SkyTerra Material Adverse Effect. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to SkyTerra in connection with the execution and delivery of this Agreement by SkyTerra or the consummation by SkyTerra of the transactions contemplated hereby except for such consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a SkyTerra Material Adverse Effect.

Section 3.5      Reports and Financial Statements. SkyTerra has timely filed all SkyTerra SEC Reports required to be filed with the SEC pursuant to the Exchange Act or the Securities Act since January 1, 2008. Such SkyTerra SEC Reports, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and none of such SkyTerra SEC Reports, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), contained any untrue statement of a material fact or omitted to state a material fact required

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to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of SkyTerra included in such SkyTerra SEC Reports have been prepared in accordance with GAAP consistently applied throughout the periods indicated (except as otherwise noted therein or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of unaudited statements, to normal, recurring year-end adjustments and any other adjustments described therein), in all material respects, the consolidated financial position of SkyTerra and its consolidated Subsidiaries as at the dates thereof and the consolidated results of operations and cash flows of SkyTerra and its consolidated subsidiaries for the periods then ended. Except as disclosed in the SkyTerra SEC Reports, there has been no change in any of the significant accounting (including Tax accounting) policies or procedures of SkyTerra since September 30, 2008.

Section 3.6      Brokers. No broker, finder or financial advisor is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of SkyTerra.

Section 3.7      Purchase Entirely for Own Account. The MSV LP Units to be transferred to SkyTerra will be acquired for investment for SkyTerra’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, in each case, in violation of applicable securities laws, and SkyTerra has no present intention of selling, granting any participation in, or otherwise distributing the same except in compliance with applicable securities laws.

Section 3.8      Reliance Upon SkyTerra’s Representations. SkyTerra understands that MSV LP Units will not be registered under the Securities Act and the sale provided for in this Agreement and Holders’ transfers of securities hereunder will be made in reliance upon an exemption from registration under the Securities Act, and that, in such case, Holders’ reliance on such exemption will be based on SkyTerra’s representations set forth herein.

Section 3.9      Investor Status; etc. SkyTerra certifies and represents to Holders that it is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the purpose of acquiring MSV LP Units. SkyTerra’s financial condition is such that it is able to bear the risk of holding the MSV LP Units for an indefinite period of time and the risk of loss of its entire investment. SkyTerra has sufficient knowledge and experience in investing in companies similar to MSV so as to be able to evaluate the risks and merits of its investment in MSV.

Section 3.10    Restricted Securities. SkyTerra understands that the MSV LP Units may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the MSV LP Units or an available exemption from registration under the Securities Act, such MSV LP Units must be held indefinitely. In

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particular, SkyTerra is aware that such MSV LP Units may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of the rule are met.

Section 3.11    Issuances Exempt. Assuming the truth and accuracy of the representations and warranties of Holders contained in Article II hereof, the offer, sale, and issuance of the SkyTerra Shares will be exempt from the registration requirements of the Securities Act, and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws, except as permitted pursuant to Section 4.1 hereof.

Section 3.12    No Integrated Offering. Neither SkyTerra, nor any of its controlled affiliates or any other person acting on SkyTerra’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising with respect to the SkyTerra Shares nor have any of such persons made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration of the SkyTerra Shares under the Securities Act or cause this offering of SkyTerra Shares to be integrated with any prior offering of securities of SkyTerra for purposes of the Securities Act.

ARTICLE IV

ADDITIONAL AGREEMENTS

Section 4.1      Blue Sky Laws. SkyTerra shall exercise its commercially reasonable best efforts to register or qualify (or obtain an exemption from registration) the SkyTerra Shares under the blue sky laws of the 50 states of the United States and of the District of Columbia and such other jurisdictions as each Holder shall reasonably request; provided, however, that, in the case of non-U.S. jurisdictions, SkyTerra will not be required to (a) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4.1, (b) subject itself to taxation in any such jurisdiction or (c) consent to general service of process in any such jurisdiction. SkyTerra shall pay for all fees (including filing and application fees), costs and expenses in connection therewith. However, the failure to obtain such “blue sky” clearance in each such jurisdiction shall not be a condition to closing and shall not prevent a Closing from occurring; rather, those SkyTerra Shares which may not be lawfully delivered shall be held in trust by Holder or its nominee for the benefit of the stockholders of record otherwise entitled thereto until such time as they may be lawfully delivered. If, after the fifth anniversary of the Closing, such shares still may not be lawfully delivered, then SkyTerra shall deliver such shares to the government agency or official responsible for administering the securities or blue sky laws in such jurisdiction. The Holders shall cooperate with and assist SkyTerra in connection with obtaining the “blue sky” clearance contemplated by this Section 4.1.

Section 4.2      Compliance with MSV Documents. (a) The parties intend that this Agreement and the transactions contemplated hereby be consistent with the conditions and restrictions applicable to the parties and/or their controlled affiliates pursuant to MSV’s organizational documents and the Partnership Agreement.

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(b)   The Holders each hereby waive any rights of such party under Article IX of the Partnership Agreement and Section 8.2 of the Stockholders' Agreement, including the right of first refusal described in Section 8.2(a) thereof, in connection with any transactions contemplated by this Agreement.

(c)  The Holders each hereby acknowledge that such party will have no rights under either the Partnership Agreement or the Stockholders' Agreement upon the Closing.

Section 4.3      Standstill. No Holder and, if applicable, no Holder’s officers and directors, will trade in the securities of SkyTerra prior to the Closing.

Section 4.4      Commercially Reasonable Efforts. The parties shall cooperate with each other and use (and shall cause their respective subsidiaries to use) their respective commercially reasonable efforts to promptly take or cause to be taken all necessary actions, and do or cause to be done all things, necessary, proper or advisable under this Agreement or the MSV Documents and applicable laws to consummate and make effective all the transactions contemplated by this Agreement as soon as practicable. Each Holder shall at any time, and from time to time, after the applicable Closing, execute, acknowledge and deliver all further assignments, transfers, and any other such instruments of conveyance, upon the request of SkyTerra, required to confirm the sale of the MSV LP Units hereunder.

ARTICLE V

CONDITIONS TO CLOSING OF SKYTERRA

The obligation of SkyTerra to purchase the MSV LP Units from such Holder, and to issue the SkyTerra Shares to such Holder, at the Closing is subject to the fulfillment to SkyTerra’s satisfaction (unless waived by SkyTerra) on or prior to the Closing Date of each of the following conditions:

Section 5.1      Representations and Warranties. Each representation and warranty made by such Holder in Article II above shall be true and correct in all material respects on and as of the Closing Date as though made on the Closing Date, except that any representation and warranty that is given as of a particular date or period and relates solely to such particular date or period shall be true and correct in all material respects only as of such date or period, provided however, that any representations and warranties which by their terms are qualified by materiality shall be true and correct in all respects, with the same force and effect as if such representation and warranty had been made on and as of the Closing Date.

Section 5.2      Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Holders on or prior to the Closing Date shall have been performed or complied with by the Holders in all respects.

Section 5.3      Certificates and Documents. Each Holder shall have delivered to SkyTerra or its counsel the Holder Closing Deliveries, and a certificate signed by such Holder, dated the Closing Date, certifying to the fulfillment of the conditions specified in Section 5.1 and Section 5.2 above.

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ARTICLE VI

CONDITIONS TO CLOSING OF HOLDERS

The obligation of each Holder to purchase the SkyTerra Shares from SkyTerra, and to transfer the MSV LP Units to SkyTerra, at the Closing is subject to the fulfillment to such Holder’s satisfaction (unless waived by such Holder) on or prior to the Closing Date of each of the following conditions:

Section 6.1      Representations and Warranties. Each representation and warranty made by SkyTerra in Article III above shall be true and correct in all material respects on and as of the Closing Date as though made on the Closing Date, except that any such representation and warranty that is given as of a particular date or period and relates solely to such particular date or period shall be true and correct in all material respects only as of such date or period, provided, however, that representations and warranties which by their terms are qualified by materiality shall be true and correct in all respects, with the same force and effect as if such representation and warranty had been made on and as of the Closing Date.

Section 6.2      Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by SkyTerra on or prior to the Closing Date shall have been performed or complied with by SkyTerra in all respects.

Section 6.3      Certificates and Documents. SkyTerra shall have delivered to each Holder or its counsel the SkyTerra Closing Deliveries, and a certificate signed by an authorized officer of SkyTerra, dated the Closing Date, certifying to the fulfillment of the conditions specified in Section 6.1 and Section 6.2 above.

ARTICLE VII

MISCELLANEOUS

Section 7.1      Survival of Representations and Warranties. The warranties and representations of Holder and SkyTerra contained in this Agreement shall survive the execution and delivery of this Agreement and the Closing, for a period of twelve (12) months following such Closing. The covenants and agreements shall survive the Closing in accordance with their terms.

Section 7.2      Expenses. Whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby and thereby shall be paid by the party incurring such expenses.

Section 7.3      Counterparts; Effectiveness. This Agreement may be executed in two or more consecutive counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by facsimile or otherwise) to the other parties.

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Section 7.4      Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws thereof.

Section 7.5      Notices. Any notices, reports or other correspondence (hereinafter collectively referred to as “correspondence”) required or permitted to be given hereunder shall be given in writing and shall be deemed given three business days after the date sent by certified or registered mail (return receipt requested), one business day after the date sent by electronic mail, overnight courier or on the date given by facsimile (with confirmation of receipt) or delivered by hand, to the party to whom such correspondence is required or permitted to be given hereunder.

To Walter V. Purnell, Jr.:

43951 Vendome Court

Ashburn, Virginia 20147

E-mail: Waltpurnell@comcast.net

To Rajendra Singh:

Telcom Ventures, LLC

200 South Biscayne Boulevard

40^th Floor

Miami, Florida 33131-2398

E-mail: rsingh@tvllc.com

To Gerald Stevens-Kittner:

1400 S. Barton Street, #433

Arlington, Virginia 22204

E-mail: gskittner@aol.com

To Glenn Meyers:

9 Brookridge Drive

Greenwich, Connecticut 06830

E-mail: glenn@putnampartners.com

To Elizabeth Tasker:

6164 Ravine Way

Ottawa, Ontario

K1C 7E9

Canada

E-mail: tasker@rogers.com

To Columbia ST Partners III, Inc.:

201 N. Union Street

Suite 300

Alexandria, Virginia 22314

Facsimile: (703) 519-7996

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To Dean & Company:

8065 Leesburg Pike, Fifth Floor

Vienna, Virginia 22182

Facsimile: (703) 506-3905

To inOvate Communications Group, LLC:

2010 Crow Canyon Place, Suite 270

San Ramon, California 94583

Facsimile: (925) 358-4901

To WBS, LLC:

PO Box 1247

McLean, Virginia 22101

E-mail: bartsnell@pssconsult.com

To SkyTerra:

SkyTerra Communications, Inc.

10802 Parkridge Boulevard

Reston, Virginia 20191

Facsimile: (703) 390-2770

Attn: Randy Segal, Esq.

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Facsimile: (917) 777-2918

Attn: Gregory A. Fernicola, Esq.

Section 7.6      Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Section 7.7      Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

Section 7.8      Entire Agreement; Non-Assignability; Parties in Interest. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the SkyTerra Disclosure Schedule: (a) constitute the entire agreement among the parties with respect to the subject matter hereof

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and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; (b) are not intended to confer upon any other person any rights or remedies hereunder and (c) shall not be assigned by operation of law or otherwise except as otherwise specifically provided. Without limiting the foregoing, no party shall be deemed to have made any representation or warranty other than as expressly made herein.

Section 7.9      Headings. Headings of the Articles and Sections of this Agreement are for convenience of the parties only, and shall be given no substantive or interpretive effect whatsoever.

Section 7.10    Certain Definitions. References in this Agreement to “subsidiaries” of SkyTerra or Holder shall mean any corporation or other form of legal entity of which more than 50% of the outstanding voting securities are on the date hereof directly or indirectly owned by SkyTerra or Holder, as the case may be. References in this Agreement (except as specifically otherwise defined) to “affiliates” shall mean, as to any person, any other person which, directly or indirectly, controls, or is controlled by, or is under common control with, such person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership of securities or partnership of other ownership interests, by contract or otherwise. References in the Agreement to “person” shall mean an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including, without limitation, a Governmental Entity.

Section 7.11    Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of each of the parties hereto.

Section 7.12    Specific Performance. The parties to this Agreement agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties to this Agreement hereby agree that each party hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States or any state having jurisdiction, in addition to any other remedy to which such party may be entitled at law or in equity.

Section 7.13    Exclusive Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may only be brought in any federal or state court located in the County and State of New York, and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of

14

the exclusive venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 7.5 shall be deemed effective service of process on such party.

Section 7.14    Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[Signature Pages Follow]

15

IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement to be duly executed and delivered as of the date first above written.

WALTER V. PURNELL, JR

/s/ Walter V. Purnell, Jr.

RAJENDRA SINGH

/s/ Rajendra Singh

GERALD STEVENS-KITTNER

/s/ Gerald Stevens-Kittner

GLENN MEYERS

/s/ Glenn Meyers

ELIZABETH TASKER

/s/ Elizabeth Tasker

COLUMBIA ST PARTNERS III, Inc.
By:	/s/ Donald A. Doering
Name:	Donald A. Doering
Title:	Secretary

DEAN & COMPANY
By:	/s/ Dean L. Wilde, II
Name:	Dean L. Wilde
Title:	Chairman

INOVATE COMMUNICATIONS GROUP, LLC
By:	/s/ Perry LaForge
Name:	Perry LaForge
Title:	President

WBS, LLC
By:	/s/ W. Bartlett Snell
Name:	W. Bartlett Snell
Title:	President

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

SkyTerra Disclosure Schedule

Schedule 3.2

1.         Pursuant to Section 8.6 of the Securities Purchase Agreement, dated December 15, 2007, 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, LP, filed as Exhibit 10.1 to the SkyTerra's Current Report on Form 8-K, filed with the SEC on December 15, 2007, the Purchasers (as defined therein) have rights of first negotiation and pro-rata participation rights, subject to certain conditions, in connection with any proposed issuance of SkyTerra equity securities, or options to purchase or rights to subscribe for any SkyTerra equity securities.

2.         Pursuant to Section 11.3 and Section 19.1 of the 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., filed as Exhibit 10.1 to SkyTerra's Current Report on Form 8-K filed with the SEC on July 25, 2008, SkyTerra may, under certain circumstances, engage in rights offerings. Stockholders other than Harbinger (as defined therein) have pro-rata participation rights in any offering pursuant to Section 11.3, and any stockholder, including Harbinger (as defined therein), has pro-rata participation rights in any offering pursuant to Section 19.1.

EX-23 11 dex23-1.htm CONSENT OF ERNST & YOUNG LLP

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-85634, 33-89124, 333-76957, 333-49290, 333-139969 and 333-153375, Form S-3 Nos. 333-124355, 333-135580, 333-135581, 333-138061 and 333-155209, and Form S-4 No. 333-144093) of SkyTerra Communications, Inc. of our reports dated February 28, 2009, with respect to the consolidated financial statements of SkyTerra Communications, Inc. and the effectiveness of internal control over financial reporting of SkyTerra Communications, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2008.

/s/ Ernst & Young LLP

McLean, Virginia

February 28, 2009

EX-31 12 dex31-1.htm CERTIFICATION OF ALEXANDER H. GOOD, CEO AND PRESIDENT

Exhibit 31.1

SKYTERRA COMMUNICATIONS, INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Alexander H. Good, certify that:

1. I have reviewed this annual report on Form 10-K of SkyTerra Communications, Inc.;

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(s) 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 controls over financial reporting, or caused such internal controls 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 this 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(s) 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.

/s/ Alexander H. Good
Name:	Alexander H. Good
Title:	Chief Executive Officer and President

February 27, 2009

EX-31 13 dex31-2.htm CERTIFICATION OF SCOTT MACLEOD, EXECUTIVE VICE PRESIDENT AND CFO

Exhibit 31.2

SKYTERRA COMMUNICATIONS, INC.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Scott Macleod, certify that:

1. I have reviewed this annual report on Form 10-K of SkyTerra Communications, Inc.;

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(s) 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 controls over financial reporting, or caused such internal controls 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 this 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(s) 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.

/s/ Scott Macleod
Name:	Scott Macleod
Title:	Executive Vice President and Chief Financial Officer

February 27, 2009

EX-32 14 dex32-1.htm CERTIFICATION OF ALEXANDER H. GOOD, CEO AND PRESIDENT

Exhibit 32.1

Certification of CEO Pursuant to

18 U.S.C. Section1350,

as Adopted Pursuant to

Section906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of SkyTerra Communications, Inc. (the “Company”) for the period ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Alexander H. Good, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his 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
Name:	Alexander H. Good
Title:	Chief Executive Officer and President

February 27, 2009

EX-32 15 dex32-2.htm CERTIFICATION OF SCOTT MACLEOD, EXECUTIVE VICE PRESIDENT AND CFO

Exhibit 32.2

Certification of CFO Pursuant to

18 U.S.C. Section1350,

as Adopted Pursuant to

Section906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of SkyTerra Communications, Inc. (the “Company”) for the period ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Scott Macleod, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his 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
Name:	Scott Macleod
Title:	Executive Vice President and Chief Financial Officer

February 27, 2009

EX-3.(I) 16 dex3-1.htm RESTATED CERTIFICATE OF INCORPORATION AS AMENDED NOVEMBER 11, 2008

RESTATED CERTIFICATE OF INCORPORATION

OF

SKYTERRA COMMUNICATIONS, INC.

(pursuant to Section 245 of the

Delaware General Corporation Law)

SKYTERRA COMMUNICATIONS, INC., a Delaware corporation (the "Company"), the original Certificate of Incorporation of which was filed with the Secretary of State of the State of Delaware on August 15, 1985 under the name International Cogeneration Corporation, DOES HEREBY CERTIFY:

This Restated Certificate of Incorporation hereby restates and integrates, without further amendment, pursuant to Section 245 of the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code, the Company's Certificate of Incorporation, as amended to date. There is no discrepancy between the terms of this Restated Certificate of Incorporation and the terms of the Company's Certificate of Incorporation, as amended to date. The text of this Restated Certificate of Incorporation, as so restated, is as follows:

FIRST: The name of the Company is Skyterra Communications, Inc.

SECOND: The address of the Company's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company.

THIRD: The purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH: The aggregate number of shares which the Company shall have authority to issue shall be:

Three Hundred Ten Million (310,000,000) shares, consisting of Two Hundred Million (200,000,000) shares of Common Stock, with a par value of One Cent ($0.01) per share, One Hundred Million (100,000,000) shares of Non-Voting Common Stock, with a par value of One Cent ($0.01) per share, and Ten Million (10,000,000) shares of Preferred Stock, with a par value of One Cent ($0.01) per share. The Board of Directors, in its sole direction, shall have full and complete authority, by resolutions, from time to time, to establish one or more series or classes to issue shares of Preferred Stock, and to fix, determine and vary the voting rights, designations, preferences, restrictions, qualifications, privileges, limitations, options, conversion rights and other special rights of each series or class of Preferred Stock, including, but not limited to, dividend rates and

mannerof payment, preferential amounts payable upon voluntary or involuntary liquidation, voting rights, conversion rights, redemption prices, terms and conditions and sinking fund and stock purchase prices, terms and conditions.

FIFTH: The name and mailing address of the incorporator is International Cogeneration Corporation, a Nevada corporation, with principal offices at 320 Walnut Street, Suite 105, Philadelphia, Pennsylvania 19106. The powers of the incorporator terminated upon the filing of the original Certificate of Incorporation of the Company on August 15, 1985.

SIXTH: Election of directors need not be by written ballot.

SEVENTH: The Board of Directors of the Company (the "Board of Directors") is authorized to adopt, amend or repeal By-Laws of the Company.

EIGHTH: The following provisions are inserted to limit the liability of directors and officers of the Company to the full extent of the law allowable and for the conduct of the affairs of the Company, and it is expressly provided that they are intended to be in furtherance and not in limitation or exclusion of the powers conferred by law:

(a)       No director shall be personally liable to the Company or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, except (i) for any breach of the director's duty of loyalty to the Company or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for paying a dividend or approving a stock repurchase which is illegal under section 174 of Title 8 of the Delaware Code relating to the Delaware General Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit.

(b)       No contract or other transaction between the Company and any other firm or corporation shall be affected or invalidated by reason of the fact that any one or more of the directors or officers of this Company is or are interested in, or is a member, stockholder, director or officer or are members, stockholders, directors or officers, individually or jointly, may be a party or parties to, or may be interested in, any contract or transaction of this Company or in which this Company with any person or persons, firm, association or corporation, shall be affected or invalidated by reason of the fact that any director or officer or officers of this Company is a party, or are parties to, or interested, such contract, act of transaction, or in any way connected, with such person or persons, firms, association or corporation, and each and every person who may become a director or officer of this Company is relieved from any liability that might otherwise exist from thus contracting with this Company for the benefit of himself or any firm, association, or corporation in which he may be in any way interested.

(c)       Subject to such restrictions and regulations contained in by-laws adopted by the stockholders, the Board of Directors may make, alter, amend and rescind the by-laws, and may provide therein for the appointment of an executive committee from their own members, to exercise all or any of the powers of the board, which may be amended or repealed, at any time, by the stockholders.

2

(d)       The Board of Directors shall have power, in its discretion, to provide for and to pay for directors rendering unusual or exceptional services to the Company special compensation appropriate to the value of such services.

(e)       By resolution duly adopted by the holders of not less than a majority of the shares of stock then issued and outstanding and entitled to vote at any regular or special meeting of the stockholders of the Company duly called and held as provided in the by-laws of the Company, any director or directors of the Company may be removed from office at any time or times, with or without cause. The Board of Directors may at any time remove any officers of the Company with or without cause.

(f)        The Company may indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amount paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith in a manner he reasonably believed to be in or not opposed to the best interest of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(g)       The Company may indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other Court shall deem proper.

(h)       To the extent that a director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to herein or in defense of any claim, issue or matter therein, he shall be

3

indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.

(i)        Any indemnification under paragraphs herein (unless ordered by a Court) shall be made by the Company upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in said paragraphs. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.

(j)        The Company may pay expenses incurred by defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding in the manner provided herein upon receipt of any undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall be ultimately determined that he is not entitled to be indemnified by the Company as authorized in this section.

The indemnification and advancement of expenses provided for herein shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(k)       The indemnification and advancement of expenses provided herein or granted pursuant to this provision shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or of any disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

(l)        The Company may purchase and maintain insurance on behalf of any person who is or was serving the Company in any capacity referred to hereinabove against any liability asserted against him and incurred by him in such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions herein.

(m)      The provisions herein shall be applicable to all claims, action, suits, or proceedings made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after the adoption hereof.

NINTH: At each annual meeting of stockholders of the Corporation, all directors shall be elected for a one-year term expiring at the next succeeding annual meeting of stockholders. Any director may be removed from office by a vote of the holders of a majority of the shares then issued and outstanding. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or the sole remaining director, and shall not be filled by the stockholders; any director so chosen shall hold office until the next annual meeting of stockholders, and until his or her successor shall be duly elected and shall qualify, unless sooner displaced.

4

IN WITNESS WHEREOF, the Company has caused this Restated Certificate of Incorporation to be executed this 18^th day of October, 2006.

SKYTERRA COMMUNICATIONS, INC.
By:	/s/ Robert Lewis
	Name: Robert Lewis
	Title: Senior Vice President, General
	Counsel and Secretary

5

CERTIFICATE OF AMENDMENT

TO THE

RESTATED CERTIFICATE OF INCORPORATION

OF

SKYTERRA COMMUNICATIONS, INC.

_________________________________________

Pursuant to Section 242 of the General

Corporation Law of the State of Delaware

_________________________________________

SkyTerra Communications, Inc., a Delaware corporation (hereinafter called the “Company”), does hereby certify as follows:

FIRST: The first sentence of Article FOURTH of the Company’s Restated Certificate of Incorporation is hereby amended to read in its entirety as set forth below:

The aggregate number of shares which the Company shall have authority to issue shall be: Three Hundred Thirty Five Million (335,000,000) shares, consisting of Two Hundred Million (200,000,000) shares of Common Stock, with a par value of One Cent ($0.01) per share, One Hundred Twenty Five Million (125,000,000) shares of Non-Voting Common Stock, with a par value of One Cent ($0.01) per share, and Ten Million (10,000,000) shares of Preferred Stock, with a par value of One Cent ($0.01) per share.

SECOND: The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Company has caused this Certificate to be duly executed in its corporate name this 11^th day of November, 2008.

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

6

-----END PRIVACY-ENHANCED MESSAGE-----

EX-10

Marc Montagner	February 23, 2009
3021 P Street, NW
Washington, DC 20007

Re: Offer of Employment

Dear Marc,

We are pleased to offer you employment with SkyTerra LP (the “Company”) at our Reston headquarters. This letter sets forth the terms and conditions of your employment.

1. Title and Responsibilities: Your initial position will be Executive Vice President, Strategy, Development and Distribution SkyTerra LP. You will be responsible for the overall management and direction of all strategy, development, distribution and mergers and acquisitions activities. This is a full time position, with a start date of February 23, 2009. Your initial objectives are detailed in Section 4 below and subject to modification by mutual agreement. You shall report to the CEO of the Company.

2. Salary: Your initial salary will be paid at the rate of $15,660.04 in bi-weekly installments which equates to $407,161.00 on an annualized basis, payable in accordance with the Company’s standard payroll practices.

3. Annual Bonus: You will also be eligible for an annual discretionary bonus equal to 75% of your base compensation, as determined by both corporate and individual performance.

4. Stock Option(s): Subject to approval of the SkyTerra Board of Directors (or its Compensation Committee) you will be granted stock options with respect to 300,000 shares of SkyTerra Communications, Inc. common stock pursuant to the attached SkyTerra Communications, Inc. 2006 Equity and Incentive Plan (the “Plan”) at an exercise price as of the fair market value as set forth in the Plan as of your start date (the “Grant Date”). The options shall vest in three annual installments beginning on the first anniversary of the Grant Date, and otherwise consistent with the SkyTerra Equity and Unit Incentive Agreement. You shall also be granted an additional 300,000 stock options, provided however that such additional stock options shall only vest, if at such time you are then an employee, upon the successful completion of one of the following: 1) the execution of an agreement with a strategic partner that either provides a) significant capital contribution of equity or debt of not less than $1,000,000,000, where vesting occurs upon the funding of such contribution, or b) a firm agreement to distribute units with ongoing annual commitments of not less than 250,000 units (or a comparable revenue with an assumed average wholesale arpu of not less than $25 where vesting occurs upon completion of the first year’s distribution); or 2) the closing of a transaction for the sale of Skyterra; or 3) the closing of the Inmarsat possible offer as contemplated by the Master Contract Service Agreement. In the alternative, 100,000 such options of the total 300,000 options shall begin a three year vesting schedule beginning upon the execution of an arrangement with respect to our next generation satellite services with identified carriers whereby said carrier would (i) commit to a substantial use our satellite for roaming services and make substantial marketing, advertising or and investment in the promotion of such services out of the ordinary course of our sales and marketing efforts for customers and products, or (ii) have substantial minimum commitments in terms of revenues to SkyTerra out of the ordinary course of our sales and marketing efforts for customers and products. For purposes of clarity, and not by way of limitation, in connection with the foregoing alternative vesting condition, the carrier commitment made would be expected to be on a carrier-wide basis and not on an individual sales opportunity for a user-group, business segment or similar sales opportunity that is of the type which the sales organization would achieve in the ordinary course and would not fairly be characterized as a strategic commitment at a carrier level.

5. Restricted Stock: In addition, upon the Grant Date, you will be granted 100,000 shares of Restricted Stock, which shares shall vest in three annual installments over three years, beginning on the first anniversary of the Grant Date, pursuant to the attached Restricted Equity Plan.

6. Termination Protections: Should the Company terminate you without Cause (as defined in Attachment A) or you leave for Good Reason (as defined below) you shall be entitled to (i) one year’s salary and target bonus (i.e., 75% of base salary), (ii) immediate vesting of all time and performance based Stock Options and all Restricted shares, and (iii) reimbursement or payment for COBRA costs for continuing health care insurance for you and your eligible dependents for 12 months following termination and (iv) reimbursement of reasonable business expenses incurred prior to your termination. Upon your termination as a result of your death or Disability (as defined below), you and/or your beneficiary(ies) shall receive the vesting of time based Stock Options and Restricted shares as set forth in (ii) above, the reimbursement for COBRA as set forth in (iii) above and reimbursement of reasonable business expenses as set forth in (iv) above. Good Reason shall mean any material adverse

change to this Agreement, including without limitation, (i) a material reduction of salary or bonus, (ii) a material reduction in your title and/or scope of responsibilities, or (iii) a relocation of your office to greater than 50 miles from the Reston office location. Upon receiving notice of termination for Good Reason, the Company will have 30 days to cure the stated issue prior to such Good Reason becoming effective. In addition, notwithstanding anything contained in Attachment B to the contrary, you shall have 30 days to cure the stated issue prior to Cause becoming effective.

In consideration of employment, including the grant of SkyTerra options and/or restricted stock, you will also enter into the following: 1) a Stock Option Agreement and Restricted Stock Agreement in the form provided; and 2) a Confidentiality, Non-Competition and Non-Solicitation Agreement in the form provided. In addition, on your date of hire, you will accept the Company’s standard employee agreements with respect to corporate policies and conduct, including the assignment to SkyTerra of any intellectual property/patents developed as an employee.

Your employment is subject to the Company’s personnel policies and procedures which are subject to change from time to time at the Company’s sole discretion. Your employment with the Company will be “at will” which means that either you or the Company may terminate your employment at any time for any reason. You will be eligible to participate in the benefit plans offered to Senior Executives, also subject to change from time to time at the Company’s sole discretion, including:

a) Health and Wellness plans including Medical and Dental Insurance as provided by the Company;

b) Tax deferred, company matching 401(k), or other available savings plan(s);

c) Life and Disability insurance;

d) Paid Time Off (“PTO”) accrual rate of 6.15 hours per pay period;

e) Standard company holidays.

In addition, you shall be covered by the Company’s directors’ and officers’ insurance coverage.

By signing this letter you represent that you have full authority to accept this position and perform the duties of the position without conflict with any other obligations and that you are not involved in any situation that might create, or appear to create, a conflict of interest with respect to your loyalty to or duties for the Company.

By signing this letter, you acknowledge the terms described in this letter, which supersede any prior representations or agreements, whether written or oral. There are no terms, conditions, representations, warranties or covenants other than those contained herein. Moreover, you warrant that you are not subject to an employment agreement or restrictive covenant preventing full performance of your duties to the Company.

This letter agreement shall be administered, interpreted and construed in a manner that does not result in the imposition of additional taxes or interest under Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”). If any amount to be paid to you on account of your separation of service while you are a “specified employee” (as defined under Section 409A of the Code) is “deferred compensation” (as defined under Section 409A of the Code, after giving effect to the exemptions thereunder), such amount shall be delayed until the first business day after the lapse of six months after separation of separation of service.

This Agreement may be executed in one or more counterparts each of which shall be deemed an original. If any part of this Agreement is found to be illegal or unenforceable, such determination shall not affect the enforceability of the remaining provisions which shall remain in effect. This letter agreement may be amended or modified only by a written instrument executed by both the Company and you. All notices shall be hand delivered to you at the address noted above, and such further address as you provide the company and if to the Company, by hand delivery to the CEO. This Agreement shall be governed by the laws of the Commonwealth of Virginia.

This is an exciting time for our business and for our industry. We look forward to your joining our team.

Respectfully,

/s/ Alexander H. Good

Alexander H. Good

Chairman, CEO and President

SkyTerra Communications

Date Executed:

Enclosures

SkyTerra LP

10802 Parkridge Boulevard, Reston, VA 20191-4334

T: +1 703 390 2700

www.skyterra.com

Cc: Applicant File

AGREED & ACCEPTED:
/s/ Marc Montagner	February 23, 2009
Marc Montagner	Date

Attachment A

For the purposes of this letter, "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 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. )

SkyTerra LP

10802 Parkridge Boulevard, Reston, VA 20191-4334

T: +1 703 390 2700

www.skyterra.com

EX-10

EXECUTION VERSION

EXCHANGE AGREEMENT

BY AND AMONG

SKYTERRA COMMUNICATIONS, INC.,

WALTER V. PURNELL, JR.,

RAJENDRA SINGH,

GERALD STEVENS-KITTNER,

GLENN MEYERS,

ELIZABETH TASKER,

COLUMBIA ST PARTNERS III, Inc.,

DEAN & COMPANY,

INOVATE COMMUNICATIONS GROUP, LLC

AND

WBS, LLC

Dated as of December 10, 2008

TABLE OF CONTENTS

Page

Section 1.1 Sale of MSV LP Units and SkyTerra Shares 1

Section 1.2 Closing 2

Section 1.3 Deliveries 2

Section 2.1 Organization; Related Entities 3

Section 2.2 Title to MSV LP Units 3

Section 2.3 Authority Relative to this Agreement 3

Section 2.4 Consents and Approvals; No Violations 3

Section 2.5 Purchase Entirely for Own Account 4

Section 2.6 Reliance Upon Holder’s Representations 4

Section 2.7 Receipt of Information 4

Section 2.8 Investor Status; etc 4

Section 2.9 Taxes 5

Section 2.10 Brokers or Finders 5

Section 2.11 Restricted Securities 5

Section 2.12 Legend 5

Section 3.1 Corporate Organization; Related Entities 6

Section 3.2 Capitalization 6

Section 3.3 Authority Relative to This Agreement 7

Section 3.4 Consents and Approvals; No Violations 7

Section 3.5 Reports and Financial Statements 7

Section 3.6 Brokers 8

Section 3.7 Purchase Entirely for Own Account 8

Section 3.8 Reliance Upon SkyTerra’s Representations 8

Section 3.9 Investor Status; etc 8

Section 3.10 Restricted Securities 8

Section 3.11 Issuances Exempt 9

Section 3.12 No Integrated Offering 9

Section 4.1 Blue Sky Laws 9

Section 4.2 Compliance with MSV Documents 9

Section 4.3 Standstill 10

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Section 4.4 Commercially Reasonable Efforts 10

Section 5.1 Representations and Warranties 10

Section 5.2 Performance 10

Section 5.3 Certificates and Documents 10

Section 6.1 Representations and Warranties 11

Section 6.2 Performance 11

Section 6.3 Certificates and Documents 11

Section 7.1 Survival of Representations and Warranties 11

Section 7.2 Expenses 11

Section 7.3 Counterparts; Effectiveness 11

Section 7.4 Governing Law 12

Section 7.5 Notices 12

Section 7.6 Assignment; Binding Effect 13

Section 7.7 Severability 13

Section 7.8 Entire Agreement; Non-Assignability; Parties in Interest 13

Section 7.9 Headings 14

Section 7.10 Certain Definitions 14

Section 7.11 Amendments and Waivers 14

Section 7.12 Specific Performance 14

Section 7.13 Exclusive Jurisdiction 14

Section 7.14 Waiver of Jury Trial 15

Schedule 3.2 SkyTerra Disclosure Schedule

ii

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of December 10, 2008 by and among SkyTerra Communications, Inc., a Delaware corporation (“SkyTerra”), and Walter V. Purnell, Jr., Rajendra Singh, Gerald Stevens-Kittner, Glenn Meyers, Elizabeth Tasker, Columbia ST Partners III, Inc., a Delaware corporation, Dean & Company, a Virginia corporation, inOvate Communications Group, LLC, a California limited liability company, and WBS, LLC, a Delaware limited liability company (each, a “Holder,” and together, the “Holders”).

RECITALS:

WHEREAS, subject to the terms and conditions hereof, at the Closing (as defined below) the Holders intend to sell to SkyTerra an aggregate of 261,067 limited partnership units (the “MSV LP Units”) of SkyTerra LP, formerly known as Mobile Satellite Ventures LP (“MSV”), owned by the Holders in exchange for an aggregate of 736,209 shares (the “SkyTerra Shares”) of SkyTerra voting common stock, par value $0.01 per share (“SkyTerra Common Stock”), in each case as appropriately adjusted for any stock split, combination, reorganization, recapitalization, reclassification, stock dividend, stock distribution or similar event declared or effected prior to the Closing.

AGREEMENT:

NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

Section 1.1      Sale of MSV LP Units and SkyTerra Shares. Subject to the terms and conditions hereof and in reliance upon the representations, warranties and agreements contained herein, at the Closing (as defined below), each Holder will purchase from SkyTerra, and SkyTerra shall issue and sell to each Holder, the number of SkyTerra Shares specified immediately below, and SkyTerra will purchase from each Holder, and each Holder shall sell to SkyTerra, the number of MSV LP Units specified immediately below:

Holder	MSV LP Units	SkyTerra Shares
1. Walter V. Purnell, Jr.	62,500	176,250
2. Rajendra Singh	62,500	176,250
3. Glenn Meyers	40,000	112,800
4. Gerald Stevens-Kittner	25,000	70,500
5. Elizabeth Tasker	10,000	28,200
6. Columbia ST Partners III, Inc.	25,000	70,500
7. Dean & Company	6,250	17,625
8. inOvate Communications Group, LLC	4,817	13,584
9. WBS, LLC	25,000	70,500
Total	261,067	736,209

Section 1.2      Closing. The closing (the “Closing”) of the purchase and sale of the MSV LP Units in exchange for the SkyTerra Shares shall be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, NY 10036 on December 15, 2008 at 10:00 a.m., local time, or at such other time, date or place as the Holders and SkyTerra may agree in writing. The date on which the Closing occurs is hereinafter referred to as the “Closing Date.”

 

Section 1.3 Deliveries.  

(a)  At the Closing, each Holder shall deliver to SkyTerra (unless waived by SkyTerra) the following (collectively, the “Holder Closing Deliveries”):

(i)   a certificate or certificates registered in Holder’s name representing the MSV LP Units to be sold by Holder to SkyTerra pursuant to Section 1.1 or an affidavit of lost certificate with respect to any lost, missing or destroyed certificate in form reasonably satisfactory to SkyTerra; and

(ii)   a duly executed partnership unit power evidencing the transfer of the Holder’s MSV LP Units from Holderto SkyTerra in such form reasonably satisfactory to SkyTerra as shall be effective to vest in SkyTerra good and valid title to Holder’s MSV LP Units, free and clear of any Lien (as defined below) other than Securities Law Encumbrances (as defined below) or pursuant to the MSV Documents (as defined below).

(b)  SkyTerra shall deliver to each Holder(unless waived by such Holder) the following (collectively, the “SkyTerra Closing Deliveries”):

(i)   a certificate or certificates registered in Holder’s name representing the number of SkyTerra Shares sold to such Holder pursuant to Section 1.1; and

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(ii)   a copy of a certificate of good standing for SkyTerra from the Secretary of State of the State of Delaware.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF HOLDERS

Each Holder represents and warrants to SkyTerra, as follows:

Section 2.1      Organization; Related Entities. If Holder is an entity, Holder is duly organized or formed, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, and has the requisite corporate power and authority to own or lease its properties and to carry on its businesses as is presently being conducted. If Holder is an entity, Holder is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except for failures, if any, to be so qualified which individually or in the aggregate have not had and could not reasonably be expected to have a Holder Material Adverse Effect. A "Holder Material Adverse Effect" means a material adverse effect respecting the ability of Holder to consummate the transactions contemplated by this Agreement or fulfill the conditions to Closing set forth herein.

Section 2.2      Title to MSV LP Units. As of the date hereof and at all times until and including at the Closing, Holder owns, of record and beneficially, the MSV LP Units attributed to such Holder in Section 1.1 free and clear of any and all option, call, contract, commitment, mortgage, pledge, security interest, encumbrance, lien, Tax (as defined below), claim or charge of any kind or right of others of whatever nature (collectively, a “Lien”) of any kind, other than pursuant to applicable securities laws (“Securities Law Encumbrances”) and the MSV Documents (as defined below). Upon the Closing, (x) SkyTerra shall be vested with good and valid title to the MSV LP Units, free and clear of any Liens of any kind (other than Securities Law Encumbrances or the MSV Documents) and (y) Holder shall not own, of record or beneficially, or have, by conversion, warrant, option or otherwise, any right to, interest in or agreement to acquire any MSV LP Units. “MSV Documents” means the Amended and Restated Limited Partnership Agreement of MSV, dated as of November 12, 2004, as amended on September 25, 2006, and January 5, 2007 (the "Partnership Agreement"), and, as incorporated by and into the Partnership Agreement, Section 8 of the Amended and Restated Stockholders’ Agreement of Mobile Satellite Ventures GP Inc., a Delaware corporation and the general partner of MSV, dated as of November 12, 2004, as amended on May 6, 2006 and September 25, 2006 (the “Stockholders’ Agreement”).

Section 2.3      Authority Relative to this Agreement. Holder has the requisite power, authority or capacity to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Holder and, assuming the due authorization, execution and delivery thereof by SkyTerra, constitutes the valid and binding obligation of Holder, enforceable against it in accordance with its terms.

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Section 2.4      Consents and Approvals; No Violations. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby will, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under (i) any provision of the organizational documents of Holder, if Holder is an entity, or (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Holder or its properties or assets, including, but not limited to, the MSV Documents. No consent, approval, order or authorization of, or registration, declaration or filing with, any federal, state, local or foreign court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory body, authority or administrative agency or commission (collectively, a “Governmental Entity”), is required by or with respect to Holder in connection with the execution and delivery of this Agreement by Holder or the consummation by Holder of the transactions contemplated hereby, except for such consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a Holder Material Adverse Effect.

Section 2.5      Purchase Entirely for Own Account. The SkyTerra Shares to be issued to Holder will be acquired for investment for Holder’s own account, not as a nominee or agent, and not with a view to the resale or distribution that would require registration of the SkyTerra Shares or any part thereof under the Securities Act of 1933, as amended (the “Securities Act”), in violation of applicable securities laws, and Holder has no present intention of selling, granting any participation in, or otherwise distributing such SkyTerra Shares except in compliance with applicable securities laws.

Section 2.6      Reliance Upon Holder’s Representations. Holder understands that the SkyTerra Shares will not be registered for issuance to Holder under the Securities Act and the sale provided for in this Agreement and SkyTerra’s issuance of SkyTerra Shares hereunder will be made in reliance upon an exemption from registration under the Securities Act pursuant to Section 4(2) thereof, and that, in such case, SkyTerra’s reliance on such exemption will be based on Holder’s representations set forth herein.

Section 2.7      Receipt of Information. Holder has received all the information it considers necessary or appropriate for deciding whether to acquire SkyTerra Shares. Holder further represents that it has had an opportunity to ask questions and receive answers from SkyTerra regarding the terms and conditions of the offering of SkyTerra Shares and the business and financial condition of SkyTerra and to obtain additional information (to the extent SkyTerra possessed such information or could acquire it without unreasonable effort or expense) necessary to verify the accuracy of any information furnished to it or to which it had access. The foregoing, however, does not limit or modify the representations or warranties of SkyTerra in this Agreement or the right of Holder to rely upon such representations or warranties. Holder has not received, nor is it relying on, any representations or warranties from SkyTerra, other than as provided herein; provided that the foregoing shall not affect any right Holder may have on account of fraud.

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Section 2.8      Investor Status; etc. Holder certifies and represents to SkyTerra that it is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act ("Accredited Investor") and was not organized for the purpose of acquiring SkyTerra Shares. Holder’s financial condition is such that it is able to bear the risk of holding the SkyTerra Shares for an indefinite period of time and the risk of loss of its entire investment. Holder has sufficient knowledge and experience in investing in companies similar to SkyTerra so as to be able to evaluate the risks and merits of its investment in SkyTerra. Upon written request of SkyTerra, Holder will provide any information reasonably requested by SkyTerra to verify its status as an Accredited Investor.

Section 2.9      Taxes. There are no Liens arising from or related to Taxes (as defined below) on or pending against Holder or any of its properties other than statutory Liens for Taxes that are not yet due and payable. “Taxes” means any and all federal, state, local, foreign or other tax of any kind (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Tax Authority (as defined below), including taxes on or with respect to income, alternative minimum, accumulated earnings, personal holding company, capital, transfer, stamp, franchises, windfall or other profits, gross receipts, property, sales, use, capital stock, payroll, employment, unemployment, social security, workers’ compensation or net worth, and taxes in the nature of excise, withholding, ad valorem or value added. “Tax Authority” means any competent domestic or foreign national, state, provincial, municipal or other local judicial, legislative, executive, administrative or regulatory authority or any governmental or private body exercising any regulatory or taxing authority responsible for the determination, assessment or collection of Taxes.

Section 2.10    Brokers or Finders. Holder has not incurred, nor will it incur, directly or indirectly, any liability for brokerage or finders’ fees or agents’ commissions or investment bankers’ fees or any similar charges in connection with this Agreement or any transaction contemplated hereby.

Section 2.11    Restricted Securities. Holder understands that the SkyTerra Shares may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the SkyTerra Shares or an available exemption from registration under the Securities Act, such SkyTerra Shares must be held indefinitely. In particular, Holder is aware that such SkyTerra Shares may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of the rule are met. Among the conditions for use of Rule 144, under certain circumstances, is the availability to the public of current information about SkyTerra.

Section 2.12    Legend. It is understood that the certificates evidencing the SkyTerra Shares will bear the following legend:

“These securities have not been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended. They may not be sold, offered for sale, pledged or hypothecated in the absence of a registration statement in effect with respect to the

5

securities under such Act or an opinion of counsel or letters of representation satisfactory to SkyTerra Communications, Inc. that such registration is not required.”

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SKYTERRA

Except as otherwise specifically provided in the Disclosure Schedule of SkyTerra attached hereto and incorporated herein by reference (the “SkyTerra Disclosure Schedule”), SkyTerra represents and warrants to Holder, as follows:

Section 3.1      Corporate Organization; Related Entities. SkyTerra is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to own or lease its properties and to carry on its business as it is presently being conducted. SkyTerra is duly qualified to do business as a foreign corporation, and is in good standing, in each jurisdiction in which the ownership of its properties or the conduct of its business requires such qualification, except for failures, if any, to be so qualified which individually or in the aggregate have not had and could not reasonably be expected to have a SkyTerra Material Adverse Effect (as defined below). The copies of the certificate of incorporation and bylaws of SkyTerra on file with the Securities and Exchange Commission ("SEC") are complete and current copies of such instruments as presently in effect. A “SkyTerra Material Adverse Effect” means a material adverse effect respecting (a) the business, assets and liabilities (taken together) or financial condition of SkyTerra and its subsidiaries on a consolidated basis or (b) the ability of SkyTerra to consummate the transactions contemplated by this Agreement or fulfill the conditions to Closing set forth herein.

 

Section 3.2 Capitalization.

(a)  As of the date of this Agreement, the authorized capital stock of SkyTerra consists of (i) 200,000,000 shares of SkyTerra Common Stock, 48,086,578 of which are issued and outstanding, and (ii) 125,000,000 shares of non-voting common stock, par value $0.01 per share, 59,958,499 of which are issued and outstanding. SkyTerra has no designations of preferred stock. As of November 25, 2008, (1) 14,693,491 shares of SkyTerra Common Stock are reserved for issuance pursuant to SkyTerra’s stock option plans or otherwise, with an average weighted strike price of $3.97 per option, and (2) 13,139,696 shares of SkyTerra Common Stock are reserved for issuance upon the exercise of outstanding warrants to purchase shares of SkyTerra Common Stock (collectively, the “SkyTerra Permitted Issuances”). Except as set forth on Schedule 3.2 of the SkyTerra Disclosure Schedule, all the issued and outstanding shares of SkyTerra’s capital stock have been duly authorized and validly issued and are fully paid, nonassessable and free of statutory preemptive rights and contractual stockholder preemptive rights, with no personal liability attaching to the ownership thereof. Except for (i) the SkyTerra Permitted Issuances, (ii) as set forth on Schedule 3.2 of the SkyTerra Disclosure Schedule, and (iii) as disclosed in the reports required to be filed with the SEC pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or the Securities Act (collectively, the "SkyTerra SEC Reports"), SkyTerra (A) does not have and is not bound by any outstanding subscriptions,

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options, voting trusts, convertible securities, warrants, calls, commitments or agreements of any character or kind calling for the purchase, issuance or grant of any additional shares of its capital stock or restricting the transfer of its capital stock and (B) is not a party to any voting trust or other agreement or understanding with respect to the voting of the capital stock or other equity securities of SkyTerra.

(b)  The SkyTerra Shares have been duly and validly authorized, and, when issued upon the terms hereof, will be fully paid, nonassessable and free of statutory preemptive rights and contractual stockholder preemptive rights, with no personal liability attaching to the ownership thereof.

Section 3.3      Authority Relative to This Agreement. SkyTerra has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by SkyTerra and the consummation by SkyTerra of the transactions contemplated hereby have been duly authorized by SkyTerra’s Board of Directors, and no other corporate or stockholder proceedings on the part of SkyTerra are necessary to authorize this Agreement or for SkyTerra to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by SkyTerra and, assuming the due authorization, execution and delivery thereof by Holders, constitutes the valid and binding obligation of SkyTerra, enforceable against SkyTerra in accordance with its terms.

Section 3.4      Consents and Approvals; No Violations. Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby will, conflict with, or result in any violation of, or default under (with or without notice or lapse of time, or both), or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under (i) any provision of the organizational documents of SkyTerra, (ii) any material mortgage, indenture, lease, contract or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to SkyTerra or its properties or assets, including but not limited to the MSV Documents, except as would not have a SkyTerra Material Adverse Effect. No consent, approval, order or authorization of, or registration, declaration or filing with, any Governmental Entity is required by or with respect to SkyTerra in connection with the execution and delivery of this Agreement by SkyTerra or the consummation by SkyTerra of the transactions contemplated hereby except for such consents, authorizations, filings, approvals and registrations which, if not obtained or made, would not have a SkyTerra Material Adverse Effect.

Section 3.5      Reports and Financial Statements. SkyTerra has timely filed all SkyTerra SEC Reports required to be filed with the SEC pursuant to the Exchange Act or the Securities Act since January 1, 2008. Such SkyTerra SEC Reports, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as the case may be, and none of such SkyTerra SEC Reports, as of their respective dates (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing), contained any untrue statement of a material fact or omitted to state a material fact required

7

to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of SkyTerra included in such SkyTerra SEC Reports have been prepared in accordance with GAAP consistently applied throughout the periods indicated (except as otherwise noted therein or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of unaudited statements, to normal, recurring year-end adjustments and any other adjustments described therein), in all material respects, the consolidated financial position of SkyTerra and its consolidated Subsidiaries as at the dates thereof and the consolidated results of operations and cash flows of SkyTerra and its consolidated subsidiaries for the periods then ended. Except as disclosed in the SkyTerra SEC Reports, there has been no change in any of the significant accounting (including Tax accounting) policies or procedures of SkyTerra since September 30, 2008.

Section 3.6      Brokers. No broker, finder or financial advisor is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of SkyTerra.

Section 3.7      Purchase Entirely for Own Account. The MSV LP Units to be transferred to SkyTerra will be acquired for investment for SkyTerra’s own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, in each case, in violation of applicable securities laws, and SkyTerra has no present intention of selling, granting any participation in, or otherwise distributing the same except in compliance with applicable securities laws.

Section 3.8      Reliance Upon SkyTerra’s Representations. SkyTerra understands that MSV LP Units will not be registered under the Securities Act and the sale provided for in this Agreement and Holders’ transfers of securities hereunder will be made in reliance upon an exemption from registration under the Securities Act, and that, in such case, Holders’ reliance on such exemption will be based on SkyTerra’s representations set forth herein.

Section 3.9      Investor Status; etc. SkyTerra certifies and represents to Holders that it is an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act and was not organized for the purpose of acquiring MSV LP Units. SkyTerra’s financial condition is such that it is able to bear the risk of holding the MSV LP Units for an indefinite period of time and the risk of loss of its entire investment. SkyTerra has sufficient knowledge and experience in investing in companies similar to MSV so as to be able to evaluate the risks and merits of its investment in MSV.

Section 3.10    Restricted Securities. SkyTerra understands that the MSV LP Units may not be sold, transferred or otherwise disposed of without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the MSV LP Units or an available exemption from registration under the Securities Act, such MSV LP Units must be held indefinitely. In

8

particular, SkyTerra is aware that such MSV LP Units may not be sold pursuant to Rule 144 promulgated under the Securities Act unless all of the conditions of the rule are met.

Section 3.11    Issuances Exempt. Assuming the truth and accuracy of the representations and warranties of Holders contained in Article II hereof, the offer, sale, and issuance of the SkyTerra Shares will be exempt from the registration requirements of the Securities Act, and will have been registered or qualified (or are exempt from registration and qualification) under the registration, permit or qualification requirements of all applicable state securities laws, except as permitted pursuant to Section 4.1 hereof.

Section 3.12    No Integrated Offering. Neither SkyTerra, nor any of its controlled affiliates or any other person acting on SkyTerra’s behalf, has directly or indirectly engaged in any form of general solicitation or general advertising with respect to the SkyTerra Shares nor have any of such persons made any offers or sales of any security or solicited any offers to buy any security under circumstances that would require registration of the SkyTerra Shares under the Securities Act or cause this offering of SkyTerra Shares to be integrated with any prior offering of securities of SkyTerra for purposes of the Securities Act.

ARTICLE IV

ADDITIONAL AGREEMENTS

Section 4.1      Blue Sky Laws. SkyTerra shall exercise its commercially reasonable best efforts to register or qualify (or obtain an exemption from registration) the SkyTerra Shares under the blue sky laws of the 50 states of the United States and of the District of Columbia and such other jurisdictions as each Holder shall reasonably request; provided, however, that, in the case of non-U.S. jurisdictions, SkyTerra will not be required to (a) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 4.1, (b) subject itself to taxation in any such jurisdiction or (c) consent to general service of process in any such jurisdiction. SkyTerra shall pay for all fees (including filing and application fees), costs and expenses in connection therewith. However, the failure to obtain such “blue sky” clearance in each such jurisdiction shall not be a condition to closing and shall not prevent a Closing from occurring; rather, those SkyTerra Shares which may not be lawfully delivered shall be held in trust by Holder or its nominee for the benefit of the stockholders of record otherwise entitled thereto until such time as they may be lawfully delivered. If, after the fifth anniversary of the Closing, such shares still may not be lawfully delivered, then SkyTerra shall deliver such shares to the government agency or official responsible for administering the securities or blue sky laws in such jurisdiction. The Holders shall cooperate with and assist SkyTerra in connection with obtaining the “blue sky” clearance contemplated by this Section 4.1.

Section 4.2      Compliance with MSV Documents. (a) The parties intend that this Agreement and the transactions contemplated hereby be consistent with the conditions and restrictions applicable to the parties and/or their controlled affiliates pursuant to MSV’s organizational documents and the Partnership Agreement.

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(b)   The Holders each hereby waive any rights of such party under Article IX of the Partnership Agreement and Section 8.2 of the Stockholders' Agreement, including the right of first refusal described in Section 8.2(a) thereof, in connection with any transactions contemplated by this Agreement.

(c)  The Holders each hereby acknowledge that such party will have no rights under either the Partnership Agreement or the Stockholders' Agreement upon the Closing.

Section 4.3      Standstill. No Holder and, if applicable, no Holder’s officers and directors, will trade in the securities of SkyTerra prior to the Closing.

Section 4.4      Commercially Reasonable Efforts. The parties shall cooperate with each other and use (and shall cause their respective subsidiaries to use) their respective commercially reasonable efforts to promptly take or cause to be taken all necessary actions, and do or cause to be done all things, necessary, proper or advisable under this Agreement or the MSV Documents and applicable laws to consummate and make effective all the transactions contemplated by this Agreement as soon as practicable. Each Holder shall at any time, and from time to time, after the applicable Closing, execute, acknowledge and deliver all further assignments, transfers, and any other such instruments of conveyance, upon the request of SkyTerra, required to confirm the sale of the MSV LP Units hereunder.

ARTICLE V

CONDITIONS TO CLOSING OF SKYTERRA

The obligation of SkyTerra to purchase the MSV LP Units from such Holder, and to issue the SkyTerra Shares to such Holder, at the Closing is subject to the fulfillment to SkyTerra’s satisfaction (unless waived by SkyTerra) on or prior to the Closing Date of each of the following conditions:

Section 5.1      Representations and Warranties. Each representation and warranty made by such Holder in Article II above shall be true and correct in all material respects on and as of the Closing Date as though made on the Closing Date, except that any representation and warranty that is given as of a particular date or period and relates solely to such particular date or period shall be true and correct in all material respects only as of such date or period, provided however, that any representations and warranties which by their terms are qualified by materiality shall be true and correct in all respects, with the same force and effect as if such representation and warranty had been made on and as of the Closing Date.

Section 5.2      Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Holders on or prior to the Closing Date shall have been performed or complied with by the Holders in all respects.

Section 5.3      Certificates and Documents. Each Holder shall have delivered to SkyTerra or its counsel the Holder Closing Deliveries, and a certificate signed by such Holder, dated the Closing Date, certifying to the fulfillment of the conditions specified in Section 5.1 and Section 5.2 above.

10

ARTICLE VI

CONDITIONS TO CLOSING OF HOLDERS

The obligation of each Holder to purchase the SkyTerra Shares from SkyTerra, and to transfer the MSV LP Units to SkyTerra, at the Closing is subject to the fulfillment to such Holder’s satisfaction (unless waived by such Holder) on or prior to the Closing Date of each of the following conditions:

Section 6.1      Representations and Warranties. Each representation and warranty made by SkyTerra in Article III above shall be true and correct in all material respects on and as of the Closing Date as though made on the Closing Date, except that any such representation and warranty that is given as of a particular date or period and relates solely to such particular date or period shall be true and correct in all material respects only as of such date or period, provided, however, that representations and warranties which by their terms are qualified by materiality shall be true and correct in all respects, with the same force and effect as if such representation and warranty had been made on and as of the Closing Date.

Section 6.2      Performance. All covenants, agreements and conditions contained in this Agreement to be performed or complied with by SkyTerra on or prior to the Closing Date shall have been performed or complied with by SkyTerra in all respects.

Section 6.3      Certificates and Documents. SkyTerra shall have delivered to each Holder or its counsel the SkyTerra Closing Deliveries, and a certificate signed by an authorized officer of SkyTerra, dated the Closing Date, certifying to the fulfillment of the conditions specified in Section 6.1 and Section 6.2 above.

ARTICLE VII

MISCELLANEOUS

Section 7.1      Survival of Representations and Warranties. The warranties and representations of Holder and SkyTerra contained in this Agreement shall survive the execution and delivery of this Agreement and the Closing, for a period of twelve (12) months following such Closing. The covenants and agreements shall survive the Closing in accordance with their terms.

Section 7.2      Expenses. Whether or not the transactions contemplated hereby are consummated, all costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby and thereby shall be paid by the party incurring such expenses.

Section 7.3      Counterparts; Effectiveness. This Agreement may be executed in two or more consecutive counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument, and shall become effective when one or more counterparts have been signed by each of the parties and delivered (by facsimile or otherwise) to the other parties.

11

Section 7.4      Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard to the principles of conflicts of laws thereof.

Section 7.5      Notices. Any notices, reports or other correspondence (hereinafter collectively referred to as “correspondence”) required or permitted to be given hereunder shall be given in writing and shall be deemed given three business days after the date sent by certified or registered mail (return receipt requested), one business day after the date sent by electronic mail, overnight courier or on the date given by facsimile (with confirmation of receipt) or delivered by hand, to the party to whom such correspondence is required or permitted to be given hereunder.

To Walter V. Purnell, Jr.:

43951 Vendome Court

Ashburn, Virginia 20147

E-mail: Waltpurnell@comcast.net

To Rajendra Singh:

Telcom Ventures, LLC

200 South Biscayne Boulevard

40^th Floor

Miami, Florida 33131-2398

E-mail: rsingh@tvllc.com

To Gerald Stevens-Kittner:

1400 S. Barton Street, #433

Arlington, Virginia 22204

E-mail: gskittner@aol.com

To Glenn Meyers:

9 Brookridge Drive

Greenwich, Connecticut 06830

E-mail: glenn@putnampartners.com

To Elizabeth Tasker:

6164 Ravine Way

Ottawa, Ontario

K1C 7E9

Canada

E-mail: tasker@rogers.com

To Columbia ST Partners III, Inc.:

201 N. Union Street

Suite 300

Alexandria, Virginia 22314

Facsimile: (703) 519-7996

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To Dean & Company:

8065 Leesburg Pike, Fifth Floor

Vienna, Virginia 22182

Facsimile: (703) 506-3905

To inOvate Communications Group, LLC:

2010 Crow Canyon Place, Suite 270

San Ramon, California 94583

Facsimile: (925) 358-4901

To WBS, LLC:

PO Box 1247

McLean, Virginia 22101

E-mail: bartsnell@pssconsult.com

To SkyTerra:

SkyTerra Communications, Inc.

10802 Parkridge Boulevard

Reston, Virginia 20191

Facsimile: (703) 390-2770

Attn: Randy Segal, Esq.

with a copy (which shall not constitute notice) to:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, New York 10036

Facsimile: (917) 777-2918

Attn: Gregory A. Fernicola, Esq.

Section 7.6      Assignment; Binding Effect. Neither this Agreement nor any of the rights, interests or obligations hereunder shall be assigned by any of the parties hereto without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

Section 7.7      Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, such provision shall be interpreted to be only so broad as is enforceable.

Section 7.8      Entire Agreement; Non-Assignability; Parties in Interest. This Agreement and the documents and instruments and other agreements specifically referred to herein or delivered pursuant hereto, including the SkyTerra Disclosure Schedule: (a) constitute the entire agreement among the parties with respect to the subject matter hereof

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and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof; (b) are not intended to confer upon any other person any rights or remedies hereunder and (c) shall not be assigned by operation of law or otherwise except as otherwise specifically provided. Without limiting the foregoing, no party shall be deemed to have made any representation or warranty other than as expressly made herein.

Section 7.9      Headings. Headings of the Articles and Sections of this Agreement are for convenience of the parties only, and shall be given no substantive or interpretive effect whatsoever.

Section 7.10    Certain Definitions. References in this Agreement to “subsidiaries” of SkyTerra or Holder shall mean any corporation or other form of legal entity of which more than 50% of the outstanding voting securities are on the date hereof directly or indirectly owned by SkyTerra or Holder, as the case may be. References in this Agreement (except as specifically otherwise defined) to “affiliates” shall mean, as to any person, any other person which, directly or indirectly, controls, or is controlled by, or is under common control with, such person. As used in this definition, “control” (including, with its correlative meanings, “controlled by” and “under common control with”) shall mean the possession, directly or indirectly, of the power to direct or cause the direction of management or policies of a person, whether through the ownership of securities or partnership of other ownership interests, by contract or otherwise. References in the Agreement to “person” shall mean an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including, without limitation, a Governmental Entity.

Section 7.11    Amendments and Waivers. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of each of the parties hereto.

Section 7.12    Specific Performance. The parties to this Agreement agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, the parties to this Agreement hereby agree that each party hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States or any state having jurisdiction, in addition to any other remedy to which such party may be entitled at law or in equity.

Section 7.13    Exclusive Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may only be brought in any federal or state court located in the County and State of New York, and each of the parties hereby consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of

14

the exclusive venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 7.5 shall be deemed effective service of process on such party.

Section 7.14    Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[Signature Pages Follow]

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IN WITNESS WHEREOF, the parties hereto have caused this Exchange Agreement to be duly executed and delivered as of the date first above written.

WALTER V. PURNELL, JR

/s/ Walter V. Purnell, Jr.

RAJENDRA SINGH

/s/ Rajendra Singh

GERALD STEVENS-KITTNER

/s/ Gerald Stevens-Kittner

GLENN MEYERS

/s/ Glenn Meyers

ELIZABETH TASKER

/s/ Elizabeth Tasker

COLUMBIA ST PARTNERS III, Inc.
By:	/s/ Donald A. Doering
Name:	Donald A. Doering
Title:	Secretary

DEAN & COMPANY
By:	/s/ Dean L. Wilde, II
Name:	Dean L. Wilde
Title:	Chairman

INOVATE COMMUNICATIONS GROUP, LLC
By:	/s/ Perry LaForge
Name:	Perry LaForge
Title:	President

WBS, LLC
By:	/s/ W. Bartlett Snell
Name:	W. Bartlett Snell
Title:	President

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

SkyTerra Disclosure Schedule

Schedule 3.2

1.         Pursuant to Section 8.6 of the Securities Purchase Agreement, dated December 15, 2007, 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, LP, filed as Exhibit 10.1 to the SkyTerra's Current Report on Form 8-K, filed with the SEC on December 15, 2007, the Purchasers (as defined therein) have rights of first negotiation and pro-rata participation rights, subject to certain conditions, in connection with any proposed issuance of SkyTerra equity securities, or options to purchase or rights to subscribe for any SkyTerra equity securities.

2.         Pursuant to Section 11.3 and Section 19.1 of the 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., filed as Exhibit 10.1 to SkyTerra's Current Report on Form 8-K filed with the SEC on July 25, 2008, SkyTerra may, under certain circumstances, engage in rights offerings. Stockholders other than Harbinger (as defined therein) have pro-rata participation rights in any offering pursuant to Section 11.3, and any stockholder, including Harbinger (as defined therein), has pro-rata participation rights in any offering pursuant to Section 19.1.

EX-23

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form S-8 Nos. 33-85634, 33-89124, 333-76957, 333-49290, 333-139969 and 333-153375, Form S-3 Nos. 333-124355, 333-135580, 333-135581, 333-138061 and 333-155209, and Form S-4 No. 333-144093) of SkyTerra Communications, Inc. of our reports dated February 28, 2009, with respect to the consolidated financial statements of SkyTerra Communications, Inc. and the effectiveness of internal control over financial reporting of SkyTerra Communications, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2008.

/s/ Ernst & Young LLP

McLean, Virginia

February 28, 2009

EX-31

Exhibit 31.1

SKYTERRA COMMUNICATIONS, INC.

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, Alexander H. Good, certify that:

1. I have reviewed this annual report on Form 10-K of SkyTerra Communications, Inc.;

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(s) 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 controls over financial reporting, or caused such internal controls 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 this 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(s) 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.

/s/ Alexander H. Good
Name:	Alexander H. Good
Title:	Chief Executive Officer and President

February 27, 2009

EX-31

Exhibit 31.2

SKYTERRA COMMUNICATIONS, INC.

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Scott Macleod, certify that:

1. I have reviewed this annual report on Form 10-K of SkyTerra Communications, Inc.;

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(s) 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 controls over financial reporting, or caused such internal controls 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 this 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(s) 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.

/s/ Scott Macleod
Name:	Scott Macleod
Title:	Executive Vice President and Chief Financial Officer

February 27, 2009

EX-32

Exhibit 32.1

Certification of CEO Pursuant to

18 U.S.C. Section1350,

as Adopted Pursuant to

Section906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of SkyTerra Communications, Inc. (the “Company”) for the period ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Alexander H. Good, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his 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
Name:	Alexander H. Good
Title:	Chief Executive Officer and President

February 27, 2009

EX-32

Exhibit 32.2

Certification of CFO Pursuant to

18 U.S.C. Section1350,

as Adopted Pursuant to

Section906 of the Sarbanes-Oxley Act of 2002

In connection with the Annual Report on Form 10-K of SkyTerra Communications, Inc. (the “Company”) for the period ended December 31, 2008, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Scott Macleod, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his 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
Name:	Scott Macleod
Title:	Executive Vice President and Chief Financial Officer

February 27, 2009

EX-3.(I)

RESTATED CERTIFICATE OF INCORPORATION

OF

SKYTERRA COMMUNICATIONS, INC.

(pursuant to Section 245 of the

Delaware General Corporation Law)

SKYTERRA COMMUNICATIONS, INC., a Delaware corporation (the "Company"), the original Certificate of Incorporation of which was filed with the Secretary of State of the State of Delaware on August 15, 1985 under the name International Cogeneration Corporation, DOES HEREBY CERTIFY:

This Restated Certificate of Incorporation hereby restates and integrates, without further amendment, pursuant to Section 245 of the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code, the Company's Certificate of Incorporation, as amended to date. There is no discrepancy between the terms of this Restated Certificate of Incorporation and the terms of the Company's Certificate of Incorporation, as amended to date. The text of this Restated Certificate of Incorporation, as so restated, is as follows:

FIRST: The name of the Company is Skyterra Communications, Inc.

SECOND: The address of the Company's registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of its registered agent at such address is The Corporation Trust Company.

THIRD: The purpose of the Company is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH: The aggregate number of shares which the Company shall have authority to issue shall be:

Three Hundred Ten Million (310,000,000) shares, consisting of Two Hundred Million (200,000,000) shares of Common Stock, with a par value of One Cent ($0.01) per share, One Hundred Million (100,000,000) shares of Non-Voting Common Stock, with a par value of One Cent ($0.01) per share, and Ten Million (10,000,000) shares of Preferred Stock, with a par value of One Cent ($0.01) per share. The Board of Directors, in its sole direction, shall have full and complete authority, by resolutions, from time to time, to establish one or more series or classes to issue shares of Preferred Stock, and to fix, determine and vary the voting rights, designations, preferences, restrictions, qualifications, privileges, limitations, options, conversion rights and other special rights of each series or class of Preferred Stock, including, but not limited to, dividend rates and

mannerof payment, preferential amounts payable upon voluntary or involuntary liquidation, voting rights, conversion rights, redemption prices, terms and conditions and sinking fund and stock purchase prices, terms and conditions.

FIFTH: The name and mailing address of the incorporator is International Cogeneration Corporation, a Nevada corporation, with principal offices at 320 Walnut Street, Suite 105, Philadelphia, Pennsylvania 19106. The powers of the incorporator terminated upon the filing of the original Certificate of Incorporation of the Company on August 15, 1985.

SIXTH: Election of directors need not be by written ballot.

SEVENTH: The Board of Directors of the Company (the "Board of Directors") is authorized to adopt, amend or repeal By-Laws of the Company.

EIGHTH: The following provisions are inserted to limit the liability of directors and officers of the Company to the full extent of the law allowable and for the conduct of the affairs of the Company, and it is expressly provided that they are intended to be in furtherance and not in limitation or exclusion of the powers conferred by law:

(a)       No director shall be personally liable to the Company or its stockholders for monetary damages for breach of his or her fiduciary duty as a director, except (i) for any breach of the director's duty of loyalty to the Company or its stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for paying a dividend or approving a stock repurchase which is illegal under section 174 of Title 8 of the Delaware Code relating to the Delaware General Corporation Law; or (iv) for any transaction from which the director derived an improper personal benefit.

(b)       No contract or other transaction between the Company and any other firm or corporation shall be affected or invalidated by reason of the fact that any one or more of the directors or officers of this Company is or are interested in, or is a member, stockholder, director or officer or are members, stockholders, directors or officers, individually or jointly, may be a party or parties to, or may be interested in, any contract or transaction of this Company or in which this Company with any person or persons, firm, association or corporation, shall be affected or invalidated by reason of the fact that any director or officer or officers of this Company is a party, or are parties to, or interested, such contract, act of transaction, or in any way connected, with such person or persons, firms, association or corporation, and each and every person who may become a director or officer of this Company is relieved from any liability that might otherwise exist from thus contracting with this Company for the benefit of himself or any firm, association, or corporation in which he may be in any way interested.

(c)       Subject to such restrictions and regulations contained in by-laws adopted by the stockholders, the Board of Directors may make, alter, amend and rescind the by-laws, and may provide therein for the appointment of an executive committee from their own members, to exercise all or any of the powers of the board, which may be amended or repealed, at any time, by the stockholders.

2

(d)       The Board of Directors shall have power, in its discretion, to provide for and to pay for directors rendering unusual or exceptional services to the Company special compensation appropriate to the value of such services.

(e)       By resolution duly adopted by the holders of not less than a majority of the shares of stock then issued and outstanding and entitled to vote at any regular or special meeting of the stockholders of the Company duly called and held as provided in the by-laws of the Company, any director or directors of the Company may be removed from office at any time or times, with or without cause. The Board of Directors may at any time remove any officers of the Company with or without cause.

(f)        The Company may indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Company) by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amount paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding, if he acted in good faith in a manner he reasonably believed to be in or not opposed to the best interest of the Company, and with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company, and with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(g)       The Company may indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interest of the Company, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Company unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other Court shall deem proper.

(h)       To the extent that a director, officer, employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to herein or in defense of any claim, issue or matter therein, he shall be

3

indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith.

(i)        Any indemnification under paragraphs herein (unless ordered by a Court) shall be made by the Company upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances because he has met the applicable standard of conduct set forth in said paragraphs. Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (2) if such a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (3) by the stockholders.

(j)        The Company may pay expenses incurred by defending a civil or criminal action, suit or proceeding in advance of the final disposition of such action, suit or proceeding in the manner provided herein upon receipt of any undertaking by or on behalf of the director, officer, employee or agent to repay such amount if it shall be ultimately determined that he is not entitled to be indemnified by the Company as authorized in this section.

The indemnification and advancement of expenses provided for herein shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.

(k)       The indemnification and advancement of expenses provided herein or granted pursuant to this provision shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be entitled under any by-law, agreement, vote of stockholders or of any disinterested directors or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office.

(l)        The Company may purchase and maintain insurance on behalf of any person who is or was serving the Company in any capacity referred to hereinabove against any liability asserted against him and incurred by him in such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against such liability under the provisions herein.

(m)      The provisions herein shall be applicable to all claims, action, suits, or proceedings made or commenced after the adoption hereof, whether arising from acts or omissions to act occurring before or after the adoption hereof.

NINTH: At each annual meeting of stockholders of the Corporation, all directors shall be elected for a one-year term expiring at the next succeeding annual meeting of stockholders. Any director may be removed from office by a vote of the holders of a majority of the shares then issued and outstanding. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, although less than a quorum, or the sole remaining director, and shall not be filled by the stockholders; any director so chosen shall hold office until the next annual meeting of stockholders, and until his or her successor shall be duly elected and shall qualify, unless sooner displaced.

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IN WITNESS WHEREOF, the Company has caused this Restated Certificate of Incorporation to be executed this 18^th day of October, 2006.

SKYTERRA COMMUNICATIONS, INC.
By:	/s/ Robert Lewis
	Name: Robert Lewis
	Title: Senior Vice President, General
	Counsel and Secretary

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CERTIFICATE OF AMENDMENT

TO THE

RESTATED CERTIFICATE OF INCORPORATION

OF

SKYTERRA COMMUNICATIONS, INC.

_________________________________________

Pursuant to Section 242 of the General

Corporation Law of the State of Delaware

_________________________________________

SkyTerra Communications, Inc., a Delaware corporation (hereinafter called the “Company”), does hereby certify as follows:

FIRST: The first sentence of Article FOURTH of the Company’s Restated Certificate of Incorporation is hereby amended to read in its entirety as set forth below:

The aggregate number of shares which the Company shall have authority to issue shall be: Three Hundred Thirty Five Million (335,000,000) shares, consisting of Two Hundred Million (200,000,000) shares of Common Stock, with a par value of One Cent ($0.01) per share, One Hundred Twenty Five Million (125,000,000) shares of Non-Voting Common Stock, with a par value of One Cent ($0.01) per share, and Ten Million (10,000,000) shares of Preferred Stock, with a par value of One Cent ($0.01) per share.

SECOND: The foregoing amendment was duly adopted in accordance with Section 242 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, the Company has caused this Certificate to be duly executed in its corporate name this 11^th day of November, 2008.

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

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