10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2009

OR

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

For the transition period from to

Commission File Number: 000-13865

SKYTERRA COMMUNICATIONS, INC.

(Exact name of registrant as specified in its charter)

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

(703) 390-1899

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every

Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  o    No  o

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

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

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

As of April 24, 2009 there were 49,022,787 shares of the Company’s voting common stock and 59,958,499 shares of the Company’s non-voting common stock outstanding.

SKYTERRA COMMUNICATIONS, INC.

INDEX

PART I – Financial Information		1
Item 1.	Financial Statements	1
	Unaudited Consolidated Statements of Operations for the Three months Ended March 31, 2009 and 2008	1
	Unaudited Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008	2
	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three months Ended March 31, 2009	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the Three months Ended March 31, 2009 and 2008	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item4.	Controls and Procedures	38
PART II – Other Information		39
Item1.	Legal Proceedings	39
Item1A.	Risk Factors	39
Item2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item3.	Defaults Upon Senior Securities	39
Item4.	Submission of Matters to a Vote of Security Holders	39
Item5.	Other Information	39
Item6.	Exhibits	40
	Signatures	41

PART I FINANCIAL INFORMATION

 

Item1. Financial Statements

SkyTerra Communications, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

(unaudited)

	Three months ended March 31,
	2009			2008
Revenues:
Services and related revenues	$	6,835		$	7,115
Equipment sales		828			1,222
Other revenues		158			256
Total revenues		7,821			8,593
Operating expenses:
Cost of equipment sold		775			974
Operations and cost of services (exclusive of depreciation and amortization)		8,653			6,663
Sales and marketing		1,774			2,643
Research and development (exclusive of depreciation and amortization)		3,739			4,107
General and administrative		8,078			7,577
Depreciation and amortization		8,318			8,081
Total operating expenses		31,337			30,045
Operating loss		(23,516	)		(21,452	)
Other income (expense):
Interest income		369			3,221
Interest expense		(15,954	)		(11,716	)
Impairment of investment in TerreStar Networks		—			(8,353	)
Change in fair value of warrants (see Note 2)		(9,357	)		—
Other income, net		231			664
Loss before income taxes		(48,227	)		(37,636	)
Benefit from income taxes		—			275
Net loss		(48,227	)		(37,361	)
Net loss attributable to noncontrolling interest		—			151
Net loss attributable to controlling interest	$	(48,227	)	$	(37,210	)
Basic and diluted loss attributable to controlling interest common shareholders per common share	$	(0.45	)	$	(0.35	)
Basic and diluted weighted average common shares outstanding		106,926,287			106,030,078

See accompanying notes.

1

SkyTerra Communications, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

(unaudited)

	March 31, 2009			December31, 2008
Assets
Current assets:
Cash and cash equivalents	$	184,865		$	65,721
Investments		41,134			46,659
Accounts receivable, net of allowance of $45 and $45, respectively		5,787			5,505
Inventory		2,766			2,058
Other current assets		6,845			7,079
Total current assets		241,397			127,022
Satellite system construction in progress		728,205			680,932
Property and equipment, net		6,896			7,428
Intangible assets, net		516,092			523,647
Other assets		22,056			21,673
Total assets	$	1,514,646		$	1,360,702
Liabilities and stockholders’ equity
Current liabilities:
Debt, current portion	$	189		$	372
Accounts payable		2,840			5,355
Accrued expenses and other current liabilities		24,001			18,759
Deferred revenue, current portion		4,148			3,474
Total current liabilities		31,178			27,960
Long-term debt ($369,379 to a related party)		1,021,040			837,818
Deferred revenue, net of current portion		12,070			12,383
Other long-term liabilities		1,749			11,188
Warrants (see Note 2)		19,585			—
Total liabilities		1,085,622			889,349
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; 49,022,787 and 48,822,787 shares issued and outstanding at March 31, 2009 and December 31, 2008		490			488
Non-voting common stock, $0.01 par value. Authorized 125,000,000 shares; 59,958,499 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively		600			600
Additional paid-in capital		995,303			1,014,981
Accumulated other comprehensive loss		(1,600	)		(1,785	)
Accumulated deficit		(565,769	)		(542,931	)
Total stockholders’ equity		429,024			471,353
Total liabilities and stockholders’ equity	$	1,514,646		$	1,360,702

See accompanying notes.

2

SkyTerra Communications, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

(unaudited)

	Common Stock				Non-voting Common Stock				Additional Paid-in			Accumulated Other Comprehensive			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Capital			Loss			Deficit			Equity
Balance, December 31, 2008		48,822,787	$	488		59,958,499	$	600	$	1,014,981		$	(1,785	)	$	(542,931	)	$	471,353
Cumulative effect of change in accounting principle (See Note 2)		—		—		—		—		(35,127	)		—			25,389			(9,738	)
Issuance of warrants		—		—		—		—		13,050			—			—			13,050
Equity-based compensation		200,000		2		—		—		2,399			—			—			2,401
Net loss attributable to controlling interest		—		—		—		—		—			—			(48,227	)		(48,227	)
Foreign currency translation adjustment		—		—		—		—		—			185			—			185
Balance, March 31, 2009		49,022,787	$	490		59,958,499	$	600	$	995,303		$	(1,600	)	$	(565,769	)	$	429,024

See accompanying notes.

3

SkyTerra Communications, Inc.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

		Three months Ended March 31,
		2009			2008
Operating activities
Net loss attributable to controlling interest	$	(48,227	)	$	(37,210	)
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash and working capital items		28,285			23,402
Net cash used in operating activities		(19,942	)		(13,808	)
Investing activities
Purchase of property and equipment		(287	)		(76,215	)
Satellite system construction in progress payments		(15,373	)		(132	)
Change in restricted cash		2			(12	)
Purchase of investments		(28,867	)		(134,239	)
Maturity of investments		34,265			65,065
Payments for assumed tax liabilities of entity acquired in BCE Exchange Transaction		(448	)		(25,269	)
Net cash used in investing activities		(10,708	)		(170,802	)
Financing activities
Proceeds from issuance of 16.5% Senior Unsecured Notes and Warrants		—			150,000
Proceeds from issuance of 18% Senior Unsecured Notes and Warrants		150,000			—
Principal payments on notes payable		(184	)		(230	)
Proceeds from exercise of SkyTerra LP unit options		—			65
Net cash provided by financing activities		149,816			149,835
Effect of exchange rates on cash and cash equivalents		(22	)		(80	)
Net decrease in cash and cash equivalents		119,144			(34,855	)
Cash and cash equivalents, beginning of period		65,721			127,905
Cash and cash equivalents, end of period	$	184,865		$	93,050
Supplemental information
Cash paid for interest	$	1,397		$	1,077
Cash paid for income taxes	$	—		$	1,027

See accompanying notes.

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SkyTerra Communications, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Basis of Presentation

All SkyTerra Communications, Inc. (SkyTerra or the Company) operating and development activity is performed through its 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. References herein to the "Company", include the Company’s subsidiaries, including SkyTerra LP, as well as SkyTerra Canada, and references to the Company’s “satellites”, “spectrum” and “networks”, include the satellites, spectrum and networks of both SkyTerra LP and SkyTerra Canada.

Communications Networks

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, that will serve as the core of its next generation network. The Company is working closely with Boeing, the satellite manufacturer, 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 early 2010 and the Company has contracted for a launch window for SkyTerra-1 that opens in March of 2010 and continues through May 2010.  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.

Liquidity

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 the Company through the third quarter of 2010. Additional funds will be needed to complete the construction of the next generation integrated network, fund operations, and begin making scheduled cash interest payments on senior indebtedness in the fourth 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. In addition, although the Company has secured committed financing 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 change.

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

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 remaining 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 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, the sale of the Company’s investment in TerreStar Networks Inc. (TerreStar Networks) 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 addition, the terms of the Company’s current and expected future indebtedness and other contractual arrangements

5

include significant limitations on additional debt, including amount, terms, access to security, and duration, among other factors, and impose limitations on the structure of strategic transactions.

The remaining cost of carrying out the Company’s business plan is 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 deploy and operate the Company’s next generation network and 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; and 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. Further, SkyTerra LP could lose its FCC or Industry Canada licenses or its international rights if it fails to achieve required performance milestones.

Quarterly Information

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company, SkyTerra LP, all wholly owned subsidiaries of the Company and SkyTerra LP, and any variable interest entities for which the Company is the primary beneficiary. All intercompany accounts are eliminated upon consolidation. These unaudited condensed financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. In the opinion of management, the accompanying condensed consolidated financial statements contain adjustments consisting only of those of a normal recurring nature, necessary for a fair presentation of the Company’s financial position, results of operations and cash flows at the dates and for the periods indicated. Operating results are not necessarily indicative of the results that may be expected for the year ending December 31, 2009. While the Company believes that the disclosures presented are adequate to make the information not misleading, these condensed consolidated financial statements should be read in conjunction with the Company’s financial statements and related notes included in the Company’s annual report on Form 10-K for the year ended December 31, 2008, and on file with the SEC.

2. Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements requires the use of estimates and judgments that affect the reported amounts of assets, liabilities, equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates, particularly estimates relating to the valuation of debt and warrants, the valuation of equity-based compensation, the valuation of intangible assets, the useful lives of long-lived assets and judgments involved in evaluating investment and asset impairments, among others, have a material impact on the financial statements. The Company bases estimates on historical experience and various other assumptions it believes are reasonable under the circumstances, 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.

Variable Interest Entity

The Company consolidates the variable interest entity in which it is the primary beneficiary. SkyTerra Canada, in which SkyTerra LP holds an effective 46.4% interest, is licensed by the Canadian government to operate in the L-band using spectrum, covering Canada, the United States, and other territories, that it has coordinated for its use. SkyTerra Canada holds a significant portion of the spectrum and satellite assets in use by the Company, and is obligated, by contract, to provide access to those assets 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. The Company has determined it is the primary beneficiary of SkyTerra Canada based upon its historical and expected future cash funding of SkyTerra Canada. Previously, based upon a contractual arrangement that has now expired, SkyTerra LP was obligated to fund the operating expenses of SkyTerra Canada. Although SkyTerra LP’s contractual obligation is no longer in force, the Company expects to continue to fund the operating expenses and working capital requirements of SkyTerra Canada. As it is the primary beneficiary of SkyTerra Canada, the Company has consolidated SkyTerra Canada into the financial results of the Company.

6

As a minority equity holder, SkyTerra LP does not have the ability to make unilateral decisions regarding the operations of SkyTerra Canada or utilization of its assets. SkyTerra LP provides financial support to SkyTerra Canada in the form of cash payments and services for which SkyTerra LP has not received cash reimbursement. SkyTerra LP provides financial and other support that it is not contractually obligated to provide in order to maintain the business, operations, and assets of SkyTerra Canada. Creditors of SkyTerra Canada have no recourse to the assets or general credit of SkyTerra LP or the Company. SkyTerra Canada has no debt or financing arrangements with any third parties. Through its contractual rights, the Company can prevent SkyTerra Canada from business activities that may expose SkyTerra Canada to incremental undue financial (or other) risk. The Company’s current maximum direct financial exposure to loss is limited to its historical investment and trade receivables from SkyTerra Canada. 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 and satellite assets currently available to it through SkyTerra Canada. The Company holds no other interests or investments in entities that may be considered variable interest entities.

Fair Value Measurements

The Company measures fair value in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements (“SFAS No. 157”). SFAS No. 157 defines fair value, establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value measurements. 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 there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

• Level 1 — unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.

• Level 2 — inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.

• Level 3 — unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.

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, based on fair value estimates provided by pricing services or brokers, 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. None of the Company’s investments became other-than-temporarily impaired during the three months ended March 31, 2009.

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Warrants

The Company adopted Emerging Issues Task Force Issue No. 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock (EITF 07-5) effective January 1, 2009. The adoption of EITF 07-5’s requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from a decline in the stock price (or “down-round” provisions). For example, warrants with such provisions will no longer be recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. The Company evaluated whether warrants to acquire stock of the Company contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a “fixed-for-fixed” option. The Company determined that the following warrants contained such provisions, thereby concluding they were not indexed to the Company’s own stock:

• Series 1-A, exercisable for 681,838 shares of the Company’s voting common stock, that expire June 4, 2009

• Series 2-A, exercisable for 2,698,942 shares of the Company’s voting common stock, that expire June 4, 2009

• Warrants issued to Harbinger in conjunction with 16.5% Senior Unsecured Notes (“Harbinger 2008 Warrants”), exercisable for 9,144,038 shares of the Company’s common stock, that expire January 7, 2018. See Note 3.

• Warrants issued and vested upon the utilization of credit under Notes Payable – Vendor (“Vendor Warrants”), exercisable for 228,647 shares of the Company’s voting common stock, that expire August 18, 2018. See Note 3.

In accordance with EITF 07-5, the Company, beginning on January 1, 2009, recognizes these warrants as liabilities at their respective fair values on each reporting date. The cumulative effect of the change in accounting for these warrants of $25.4 million was recognized as an adjustment to the opening balance of accumulated deficit at January 1, 2009. The cumulative effect adjustment was the difference between the amounts recognized in the consolidated balance sheet before initial adoption of EITF 07-5 and the amounts recognized in the consolidated balance sheet upon the initial application of EITF 07-5. The amounts recognized in the consolidated balance sheet as a result of the initial application of EITF 07-5 on January 1, 2009 were determined based on the amounts that would have been recognized if EITF 07-5 had been applied from the issuance date of the warrants. The Company measured the fair value of these warrants as of March 31, 2009, and recorded a $9.4 million charge to record the liabilities associated with these warrants at their respective fair values as of March 31, 2009. The Company determined the fair values of these securities using a Monte Carlo valuation model.

8

Recurring Fair Value Estimates

The Company’s recurring fair value measurements at March 31, 2009 were as follows (in thousands):

	Fair Value as of March 31, 2009		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Gains (losses) during the three months ended March 31, 2009
Assets:
Cash equivalents	$	184,865	$	184,865	$	—	$	—	$	—
Available-for-sale investments		400		—		—		400		—
	$	185,265	$	184,865		—	$	400	$	—
Liabilities:
Series 1-A warrants		—		—		—		—		—
Series 2-A warrants		—		—		—		—		—
Harbinger 2008 warrants		19,083		—		—		19,083		(9,346	)
Vendor warrants		502		—		—		502		(11	)
	$	19,585	$	—	$	—	$	19,585	$	(9,357	)

Recurring Level 3 Activity, Reconciliation and Basis for Valuation

The table below provides a reconciliation of the beginning and ending balances for the major classes of assets and liabilities measured at fair value using significant unobservable inputs (Level 3). The table reflects gains and losses for the quarter for all financial assets and liabilities categorized as Level 3 as of March 31, 2009.

Fair Value Measurements Using Significant Unobservable Inputs (Level 3) (in thousands):

Assets:
Balance as of January 1, 2009	$	400
Total realized and unrealized gains (losses)		—
Balance as of March 31, 2009	$	400
Liabilities:
Balance as of January 1, 2009	$	9,737
Initial measurement of Vendor Warrants during the three months ended March 31, 2009		491
Increase in fair value of warrants		9,357
Balance as of March 31, 2009	$	19,585

The Company determined the value of one investment classified as “available-for-sale”, based on fair value estimates provided by pricing services or brokers, with changes in fair value reported within equity as a component of other comprehensive income.

The Company determined the fair value of the Harbinger 2008 warrants and the Vendor warrants using a Monte Carlo model that considered their “down-round” provisions that reduce the exercise price if the Company issues new warrants or equity at a lower price. The model considered amounts and timing of future possible equity and warrant issuances and historical volatility of the Company’s stock price.

9

Non-recurring Fair Value Estimates

The Company’s non-recurring fair value measurements recorded during the three months ended March 31, 2009 were as follows (in thousands):

	Fair Value at Measurement Date		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Gains (losses)
Liabilities:
18% Senior Unsecured Notes	$	137,000	$	—	$	—	$	137,000	$	—
Warrants issued in conjunction with 18% Senior Unsecured Notes		13,050		—		13,050		—		—
Notes Payable – Vendor borrowings during the three months ended March 31, 2009		14,610		—		—		14,610		—
Warrants vested in conjunction with Notes Payable – Vendor borrowings		491		—		—		491		—
	$	165,151	$	—	$	13,050	$	152,101	$	—

Non-recurring Level 3 Basis for Valuation

The fair value of the warrants issued in conjunction with the 18% Senior Unsecured Notes is objectively determinable based on the quoted market price of the Company’s stock and an exercise price of only $0.01 per share. The fair value of the 18% Senior Unsecured Notes was determined to be the difference between the $150 million in proceeds received at issuance and the $13.0 million fair value of the warrants, or $137.0 million. Notes Payable – Vendor are not investor debt, rather, they are vendor arranged financing collateralized by the satellite system under construction. There is no alternative market or benchmark for this debt. The debt carries a variable rate market-based interest rate. As such, the fair value of Notes Payable – Vendor was deemed to be its face value on each date of credit utilization. The Company separately measured the fair value of the Notes Payable – Vendor and the warrants that were issued and vested to allocate the total proceeds on a pro-rata basis to each (see Note 3).

Investment in TerreStar Networks

The Company owns an investment in TerreStar Networks (a privately-held subsidiary of publicly-held, TerreStar Corporation) that it accounts for under the cost method. The Company has a Transfer and Exchange Agreement with TerreStar Corporation that allows transferees of the TerreStar Network shares held by the Company (but not the Company itself) 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. Due to TerreStar Corporation liquidity constraints, concerns exist regarding TerreStar Corporation’s ability to continue as a going concern, indicating that there may have been a decline in the fair value of the Company’s investment in TerreStar Networks as of March 31, 2009.

To perform its assessment of impairment as of March 31, 2009, the Company continued to utilize a valuation approach based upon the exchange ratio outlined in the Transfer and Exchange Agreement with TerreStar Corporation. At March 31, 2009, utilizing the exchange ratio and the quoted market price of TerreStar Corporation common stock to determine the fair value of the TerreStar Networks shares it owns, the Company determined a value of the investment in excess of its carrying amount of $7.4 million. As a result, the Company determined that the TerreStar Networks investment was not other-than-temporarily impaired.

Derivative Financial Instruments

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 does not enter into any derivative contracts for speculative purposes.

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The Company recognizes all derivatives as assets or liabilities measured at fair value with changes in fair value of derivatives reflected as current period income or loss unless the derivatives qualify as hedges of future cash flows and are accounted for as such. The Company has not elected hedge accounting for any derivative contracts during the three month periods ended March 31, 2009 and 2008. As of March 31, 2009 the Company did not hold any foreign currency contracts. As a result of the Company’s adoption of EITF 07-5, effective January 1, 2009 certain warrants are now accounted for as derivatives. See “Fair Value Measurements” above.

Revenue Recognition

The Company recognizes revenue from products when a) persuasive evidence of an 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 satellite based services including capacity, telephony, and data. The Company also sells equipment for use by end users.

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, including dispatch service, which provides the wide-area equivalent of “push-to-talk” two-way radio service among users in customer defined groups. 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 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.

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):

	Three months ended March 31,
	2009		2008
Capitalized interest	$	21,886	$	15,123
Interest expense		15,954		11,716
Total interest	$	37,840	$	26,839

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for operating loss and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. 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

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generation of future taxable income during the period in which those temporary differences become deductible. The scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies are evaluated in determining whether it is more likely than not that deferred tax assets will be realized.

A valuation allowance has been recorded against substantially all of the Company’s deferred tax assets. The Company has concluded that there are no uncertain tax positions requiring recognition in its consolidated financial statements. The Company’s policy is to recognize interest and penalties on income tax matters in the income tax provision. The total amounts of interest and penalties recorded in the income tax provision is zero, and there are no amounts accrued for such items on the accompanying balance sheet as of March 31, 2009.

The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, various states and foreign jurisdictions. The Company’s foreign jurisdictions are primarily Canada and its provinces. Some elements of income tax returns dating 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. The Company does not expect the results of those audits to have a material impact on the Company’s financial position or results of operations.

Other Comprehensive Loss

Comprehensive loss is the change in equity of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. For the three months ended March 31, 2009 and 2008, comprehensive loss was $48.0 million and $37.2 million, respectively. The difference between net loss and comprehensive loss is due to foreign currency translation.

Loss Per Common Share

Basic loss per common share is computed by dividing net loss attributable to the common shareholders by the weighted average number of common shares outstanding for the period, excluding unvested restricted stock. Diluted loss per common share reflects the potential dilution for the exercise or conversion of securities into common stock. For the three months ended March 31, 2009 and 2008, options, warrants, and unvested restricted stock aggregating 36,603,643, and 14,346,622 shares, respectively, were excluded from the computation of diluted net loss per common share as the effect would have been anti-dilutive.

Non-Monetary Exchanges

The Company accounts for non-monetary exchanges under Accounting Principles Board Opinion (APB) No. 29, Accounting for Nonmonetary Transactions. The Company, under certain of its arrangements with other L-band operators may make non-monetary exchanges or transactions of spectrum assets. To date, the Company has determined non-monetary exchanges or transactions did not result in significant changes to the expected cash flows to the Company, and therefore lack commercial substance. As such no accounting has been recorded for such exchanges.

Recent Pronouncements

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The presentation of a noncontrolling interest has been modified for both the income statement and balance sheet, and disclosure requirements have been expanded to include disclosures that clearly identify and distinguish between the interests of the parent’s owners and the interest of the noncontrolling owners of a subsidiary. The provisions of SFAS No. 160 are effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. The adoption of SFAS No. 160 did not have a material impact on the Company’s financial statements and disclosures.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB 28-1 amends SFAS No. 107, Disclosures About Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP FAS 107-1 and APB 28-1also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 are effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 107-1 and APB 28-1 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 107-1 and APB 28-1 requires comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes

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associated with adoption of FSP FAS 107-1 and APB 28-1 will have a material effect on its financial statements and disclosures.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2 does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 115-2 and FAS 124-2 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 115-2 and FAS 124-2 require comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with the adoption of FSP FAS 115-2 and FAS 124-2 will have a material effect on the on its financial statements and disclosures.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4). FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 157-4 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 157-4 requires comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with adoption of FSP FAS 157-4 will have a material effect on the on its financial statements and disclosures.

3. Debt

Debt consisted of the following at the dates indicated (in thousands):

	March 31, 2009			December 31, 2008
Senior secured discount notes, net	$	651,661		$	629,759
16.5% senior unsecured notes (related party), net		147,566			147,119
18% senior unsecured notes (related party), net		137,162			—
Notes payable - vendor		84,651			60,940
Note payable - other		189			372
		1,021,229			838,190
Less: Current portion		(189	)		(372	)
Total debt	$	1,021,040		$	837,818

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 at a rate of 14%, until the notes reach full principal amount at April 1, 2010. Beginning October 2010, interest will be payable in cash semi-annually in arrears 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.

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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 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 March 31, 2009.

16.5% Senior Unsecured Notes

In January 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 (APB 14), 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.

To date, the Company has made its scheduled interest payments on the 16.5% Senior Unsecured Notes “in-kind” through the issuance of additional 16.5% Senior Unsecured Notes. These “in-kind” notes are included in the balance of 16.5% Senior Unsecured Notes on the accompanying balance sheet.

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 March 31, 2009.

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18% Senior Unsecured Notes

In July 2008, the Company entered into a Securities Purchase Agreement (the "Securities Purchase Agreement") with affiliates of Harbinger, pursuant to which the Company 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 it has not already purchased 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 Company accounted for the issuance of the warrants in accordance with APB 14, whereby the Company separately measured the fair value of the 18% 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 18% Senior Unsecured Notes is amortized using the effective interest rate method over the term. The fair value of the warrants of $13.0 million was estimated based on differential between the quoted market price of the Company’s stock and the warrants’ exercise price of $0.01 per share.

The terms of the 18% Senior Unsecured Notes require the SkyTerra LP to comply with certain covenants that restrict some of the Company’s corporate activities, including its 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 18% Senior Unsecured Notes. An event of default resulting from a breach of a covenant may result, at the option of the 18% Senior Unsecured Notes holders, in an acceleration of the principal and interest outstanding. The 18% 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 18% Senior Unsecured Notes as of March 31, 2009.

On April 1, 2009 the Company completed the second issuance of the 18% Senior Unsecured Notes in an aggregate principal amount of $175 million. At closing, the Company issued Harbinger ten-year warrants to purchase 21.25 million shares of the Company's voting or non-voting common stock, at an initial exercise price of $0.01 per share. The remaining $175 million of 18% Senior Unsecured Notes is scheduled to be issued to Harbinger in tranches of $75 million and $100 million on July 1, 2009 and January 4, 2010, respectively.

Notes Payable – Vendor

SkyTerra LP has financed$84.7 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 and are payable upon the earlier of December 20, 2010 or ten days prior to shipment of the SkyTerra-2 satellite. The Company has $30.9 million remaining available credit under the Note Payable – Vendor at March 31, 2009. The interest rate on the Notes Payable – Vendor was 5.3% as of March 31, 2009.

In August 2008, the Company 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 utilization of credit under the Notes Payable – Vendor subsequent to August 2008. During the three months ended March 31, 2009, the Company utilized $14.6 million of credit under the Notes Payable – Vendor, resulting in the vesting of 228,647 warrants.

The Company separately measured the fair value of the Notes Payable – Vendor and the warrants that were issued and vested and allocated the total proceeds of $14.6 million on a pro-rata basis to each. The proceeds allocated to the warrants were recognized as a liability in accordance with EITF 07-5, as the Company determined the warrants were not indexed to the Company’s own stock (see Note 2) and the resulting discount on the Notes Payable – Vendor is amortized using the effective interest rate method over the term. The fair value of the warrants

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of $0.5 million was estimated using a Monte Carlo valuation model. Based on these fair value determinations, the allocation of the proceeds to Notes Payable – Vendor and warrants was $14.1 million and $0.5 million, respectively.

Future Minimum Debt Payments

Future minimum payments as of March 31, 2009 related to the Company’s debt agreements are as follows for the years ending December 31 (in thousands):

2009	$	47,729
2010		211,616
2011		184,016
2012		191,202
2013		478,553
Thereafter		697,500
Total future payments	$	1,810,616

4. Equity Based Compensation

SkyTerra Equity-Based Compensation

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.

In August 2008, the Company completed an offer to all SkyTerra LP option holders as of that date, to grant them 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 for each SkyTerra LP option terminated. All participating Canadian SkyTerra LP option holders received the right to exchange SkyTerra LP options for SkyTerra options in the future. Sale of shares subject to the options received upon exchange are subject to restriction until May 1, 2010, with certain exceptions. 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 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.

As of March 31, 2009, the Company has outstanding awards of 2,055,000 restricted shares of common stock to executives and board members. Certain of those restricted shares contain vesting based on market conditions. The fair value of the restricted stock grants containing market conditions and deemed service periods were estimated using a Monte Carlo simulation model.

The SkyTerra equity-based compensation expense was $1.6 million and $1.0 million during the three months ended March 31, 2009 and 2008, respectively. As of March 31, 2009, unrecognized compensation related to SkyTerra equity-based compensation awards is $11.8 million, and is expected to be recognized over a weighted-average period of 1.8 years.

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SkyTerra LP Equity-Based Compensation

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 the Board of Directors of the general partner of SkyTerra LP. There are 0.7 million SkyTerra LP unit options outstanding as of March 31, 2009, 0.6 million of which are held by Canadian SkyTerra LP option holders participating in the Option Exchange, discussed above. No further SkyTerra LP Unit Option incentives are expected to be awarded in the future, as all future options will be issued under SkyTerra plans, discussed above.

SkyTerra LP generally issued unit option awards with an exercise price equal to the fair value of the underlying unit on the date of grant, that vest ratably over 3 years of service, with a term of ten years. The fair value of each option was 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 LP was 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.

SkyTerra LP equity-based compensation expense was $0.8 million and $2.8 million during the three months ended March 31, 2009 and 2008, respectively. SkyTerra LP equity-based compensation capitalized as system under construction was $0.1 million and $0.4 million during the three months ended March 31, 2009 and 2008, respectively. As of March 31, 2009, the unrecognized compensation related to SkyTerra LP equity-based compensation awards was $1.4 million, which will be recognized over a weighted-average period of 1.2 years.

5. Commitments and Contingencies

Facility 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; Ottawa, Ontario and Calgary, Alberta.

Satellite Construction Services

The Company 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. The Company is purchasing two satellites, SkyTerra-1 and SkyTerra-2, with a portion of the contract value payable if certain performance incentives are met over the satellites 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.

Satellite Launch Services

The Company has fixed price contracts with ILS International Launch Services and Sea Launch Company to launch the next generation satellites, SkyTerra-1 and SkyTerra-2.

EV-DO Satellite Enabled Mobile Chipsets and Base Station Subsystems

The Company has a contract 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 next generation network.

On March 31, 2009 the Company entered into an agreement with Alcatel-Lucent USA Inc. (Alcatel-Lucent) to develop, test, and provide a production satellite base station subsystem and to supply such base station subsystem commercial products. This base station subsystem ground infrastructure will be designed to work with chipsets produced under Qualcomm-adapted EV-DO technology. The agreement contemplates that other operators may enter into the agreement or purchase base station subsystem product following successful completion of the base station subsystem development with each participating operator sharing in the non-recurring expenses. To date, TerreStar Networks has joined under the agreement.

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GMR1-3G Satellite Enabled Mobile Chipsets and Base Station Subsystems

On March 31, 2009, the Company entered into an agreement with Infineon Technologies AG (Infineon), for the design and development of a multi-standard mobile platform based on Infineon innovative software-defined-radio technology that will be compatible with the Hughes base station subsystem the Company is undertaking. The agreement contemplates that up to two other operators may enter into the agreement without any impact to total contract price, provided the scope and functionality are not changed, and bearing their proportionate share of costs of the total contract price. TerreStar Networks has jointly entered into the agreement with SkyTerra.

On March 31, 2009, the Company entered into an agreement with Hughes Network Systems (Hughes) for additional software development work that will, in conjunction with the Company’s existing Hughes base station subsystem agreement, allow Hughes to deliver the full base station subsystem development required with respect to the GMR1-3G air interface to be included in connection with the Infineon chipset technology. To date, TerreStar Networks has entered into the Hughes agreement with respect to the additional development effort.

Operator Participation in Satellite Enabled Mobile Chipsets and Base Transceiver Subsystems

For each of the satellite enabled mobile chipsets and base transceiver subsystems agreements discussed above, the termination by one operator of its agreement does not affect the agreement of any other operator, provided that the remaining operator(s) assume the unpaid non-recurring expenses. In the event of the termination by one or more of the operator(s), the remaining operator(s) can elect to terminate the agreement. Further, in the event that any additional operator participates in any of these agreements, the total non-recurring expenses there under will be pro-rated among the participating operators and in some instances a premium might also be paid for late entry. The Company may, in its sole discretion, determine its continued participation based on and following the termination of other operators of the various agreements.

Inmarsat Cooperation Agreement

The Company has a Cooperation Agreement relating to the use of L-band spectrum for both MSS and ATC services in North America with Inmarsat Global Limited (“Inmarsat Global”). 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 LP to trigger certain provisions, SkyTerra LP 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 Global and SkyTerra LP spectrum in a pre-agreed market. Simultaneously upon the election by the Company regarding such an investment, the Company is required to issue to Inmarsat Global $31.3 million of the Company’s common stock, valued in accordance with terms of the agreement. It has not been determined which, if any, of the previous investments will be designated by the Company as a “triggering investment” and, if so, what the valuation of the Company’s common stock would be in connection with the issuance of the Company’s stock. This matter remains open and the Company has not designated any investment a “triggering investment” under the terms of the agreement. Upon the completion of the transition of the spectrum in Phase 1, the Company will issue to Inmarsat Global 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 Company has the option to accelerate the transition timing by accelerating payment to Inmarsat Global of $50 million that would be credited towards the $250 million in cash payments.

Upon the occurrence of certain events, until September 1, 2011, the Company has the option (Phase 1 Option), subject to certain conditions, to effect a transition to a modified band plan within an 18 to 30 month period. Over the transition period, the Company will be required to make payments to Inmarsat Global of $250 million in cash. Upon the commencement of Phase 1, the Company will issue to Inmarsat Global 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.

Subsequent to the exercise of the Phase 1 Option, between January 1, 2010 and January 1, 2013, the Company has the option (Phase 2 Option) to require Inmarsat Global 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. If the Company does not exercise the Phase 2 Option, then between January 1, 2013 and January 1, 2015, Inmarsat Global would have the option to require the Company to exercise the Phase 2 Option on the same terms.

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Possible Merger and Acquisition of Inmarsat

The Company has 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. The proposed business combination 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. Harbinger has not yet proposed 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. 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.

L-band Coordination

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 the Company to access additional spectrum for the benefit of the Company 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.

Future Minimum Commitments

Future minimum payments related to the Company’s commitments (excluding indebtedness) are as follows as of March 31, 2009 for the years ending December 31 (in thousands):

	Leases (a)		Satellite and Ground System (b)		Chipset, device and satellite base station subsystem		Launch Services		Satellite Operational Services		Other		Total
2009	$	1,896	$	71,431	$	17,898	$	39,744	$	2,526	$	7,148	$	140,643
2010		2,744		50,006		29,675		94,213		1,884		3,200		181,722
2011		1,165		938		6,884		10,576		1,434		158		21,155
2012		886		—		—		—		1,434		158		2,478
2013		896		—		—		—		1,434		158		2,488
Thereafter		10,781		—		—		—		16,013		1,737		28,531
	$	18,368	$	122,375	$	54,457	$	144,533	$	24,725	$	12,559	$	377,017

(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.

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Litigation and Claims

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

Contingencies

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

6. Income Taxes

The Company and its eligible subsidiaries file a consolidated United States federal income tax return. As a limited partnership, SkyTerra LP is not subject to income tax. SkyTerra is subject to income tax based on its 100% share of SkyTerra LP income or loss. The Company’s Canadian subsidiary, SkyTerra Corp., and SkyTerra Canada are taxed as corporations in Canada. The Company’s effective tax rate differs from the Federal statutory rate, due primarily to operating losses for which, generally, a full valuation allowance has been recognized. As of December 31, 2008, SkyTerra and the consolidated subsidiaries had unused net operating loss (NOL) carryforwards of $203.0 million expiring from 2020 through 2028. Despite NOL carryforwards, the Company may have a future income tax liability due to alternative minimum tax or state or foreign tax requirements.

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 at least one 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 statements. Based on additional, but incomplete ownership information more recently obtained, the Company believes a subsequent ownership change may also have occurred in 2008. Due to a decline in Company trading share price later in 2008, a second 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 second ownership change in 2008. 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 statements as of March 31, 2009. However, decreases in gross deferred tax assets may occur, and limitations on other Company deductions, such as depreciation and amortization, may result.

7. Segment Information

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

For the year ended December 31, 2008 the Company disclosed the operating results of three segments: Next Generation, Current Generation, and SkyTerra Corporate. The Next Generation segment related to activities specific to the deployment of a next generation satellite system. The Current Generation segment related to SkyTerra LP provision of mobile satellite services that support the delivery of data, voice, fax and dispatch radio services using its existing in-orbit satellites. The SkyTerra Corporate segment related to activities related to the publicly traded holding company.

Efforts regarding the development and deployment of a next generation network have accelerated in 2009. A launch of the first space-based next generation network asset is expected within several quarters, and ground based next generation network segments are expected to become operational over the same period of time. The activities of the Company’s employees have become less distinguishable between those specific to current generation network operation and those specific to next generation network activities. As these activities merge, the chief operating decision maker has determined that the allocation of expenses between current and next generation network activities is no longer meaningful, and the chief operating decision maker no longer requires discrete financial information on which to base decisions regarding the allocation of resources between those activities. The Company has determined that its current generation and next generation activities no longer qualify as operating segments.

The activities previously reported separately as SkyTerra Corporate are corporate services that support both current and next generation activities, including financing, corporate governance, and other activities. In conjunction with the merging of the current and next generation operating activities discussed above, the chief

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operating decision maker no longer reviews, or requires discrete financial information for SkyTerra Corporate activities. Similar to the current and next generation activities, the Company has determined that SkyTerra Corporate activities no longer qualify as operating segments. As a result, as of March 31, 2009 the Company has only one operating segment.

8. Supplemental Information

The SkyTerra Communications, Inc. legal entity (SkyTerra Corporate) is a holding company whose primary asset is ownership of 100% of the equity interests of SkyTerra LP. Included in the consolidated results of the Company are the results of SkyTerra Corporate. All other results relate to the operations of SkyTerra LP and SkyTerra LP consolidated subsidiaries.

SkyTerra Corporate’s material assets and liabilities as of March 31, 2009, that are not eliminated in consolidation, include $6.8 million of cash and cash equivalents, a $7.4 million investment in TerreStar Networks, and $1.8 million of short-term liabilities. SkyTerra Corporate has no revenues and its material expenses for the three months ended March 31, 2009, that are not eliminated in consolidation, include $1.9 million of general and administrative expenses.

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

The following discussion contains forward-looking statements within the meaning of Section27A of the Securities Act of 1933 and Section21E of the Securities Exchange Act of 1934 that involve risks and uncertainties, including statements regarding the Company’s capital needs, business strategy, expectations and intentions. The Company urges you to consider that statements that use the terms “believe,” “do not believe,” “anticipate,” “expect,” “plan,” “estimate,” “intend” and similar expressions are intended to identify forward-looking statements. These statements reflect the Company’s current views with respect to future events. The Company’s business is subject to numerous risks and uncertainties, including the risks described in the “Risk Factors” section of the Company’s annual report on Form 10-K for the year ended December 31, 2008. Accordingly, the Company’s actual results could differ materially from those anticipated in the forward-looking statements, including those set forth below under this “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Actual results will most likely differ from those reflected in these statements, and the differences could be substantial. The Company disclaims any obligation to publicly update these statements, or disclose any difference between the Company’s actual results and those reflected in these statements. The information constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Overview

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 has been coordinated for their use. SkyTerra LP holds a 46.4% effective interest in SkyTerra (Canada) Inc. and has determined that it is the primary beneficiary of SkyTerra Canada as a result of its historical and expected future funding of the operations of SkyTerra Canada and as a result of certain services and capacity lease agreements between the entities. As such, and in accordance with FASB Interpretation No. 46R, Variable Interest Entities, SkyTerra Canada has been consolidated into the financial results of the Company. References herein to the "Company" include the Company’s subsidiaries, including SkyTerra LP, as well as SkyTerra Canada, and references to the Company’s “satellites”, “spectrum” and “networks”, include the satellites, spectrum and networks of both SkyTerra LP and SkyTerra Canada.

L-band Spectrum and Ancillary Terrestrial Component

The Company’s consolidated subsidiaries SkyTerra LP (United States) and SkyTerra Canada (Canada) are licensed by their respective governments to operate both current and next generation satellite systems in the 1.5 to 1.6 GHz frequency band (the “L-band”) spectrum which has been 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 this 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. 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.

Next Generation Network and Business

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, that will serve as the core of its next generation network. The Company is working closely with Boeing, the satellite manufacturer, 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 early 2010 and the Company has contracted for a launch window for SkyTerra-1 that opens in March of 2010 and continues through May 2010.  The launch of SkyTerra-2 is

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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.

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 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 services on its next generation network, including developing plans for the potential transition of certain current customers to the next generation satellite and continuing to support certain current generation communications ground segments and mobile data system network terminals.  The Company expects it will generate revenue through at least the end of 2012 regarding these services.  In addition, 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.

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To address the opportunities and challenges inherent in development of the Company’s next generation network and business, the Company continues to focus on the following:

• 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 funding commitments from Harbinger (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 and Business

The Company currently 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 to a number of vertical markets in the United States and Canada. End users of the Company’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. 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

Financing

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 the Company through the third quarter of 2010. Additional funds will be needed to complete the construction of the next generation integrated network, fund operations, and begin making scheduled cash interest payments on senior indebtedness in the fourth 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. In addition, although the Company has secured committed financing 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 change.

Pursuant to the terms of the agreement with Harbinger, the Company has committed funding available to it of $500 million through the sale of four tranches of 18% Senior Unsecured Notes. On January 7, 2009, the Company issued the first tranche of the 18% Senior Unsecured Notes in an aggregate principal amount of $150 million. On April 1, 2009, the Company issued the second tranche of the 18% Senior Unsecured Notes in an aggregate principal amount of $175 million that is not reflected on the accompanying balance sheet as it was consummated subsequent to the date of the accompanying balance sheet. The remaining $175 million of 18% Senior Unsecured Notes are scheduled to be issued in the amount of $75 million and $100 million on 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-

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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.

EV-DO Satellite Enabled Mobile Chipsets and Base Transceiver Subsystems

The Company has 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.

On March 31, 2009 the Company entered into an agreement with Alcatel-Lucent USA Inc. (Alcatel-Lucent) to develop, test, and provide a production satellite base station subsystem and to supply such base station subsystem commercial products. This base station subsystem ground infrastructure will be designed to work with Qualcomm-adapted EV-DO technology chipsets. The combination of the base station subsystem and the Qualcomm chipset will form a full communication path and enable communications with a satellite system. The agreement also contemplates that other operators may enter into the agreement with Alcatel-Lucent or purchase base station subsystem product following successful completion of the base station subsystem development with each participating Operator sharing in the non-recurring expenses incurred in connection with the agreement which sharing may be in the form or rebates or other similar purchase price offsets. TerreStar Networks has joined as an operator under the agreement. Based on the continued participation of the current operators, the cost to the Company of its portion of the development and software costs, and initial expected product and deployment costs, under the agreement is $11.1 million.

GMR1-3G Satellite Enabled Mobile Chipsets and Base Transceiver Subsystems

On March 31, 2009, the Company entered into an agreement with Infineon Technologies AG, (Infineon), for the design and development of a multi-standard mobile platform based on Infineon’s innovative software-defined-radio (SDR) technology which would be compatible with the Hughes base station subsystem. This SDR chipset technology will enable satellite-terrestrial handsets to operate with multiple cellular and satellite-based communications technologies including GSM, GPRS, EDGE, WCDMA, HSDPA, HSUPA and GMR-2G/3G. The agreement also contemplates that up to two other operators may enter into the Infineon Agreement without any impact to the total contract price, provided the scope and functionality are not changed, and bearing their proportionate share of costs of the total contract price. TerreStar has entered into the agreement with the Company, such that four operators in total could be involved. Based on the continued participation of the current operators, the cost to SkyTerra of its portion of the development and software costs under the agreement is expected to be $19.4 million.

On March 31, 2009, in conjunction with the Infineon agreement, the Company entered into an agreement with Hughes Network Systems (Hughes) for additional software development work that will, with the existing Hughes base station subsystem agreement, allow Hughes to deliver the full base station subsystem development required with respect to the GMR1-3G air interface to be included in connection with the Infineon SDR technology. TerreStar has entered into this agreement with Hughes and the Company with respect to the additional development effort. Based on the continued participation of the current operators, the cost to SkyTerra of its portion of the development and software costs incurred under the agreement is expected to be $7.9 million.

Operator Participation in Satellite Enabled Mobile Chipsets and Base Transceiver Subsystems

For each of the satellite enabled mobile chipsets and base transceiver subsystems agreements discussed above, the termination by one operator of its agreement does not affect the agreement of any other operator, provided that the remaining operator(s) assume the unpaid non-recurring expenses. In the event of the termination by one or more of the operator(s), the remaining operator(s) can elect to terminate the agreement. Further, in the event that any additional operator participates in any of these agreements, the total non-recurring expenses thereunder will be pro-rated among the participating operators and in some instances a premium might also be paid

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for late entry. The Company may, in its sole discretion, determine its continued participation based on and following the termination of other operators of the various agreements.

Possible Merger and Acquisition of Inmarsat

The Company has 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. The proposed business combination 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. Harbinger has not yet proposed a structure or formal terms 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. 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.

In August 2008, 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 March 4, 2009, following a request to the Company from Harbinger, Harbinger and the Company asked the FCC to separate the request for authority to transfer control of the Company from the request for approval of the possible business combination between the Company and Inmarsat, in order to facilitate expedited action on the application for approval of the transfer of ownership. Harbinger has informed the Company that it does not expect there to be any material change to the timetable for approval of the business combination between SkyTerra and Inmarsat.

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.

In the event the possible offer by the Company for Inmarsat is not consummated by September 22, 2009, the Company will need to refile a notice with the U.S. Department of Justice's Antitrust Division. 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.

ATC Modification Application

In November 2005, the Company filed an application to modify its ATC license to take advantage of changes in the FCC’s technical ATC rules. In December 2008, the Company amended the ATC modification application pursuant to the flexibility accorded in the Cooperation Agreement. In April 2009, the FCC issued a letter order dismissing the amended ATC modification application without prejudice to refiling, for the alleged failure to

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provide sufficient information to demonstrate compliance with certain of the FCC’s rules. The Company is in the process of refiling the application with additional information responsive to the FCC’s letter.

Critical Accounting Policies

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of the Company’s consolidated financial statements requires the Company to make estimates and judgments that affect the reported amounts of assets, liabilities and equity and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. These estimates, particularly estimates relating to the valuation of debt and warrants, the valuation of equity-based compensation, the valuation of intangible assets, the useful lives of long-lived assets and judgments involved in evaluating investment and asset impairments, among others, have a material impact on the financial statements. The Company bases estimates on historical experience and various other assumptions it believes are reasonable under the circumstances, 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.

For a more detailed explanation of the judgments made in these areas and a discussion of the Company’s critical accounting estimates and policies, refer to “Critical Accounting Policies” included in Item 7 and “Summary of Significant Accounting Policies” (Note 2) to the Company’s consolidated financial statements beginning on page F-26 of the Annual Report on Form 10-K for the year ended December 31, 2008.

EITF 07-5

The Company adopted EITF 07-5, Determining Whether an Instrument (or Embedded Feature) is Indexed to an Entity’s Own Stock (EITF 07-5) effective January 1, 2009. The adoption of EITF 07-5’s requirements can affect the accounting for warrants and many convertible instruments with provisions that protect holders from declines in the stock price (or “down-round” provisions). Warrants with such provisions will no longer be recorded in equity. Down-round provisions reduce the exercise price of a warrant or convertible instrument if a company either issues equity shares for a price that is lower than the exercise price of those instruments or issues new warrants or convertible instruments that have a lower exercise price. The Company evaluated whether warrants to acquire stock of the Company contain provisions that protect holders from declines in the stock price or otherwise could result in modification of the exercise price and/or shares to be issued under the respective warrant agreements based on a variable that is not an input to the fair value of a “fixed-for-fixed” option. The Company determined that the following warrants contained such provisions, thereby concluding they were not indexed to the Company’s own stock:

• Series 1-A, exercisable for 681,838 shares of the Company’s voting common stock, that expire June 4, 2009

• Series 2-A, exercisable for 2,698,942 shares of the Company’s voting common stock, that expire June 4, 2009

• Warrants issued to Harbinger in conjunction with 16.5% Senior Unsecured Notes (“Harbinger 2008 Warrants”), exercisable for 9,144,038 shares of the Company’s common stock, that expire January 7, 2018.

• Warrants issued and vested upon the utilization of credit under Notes Payable – Vendor (“Vendor Warrants”), exercisable for 228,647 shares of the Company’s voting common stock, that expire August 18, 2018.

In accordance with EITF 07-5, the Company, beginning on January 1, 2009, recognizes these warrants as liabilities at their respective fair values on each reporting date. The cumulative effect of the change in accounting for these warrants of $25.4 million was recognized as an adjustment to the opening balance of accumulated deficit at January 1, 2009. The cumulative effect adjustment was the difference between the amounts recognized in the consolidated balance sheet before initial adoption of EITF 07-5 and the amounts recognized in the consolidated balance sheet upon the initial application of EITF 07-5. The amounts recognized in the consolidated balance sheet as a result of the initial application of EITF 07-5 on January 1, 2009 were determined based on the amounts that would have been recognized if EITF 07-5 had been applied from the issuance date of the warrants. The Company measured the fair value of these warrants as of March 31, 2009, and recorded a $9.4 million charge to record the liabilities associated with these warrants at their respective fair values as of March 31, 2009. The Company determined the fair values of these securities using a Monte Carlo valuation model.

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Recently Issued Accounting Standards

In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements — an Amendment of ARB No. 51 (SFAS No. 160). SFAS No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The presentation of a noncontrolling interest has been modified for both the income statement and balance sheet, and disclosure requirements have been expanded to include disclosures that clearly identify and distinguish between the interests of the parent’s owners and the interest of the noncontrolling owners of a subsidiary. The provisions of SFAS No. 160 are effective for fiscal years beginning after December 15, 2008 and interim periods within those fiscal years. The adoption of SFAS No. 160 did not have a material impact on the Company’s financial statements and disclosures.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP FAS 107-1 and APB 28-1). FSP FAS 107-1 and APB 28-1 amends SFAS No. 107, Disclosures About Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. FSP FAS 107-1 and APB 28-1also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. FSP FAS 107-1 and APB 28-1 is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 107-1 and APB 28-1 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 107-1 and APB 28-1 requires comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with adoption of FSP FAS 107-1 and APB 28-1 will have a material effect on its financial statements and disclosures.

In April 2009, the FASB issued FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (FSP FAS 115-2 and FAS 124-2). FSP FAS 115-2 and FAS 124-2 amends the other-than-temporary impairment guidance for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. FSP FAS 115-2 and FAS 124-2 does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. FSP FAS 115-2 and FAS 124-2 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 115-2 and FAS 124-2 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 115-2 and FAS 124-2 require comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with adoption of FSP FAS 115-2 and FAS 124-2 will have a material effect on the on its financial statements and disclosures.

In April 2009, the FASB issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4). FSP FAS 157-4 provides additional guidance for estimating fair value in accordance with SFAS No. 157, Fair Value Measurements, when the volume and level of activity for the asset or liability have significantly decreased. FSP FAS 157-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. FSP FAS 157-4 is effective for interim and annual reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. FSP FAS 157-4 does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, FSP FAS 157-4 requires comparative disclosures only for periods ending after initial adoption. The Company does not expect the changes associated with adoption of FSP FAS 157-4 will have a material effect on the on its financial statements and disclosures.

Segment Information

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

For the year ended December 31, 2008 the Company disclosed the operating results of three segments: Next Generation, Current Generation, and SkyTerra Corporate. The Next Generation segment related to activities specific to the deployment of a next generation satellite system. The Current Generation segment related to SkyTerra LP provision of mobile satellite services that support the delivery of data, voice, fax and dispatch radio services using its existing in-orbit satellites. The SkyTerra Corporate segment related to activities related to the publicly traded holding company.

Efforts regarding the development and deployment of a next generation network have accelerated in 2009. A launch of the first space-based next generation network asset is expected within several quarters, and ground based

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next generation network segments are expected to become operational over the same period of time. The activities of the Company’s employees have become less distinguishable between those specific to current generation network operation and those specific to next generation network activities. As these activities merge, the chief operating decision maker has determined that the allocation of expenses between current and next generation network activities is no longer meaningful, and the chief operating decision maker no longer requires discrete financial information on which to base decisions regarding the allocation of resources between those activities. The Company has determined that its current generation and next generation activities no longer qualify as operating segments.

The activities previously reported separately as SkyTerra Corporate are corporate services that support both current and next generation activities, including financing, corporate governance, and other activities. In conjunction with the merging of the current and next generation operating activities discussed above, the chief operating decision maker no longer reviews, or requires discrete financial information for SkyTerra Corporate activities. Similar to the current and next generation activities, the Company has determined that SkyTerra Corporate activities no longer qualify as operating segments. As a result, as of March 31, 2009 the Company has only one operating segment.

Results of Operations

Comparison of the three months ended March 31, 2009 and 2008

The following tables detail the Company’s consolidated financial results for the three months ended March 31, 2009 and March 31, 2008.

Revenues

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

	Three months ended March 31,
	2009		2008		% Change
Revenues
Capacity	$	3,290	$	3,121	5.4	%
Telephony		2,788		3,157	(11.7	)%
Data		757		837	(9.6	)%
Equipment		828		1,222	(32.2	)%
Other		158		256	(38.3	)%
Total revenues	$	7,821	$	8,593	(9.0	)%

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 three months ended March 31, 2009, as compared to the same periods in 2008 have not fluctuated significantly.

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. Monthly network access revenue is recognized in the month

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of service to the end-user. Variable usage revenue is recognized during the period of end-user usage. Activation fees are deferred and recognized ratably over the customer’s contractual service term, generally one year.

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

	Three months ended March 31,
	2009		ARPU		2008		ARPU		Change Subscribers		Change ARPU
Total subscribers, January 1	19,014				19,866				(4.3	)%
Additions	256				548				(53.3	)%
Deletions	(792	)			(443	)			78.8	%
Total subscribers, March 31	18,478		$	49.73	19,971		$	52.56	(7.5	)%	(5.4	)%

Telephony revenues for the three months ended March 31, 2009, as compared to the same period in 2008, decreased due to a decline in ARPU and a decline 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 the three months ended March 31, 2009, as compared to the same period in 2008, decreased due to a decrease of 10.6% in average monthly revenue per subscriber unit, which was partially offset by an increase of 1.8% in the average number of subscribers.

Equipment

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

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

Equipment sales during the three months ended March 31, 2009, decreased as compared to the same periods in 2008 due to decreased sales of mobile terminals.

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Operating Expenses

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

	Three months ended March 31,
	2009		2008		% Change
Cost of equipment sold	$	775	$	974	(20.4	)%
Operations and cost of services (exclusive of depreciation and amortization)		8,653		6,663	29.9	%
Sales and marketing		1,774		2,643	(32.9	)%
Research and development (exclusive of depreciation and amortization)		3,739		4,107	(9.0	)%
General and administrative		8,078		7,577	6.6	%
Depreciation and amortization		8,318		8,081	2.9	%
Total operating expenses	$	31,337	$	30,045	4.3	%

Cost of Equipment Sold

The cost of equipment sold is comprised of the cost of equipment purchased for resale. The Company does not manufacture any of its own equipment. Also included in cost of equipment sold are the costs of warehousing and warehousing services. Cost of equipment sold during the three months ended March 31, 2009, as compared to the same periods in 2008 decreased as a result of decreased equipment sales.

Operations and Cost of Services

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 cost of services expenses increased during the three months ended March 31, 2009, as compared to the same period in 2008, due primarily to costs associated with the engineering of chipsets for next generation network devices, and increased compensation costs and staffing. Those increases were partially offset by a reduction in equity-based compensation due to the recognition of additional equity-based compensation expense in the first quarter of 2008 resulting from the February 2008 modifications to outstanding options.

Sales and Marketing

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

Sales and marketing expenses decreased during the three months ended March 31, 2009, as compared to the same period in 2008 due to decreased compensation costs and staffing and a reduction in equity-based compensation due to the recognition of additional equity-based compensation expense in the first quarter of 2008 resulting from the February 2008 modifications to outstanding options.

Research and Development

Research and development expenses include the compensation costs of employees working on next generation products and services, and other development costs of the next generation network. Research and development expenses decreased during the three months ended March 31, 2009, as compared to the same period in 2008, due primarily to decreased third-party consulting expenses related to the development of operational and business support systems for the next generation network.

General and Administrative

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

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General and administrative expenses increased during the three months ended March 31, 2009, as compared to the same period in 2008, due to increased consulting fees, and increased compensation costs. Those increases were partially offset by a reduction in equity-based compensation due to the recognition of additional equity-based compensation expense in the first quarter of 2008 resulting from the February 2008 modifications to outstanding options.

Depreciation and Amortization

Depreciation and amortization expenses consist of the depreciation of property and equipment and the amortization of intangible assets. Depreciation and amortization expenses did not fluctuate significantly during the three months ended March 31, 2009, as compared to the same periods in 2008.

Other Income and Expenses

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

	Three months ended March 31,
	2009			2008			% Change
Interest income	$	369		$	3,221		(88.5	)%
Interest expense		(15,954	)		(11,716	)	36.2	%
Impairment of investment in TerreStar Networks		—			(8,353	)	(100.0	)%
Change in fair value of warrants		(9,357	)		—		100.0	%
Other income (expense), net		231			664		(65.2	)%
Benefit (provision) for income taxes		—			275		(100.0	)%
Total other expenses	$	(24,711	)	$	(15,909	)	55.3	%

Interest Income

Interest income is interest earned on cash, cash equivalents, restricted cash and short-term investments. Interest income decreased during the three months ended March 31, 2009, as compared to the same periods in 2008 due to the decrease of cash, cash equivalents, and short-term investments, and a significant decrease in yields.

Interest Expense

Interest expense is comprised of the amortization of the discount and debt issuance costs on Senior Secured Discount Notes, interest and amortization of the discount on the 16.5% Senior Unsecured Notes, interest and amortization of the discount and debt issuance costs on the 18% Senior Unsecured Notes, and interest incurred on Notes Payable - Vendor, offset by capitalized interest on the system under construction. Total and capitalized interest is as follows (in thousands):

	Three months ended March 31,
	2009		2008
Capitalized interest	$	21,886	$	15,123
Interest expense		15,954		11,716
Total interest	$	37,840	$	26,839

Total interest increased during the three months ended March 31, 2009, as compared to the same period in 2008, due to increased interest related to Senior Secured Notes, 16.5% Senior Unsecured Notes, 18% Senior Unsecured Notes and Notes Payable - Vendor, and Notes Payable – Vendor of $3.2 million, $1.0 million, $6.6 million and $0.2 million, respectively.

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Impairment of investment in TerreStar Networks

During the three months ended March 31, 2008, the Company recorded a write-down of its investment in TerreStar Networks in the amount of $8.4 million as the Company determined the TerreStar Networks investment had become other-than-temporarily impaired.

Change in fair value of warrants

In accordance with EITF 07-5, the Company, beginning on January 1, 2009, recognizes certain warrants as liabilities at their respective fair values on each reporting date. The cumulative effect of the change in accounting for these warrants of $25.4 million was recognized as an adjustment to the opening balance of accumulated deficit at January 1, 2009. The cumulative effect adjustment was the difference between the amounts recognized in the consolidated balance sheet before initial adoption of EITF 07-5 and the amounts recognized in the consolidated balance sheet upon the initial application of EITF 07-5. The Company measured the fair value of these warrants as of March 31, 2009, and recorded a $9.4 million charge to record the liabilities associated with these warrants at their respective fair values as of March 31, 2009.

Benefit (Provision) for Income Taxes

The Company’s effective tax rate differs from the Federal statutory rate, due primarily to a full valuation allowance recorded against net operating losses generated in the periods presented.

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, debt service and operating expenses. 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 payment of interest on the 16.5% Senior Unsecured Notes is required to begin in June 2012, and cash payment of principal is due in full in May 2013. Cash payment of interest on the 18% Senior Unsecured Notes is required to begin in July 2011, and cash payment of principal is due in full in July 2013.

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 the Company through the third quarter of 2010. Additional funds will be needed to complete the construction of the next generation integrated network, fund operations, and begin cash payment of interest in the fourth 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. In addition, although the Company has secured committed financing 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 change.

Pursuant to the terms of the agreement with Harbinger, the Company has committed funding available to it of $500 million through the sale of four tranches of 18% Senior Unsecured Notes. On January 7, 2009, the Company issued the first tranche of the 18% Senior Unsecured Notes in an aggregate principal amount of $150 million. On April 1, 2009, the Company issued the second tranche of the 18% Senior Unsecured Notes in an aggregate principal amount of $175 million that is not reflected on the accompanying balance sheet as it was consummated subsequent to the date of the accompanying balance sheet. The remaining $175 million of 18% Senior Unsecured Notes are scheduled to be issued in the amount of $75 million and $100 million on July 1, 2009 and January 4, 2010, respectively.

The U.S. and worldwide financial markets have experienced unprecedented volatility, particularly in the financial services sector. No assurance can be given that Harbinger will satisfy its remaining 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 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

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discretionary spending, the sale of the Company’s investment in TerreStar Networks Inc. (TerreStar Networks) 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 addition, the terms of the Company’s current and expected future indebtedness and other contractual arrangements include significant limitations on additional debt, including amount, terms, access to security, and duration, among other factors, and impose limitations on the structure of strategic transactions.

The remaining cost of carrying out the Company’s business plan is 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. Further, SkyTerra LP could lose its FCC or Industry Canada licenses or its international rights if it fails to achieve required performance milestones.

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.

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Contractual Obligations and Known Future Cash Requirements

Set forth below is information concerning the Company’s known contractual obligations as of March 31, 2009 that are fixed and determinable. The Company leases office space, computers and other equipment under operating lease agreements. In addition to base rent, the Company is responsible for certain taxes, utilities and maintenance costs, and several leases include options for renewal or purchase. The Company’s various non-cancelable vendor arrangements (including satellite, launch vehicle, base transceiver subsystems and air interface technology construction), long-term and other debt arrangements, non-cancelable operating leases and agreements with initial terms of greater than one year are as follows as of March 31, 2009, except as noted (in thousands):

	Payments due by period
	Total		2009		1–3 years		3-5 years		More than 5 years
Operating leases (1)	$	18,368	$	1,896	$	3,909	$	1,782	$	10,781
Notes payable		194		194		—		—		—
Satellite and ground system (2)		217,464		75,914		140,612		938		—
Launch services		144,533		39,744		104,789		—		—
Chipset, device and satellite base station subsystem		54,457		17,898		36,559		—		—
Satellite operational services		24,725		2,526		3,318		2,868		16,013
Senior Secured Discount Notes (4)		1,065,000		—		157,500		210,000		697,500
Senior unsecured notes (related party) (3)(4)		650,332		43,052		147,525		459,755		—
Other		12,559		7,148		3,358		316		1,737
	$	2,187,632	$	188,372	$	597,570	$	675,659	$	726,031

(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.

(3)      Assumes semi-annual interest payments made “in-kind” through the allowable payment “in-kind” period, with cash payment of interest on the 16.5% Senior Unsecured Notes and 18% Senior Unsecured Notes beginning June 2012 and July 2011, respectively.

(4)      The amounts include scheduled cash interest payments.

Future Capital Requirements

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.

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 the three months ended March 31, 2009. As of March 31, 2009, 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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Cash Flow

Net Cash Used in Operating Activities. During the three months ended March 31, 2009, as compared to the same period in 2008, net cash used in operating activities increased $6.1 million primarily due to increases in personnel, staffing and related costs, and increased expenses to develop the next generation network.

Net Cash Used in Investing Activities. During the three months ended March 31, 2009, as compared to the same period in 2008, net cash used in investing decreased due to fewer purchases of investments, and the payment of estimated taxes related to TMI Delaware in 2008.

Net Cash Provided by Financing Activities. During the three months ended March 31, 2009, as compared to the same period in 2008, net cash provided by financing activities did not fluctuate significantly. Proceeds from the issuance of the 16.5% Senior Unsecured Notes of $150 million in 2008 offset the proceeds from the issuance of the 18% Senior Unsecured Notes of $150 million in 2009.

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Item3.Quantitative and Qualitative Disclosures About Market Risk

Foreign Currency Exchange Rate Risk

The United States dollar is the functional currency for the Company’s consolidated financials. The functional currency of the Company’s Canadian subsidiary and joint venture is the Canadian dollar. The financial statements of these entities are translated to United States dollars using period end rates for assets and liabilities, and the weighted average rate for the period for all expenses and revenues. During the normal course of business, the Company is exposed to market risks associated with fluctuations in foreign currency exchange rates, primarily the Canadian dollar and the Euro. To reduce the impact of these risks 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 policies prohibit 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. As of March 31, 2009 the Company did not hold any foreign currency contracts.

Interest Rate Risk

Changes in interest rates affect the fair value of the Company’s fixed rate debt. There is limited active public trading in the Company’s Senior Secured debt securities, and there is no public trading in any other of the Company’s debt securities. To determine fair value of these securities, an estimated bid-side broker quote 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 and 18% Senior Unsecured Notes, resulting in an aggregate fair value of $299.6 million at March 31, 2009. Based on securities outstanding at March 31, 2009, 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 $7.5 million and $7.6 million, respectively at March 31, 2009.

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 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 March 31, 2009 the Company had $84.7 million outstanding under its Notes Payable - Vendor with interest rates tied to changes in the LIBOR rate. Based on balances outstanding at March 31, 2009, 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 by $1.1 million.

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Item4. Controls and Procedures

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

(b) Changes in Internal Control Over Financial Reporting. There have not been any changes in the Company’s internal control over financial reporting during the three-month period ended March 31, 2009 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II - OTHER INFORMATION

 

Item1. Legal Proceedings

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

Item1A. Risk Factors

For a description of risk factors relating to our business, refer to “Risk Factors” included in Item 1A. in the Annual Report on Form 10-K for the year ended December 31, 2008.

 

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

None.

Item3. Defaults Upon Senior Securities.

None.

 

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

None.

 

Item5. Other Information.

None.

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Item6. Exhibits.

Information about Exhibits Included in this Form 10-Q

In reviewing the agreements included or incorporated by reference as exhibits to this Form 10-Q, 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-Q and the Company’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.

Exhibit Number	Description
4.1	Warrant to Purchase 15,937,500 Shares of Common Stock issued on April 1, 2009 to Harbinger Capital Partners Master Fund I, Ltd.
4.2	Warrant to Purchase 5,312,500 Shares of Common Stock issued on April 1, 2009 to Harbinger Capital Partners Special Situations Fund, L.P.
10.1	Contract for Design and Development of SDR Modem Platforms between TerreStar Networks, Inc. and SkyTerra LP and Infineon Technologies AG dated March 31, 2009
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 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.

Date: May 1, 2009	By:	/s/ Alexander H. Good
		Alexander H. Good
		Chief Executive Officer and President
Date: May 1, 2009	By:	/s/ Scott Macleod
		Scott Macleod
		Executive Vice President and Chief Financial Officer

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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. 3

WARRANT

TO PURCHASE 15,937,500 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"), 15,937,500 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.

"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 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

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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.

"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.

3

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"January 2009 Warrants" shall mean warrants issued by the Company to Harbinger on January 7, 2009 to purchase an aggregate of 7,500,000 shares of Common Stock, and all warrants issued upon transfer, division, or combination of, or in substitution of such warrants.

"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, January 2009 Warrants 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, January 2009 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), as amended to date.

"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 April 1, 2009.

"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 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,

4

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 all of the warrants issued by the Company to Harbinger on April 1, 2009 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 for, such warrants. All Warrants shall at 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.

5

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 15,937,500 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 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

6

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 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

7

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.

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.

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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 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

9

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 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.

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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 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,

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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 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.

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(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 APRIL 1, 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 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).

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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:

(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.

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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 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

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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

Attest:
By:	/s/ Randy Segal
	Name: Randy Segal
	Title:   Senior Vice President,
	General Counsel and Secretary

3^rd Warrant

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. 4

WARRANT

TO PURCHASE 5,312,500 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"), 5,312,500 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.

"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 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

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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.

"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.

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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976.

"January 2009 Warrants" shall mean warrants issued by the Company to Harbinger on January 7, 2009 to purchase an aggregate of 7,500,000 shares of Common Stock, and all warrants issued upon transfer, division, or combination of, or in substitution of such warrants.

"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, January 2009 Warrants 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, January 2009 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), as amended to date.

"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 April 1, 2009.

"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 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,

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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 all of the warrants issued by the Company to Harbinger on April 1, 2009 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 for, such warrants. All Warrants shall at 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.

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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 5,312,500 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 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

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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 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

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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.

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.

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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 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

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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 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.

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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 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,

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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 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.

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(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 APRIL 1, 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 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).

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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:

(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.

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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 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

15

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

Attest:
By:	/s/ Randy Segal
	Name: Randy Segal
	Title:   Senior Vice President,
	General Counsel and Secretary

4^th Warrant

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

CONTRACT

BETWEEN

TERRESTAR NETWORKS INC.

AND SKYTERRA LP

AND

INFINEON TECHNOLOGIES AG

FOR THE

DESIGN AND DEVELOPMENT OF SDR MODEM PLATFORMS

March 31, 2009

TABLE OF CONTENTS

Page

1. Scope of Work 4

2. Contractor Performance Schedule 6

3. CUSTOMER(s)-Furnished Items. 6

4. Milestone Acceptance 8

5. Changes 9

6. Price 10

7. Payment Terms 11

8. Warranty 12

9. Personnel and Key Personnel 14

10. Major Subcontracts 15

11. Access to Works in Process 16

12. Intellectual Property Rights 16

13. Intellectual Property Rights Indemnity 18

14. General Indemnity 21

15. Confidential Information 21

16. Termination For Default, Excessive Force Majeure                                                                23

17. Force Majeure 24

18. Termination for Convenience 25

19. applicable law, Compliance with Law 25

20. Dispute Resolution 26

21. Contractor Insurance Requirements 27

22. Communications 28

23. Public Release of Information 29

24. Order of Precedence 29

25. Limitation of Liability 29

26. General 29

27. Entire Agreement 31

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PREAMBLE

This Contract for the Design and Development of SDR Modem Platforms is a contract between Infineon Technologies AG with its principal place of business at Am Campeon 1-12, 85579 Neubiberg, Germany (hereinafter referred to as the “Contractor”), TerreStar Networks Inc., a corporation organized under the laws of Delaware with its principal place of business at One Discovery Square, Suite 900, 12010 Sunset Hills Road, Reston, Virginia 20190 (hereinafter referred to as “TerreStar”) and SkyTerra LP, a limited partnership organized under the laws of Delaware with offices at 10802 Parkridge Boulevard, Reston, VA 20191, USA (hereinafter referred to as “SkyTerra”). Contractor, TerreStar and SkyTerra may each be referred to individually as a “Party” and collectively as the “Parties.” TerreStar, SkyTerra and any other party entering into this Contract after the EDC pursuant to Section 5.2 may individually or collectively be referred to as “Customer” or “Customers”.

The effective date of this Contract (“EDC”) is March 31, 2009.

Capitalized terms shall have the meaning ascribed to them below, in the Exhibits, or in the Glossary attached at Attachment 1, as the case may be.

RECITALS

WHEREAS, each Customer has been licensed by the U.S. Federal Communications Commission to construct, launch and operate a communication system to be utilized by the respective Customer to provide mobile satellite services that is composed of a space-based network, an ancillary terrestrial component system, and mobile terminals; and

WHEREAS, as of EDC, Customers intend for the mobile terminals to include a multi-standard software defined radio (“SDR”) integrated chipset (the “SDR Modem Platform,”) as more fully described in Exhibit A (Statement of Work) and Exhibit B (Specifications) of the Initial Exhibit Set; and

WHEREAS, Contractor desires to design and develop one or more SDR Modem Platforms and Customers desire to procure from Contractor such design and development services, and other related services as described in the respective Exhibit Set and/or described in this Contract; and

WHEREAS, the Parties have entered into a pre-development agreement for the SDR Modem Platform on July 06, 2008, Amendment 1 thereto on September 15, 2008 and Amendment 2 thereto on December 04, 2008; and

WHEREAS,the Parties desire to enter into a master agreement that will provide them with the flexibility to contract for the provision of additional SDR Modem Platform designs and related services, if desired; and

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein and intending to be legally bound, the Parties agree as follows:

1. Scope of Work

1.1 Contract Structure. This Contract is a master agreement under which the Parties may agree upon one or more Projects for professional services, as further described in Section 1.2.

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1.2 Projects. From time to time the Parties may agree upon a project for certain Services to be performed by Contractor (“Project”). The work for a Project may be performed on a time-and-materials basis (a “T&M Project”) or on a firm-fixed price basis (a “FFP Project”). The details of each Project shall be laid down in writing in a set of Exhibits (“Exhibit Set”) agreed by the Parties and comprising at a minimum:

(i)        a Statement of Work including a description of the Contractor Services and/or Deliverables, as well as the responsibilities and items to be furnished by the Customers and other Project specific conditions, if any,

(ii) the Specifications and Acceptance Test criteria for Deliverables, and

(iii)      the Milestone Schedule for the Deliverables and the Payment Plan including the remuneration for the Services and/or Deliverables and the payment terms.

A Project shall be binding and enforceable only when the relevant Exhibit Set is signed by the authorized representatives of each Party.

1.3 InitialExhibit Set. As of EDC, the Parties hereby agree to an initial FFP Project with a Purchase Price as set forth in Section 6.2 (the “Initial Project”). The Initial Project will be for the design, development, testing, integration and demonstration of a SDM Modem Platform as more fully detailed in the following documents to be agreed upon and dated on even date hereof. These documents form a part of the Initial Project and include: (a) Exhibit A: a SDR Modem Platform Statement of Work; (b) Exhibit B: a SDR Modem Platform Technical Specification; and (c) Exhibit C: a SDR Modem Platform Payment Plan and Milestone Schedule (collectively, such exhibits are referred to as the “Initial Exhibit Set”).:

1.4 Provision of Services and Materials. Contractor shall perform the activities and accomplish the tasks and deliver to Customers the deliverables described in the applicable Statement of Work and Specifications (the “Deliverables”), and shall perform the services as set forth in this Contract and the applicable Statement of Work (collectively, the “Services”). Contractor shall ensure it has the personnel, materials, facilities and other resources necessary to perform the Services and deliver the Deliverables in accordance with this Contract, excluding items specified as Customer-Furnished Items (“CFI”) in the applicable Statement of Work.

1.5 Options.

1.5.1 Options for Initial Exhibit Set. Subject to an executed written agreement to be negotiated in good faith by Customer(s) and Contractor on mutually agreeable and commercially reasonable terms and conditions, with respect to the Initial Exhibit Set, Customers may jointly or severally procure one or more of the following additional Deliverables and/or Services from Contractor:

(a) Testing Services. At any time during this Contract, either Customer (or its respective designees) may request testing services in addition to those set forth below relating to the Product Deliverables.

(b) Mobile Phone/Data Card Demonstrator Design and Verification Services. At any time up to twelve (12) months following Final Acceptance, either Customer (or its

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respective designees) may request Mobile Phone/Data Card Demonstrator Design and Verification Services as described in the Initial Exhibit Set.

(c) Mobile Terminal Testing Services. At any time up to thirty six (36) months following Final Acceptance, either Customer (or its respective designees) may request Mobile Terminal Testing Services as described in the Initial Exhibit Set.

(d) SDR-MP Mobile Terminal Functional Upgrade to LTE. Either Customer (or its respective designees) may request an upgrade to the SDR-MP (as defined in the Initial Exhibit Set) which shall enable the platform additionally to operate the LTE protocol.  Such upgrade shall include updated RF transceiver hardware and firmware, updated baseband firmware and software, and such integration and testing as may be necessary.  The Contractor agrees that the SDR-BB in the Product includes the necessary hardware to support LTE functionality, as defined in the 3GPP standards as of EDC, and neither Customer will be financially liable for hardware related changes in the SDR-BB in case of SDR-MP functional upgrade to LTE.

1.5.2 Options for All Exhibit Sets. With respect to any and all Exhibit Sets, Customers may jointly or severally procure additional Deliverables and/or Services from Contractor as follows:

(a) Production Contract. Subject to the terms and conditions of a separate supply agreement either (i) between the Contractor and one or both Customers or their respective designees; or (ii) between Contractor and a handset manufacturer designated by either Customer (each a “Production Contract”), Contractor will supply production units of the SDR Modem Platform. Production Contracts between Customers and Contractor and new Production Contracts between Contractor and handset manufacturers will be at commercially reasonable terms, no less favorable to the buyer than Contractor’s then-current standard sales agreement terms and conditions. The price for each production unit may be pre-determined between the Parties in accordance with Section 1.5.2(b).

(b) Establishing the Production Unit Pricing. For each Project the Parties may mutually agree in writing on an initial price range for production units of the SDR Modem Platform. In the event of such written agreement, the pricing of SDR Modem Platforms in the Production Contracts will not exceed the maximum price in such initial price range. The initial price range may be specified in any of the Project documents contained in the applicable Exhibit Set. In an Exhibit Set the Parties may also agree on a specific date for establishing a firm price for production units of the respective SDR Modem Platform. In such a case Contractor shall provide its firm price to Customers on that date and all such production units sold by Contractor under a Production Contract will not exceed the firm pricing.

(c) Other Production Unit Pricing Parameters. In any event, the price of a production unit under the Production Contract shall not exceed prices charged to any Customers Competitor for the purchase of a similar or lesser quantity of SDR Modem Platforms for similar applications and provided that similar terms and conditions apply for the supply of such production units to Customers Competitors.

1.6 Documentation. All Deliverables provided to Customers shall be accompanied by documentation sufficient to enable Customers to use the same. Any documentation to be

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provided by Contractor for a Deliverable shall be written in such a manner as to permit a competent engineer who is a qualified specialist in view of SDR Modem Platforms or a qualified specialist in terrestrial wireless (e.g. familiar with 3GPP standards, familiar with cellular baseband design, familiar with cellular platforms) butwho was not involved in the development of the associated Deliverable to understand the function and operability of the Deliverable on his or her own without recourse to Contractor or any third party. All documentation provided as Deliverables under an Exhibit Set shall be provided in electronic format, unless otherwise agreed between the Parties in the respective Exhibit Set. Any data or documentation provided under this Contract shall be in the English language and, if in electronic form, shall be embodied in, or in a form compatible with, Microsoft Office software.

1.7 Progress Meetings. The Parties shall schedule meetings on a regular basis to review the progress of the performance of each Project. The Parties shall promptly inform one another in writing in the event that they become aware of any delay or non conformance of any CFI or any Deliverable or Services. The Parties will use reasonable efforts to notify one another, if they become aware of information material for the Deliverables and Services provided by the other Parties during the term of this Contract which differs from information concerning the Deliverables and Services provided to the other Party by Contractor, Customers or Customer’s Subcontractors under this Contract. At any time during this Contract, either Customer may request and Contractor shall promptly provide to the Customers a written update of the current status of any Project hereunder.

2. Contractor - Performance Schedule

2.1 Milestones. Contractor shall provide the Deliverables and/or Services in accordance with the applicable Milestone Schedule and all other applicable scheduling requirements.

2.2 Notice of Delay. Should Contractor realize that it cannot adhere to the delivery dates for any Deliverable set forth in the applicable Milestone Schedule, Contractor shall without delay inform the Customers in writing and indicate the cause for and prospective duration of the delay. The Parties shall endeavor to find reasonable remedial measures.

2.3 Liquidated Damages for Delay. To the extent due to a delay for which Contractor or its Subcontractors are solely responsible, Contractor does not deliver a Deliverable on the delivery date for a Key Milestone set forth in the applicable Milestone Schedule (“Delay”), Contractor shall be liable to Customers for liquidated damages as set forth in the applicable Exhibit Set which, where not otherwise stated, are deemed to include in all cases at least a minimum thirty (30) day grace period prior to any right to liquidated damages commencing. Subject to Customer’s applicable termination rights according to Section 16.1.2 (c), the liquidated damages described in this section shall be the sole and exclusive remedy for Customers in case of Contractors’ Delay.

3. Customers - Furnished Items

3.1 Customers - Furnished Items. Customers acknowledge that, for the performance of the Services and delivery of Deliverables, Contractor will depend on the items and services identified as CFI in the applicable Statement of Work to be provided by Customers or Subcontractors of Customers. Customers shall themselves, or shall ensure that their respective Subcontractors provide to Contractor the CFI in the applicable Statement of Work. Contractor shall be entitled to use the CFI solely for the purpose of Contractor performing its obligations under this Contract without prejudice to Contractor’s rights to use CFI contained in Foreground IP as set forth in

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Section 12. For the avoidance of doubt, no item, information, services or other materials shall be considered to be CFI unless expressly identified as such in the applicable Statement of Work.

In no event shall Contractor be liable under or in connection with this Contract in any way related to the performance, functionality or timely delivery of CFI or any part thereof or any other components or services provided by Customers or any of its Subcontractors.

3.2 CFI Delay. In the event that any Customer, or respective Subcontractor of a Customer, fails to deliver conforming CFI in accordance with the applicable Exhibit Set on the delivery date set forth in the applicable Milestone Schedule, except where such failure to timely deliver is caused by Contractor, the same shall not be considered a breach of this Contract but the failing Customer shall be liable for Idling Fees as set forth in the applicable Exhibit Set. Notwithstanding the foregoing, in no event shall Customers be responsible for Idling Fees to the extent a failure or delay in delivering CFI is caused by Contractor or its Subcontractors. Upon Customer acceptance of the associated Key Milestone and waiver of features as further set forth in Section 4 of Exhibit C, and mutual agreement by the Parties as to scope and schedule, Customers shall be entitled to cumulate the corrections of nonconformance of a CFI (“CFI Cumulative Correction”). For the avoidance of doubt, nothing in this paragraph shall be construed to limit Customer’s obligations for Idling Fees as set forth in Exhibit C for (i) Delay in delivery after the scheduled delivery date of the CFI Cumulative Correction, or (ii) non-conformance of a CFI Cumulative Correction.

3.3 Extended CFI Delay. Should the aggregate days of delay in Customer(s)’s provision of conforming CFI pursuant to Section 3.2 and the applicable Exhibit Set exceed fifteen (15) months from the original date scheduled for delivery of the CFI as set forth in the applicable Milestone Schedule, Contractor may terminate the impacted Project by written notice to Customers.

3.4 Conditions for Use. Without prejudice to the restrictions set forth in Section 12.3, Contractor shall not provide access to or grant a right to use the CFI to any third party other than its Subcontractors in such case solely for purposes of performing the Services or developing the Deliverables.

3.5 Customer(s) Subcontractors. Customers may forward to their Subcontractors (other than Infineon Competitors) who need to know, the Deliverables or documentation of Contractor for the purpose of the fulfillment of Customers obligations under this Contract, provided they have in place with such Subcontractors a written undertaking to treat the respective information confidential in a way at least as stringent as set forth in this Contract and ensure by written agreement with such Subcontractor that Contractor’s rights and benefits under this Contract will not be impaired by the engagement of such Subcontractors. Each Customer shall be responsible towards Contractor for any acts or omissions of its respective Subcontractors, including any non-compliance with the provisions of this Contract or damages caused by its Subcontractors, in the same manner as if caused by the applicable Customer itself. Except as provided in Section 16, any failure by a Subcontractor of a Customer to meet its obligations to that Customer shall not constitute a Force Majeure Event and shall not relieve that Customer from meeting any of its obligations under this Contract. Notwithstanding the foregoing, Customers shall be jointly responsible towards Contractor for any acts or omissions of their Subcontractor HNS (as defined in the Exhibit A) and any other Subcontractors jointly engaged by Customers.

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4. Milestone Acceptance

4.1 Key Milestone Acceptance. Upon completion of a Key Milestone, Contractor shall provide Customers documentation (and demonstration, where appropriate) with detailed information on the completion of the Key Milestone, and Deliverables, if applicable, as set forth in the applicable Exhibit Set. For Key Milestones associated with Product Deliverables, Contractor shall also provide Customers test logs of Contractor’s own testing of the Product Deliverables in accordance with the acceptance test criteria as set forth in the applicable Exhibit Set (“Acceptance Test”), or as agreed by the Parties at a later time.

4.2 Acceptance Review Period. Each Customer shall provide written feedback to Contractor by its respective Customer Program Manager stating its respective acceptance or non-acceptance of a Key Milestone within four (4) weeks from notice and delivery of Contractor on completion of a Key Milestone. If a Key Milestone is not accepted by either Customer, that Customer shall provide detailed information on the cause of the non-acceptance and the reason(s) why that Customer contend and reasonably demonstrate that the Contractor did not fulfill its duties and obligations as set forth in this Contract and the applicable Exhibit Set. Non-Acceptance of a Key Milestone by one Customer shall be deemed to be non-acceptance by all Customers. For Key Milestones associated with Product Deliverables, if a Key Milestone is not accepted by Customer(s) due to nonconformance with the Specification (i) Customer(s) shall detail the functionality and test criteria not conforming to the Specification and (ii) Customer(s) shall reasonably demonstrate the nonconformance, enabling the Contractor to reproduce the nonconformance.

4.3 Non-Conformance.

If a Key Milestone is not accepted by Customer(s) due to nonconformance with the respective Exhibit Set for which Contractor or its Subcontractors are solely responsible and in accordance with Section 4.2, the following shall apply:

4.3.1 Correction of Deliverables. Unless the Parties agree to a Cumulative Correction in accordance with Section 4.3.2 below, Contractor shall thereupon supply Customers with Deliverables conforming to respective Exhibit Set. Subject to Section 4.3.2, and for the avoidance of doubt, Liquidated Damages in accordance with Exhibit C shall be applicable from the date that Customer(s) provides notice to Contractor of such nonconformance in accordance with Section 4.2 until such time as the missed Key Milestone is delivered by Contractor.

4.3.2 Cumulative Correction. Upon written approval by Customers, and mutual agreement by the Parties as to scope and schedule, such approval not to be unreasonably withheld, in lieu of the provisions of Section 4.3.1, Contractor shall be entitled to cumulate the corrections of nonconformance for more than one Key Milestones into one new hardware and/or new software release, as long as such cumulative corrections will not delay the final Milestone according to the Milestone Plan (“Cumulative Correction”). In case of a Cumulative Correction of a Key Milestone(s) that is/are accepted by Customers, such Key Milestone(s) will be deemed accepted. For the avoidance of doubt, nothing in this paragraph shall be construed to limit Contractor’s obligations for liquidated damages as set forth in Exhibit C for (i) Delay in delivery after the scheduled delivery date of the Cumulative Correction, or (ii) non-conformance of a Cumulative Correction.

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Should Contractor be unable to remedy the nonconformance in accordance with either Section 4.3.1 or Section 4.3.2, the Parties shall consult forthwith in good faith to determine the timing and delivery by Contractor of the replacement of the SDR-BB with a hardware based implementation of a baseband consisting of terrestrial and satellite functionality complying with the Specification set forth in the applicable Exhibit Set. For the avoidance of doubt, nothing in this paragraph shall be construed to limit Contractor’s obligations for liquidated damages pursuant to Section 4.3.1 or Section 4.3.2. Subject to Customer’s applicable termination rights according to Section 16.1.2 (c), this shall be the sole and exclusive remedy for Customers in case of Contractor’s nonconformance with the Exhibit Set as described in this Section 4.3.

4.4 Deemed Acceptance. If Customers provide written feedback with acceptance of a Key Milestone, in accordance with Section 4.2, the Key Milestone and all Deliverables associated with the Key Milestone shall be deemed accepted by the Customers. If Customer(s) (i) fail to provide written feedback within four (4) weeks from notice and delivery of Contractor on completion of a Key Milestone, in accordance with Section 4.2, or (ii) fail to detail or reasonably demonstrate nonconformance of Deliverables with Specification, in accordance with Section 4.2, the Key Milestone and all Deliverables associated with the Key Milestone shall be deemed accepted by the Customers.

Contractor’s sole obligation with respect to achieving acceptance shall be to provide Deliverables and all documentation required by Section 4.1 that conform in all material respects with the Specification according to the Acceptance Test, or as will be agreed by the Parties at a later time.

4.5 Final Acceptance. The final Key Milestone shall be accepted or not accepted by Customers in accordance with Sections 4.1 through 4.4, except that any Customer shall be permitted to request an extension of the acceptance review period set forth in Section 4.2, which shall not exceed an additional four (4) weeks. Such request shall not be unreasonably denied by Contractor. Upon such acceptance by all Customers, the obligations of the Contractor with respect to the respective Exhibit Set shall be deemed completed, subject to any on-going warranty, maintenance or other obligations set forth in this Contract.

4.6 Testing. The Acceptance Tests and acceptance criteria will be mutually agreed by the Parties and conducted by Customers, Subcontractors of Customers, or Contractor, as agreed between the Parties in the Exhibit Set, or as will be agreed by the Parties at a later time. Customers shall approve any results of such tests.

5. Changes

5.1 Product Changes.

5.1.1 Change Request Process. Any Party may request changes in a Specification or a Statement of Work during a Project. Without undue delay upon receipt of such a request from a Customer, or concurrent with its own request, Contractor shall evaluate the requested changes and inform Customers of the effects associated with such changes, including the effects on non-recurring engineering costs, prices and the applicable Milestone Plan schedule and to Contractor’s best knowledge at the time of change request any third party Intellectual Property licenses that are required as a result of the change. If the changes requested by the Customer are technically unfeasible or technically or commercially unreasonable for Contractor, then Contractor shall reasonably substantiate this unfeasibility or unreasonableness and may decline the change; otherwise, the Parties shall negotiate in good faith to find a mutually acceptable solution to implement the changes, agree on the non-recurring

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engineering costs therefore and amend the respective Exhibit Set accordingly. Any amendment of the Milestone Plan proposed by Contractor for the implementation of the change shall be in accordance with additional time periods reasonably necessary for Contractor to implement the change and any amendment to the non-recurring engineering costs and price proposed by Contractor shall be consistent with Contractor’s pricing as applied to similar Services and/or Deliverables under the original Project unless a need for a different pricing due to change in Contractor’s cost basis is reasonably substantiated by Contractor.

5.1.2. Writing Requirement. Any such changes to the Specification and amendments to any Exhibit Set shall only be valid if documented in writing and signed by authorized representatives of the Parties. Should the Parties fail to mutually agree on a requested change, the non-recurring engineering costs or the necessary amendments to the respective Exhibit Set, the Project shall be executed according to the latest mutually agreed upon Specification.

5.2 Addition of New Customers.

Upon the joint written request of the Customers, the Parties shall mutually agree to amend this Contract to add up to two (2) additional third party(ies) as Customers (either for purposes of this Contract, as a whole, or for purposes of a specific Project only). Without undue delay upon receipt of such a request from Customers that a new party is interested in joining this Contract as a whole or for purposes of a specific Project, Contractor shall evaluate any requested changes to the Contract and applicable Exhibit Sets and inform Customers of the effects associated with such changes, including the effects on non-recurring engineering costs, prices and the applicable Milestone Plan schedule, and the Parties shall mutually agree in writing on any required amendments to the same. For purposes of clarification, with respect to the Initial Exhibit Set the addition of one or more additional Customers shall not give rise to an increase in the Purchase Price, provided that Exhibit A and Exhibit B of the Initial Exhibit Set remain unchanged.

6. Price

6.1 Estimated Price for T&M Projects. For each T&M Project, Contractor shall estimate, in good faith and based on and taking into consideration all facts of the T&M Project as timely made known to Contractor in writing by Customers, the approximate amount of charges, which will be specified in the applicable Statement of Work (the “Estimated Price”). Contractor will perform the Services and develop the Deliverables on a time and materials basis as described in the applicable Exhibit Set and each Customer shall, as consideration therefore, pay to Contractor the applicable charges according to the hours worked. In the case that Contractor foresees that in order to perform the Services and develop the Deliverables, Contractor will exceed the hours set forth in the Estimated Price, Contractor shall notify Customers in advance in writing of the same. Upon receipt of such notice, if Customers desire for Contractor to continue such Services, Customers shall authorize Contractor in writing to exceed the Estimated Price, in which case Contractor shall promptly continue its Services. In the case where Customers do not authorize Contractor in writing to exceed the Estimated Price, Contractor shall stop performing the Services and developing the Deliverables and the applicable Statement of Work shall immediately terminate. Following the end of each applicable month, or other agreed upon billing interval, Contractor shall provide to Customers a project sheet showing the individual and his or her hours worked each day during the billing period (a “Project Time Sheet”).

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6.2 For Fixed Fee Projects. For each Fixed Fee Project, Contractor shall perform all Services for an amount specified in the applicable Payment Plan and Milestone Schedule, unless such amount has been increased or decreased in accordance with this Contract. The Purchase Price for the Initial Project hereunder, as described in the Initial Exhibit Set, is a firm fixed price of thirty three million three hundred thousand Euros (€33.300.000), which price may be amended from time to time solely in accordance with this Contract.

6.3 Milestone Payments. The prices referred to in Sections 6.1 and 6.2 shall be full consideration for the satisfactory and timely performance of Services and delivery of Deliverables, each in accordance with the requirements of this Contract. For the avoidance of doubt, payment is not deemed acceptance of any Milestone.

6.4 Taxes. All prices and fees set forth in this Contract or in the relevant SOW, as applicable, are exclusive of sales and use taxes, excise taxes, custom duties, consumption, value-added or other similar taxes (“other Taxes”) properly assessed on the sale of the Services and delivery of the Deliverables from Contractor to Customer. Provided such foregoing taxes and charges are adequately accounted for, properly invoiced, and separately stated at the same time as the payments are invoiced on the same invoice, each Customer will be responsible for all such foregoing taxes and charges with respect to the prices and fees they pay. Notwithstanding anything to the contrary herein, Contractor shall be responsible for paying any and all duties, taxes, tax-like charges or tax-related surcharges except for Other Taxes as defined above, including such taxes determined by Contractor’s income, net worth, franchise or property, or otherwise related to the Deliverables and the performance of the Services (“Contractor Taxes”). In the event that Customers provide Contractor with a direct pay permit, sale for resale exemption certificate, sales tax exemption certificate or other applicable exemption certificate, Contractor will not invoice the respective Party for Other Taxes covered by such exemption certificate(s). The Parties shall cooperate to minimize all Other Taxes and Contractor Taxes, including taking all steps within their power that are necessary to ensure that all applicable exemptions and tax credits are available in respect of the Deliverables and Services. In the event any governmental or taxing authority imposes or assesses Other Taxes or Contractor Taxes against a Party hereto for which the other party is responsible pursuant to this Section 6.4, the responsible Party shall indemnify the other Party or Parties for such Taxes paid by the Party entitled to indemnification and shall reimburse such Party or Parties for related costs of defense (whether or not such Party actually pays the subject Taxes). The Party that is assessed will take all reasonable steps to defend any such assessment. The responsible Party or Parties will be entitled to be promptly notified within 15 days of any assessment or at the beginning of any applicable revenue audit and to all reasonable information related to the assessment of such Taxes, and, at its option and expense, may assume control of any defense or submission in respect of such assessed Taxes.

7. Payment Terms

7.1 Invoicing: Payment Milestones for each project shall be set forth in each respective Exhibit Set. Upon achievement of each Payment Milestone, Contractor shall submit an invoice to Customers in accordance with the applicable Payment Plan. All invoices required to be delivered by Contractor hereunder shall be submitted by facsimile and overnight courier to Customers (original and one (1) copy) at the addresses set forth in the Exhibit Set, or to such address as Customer(s) may in writing to Contractor reasonably in advance.

7.2 Payment Conditions. Customers shall pay each invoiced amount within thirty (30) days after Customers receive the invoice and certification.

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7.3 Late Payments. In the event either Party fails to pay an amount within forty five (45) days after the applicable due date, Contractor shall be entitled to interest at the rate of the lesser of ten percent (10%) per annum or the maximum rate permitted by applicable law on the unpaid balance of the payment from and after the due date until such amount is paid.

8. Warranty

8.1 Mutual Warranties of Organization; Good Standing, Qualification and Authorization. Each Party represents and warrants that:

8.1.1 It is a validly existing legal entity in good standing under the laws of the jurisdiction in which it was formed;

8.1.2 It is duly qualified and in good standing to do business in all jurisdictions in which the business conducted (or to be conducted) by it makes such qualification necessary, except for those jurisdictions where the failure to be so duly qualified will not have a material adverse effect on its business or the performance of its obligations under the Contract;

8.1.3 It has full power and authority to enter into the Contract and to perform its obligations hereunder; and

8.1.4 The Contract has been duly and validly executed and delivered by such Party and constitutes a valid and legally binding obligation of such Party.

8.2 Product Deliverables Warranties.

8.2.1 Contractor warrants that all Product Deliverables shall conform in all material respects with the applicable Specification through the Warranty Period. Subject to the foregoing, Contractor does not warrant that any software Deliverable will operate uninterrupted or error-free in the combinations or in the environment as selected by Customers.

8.2.2 To claim a nonconformance of the Product Deliverables in accordance with Section 8.2.1, Customer(s) shall be responsible at their own expense to (i) conduct a technically reasonable analysis to determine the cause of the nonconformance and (ii) demonstrate the nonconformance of the Product Deliverables, enabling the Contractor to reproduce the nonconformance.

8.2.3 Contractor warrants that all Services shall be performed in a skillful and workmanlike manner consistent with the state of the art practiced at Contractor in general.

8.2.4 In case of a nonconformance of the Product Deliverables in accordance with Sections 8.2.1, 8.2.2 or 8.2.3, Contractor shall, at no additional charge to Customers, use commercially reasonable efforts to correct the nonconformance within a commercially reasonable time. Should Contractor be unable to correct the nonconformance, the Parties shall consult forthwith in good faith to determine the timing and delivery by Contractor a replacement for the SDR-BB with a hardware based implementation of a baseband consisting of terrestrial and satellite functionality complying with the Specification set forth in the applicable Exhibit Set. This constitutes Contractor’s sole obligation and Customer’s sole remedy in the event of a nonconformance of a Product Deliverables during the Warranty Period.

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8.2.5 With respect to the Product Deliverables or Service the warranty period under this Section 8.2 shall be set forth in the Exhibit Set (the “Warranty Period”).

8.2.6 The Parties warrant that the execution and performance of the Contract does not and will not violate any other contract or obligation to which it is a party.

8.2.7 Subject to a separate agreement between the Parties Contractor is prepared to render maintenance for the Product Deliverables for the period of 12 months starting with expiration of the Warranty Period, or as otherwise stated in the applicable Exhibit Set.

8.3 No Virus. Contractor warrants that no code, device or routine (including, without limitation, time bombs, back doors or drop dead devices) that would have the effect of disabling or otherwise shutting down all or any portion of any software comprising any portion of any Deliverable (“Viruses”) is coded or introduced into any Deliverable any time prior to Final Acceptance (unless Customers expressly authorize the inclusion of a disabling code). If a Virus is present in any portion of any Deliverable prior to or during the Warranty Period and it is determined that the introduction of the Virus was attributable to Contractor, Contractor shall use reasonable efforts to assist Customers in removing or reducing the effects of the Virus, and to assist Customers with mitigating any such losses of operational efficiency or data that arise as a result of the Virus. This constitutes Contractor’s sole obligation and Customers’ sole remedy in the event of Viruses in any Product Deliverables during the Warranty Period. In no event shall Contractor invoke any Virus or disabling code at any time, including upon expiration or termination of the Contract (in whole or in part) for any reason, without Customers’ prior written consent.

8.4 Deliverable Data and Documentation. Contractor warrants that the documentation delivered under the Contract shall be complete, correct and up to date, and shall otherwise conform to the requirements of this Contract. As Contractor’s sole obligation and Customers’ sole remedy, Contractor shall provide a correction to any documentation when Contractor is notified or otherwise becomes aware of any such defect.

8.5 Intellectual Property. Contractor represents and warrants that as of EDC, to the best of Contractor’s legal department and/or Contractor’s SDR business unit management (Mr. Ronen Ben-Hamou) knowledge, no claims have been brought against Contractor by a third party alleging that any Deliverable identified in the Exhibit Set as of EDC or the use of the Deliverables, or the sale of Product Deliverables infringes any Intellectual Property Right of a third party. In the event that any claim is filed in court against Contractor after EDC alleging that any Deliverable identified in the Exhibit Set or the use of the Deliverables or the sale of Product Deliverables infringes any Intellectual Property Right of a third party, Contractor represents and warrants that it shall provide written notice thereof to Customers.

Each Customer represents and warrants that as of EDC, to the best of Customer’s legal department and/or Customer’s business management knowledge, no claims have been brought against Customer in court by a third party alleging that the CFI or any portion thereof identified in the Exhibit Set as of EDC or the use of the CFI or any portion thereof, or the sale of products incorporating the CFI or any portion thereof infringes any Intellectual Property Right of a third party. In the event that any claim is filed in court against Customer after EDC alleging that CFI or any portion thereof identified in the Exhibit Set or the use of the CFI or any portion thereof, or the sale of products incorporating the CFI or any portion thereof infringes any Intellectual Property Right of a third party, Customer represents and warrants that it shall provide written notice thereof to Contractor.

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8.6 Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH IN THIS SECTION 8, THE SERVICES AND DELIVERABLES AND THE SDR MODEM PLATFORMS ARE PROVIDED “AS IS”, WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND (WHETHER EXPRESS, IMPLIED OR STATUTORY), INCLUDING, WITHOUT LIMITATION, ANY IMPLIED CONDITIONS OR WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS. THIS SECTION 8 STATES CONTRACTOR’S SOLE WARRANTY OBLIGATIONS UNDER THIS CONTRACT.

8.7 Exclusions. Contractor shall not be liable under this Section 8 for any Product Deliverables that (i) have been altered, damaged, or modified by Customers or its Subcontractors or any other third party other than Contractor’s Subcontractor(s), or (ii) have errors that are caused by Customer's or their Subcontractors’ negligence or willful act or any other causes beyond the control of Contractor or its Subcontractors. The warranty set forth in this Section 8 shall not apply with respect to any CFI, information, instructions, data or other items provided by Customers or their Subcontractors. Contractor’s liability under this Section 8 shall also be excluded to the extent the breach of the warranty is caused by a combination of the Product Deliverables with any software, hardware or item other than supplied by Contractor to Customers explicitly for such combination or contemplated by the applicable Exhibit Set. The warranties shall not apply to any Product Deliverables to the extent damaged by a test in which the Deliverable is used not in compliance with its Specifications or subject to mishandling, misuse, neglect, repair, alteration, assembly that alters physical or electrical functions, except as may be caused by Contractor or Contractor’s Subcontractor(s). All samples and prototypes provided by Contractor under this Contract are provided solely for testing and development purposes as set forth in this Contract or the applicable Statement of Work. Contractor shall not be liable under this Contract for any use of the samples or prototypes for other purposes.

8.8 Disclaimer. The SDR Modem Platform(s) are not designed or intended for use in online control of aircraft, air traffic, aircraft navigation or aircraft communications; in the design, construction, operation or maintenance of any weapons systems or nuclear facility; or in the design, construction, operation or maintenance of any applications intended to support or sustain life where personal injury or death may occur. Such use of any Contractors Deliverables shall be at Customers risk and Contractor disclaims any liability for such use.

8.9 Quality Assurance. Contractor shall maintain and comply with a written quality assurance program and procedure as those identified in the standard Contractor’s System Development Handbook Process.

9. Personnel and Key Personnel

9.1 Personnel Qualifications. Contractor shall ensure that its personnel (including Subcontractors personnel) are reasonably qualified to perform the Services and create the Deliverables as described in the applicable Statement of Work.

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9.2 Assignment of Key Personnel. Contractor will use commercially reasonable efforts to keep the key individuals identified as “Key Personnel” in the applicable Statement of Work dedicated to the performance of this Contract. In the event that it is necessary to replace a Key Personnel, such replacement shall have equivalent or better qualifications as the Key Personnel being replaced and shall be sufficiently briefed by the former Key Personnel, in order to minimize disruption of the Project. Prior to replacing any Key Personnel, Contractor shall provide Customers with information reasonably requested by Customers regarding such person’s qualifications, and Contractor shall, at Customers’ request, meet with Customers to discuss any concerns Customers has with regard to the replacement and shall take such concerns into consideration prior to assigning such person to the Customers project. For the avoidance of doubt, Contractor shall always be free to take any measure with regard to Key Personnel which it is obliged to take under any applicable law.

9.3 Program Managers. Each Party shall appoint an executive to act as program manager who shall be entitled to take or provide for day-to-day decisions necessary for performance of its company’s obligations hereunder and for managing the relationship between the Parties (the “Contractor Program Manager” or the “Customers Program Managers,” as the case may be). The Program Managers shall act as the primary contact for all day-to-day and operational issues.

10. Major Subcontractors

10.1 Selection of Major Subcontractors. Selection and engagement of any Major Subcontractor, whether as an initial selection or as a replacement selection, shall be subject to the other Parties’ prior written approval, not to be unreasonably withheld. Each Party shall be fully responsible for the acts and omissions of any of its Major Subcontractors hereunder, including any non-compliance with the provisions of this Contract or damages caused by its Major Subcontractors, in the same manner as if caused by the respective Party itself, engaging such Major Subcontractor. Except as provided in Section 16, any failure by a Major Subcontractor to meet its obligations hereunder shall not constitute a Force Majeure Event and shall not relieve the respective Party from meeting any of its obligations under this Contract. The Parties approval of any Major Subcontractor or subcontractor shall not relieve the Party engaging such Major Subcontractor or subcontractor from any obligations or responsibilities under this Contract. The Parties shall be free to choose and cooperate with any other Subcontractors, which are not Major Subcontractors. Contractor hereby approves the appointment of HNS (as defined in the Exhibit A of the Initial Exhibit Set) as one of Customers’ Major Subcontractors.

10.2 Step-In Payment Rights. Contractor shall notify Customers within five (5) Business Days of it becoming aware of the occurrence of an event that with or without the passage of time or the giving of notice, or both, would give rise to a right of termination or a right to receive damages or a payment of penalties under any of Contractor’s Major Subcontracts (a “Subcontract Default”). Customers shall have the right (but not the obligation) to cure any such Subcontract Default, including by making any payment due there under. The price shall be reduced by the amount of the cost to cure such Subcontract Default paid by Customers pursuant to the preceding sentence. Such reduction in the price shall be applied against and used to reduce the next payment due to Contractor under the Milestone Schedule (which shall be adjusted accordingly). No action on the part of Customers under this Section shall relieve Contractor from any obligations or responsibilities under this Contract or the Major Subcontract.

10.3 No Privity of Contract. Nothing in this Contract shall be construed as creating any contractual relationship between Customers and any Major Subcontractor or Subcontractor of Contractor, or between Contractor and any Major Subcontractor or other Subcontractor of a Customer. Each

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Party engaging a Subcontractor (or Customers jointly when Customers have jointly engaged a Subcontractor) shall be responsible to the other Parties (or to Contractor, as applicable) for the acts or omissions of its Subcontractors, including any non-compliance with the provisions of this Contract or damages caused by its Subcontractors, in the same manner as if caused by such Party itself. Except as provided in Section 16, any failure by a Major Subcontractor or Subcontractor of a Party to meet its obligations shall not constitute a Force Majeure Event and shall not relieve the Party engaging such Major Subcontractor or Subcontractor from meeting any of its obligations under this Contract.

11. Access to Works in Process

11.1 General. In the event Contractor does not respond to a request for information regarding the progress of the Services or Deliverables, and explicitly made by a Customer in writing, at the latest during the next regular Project meeting, a Customer may notify Contractor thereof in writing, setting a reasonable time period for Contractor to provide such information and indicating that it will exercise its right under this Section 11 if the information is not provided. Subject to Section 16, after elapse of such time period, Contractor shall grant Customers with reasonable access, during normal working hours and subject to Customers providing Contractor with reasonable advance notice, for the sole purpose to inspect the respective work-in-process in order to find out the requested information. While on-site at Contractor’s facility, Customers shall require its personnel to comply with Contractor’s normal and customary safety and security policies and procedures (as enforced by Contractor with respect to its own employees) of which Customers has received written notice (including a copy of such policies and procedures).

11.2 On-Site Facilities for Customers’ Personnel. To the extent it is reasonably required in accordance with Section 11.1 above for Customers’ personnel (which may include other Customers Subcontractors identified in the applicable Statement of Work) to work with Contractor at Contractor’s facilities, Contractor shall provide the necessary office facilities at Contractor’s facilities for such purpose.

12. Intellectual Property Rights

12.1 Definitions. For the purposes of this Section 12, the following terms shall have the following definitions:

12.1.1 “Contractor Background IP” means (i) all IP owned or controlled by Contractor as of EDC, and incorporated in or commercially reasonably necessary for the use (as expressly provided for herein) of any Deliverable or use or manufacture of any SDR Modem Platform, and (ii) all IP conceived or developed by Contractor after EDC other than in connection with this Contract, and incorporated in or commercially reasonably necessary for the use (as expressly provided for herein) of any Deliverable or SDR Modem Platform.

12.1.2 “Foreground IP” shall mean all IP developed as a result of or arising from Contractor’s or Contractor’s Subcontractors or either Customer’s or Customer’s Subcontractors (as applicable) performance under this Contract, which is incorporated in or commercially reasonably necessary for the use of any Deliverable or use or manufacture of an SDR Modem Platform.

12.1.3 “Intellectual Property” or “IP” means all ideas, information, concepts, discoveries, inventions, methods or processes, specifications, technology, software and other works of authorship, improvements and know-how (whether or not patentable and whether or not

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reduced to practice), and all associated rights in and to any patents, patent applications (including any reissues, continuations, continuations-in-part, revisions, extensions and reexaminations thereof), mask works, copyrights and trade secrets, and all rights in and to any proprietary or confidential information.

12.1.4 “Customers Background IP” means (i) all IP owned or controlled by each Customer or its Subcontractors, as of EDC, and incorporated in or commercially reasonably necessary for the use (as expressly provided for herein) of any Deliverable or use or manufacture of any SDR Modem Platform or the performance of any Services hereunder and (ii) all IP conceived or developed by or on behalf of Customers on or after EDC other than in connection with this Contract, and incorporated in or commercially reasonably necessary for the use (as expressly provided for herein) of any Deliverable or SDR Modem Platform.

12.1.5 For purposes of the foregoing definitions, “controlled” includes IP that is licensed to such Party and is provided as its own and /or is incorporated in the Deliverables or CFI.

12.2 Ownership of IP and IP Rights.

12.2.1 Contractor IP  – Subject to the licenses granted in Section 12.3.4, as between Contractor and Customers, all Contractor Background IP and Contractor Foreground IP shall be the sole and exclusive property of Contractor. Without limitation, Contractor shall be entitled to use the Contractor Foreground IP for the development, manufacture and sale of products outside the scope of this Contract as well as for the manufacture and sale of the SDR Modem Platform to any third party.

12.2.2 Customers IP – Subject to the licenses granted in Section 12.3.1, as between Contractor and Customers, all Customers Background IP and Customers Foreground IP shall be the sole and exclusive property of the respective Customer.

12.3 License Rights.

12.3.1 Grant by Customers - Development. Subject to the terms and conditions stated herein, Customers grant to Contractor and its Affiliates a fully paid-up, irrevocable (except in the case of termination of this Contract under Section 16.1.1 due to Contractor’s material breach), non-transferable, worldwide, nonexclusive right and license to all Customers Background IP and Customers Foreground IP solely as necessary for Contractor to perform Services and for the development of the Deliverables under this Contract (not for commercial use).

12.3.2 Grant by Customers – Commercialization. Subject to Customers’ grant of Final Acceptance in connection with the Initial Exhibit Set and to the terms of Exhibit C hereto, Customers shall grant to Contractor a non-exclusive, non-transferable, worldwide license to any Customers-owned (i) Customers Background IP and (ii) Customers Foreground IP solely for purposes of commercialization of any SDR Modem Platform.

12.3.3 Third Party IP – Commercialization. Contractor shall be solely responsible at its sole expense for obtaining any and all rights to any third party modules and IP necessary for the manufacture, use, sale, or commercialization of the SDR Modem Platform, under separate agreements, including, without limitation, all necessary IP and other rights required from HNS in connection with Contractor’s sale or distribution of HNS’ GMR1-3G software.

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12.3.4 Grant by Contractor. Subject to the terms and conditions stated herein, Contractor grants to the Customers a fully paid-up, non-exclusive, irrevocable, perpetual, transferable, worldwide right and license under Contractor Background IP and Contractor Foreground IP to use and have used (including, without limitation, by HNS) the Deliverables for the sole and exclusive purpose of developing, testing, integrating, and demonstrating the SDR Mobile Platform (not for commercial use).

12.4 General Technology Evolution. Contractor will reasonably inform the Parties of any improvements to SDR Modem Platform designs Contractor makes that are (a) compatible with any SDR Modem Platform developed under this Contract and (b) are made generally available to other customers in Contractor’s general course of business and not subject to any non-disclosure or exclusivity obligation of Contractor. Delivery of any improvements to SDR Modem Platform design to Customers shall be made in accordance with a separate maintenance agreement to be negotiated by the Parties. For the avoidance of doubt, this Section 12.4 shall not be construed to require Contractor to develop any upgrades or provide additional functionality to the SDR Modem Platform.

12.5 Bankruptcy Provision. All rights and licenses granted to a Party hereunder are, for purposes of Section 365(n) of the United States Bankruptcy Code (the “Bankruptcy Code”), licenses of intellectual property within the scope of Section 101 of the Bankruptcy Code. Both Parties acknowledge that the other Party, as a licensee of such rights and licenses hereunder, will retain and may fully exercise all of its rights and elections under the Bankruptcy Code.

13. Intellectual Property Rights Indemnity

13.1 Indemnification by Contractor. Except as set forth in Section 13.2 Contractor, at its own expense, shall defend, or at its option settle, any suit, action, or other proceeding brought against Customer(s), its Affiliates or their respective directors, officers, employees, and agents (“Customer Indemnified Party”), by a third party based on an infringement by the prototype of the SDR Modem Platform, any other Deliverable, or the performance of the Services, of any Intellectual Property right (excluding trademarks) of a third party (“IP Claim”), and shall indemnify and hold each Customer Indemnified Party harmless against all damages finally awarded against the Customer Indemnified Parties and, expenses and costs (including reasonable attorneys’ fees) incurred by Customer Indemnified Parties, in each case as a result of any such IP Claim or resulting from the settlement of such IP Claim. The obligations of Contractor set forth in this Section 13 shall continue for a period of four (4) years following Final Acceptance, and shall further continue thereafter for successive one (1) year periods after the end of such four (4) year period provided that a Customer (or its Subcontractors or designees) has commercialized or made substantial progress toward the commercialization of mobile terminals comprising Contractor’s Deliverables during the preceding one (1) year period and has provided substantial evidence of the commercialization or substantial progress of the same to Contractor. Contractor’s obligations set forth in this Section 13 shall in any event cease after a period of (8) eight years from the Final Acceptance. The conditions to indemnification specified in Section 13.8 shall apply to IP Claims subject to indemnification as described in this paragraph.

13.2 Exceptions to Indemnification by Contractor. Contractor shall only be liable under this Section 13 for an IP Claim provided that (i) the infringement is caused by the SDR Modem Platform itself and does not result from any satellite application of the SDR Modem Platform and (ii) the infringement is caused by such part of the SDR Modem Platform that Contractor is responsible to develop under this Contract and not by any part contained in the SDR Modem Platform as delivered by Contractor which has been provided to Contractor as CFI by Customer(s) or any of

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Customer(s)’s subcontractors or has been incorporated into the SDR Modem Platform by Customer(s) or any of its subcontractors and (iii) the infringement is not caused by the use of any SDR Modem Platform provided by Contractor hereunder in combination with other items not explicitly provided for such combination by Contractor or otherwise contemplated by the applicable Exhibit Set and (iv) the infringement is not caused by Customer(s)’s or any Customer(s) subcontractor’s modification of the SDR Platform provided by Contractor hereunder and (v) the third party Intellectual Property right is not essential for compliance with industry standards, whereby essential shall mean that it is not possible on technical grounds (where no commercially reasonable alternative exists), taking into account normal technical practice and the state of the art generally available at the time of standardization, that the SDR Modem Platform and the technology incorporated in the SDR Modem Platform comply with the respective industry standards without infringing such third party Intellectual Property right.

13.3 Indemnification by Customer(s). Except as set forth in Section 13.4, Customer(s), at its (their) own expense, shall defend, or at its (their) option settle, any suit, action, or other proceeding brought against Contractor, its Affiliates or their respective directors, officers, employees, and agents, (“Contractor Indemnified Party”), by a third party based on infringement by any CFI provided by Customer(s) of any Intellectual Property right (excluding trademarks) of a third party (“IP Claim to Contractor”), and shall indemnify and hold each Contractor Indemnified Party harmless against all damages finally awarded against the Contractor Indemnified Parties and expenses and costs (including reasonable attorneys’ fees) incurred by and/or awarded against the Contractor Indemnified Party, in each case as a result of any such IP Claim to Contractor or resulting from the settlement of such IP Claim. The obligations of Customers as set forth in this Section 13.3 shall continue for the same period as Contractor’s obligations set forth in Section 13.1. The conditions to indemnification specified in Section 13.8 shall apply as well to IP Claims subject to indemnification as described in this paragraph.

13.4 Exceptions to Indemnification by Customer(s). Customer(s) shall have no liability under this Section 13 for an IP Claim to Contractor to the extent arising from: (i) use of any CFI provided by Customer(s) hereunder not in accordance with this Contract; or (ii) Contractor’s or any third party’s modification of the CFI provided by Customer(s) hereunder; or (iii) Contractor’s failure to employ modifications or replacements of the CFI made available by Customer(s) which conform in all material respects to the applicable specification; or (iv) the use of any CFI in combination with other items not explicitly provided for such combination by Customer(s).

13.5 Additional Measures of Contractor. If the use of the SDR Modem Platform is enjoined based on an IP Claim, Contractor shall, without undue delay at its own discretion and expense (i) procure for Customer(s) the right to use the infringing item; or (ii) modify the infringing item so that it becomes non-infringing while remaining in compliance in all material respects with the Specification. If (i) or (ii) cannot be obtained under commercially reasonable conditions, Contractor shall meet with Customer(s), at Customer(s)’s request, to address the matter and reach an equitable solution reasonably acceptable to the Parties on the timing and delivery by Contractor of the replacement of the SDR-BB with a hardware based implementation of a baseband consisting of terrestrial and satellite functionality complying with the Specification set forth in the applicable Exhibit Set.

13.6 Exclusive Remedy. This Section 13 states (i) Contractor’s entire liability and Customer(s)’s exclusive remedy for any claim of infringement of the Deliverables and (ii) Customer(s)’s entire liability and Contractor’s exclusive remedy for any claim of infringement of the CFI, and any further liability of either Party for the infringement of any intellectual property rights of third

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parties by any Deliverables or CFI, respectively, shall be excluded. Each Party’s liability under this Section 13 shall be subject to the cap as set forth in Section 25.2.

13.7 Conditions to Indemnification. The right to any indemnity set forth in this Contract shall be subject to the following conditions:

13.7.1 Notice. The Party seeking indemnification (the “Indemnified Party”) shall without undue delay advise the other Party (the “Indemnifying Party”) in writing of the filing of any claim for which it seeks indemnification upon receipt thereof and shall provide the Indemnifying Party, at its written request, with copies of all documentation relevant to such claim. Within thirty (30) days following receipt of written notice from the Indemnified Party, but no later than a reasonable time before the date on which any response to a complaint or summons is due, the Indemnifying Party shall notify the Indemnified Party in writing if the Indemnifying Party elects to assume control of the defense or settlement of that claim (a “Notice of Election”).

13.7.2 Control of Action. If the Indemnifying Party delivers a Notice of Election relating to any claim for indemnification within the required notice period, so long as it is actively defending such claim, the Indemnifying Party shall be entitled to have sole control over the defense and settlement of such claim; provided that (i) the Indemnified Party shall be entitled to participate in the defense of such claim and to employ counsel at its own expense to assist in the handling of such claim; (ii) where the Indemnified Party is so represented, the Indemnifying Party shall keep counsel of the Indemnified Party informed of each step in the handling of any such claim; (iii) the Indemnified Party shall provide, at the Indemnifying Party’s request and expense, such assistance and information as is available to the Indemnified Party for the defense and settlement of such claim; and (iv) the Indemnifying Party shall inform the Indemnified Party of any non-monetary settlement of such claim or ceasing to defend against such claim.

13.8 Right of Indemnified Party to Defend/Settle. If the Indemnifying Party does not deliver a Notice of Election relating to any claim within the required notice period or fails actively to defend such claim, the Indemnified Party shall have the right to defend and/or settle the claim. The Indemnifying Party shall without undue delay reimburse the Indemnified Party in accordance with the provisions of this Section 13.

13.9 Support Efforts.

13.9.1 Support Efforts by Contractor. In respect of any request of license brought against any Customer Indemnified Party by a third party based on an infringement by the prototype of the SDR Modem Platform, any other Deliverable, or the performance of Services, of any Intellectual Property Right (excluding trademarks) of a third party, Contractor shall use all reasonable commercial efforts to support Customers regarding such request of license through activities such as technical analysis of the request and evaluation of its merits.

13.9.2 Support Efforts by Customers. In respect of any request of license brought against any Contractor Indemnified Party by a third party based on an infringement by any CFI provided by Customers of any Intellectual Property Right (excluding trademarks) of a third party, Customers shall use all reasonable commercial efforts to support Contractor regarding such request of license through activities such as technical analysis of the request and evaluation of its merits.

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14. General Indemnity

14.1 Contractor’s Indemnity. Contractor shall indemnify, defend and hold harmless Customers and its/their Affiliates, and their employees, officers, directors, agents and representatives from and against all claims, damages, penalties, fines, costs and expense (including reasonable attorneys’ fees) finally awarded, based on (i) third party claims of injury to persons to the extent caused by or resulting from a negligent act or omission or willful misconduct of Contractor or its employees, Subcontractors, agents or representatives; or (ii) claims of Contractor’s failure to comply with applicable laws.

14.2 Customers’ Indemnity to Contractor. Each Customer shall indemnify, defend and hold harmless Contractor and its Affiliates, their employees, officers, directors, agents and representatives from and against all claims, damages, penalties, fines, costs and expense (including reasonable attorneys’ fees) finally awarded, based on (i) third party claims of injury to persons to the extent caused by or resulting from a negligent act or omission or willful misconduct of such Customer or its employees, Subcontractors, agents or representatives; or (ii) claims of such Customer’s failure to comply with applicable laws.

14.3 Customers’ Indemnity to One Another. Each Customer shall indemnify, defend and hold harmless each other Customer and its Affiliates, their employees, officers, directors, agents and representatives from and against all claims, damages, penalties, fines, costs and expense (including reasonable attorneys’ fees) finally awarded, based on (i) third party claims of injury to persons to the extent caused by or resulting from a negligent act or omission or willful misconduct of such Customer or its employees, Subcontractors, agents or representatives; or (ii) claims of such Customer’s failure to comply with applicable laws and obligations thereunder, or its obligations under this Contract.

15. Confidential Information

15.1 Definition of Confidential Information.

15.1.1 Definition. For the purpose of this Contract, “Confidential Information” means all confidential or proprietary information in whatever form, that is transmitted, disclosed or otherwise made available by such Party (hereinafter referred to as the “Disclosing Party”) to another Party hereto (hereinafter referred to as the “Receiving Party”) pursuant to this Contract and: (i) is identified as proprietary or confidential by means of a written legend thereon, or (ii) if disclosed orally, is identified as proprietary or confidential at the time of initial disclosure and then summarized in a written document, with the Confidential Information specifically identified, that is supplied to the Receiving Party within ten (10) days of initial disclosure. In the case of any Party, Confidential Information also shall include, whether or not designated “Confidential Information,” (a) correspondence under this Contract and (b) all information concerning a Party (and/or its Affiliates) regarding its operations, affairs and businesses, its financial affairs, and its relations with its customers, employees and service providers (including business plans, customer lists, customer information, account information and consumer markets). This Contract (and the exhibits, appendices and attachments) shall be deemed Confidential Information of the Parties.

15.1.2 Exceptions. Confidential Information shall not include any information disclosed by a Disclosing Party that (i) is already known to the Receiving Party at the time of its

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disclosure, as evidenced by written records of the Receiving Party, without an obligation of confidentiality at the time of disclosure; (ii) is or becomes publicly known through no wrongful act of the Receiving Party; (iii) is independently developed by the Receiving Party without use of the Disclosing Party’s Confidential Information as evidenced by written records of the Receiving Party; or (iv) is obtained by the Receiving Party from any third party without restriction and without breach of any confidentiality obligation by such third party.

15.2 Terms for Handling and Use of Confidential Information. Subject to Section 12.3, for a period of five (5) years after receipt of any Confidential Information, the Receiving Party shall not disclose Confidential Information that it obtains from the Disclosing Party to any person or entity except its employees, Affiliates, attorneys, agents and Subcontractors, or another Party hereto who have a need to know, who have been informed of and have agreed in writing (or, in the case of employees or attorneys, are otherwise subject to confidentiality obligations consistent with the obligations set forth herein) to abide by the Receiving Party’s obligations under this Section 15. The Receiving Party shall use not less than the same degree of care to avoid disclosure of such Confidential Information as it uses for its own Confidential Information of like importance; but in no event less than a reasonable degree of care. Confidential Information shall be used by the Receiving Party only for the purpose of performing its obligations and exercising the rights under this Contract or as the Disclosing Party otherwise authorizes in writing.

15.3 Legally Required Disclosures. Notwithstanding the foregoing, in the event that the Receiving Party becomes legally compelled to disclose Confidential Information of the Disclosing Party, including this Contract or other supporting document(s), the Receiving Party shall provide the Disclosing Party with written notice thereof so that the Disclosing Party may seek a protective order or other appropriate remedy, or to allow the Disclosing Party to request the redaction of such portions of the Confidential Information as are not required by law to be disclosed. In any such event, the Receiving Party will disclose only such information as is legally required, and will cooperate with the Disclosing Party (at the Disclosing Party’s expense) to obtain proprietary treatment for any Confidential Information being disclosed.

15.4 Return of Confidential Information. Except with respect to any Deliverable or Confidential Information embedded in any Deliverable, upon the request of the Disclosing Party, the other Party in possession of such Confidential Information shall promptly return such Confidential Information (and any copies, extracts, and summaries thereof) to the requesting Party, or, with the requesting Party’s written consent, shall promptly destroy such materials (and any copies, extracts, and summaries thereof), except for one (1) copy which may be retained for legal archive purposes, and shall further provide the requesting Party with written confirmation of same; provided, however, where both Parties have proprietary rights in the same Confidential Information, a Party shall not be required to return such information to the other Party.

15.5 No License. Except as expressly provided in this Contract, nothing in this Contract shall be construed as granting the Receiving Party, whether by implication, estoppel, or otherwise, any license or any right to use any Confidential Information received from the Disclosing Party, or use any patent, trademark, or copyright now or hereafter owned or controlled by the Disclosing Party.

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16. Termination for Default, Excessive Force Majeure

16.1 Right of Termination.

16.1.1 Contractor’s Termination of Customer for Default. Subject to this Section 16.1.1, Contractor may terminate this Contract for a Customer’s default:

(a) if a Customer materially breaches this Contract, subject to a thirty (30) day cure period following written notice by the Contractor to all Customers of Contractor’s intent to terminate. For purposes of clarification, any Customer shall have the right (but not the obligation) to cure any other Customer’s breach, including by making any overdue payment to Contractor. In the event of a cure, the curing Customer shall have the right as determined by it in its sole discretion to either (i) continue with the Contract as-is without any changes thus allowing such breaching Customer to continue as a Party hereunder, or (ii) have the Contract terminate solely with respect to the breaching Customer, in which case the remaining parties shall negotiate in good faith any modifications to the applicable Exhibit Set necessary to reflect the breaching Customer’s removal as a party, with pricing not to exceed the then-current Project pricing reflected in the Exhibit Set.

(b) upon five (5) Business Days written notice to all Customers if a Customer (the “Affected Customer”) becomes insolvent, makes a general assignment for the benefit of creditors, suffers or permits the appointment of a receiver for its business or assets or files a voluntary petition in bankruptcy, or is the subject of a petition seeking the reorganization, liquidation or similar relief, where such petition remains undismissed or unstayed for a total of sixty (60) days. Notwithstanding the foregoing, if the non-Affected Customer(s) provide written notice to Contractor during such five (5) Business Day notice period of their desire to continue the Contract without the Affected Customer’s participation, such termination shall be deemed effective only with respect to such Affected Customer and the remaining parties shall negotiate in good faith any modifications to the applicable Exhibit Set necessary to reflect the Affected Customer’s removal as a party, with pricing not to exceed the then- current Project pricing reflected in the Exhibit Set.

16.1.2 Customers’ Termination of Contractor for Default. Subject to this Section 16.1.2, a Customer may terminate this Contract for Contractor’s default:

(a) if Contractor materially breaches this Contract, subject to a thirty (30) day cure period following written notice by such Customer to all Customers and Contractor of Customer’s intent to terminate. For the avoidance of doubt a Delay by Contractor (subject to Section 16.1.2(c)) shall not be considered a material breach of this Contract; or

(b) upon five (5) Business Days written notice to all Customers and Contractor if Contractor becomes insolvent, makes a general assignment for the benefit of creditors, suffers or permits the appointment of a receiver for its business or assets or files a voluntary petition in bankruptcy, or is the subject of a petition seeking the reorganization, liquidation or similar relief, where such petition remains undismissed or unstayed for a total of sixty (60) days; or

(c) if, in the case where liquidated damages are due or owing from Contractor pursuant to Section 2.3 of this Contract and the applicable Exhibit Set, Contractor does not deliver a conforming Deliverable to Customers by the conclusion of the period for which such liquidated damages are due.

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16.1.3 Consequences of Termination.

(a) By Customers. In the event that this Contract is terminated for (i) Contractor’s default pursuant to Section 16.1 or (ii) Contractor’s Excessive Force Majeure pursuant to Section 16.2:

(i) The licenses to Customers Background IP and Customers Foreground IP granted in Section 12.3.1 and 12.3.2 shall terminate;

(ii) The licenses to Contractor Background IP and Contractor Foreground IP granted in Section 12.3.4 shall survive such termination and Customers shall be further permitted to use such Contractor Background IP and Contractor Foreground IP to use and/or have used (other than by Infineon Competitors) the Deliverables delivered prior to the termination date for the sole and exclusive purpose of manufacture, use or, sale, of the SDR Modem Platform for commercial use;.

(iii) Contractor shall reimburse to Customers twenty per cent (20%) of the all fees paid under this Contract with respect to all Projects in which Contractor was in default that are on-going at the time of such termination and shall reimburse Customers their cost of cover to have a replacement product delivered; and

(iv) Contractor shall provide Customer with access to, and where applicable a copy of, all work in progress and related documentation (for the avoidance of doubt, in such event the provisions of Section 3.5 shall not apply).

(b) By Contractor. In the event that this Contract, or a particular Customer, is terminated for (i) a Customer’s default pursuant to this Section 16.1 or (ii) a Customer’s Excessive Force Majeure pursuant to Section 16.2:

(i) The licenses to the terminated Customers Background IP and Customers Foreground IP granted in Section 12.3.1 and 12.3.2 shall survive such termination;

(ii) The licenses to Contractor Background IP and Contractor Foreground IP granted in Section 12.3.4 shall terminate with respect to all terminated Customers.

16.2 Excessive Force Majeure. A Party may, upon written notice to the other Parties, immediately terminate this Contract, in whole or in part, if and when: (i) a delay in the other Party’s performance of its obligations hereunder exceeds six months due to one or more Force Majeure Events under Section 17.1, or (ii) it becomes reasonably certain that the aggregate delay due to Force Majeure Events under Section 17 will exceed six months.

16.3 Limitation on Right to Terminate. Except as otherwise specified in this Contract, neither Party shall have any right to terminate or suspend this Contract.

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17. Force Majeure

17.1 Definition. Neither Party will be liable for default or delay in the performance of its obligations hereunder, to the extent such default or delay is caused by a “Force Majeure Event,” which occurs when both of the following circumstances exist:

17.1.1 The occurrence of any act of war, domestic and/or international terrorism, civil riots or rebellions, epidemic, quarantines, embargoes and other similar unusual governmental actions, extraordinary elements of nature or acts of God delay performance of a Party’s obligations, other catastrophic events (including catastrophic failure of a Customer’s satellite), and

17.1.2 Such delay could not have been prevented through the non-performing Party’s reasonable precautions or commercially acceptable processes, or could not have been reasonably circumvented through the use of substitute services, alternate sources, work-around plans or other means by which the requirements under the Contract would be satisfied.

The Parties expressly acknowledge that Force Majeure Events do not include and cannot be caused (i) by labor strikes, lockouts, or other labor disturbances to the extent such activities exceed, in the aggregate, three (3) months, or (ii) the non-performance of subcontracts or other third parties relied on or otherwise engaged by Contractor, except to the extent such Subcontractor’s non-performance is itself the result of a Force Majeure Event.

17.2 Equitable Adjustments. Upon the occurrence of any Force Majeure Event that causes a delay in Contractor’s performance of its obligations hereunder, an equitable adjustment shall be negotiated in the Milestone Schedule and other portions of this Contract affected by the Force Majeure Event.

18. Termination for Convenience

18.1 Contract Termination for Convenience. No Party shall have the right to terminate this Contract for convenience.

18.2 Project Termination for Convenience. Customer(s) may terminate a Project and the respective Exhibit Set according to the special terms and conditions for each Project Termination for Convenience as defined in the respective Exhibit Set. In case of Termination for Convenience by one or more Customer(s) (but not by a simultaneously termination by all Customers) only, Contractor will negotiate in good faith with the remaining Customer(s) any modifications to the applicable Exhibit Set, with pricing not to exceed the current Project pricing. In the event Customers exercise any Termination for Convenience right, Contractor shall use all commercially reasonable efforts to mitigate the impact of such termination including the termination of any agreements with Subcontractors.

19. Applicable Law; Compliance with Laws

19.1 This Contract shall be interpreted, construed and governed, and the rights of the Parties shall be determined in all respects, according to the laws of the state of New York without reference to its choice of laws rules.

19.2 Contractor shall perform its obligations under this Contract in accordance with all applicable national, federal, provincial, state and local statutes, laws, rules and regulations, and in

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accordance with the conditions of all applicable permits and licenses. Without limiting the generality of the foregoing, Contractor agrees that, to the extent applicable, it will only assign an individual to perform Services within the United States who is authorized for employment under the Immigration Reform and Control Act of 1986 or its implementing regulations. In the event any Contractor personnel performing Services within the United States is discovered to not be authorized for employment, Contractor will immediately remove such an individual from performing Services and replace such individual with an individual who is authorized. Without limiting the generality of this Section19.1, Contractor represents and warrants that:

(i) None of Contractor, any subsidiary or affiliate thereof, or their respective officers, directors, employees or agents shall take any action that would violate applicable anti-bribery and anti-corruption measures, including but not limited to the Foreign Corrupt Practices Act (“FCPA”); and

(ii) Contractor and Customers shall comply with all laws and regulations related to export control applicable to the Customers, including but not limited to those of U.S., Germany, and EU. Contractor and Customers shall not, directly or indirectly, take any action in violation of the Arms Export Control Act (“AECA”) (as implemented by the International Traffic in Arms Regulations (“ITAR”)). Customers shall identify, in writing, any CFI that is subject to ITAR and inform the Contractor accordingly. Contractor and Customers shall not, without prior written authorization from the respective export control authorities having jurisdiction, export or re-export, directly or indirectly, any source technical data (as defined in accordance with applicable regulation) or any products utilizing any such data, to any country for which at the time of export or re-export, an export license or other authorization is required.

20. Dispute Resolution

Any dispute, claim, or controversy between the Parties arising out of or relating to this Contract (“Dispute”), including any Dispute with respect to the interpretation, performance, termination, or breach of this Contract or any provision thereof shall be resolved as provided in this Section 20.

20.1 Informal Dispute Resolution. Prior to the initiation of formal Dispute resolution procedures, the Parties shall first attempt to resolve their Dispute informally, in a timely and cost-effective manner, as follows, except that with respect to disputes relating to Intellectual Property each Party may seek immediate arbitration or injunctive relief, without regard to the informal dispute resolution and the time periods set forth below:

20.1.1 The disputing Party shall provide written notice describing the Dispute and recommending corrective actions, and the Parties’ Program Managers shall promptly consult to resolve the Dispute.

20.1.2 If the Program Managers are unable to resolve the Dispute within twenty (20) days of written notice, either Party may escalate the Dispute to the executive level, and if the executives are unable to resolve the Dispute either within an additional thirty (30) days, then the Dispute shall be escalated to a senior executive of each Party.

20.2 Arbitration. In the event the designated senior executives are not able to resolve, within an additional thirty (30) day period or such other period as the parties may mutually agree, any

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Dispute pursuant to the Informal Dispute Resolution procedure as set forth in Section 20.1, such Dispute shall be resolved by binding arbitration of three arbitrators in accordance with the rules (“Rules”) promulgated by the International Chamber of Commerce (the “ICC”).  Each Party shall select one arbitrator in the request for arbitration and the answer to the request respectively, and the two nominated arbitrators shall select their chairman, provided however, that if the two nominated arbitrators are unable to mutually agree to the chairman within thirty (30) days after the appointment of the second arbitrator, the chairman shall be selected by the ICC in accordance with the Rules. For purposes of the selection of arbitrators under this Section 20.2, the Customers shall be collectively considered to be a single Party. Unless otherwise mutually agreed to by the parties to the arbitration, the arbitration shall take place in New York, NY, and the procedural law of the place of arbitration shall apply where the Rules are silent. The language of the arbitration and all pleadings, written statements, documents, and decisions shall be in English. The decision or award rendered by the arbitrators shall be written, final and non-appealable and may be entered and enforced in any court of competent jurisdiction.  Notwithstanding the foregoing, either party may apply to any court of competent jurisdiction (i) for interim injunctive relief, or (ii) in conjunction with any dispute about the validity of a patent without breach of this arbitration provision.  The costs of the arbitration, including administrative fees and fees of the arbitrators, shall be shared equally by the parties, unless otherwise determined by the arbitrators.  Furthermore, notwithstanding the foregoing, if an IP Claim or IP Claim to Contractor is brought against any Party to this Contract, such Party may bring any counterclaim, cross-claim, impleader or other action to bring any other Party or Parties to this Contract into such third party initiated action if the Party brought into such suit would have an indemnity obligation under Section 12 or 13 hereunder; the question whether or not such indemnification obligation between the Parties exists shall be decided by the arbitral tribunal in accordance with Section 20.

21. Contractor Insurance Requirements

21.1 Insurance Coverage. Contractor has obtained and will maintain (i) insurance that is legally required by each applicable jurisdiction, as well as (ii) the following insurance coverages:

A. Employer’s liability insurance to the extent required by law.

B. Commercial general liability on a claims made basis for (i) bodily injury and (ii) property damage, combined single limit each occurrence (which shall not be less than US$1,000,000), comprehensive form, premises-operation, products-completed operations.

C. Errors and omissions insurance as covered in the product liability insurance with minimum coverage of $1,000,000 for any claim arising out of a single occurrence.

D. Excess liability (umbrella) insurance with limits of $2,000,000.00.

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21.2 Policy Requirements. Each of the foregoing policies shall be issued by insurance companies having an A.M. Best rating of A- or better. Customers shall be named as an additional insured on each of the above insurance policies if and as far as interests of Customers are affected. Each such policy shall be primary and non-contributing to any insurance coverage maintained by Customers. Contractor shall promptly notify Customers of the cancellation or non-renewal of the coverage required by this Article 22, unless Contractor has obtained replacement insurance providing the required coverage.

22. Communications

22.1 Notification Address. All notices, reports, invoices and other correspondence to be provided to Customers or Contractor pursuant to this Contract shall be sent to the following addresses:

TerreStar Networks Inc. 12010 Sunset Hills Road, Ninth Floor Reston, Virginia 20190 Attention:  Dennis Matheson, CTO	Infineon Technologies AG Am Campeon 1-12, 85579 Neubiberg, Germany 11717 Attention:  Head of COM SDR
With a copy to:	With a copy to:
Tom Portman VP of Contracts TerreStar Networks Inc. 12010 Sunset Hills Road, Ninth Floor Reston, Virginia 20190 Fax: 703-483-7978	Legal Department Infineon Technologies AG Am Campeon 1-12, 85579 Neubiberg, Germany 11717 Fax:
SkyTerra LP 10802 Parkridge Blvd. Reston, Virginia 20191 Attention:  General Counsel
With a copy to: SkyTerra LP 10802 Parkridge Blvd. Reston, Virginia 20191 Attention: Director of Contracts

22.2 Written Notification. All communications pertinent to this Contract shall be made in writing and shall be deemed effective upon receipt for personal delivery, or on the Business Day following the date of sending by facsimile and on the third Business Day following the date of sending by international courier service. In addition, invoices and Project status reports may be delivered via email to the Customers Program Managers.

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22.3 Change of Address. Either Party may from time to time change its notice address or the persons to be notified by giving the other Party written notice (as provided above) of such new information and the date upon which such change shall become effective.

23. Public Release of Information

23.1 Generally. Either Party intending to disclose publicly, whether through the issuance of news releases, articles, brochures, advertisements, prepared speeches or other information releases, information concerning this Contract shall obtain the prior written approval of the other Parties with respect to the content and timing of such issuance.

23.2 Exceptions. The obligations set forth above shall not apply to the following:

23.2.1 information that is publicly available from any governmental agency or that is or otherwise becomes publicly available without breach of this Contract; and

23.2.2 public statements or filings that are required as a matter of law; provided that the disclosing Party notifies the other Parties of such disclosure prior to the disclosure.

24. Order of Precedence

With respect to the description of Services, Deliverables and Project specific conditions, in the event of a conflict between these documents, the applicable Statement of Work shall prevail. With respect to all other matters this Contract shall prevail.

25. Limitation of Liability

25.1 Disclaimer of Damages. EXCEPT FOR (i) PERSONAL INJURY FOR WHICH A PARTY IS FOUND RESPONSIBLE, (ii) ANY BREACH OF LICENSE GRANT UNDER THIS CONTRACT, (iii) ANY BREACH OF CONFIDENTIALITY OBLIGATIONS SET FORTH HEREIN, OR (iv) ANY WILLFUL MISCONDUCT, IN NO EVENT SHALL ANY PARTY BE LIABLE TO THE ANY OTHER PARTY FOR ANY INCIDENTAL, CONSEQUENTIAL, INDIRECT, OR PUNITIVE DAMAGES ARISING OUT OF OR RELATING TO THIS CONTRACT, REGARDLESS OF THE NATURE OF THE CLAIM (WHETHER ARISING IN CONTRACT OR IN TORT (INCLUDING BREACH OF WARRANTY) AND EVEN IF SUCH PARTY HAS BEEN PREVIOUSLY ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

25.2 Liability Cap. WITHOUT PREJUDICE TO SECTION 13.7, NO PARTY’S LIABILITY UNDER THIS CONTRACT, WHETHER IN CONTRACT, WARRANTY, FAILURE OF A REMEDY TO ACHIEVE ITS ESSENTIAL PURPOSE OR ANY OTHER LEGAL OR EQUITABLE THEORY, WILL IN NO EVENT EXCEED THE GREATER OF FIVE MILLION EUROS (€ 5,000,000.00) OR TEN PERCENT (10%) OF THE AMOUNTS ACTUALLY RECEIVED FROM CUSTOMER(S) UNDER THE RESPECTIVE EXHIBIT SET FOR ALL LIABILITY IN THE AGGREGATE ARISING UNDER THE RESPECTIVE EXHIBIT SET, EXCEPT FOR (i) PERSONAL INJURY FOR WHICH SUCH PARTY IS FOUND RESPONSIBLE; (ii) ANY BREACH OF LICENSE GRANT UNDER THIS CONTRACT, (iii) BREACH OF CONFIDENTIALITY OBLIGATIONS SET FORTH HEREIN, (iv) ANY WILFUL MISCONDUCT OR (v) CUSTOMER(S)´S PAYMENT OBLIGATIONS SPECIFIED IN SECTION 6 AND 7.

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26. General

26.1 Assignment. No Party may assign this Contract or any rights hereunder, or delegate such Party's obligations hereunder, without the prior written consent of the other Parties, which consent shall not be unreasonably withheld; provided, however, upon written notice to the other Parties (but without the requirement to obtain the other Parties’ consent), each Party may assign its rights and obligations under this Contract to an entity that acquires all or substantially all of the assets of such Party or of such Party’s business unit performing this Contract, to any Affiliate, or to a successor in interest to such Party by way of a merger or acquisition, or to a financing entity, in each case provided that the resulting entity is not a Competitor. Any assignment in violation of this Contract shall be void and of no effect.

26.2 Severability. If any provision of this Contract is declared or found to be illegal, unenforceable or void, the Parties shall negotiate in good faith to agree upon a substitute provision that is legal and enforceable and is as nearly as possible consistent with the intentions underlying the original provision. If the remainder of this Contract is not materially affected by such declaration or finding and is capable of substantial performance, then the remainder shall be enforced to the extent permitted by law.

26.3 Waiver of Breach of Contract. A waiver of any provision or any breach of a provision of this Contract shall not be binding upon any Party unless the waiver is in writing, signed by a duly authorized representative of the Party to be bound, as applicable, and such waiver shall not affect the rights of the Parties not in breach with respect to any other or future breach. No course of conduct by a Party shall constitute a waiver of any provision or any breach of a provision of this Contract unless a written waiver is executed in accordance with the provisions of this Section 26.3.

26.4 Amendments. This Contract, including any and all of its Attachments and Exhibits, may not be modified except by written instrument signed by an authorized representative of each Party.

26.5 Captions. The captions contained herein are for purposes of convenience only and shall not affect the construction of this Contract.

26.6 Relationships of the Parties. It is expressly understood that Contractor and Customers intend by this Contract to establish the relationship of independent contractors only, and do not intend to undertake the relationship of principal and agent or to create a joint venture or partnership or any other relationship, other than that of independent contractors, between them or their respective successors in interests. Neither Contractor nor Customers shall have any authority to create or assume, in the name or on behalf of the other Parties, any obligation, expressed or implied, or to act or purport to act as the agent or the legally empowered representative of the other Parties, for any purpose whatsoever.

26.7 Construction. This Contract, including all its Attachments and Exhibits have been drafted jointly by the Parties and in the event of any ambiguities in the language hereof, there shall be no inference drawn in favor of or against any Party.

26.8 Counterparts. This Contract may be signed in any number of counterparts with the same effect as if the signature(s) on each counterpart were upon the same instrument.

26.9 Survival. The following provisions shall survive the termination or expiration of this Contract for any reason: Sections 6 (Price) and 7 (Payment Terms) with respect to payments remaining due and owing at the time of such termination, 8 (Warranty ), 12.1 (Definitions), 12.2

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(Ownership of IP and IP Rights), 13 (Intellectual Property Rights Indemnity), 14 (General Indemnity), 15 (Confidential Information), 16.1.3 (Consequences of Termination), 19 (Applicable Law; Compliance with Laws), 20 (Dispute Resolution), 22 (Communications), 25 (Limitation of Liability) and any other provisions that by their nature would be intended to be applicable following any such termination or expiration.  

26.10 U.N. Convention on the International Sales of Goods. The U.N. Convention on the International Sales of Goods shall not apply or otherwise have any legal effect with respect to this Contract.

27. Entire Agreement

This Contract, including all Attachments and Exhibits hereto, constitutes the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior or contemporaneous correspondence, representations, proposals, negotiations, understandings, or agreements of the Parties, whether oral or written.

[The Rest of this Page is Intentionally Blank; Signature Page Follows]

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IN WITNESS WHEREOF, the Parties hereto have signed this Contract in triplicate.

TERRESTAR NETWORKS INC.	INFINEON TECHNOLOGIES AG
BY:   /s/ Jeffrey W. Epstein	BY:  /s/ Ronen Ben-Hamou    /s/ Ana-Maria Jaime
Name:   Jeffrey W. Epstein	Name:   Ronen Ben Hamou      Ana-Maria Jaime
Title:   President	Title:   VP & GM SDR                  Senior Director
Date:   March 31, 2009	Date:   March 31, 2009
SKYTERRA LP, BY ITS GENERAL PARTNER SKYTERRA GP INC.
BY:   /s/ Drew Caplan	BY:   /s/ Randy Segal
Name:  Drew Caplan	Name:   Randy Segal
Title: Chief Network Officer	Title:   SVP, General Counsel
Date:    March 31, 2009	Date:   March 31, 2009

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Attachment 1

Glossary

“Acceptance Test” has the meaning specified in Section4.1.

“Affiliate” means an entity that directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another entity or has the power to vote or direct the vote of more than fifty percent (50%) of any class of voting stock (or of any form of voting equity interest in the case of a person that is not a corporation) of such other entity. For purposes of this definition, “control”, including the terms “controlling” or “controlled”, means the power to direct or cause the direction of the management and policies of an entity, directly or indirectly, whether through the ownership of securities or partnership or other ownership interests, by contract or otherwise, and further includes SkyTerra (Canada), Inc., a joint venture partner of SkyTerra LP.

“Business Day” means any day other than the following: a Saturday, Sunday and any other public holiday in Germany or the United States of America.

“Confidential Information” has the meaning specified in Section 15.1.

“Contract” means the terms and conditions together with the Exhibit Sets that are attached hereto (or incorporated by reference).

“Contractor” has the meaning specified in the Preamble.

“Contractor Background IP” has the meaning specified in Section 12.1.1.

“Contractor Competitor” means any entity identified in Attachment 2, which Attachment may be updated subject to the approval of Contractors, which approval shall not be unreasonably withheld.

“Contractor Program Manager” has the meaning specified in Section 9.3.

“Customer or Customers” have the meaning specified in the Preamble.

“Customers Background IP” has the meaning specified in Section 12.1.4.

“Customers Competitor” means any entity identified in Attachment 3, which Attachment may be updated subject to the approval of Contractors, which approval shall not be unreasonably withheld.

“Customers Program Manager” has the meaning specified in Section 9.3.

“Deliverables” has the meaning specified in Section 1.4.

“Development Deliverables” means any Deliverable identified as a ”Development Deliverable” in the respective Exhibit Set.

“Disclosing Party” has the meaning specified in Section 15.1.

“EDC” has the meaning specified in the Preamble.

“Final Acceptance” has the meaning specified in Section 4.5.

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“Force Majeure Event” has the meaning specified in Section 17.1.

“Foreground IP” has the meaning specified in Section 12.1.2. “Indemnified Party” has the meaning specified in Section 13.9.1.

“Indemnifying Party” has the meaning specified in Section 13.9.1.

“Initial Exhibit Set” has the meaning specified in Section 1.3.

“Intellectual Property” or “IP” has the meaning specified in Section 12.1.

“IP Claim” has the meaning specified in Section 13.1.

“Key Milestone” means any milestone identified as a Key Milestone in the Milestone Schedule as set forth in the respective SOW.

“Key Personnel” means those individuals or roles expressly identified in the applicable Statement of Work as being a Key Personnel.

“Major Subcontractor” means a Subcontractor related to the performance of this Contract and who is engaged for 25% or more of the total work to be performed by a Party under the applicable Statement of Work

“Milestone” shall mean any milestone event identified in the Milestone Schedule.

“Milestone Date” shall mean the date upon which a Milestone is scheduled to be completed, as specified in the applicable Milestone Schedule.

“Milestone Schedule” means (i) with respect to the initial SDR Modem Platform, the milestone schedule set forth in Exhibit C; and (ii) with respect to any other SDR Modem Platform, the milestone schedule set forth in the mutually agreed upon schedule identified by the applicable Exhibit Set.

“Notice of Election” has the meaning specified in Section 13.7.1.

“Payment Milestone” means a Milestone, the achievement of which triggers a payment obligation by Customers, as set forth in the payment schedule of the applicable Exhibit Set.

“Product Deliverable” means any Deliverable identified as a “Product Deliverable” in the respective SOW.

“Program Managers” means Contractor Program Manager and Customers Program Managers identified pursuant to Section 9.3.

“Receiving Party” has the meaning specified in Section 15.1.1.

“SDR Modem Platform” has the meaning specified in the Recitals, as further described in Initial Exhibit Set.

“Services” has the meaning specified in Section 1.4.

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“Specification” shall mean Exhibit B of the applicable Exhibit Set.

“Statement of Work” or “SOW” shall mean the applicable Statement of Work included in an Exhibit Set.

“Subcontractor” means any third party supplier, contractor, consultant or any other third party person or entity engaged, directly or indirectly (at any tier), by a Party to provide any portion of the CFI, Deliverables or Services. On Customers side, a Subcontractor shall always be jointly commissioned by all Customers.

“Warranty Period” has the meaning specified in Section 8.2.5.

Page 33  

Attachment 2

Contractor Competitors

3 plus 1

ADI / MediaTek

Axiom

Bitwave

Broadcom

EMP

Freescale

Icera

NEC

NXP

Qualcomm

Quorum (acquired by Spreadtrum)

Renesas

RFMD

Sandbridge

Sequoia 

Sirific

Skyworks

Spreadtrum

ST

TI

Triquint 

and any successors in interest of any of the foregoing

Page 34  

Attachment 3

Customers Competitors

Globalstar

ICO

Inmarsat

Iridium

SES/Eutelsat

Europamax

Thuraya

Ondas

World Radio

Yaz Media

and any successors in interest of any of the foregoing

Page 35  

EX-31

Exhibit 31.1

CERTIFICATIONS

I, Alexander H. Good, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 1, 2009

/s/ Alexander H. Good

Alexander H. Good

Chief Executive Officer and President

EX-31

Exhibit 31.2

CERTIFICATIONS

I, Scott Macleod, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 1, 2009

/s/ Scott Macleod

Scott Macleod

Executive Vice President and Chief Financial Officer

EX-32

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SkyTerra Communications, Inc. (the “Company”) for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Alexander H. Good, Chief Executive Officer and President of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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

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

/s/ Alexander H. Good

Alexander H. Good

Chief Executive Officer and President

May 1, 2009

EX-32

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of SkyTerra Communications, Inc. (the “Company”) for the period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott Macleod, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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

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

/s/ Scott Macleod

Scott Macleod

Executive Vice President

and Chief Financial Officer

May 1, 2009