-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PdDSpMRRF0kzjSKf2HVEEAPkOyajN5EKh18Jpe6D/frZE2Qw4SCNOoD0FjykkZ6e Rbgz9ZQXubIL4aTIkr+jbw== 0000919574-08-000542.txt : 20080207 0000919574-08-000542.hdr.sgml : 20080207 20080207172536 ACCESSION NUMBER: 0000919574-08-000542 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 8 FILED AS OF DATE: 20080207 DATE AS OF CHANGE: 20080207 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TERRESTAR CORP CENTRAL INDEX KEY: 0000913665 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATION SERVICES, NEC [4899] IRS NUMBER: 930976127 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-42503 FILM NUMBER: 08586143 BUSINESS ADDRESS: STREET 1: 12010 SUNSET HILLS ROAD, STREET 2: 9TH FLOOR CITY: RESTON STATE: VA ZIP: 20190 BUSINESS PHONE: 703-483-7806 MAIL ADDRESS: STREET 1: 12010 SUNSET HILLS ROAD, STREET 2: 9TH FLOOR CITY: RESTON STATE: VA ZIP: 20190 FORMER COMPANY: FORMER CONFORMED NAME: MOTIENT CORP DATE OF NAME CHANGE: 20000424 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN MOBILE SATELLITE CORP DATE OF NAME CHANGE: 19931019 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. CENTRAL INDEX KEY: 0001233563 IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: C/O INTERNATIONAL FUND SERVICES LIMITED STREET 2: THIRD FL, BISHOP'S SQUARE REDMOND'S HILL CITY: DUBLIN 2 STATE: L2 ZIP: 00000 BUSINESS PHONE: 2125216972 MAIL ADDRESS: STREET 1: C/O INTERNATIONAL FUND SERVICES LIMITED STREET 2: THIRD FL, BISHOP'S SQUARE REDMOND'S HILL CITY: DUBLIN 2 STATE: L2 ZIP: 00000 FORMER COMPANY: FORMER CONFORMED NAME: HARBERT DISTRESSED INVESTMENT MASTER FUND LTD DATE OF NAME CHANGE: 20030516 SC 13D/A 1 d853059_13d-a.txt SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ---------------- SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 14)(1) TerreStar Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.01 par value - -------------------------------------------------------------------------------- (Title of Class of Securities) 619908304 - -------------------------------------------------------------------------------- (CUSIP Number) William R. Lucas, Jr. One Riverchase Parkway South Birmingham, Alabama 35244 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) February 5, 2008 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [X]. Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. - ---------- (1) The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Harbinger Capital Partners Master Fund I, Ltd. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Cayman Islands NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 29,909,389 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 29,909,389 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 29,909,389 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 32.8% 14. TYPE OF REPORTING PERSON* CO CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Harbinger Capital Partners Offshore Manager, L.L.C. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 29,909,389 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 29,909,389 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 29,909,389 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 32.8% 14. TYPE OF REPORTING PERSON* CO CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) HMC Investors, L.L.C. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 29,909,389 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 29,909,389 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 29,909,389 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 32.8% 14. TYPE OF REPORTING PERSON* CO CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Harbinger Capital Partners Special Situations Fund, L.P. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* WC 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 11,011,640 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 11,011,640 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,011,640 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.5% 14. TYPE OF REPORTING PERSON* PN CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Harbinger Capital Partners Special Situations GP, LLC 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Delaware NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 11,011,640 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 11,011,640 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,011,640 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.5% 14. TYPE OF REPORTING PERSON* CO CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) HMC - New York, Inc. 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION New York NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 11,011,640 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 11,011,640 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11,011,640 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 12.5% 14. TYPE OF REPORTING PERSON* CO CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Harbert Management Corporation 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION Alabama NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 40,921,029 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 40,921,029 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 40,921,029 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.6% 14. TYPE OF REPORTING PERSON* CO CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Philip Falcone 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 40,921,029 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 40,921,029 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 40,921,029 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.6% 14. TYPE OF REPORTING PERSON* IN CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Raymond J. Harbert 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 40,921,029 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 40,921,029 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 40,921,029 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.6% 14. TYPE OF REPORTING PERSON* IN CUSIP No. 619908304 --------- 1. NAME OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Michael D. Luce 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [_] (b) [x] 3. SEC USE ONLY 4. SOURCE OF FUNDS* AF 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) [_] 6. CITIZENSHIP OR PLACE OF ORGANIZATION U.S.A. NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON 7. SOLE VOTING POWER 0 8. SHARED VOTING POWER 40,921,029 9. SOLE DISPOSITIVE POWER 0 10. SHARED DISPOSITIVE POWER 40,921,029 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 40,921,029 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 44.6% 14. TYPE OF REPORTING PERSON* IN CUSIP No. 619908304 --------- - -------------------------------------------------------------------------------- Item 1. Security and Issuer. NO MATERIAL CHANGE FROM THE SCHEDULE 13D, AMENDMENT NO. 13, FILED ON SEPTEMBER 19, 2007. - -------------------------------------------------------------------------------- Item 2. Identity and Background. NO MATERIAL CHANGE FROM THE SCHEDULE 13D, AMENDMENT NO. 13, FILED ON SEPTEMBER 19, 2007. - -------------------------------------------------------------------------------- Item 3. Source and Amount of Funds or Other Consideration. As of the date hereof the Master Fund may be deemed to beneficially own 29,909,389 Shares. As of the date hereof Harbinger Management may be deemed to beneficially own 29,909,389 Shares. As of the date hereof HMC Investors may be deemed to beneficially own 29,909,389 Shares. As of the date hereof the Special Fund may be deemed to beneficially own 11,011,640 Shares. As of the date hereof HCPSS may be deemed to beneficially own 11,011,640 Shares. As of the date hereof HMCNY may be deemed to beneficially own 11,011,640 Shares. As of the date hereof HMC may be deemed to beneficially own 11,011,640 Shares. As of the date hereof Philip Falcone may be deemed to beneficially own 40,921,029 Shares. As of the date hereof Raymond J. Harbert may be deemed to beneficially own 40,921,029 Shares. As of the date hereof Michael D. Luce may be deemed to beneficially own 40,921,029 Shares. No borrowed funds were used to purchase the Shares, other than any borrowed funds used for working capital purposes in the ordinary course of business. - -------------------------------------------------------------------------------- Item 4. Purpose of Transaction. The Reporting Persons have acquired the securities of the Issuer for investment. The Reporting Persons evaluate their investment in the securities on a continual basis. Other than as expressly set forth below, the Reporting Persons have no plans or proposals as of the date of this filing which relate to, or would result in, any of the actions enumerated in Item 4 of the instructions to Schedule 13D. On February 5, 2008 and February 7, 2008, the Master Fund and the Special Fund (collectively, the "Harbinger Funds") entered into certain definitive agreements with the Issuer (as more specifically described below) to provide financing to and for the benefit of the Issuer, and to purchase securities of the Issuer. The Harbinger Funds entered into a Master Investment Agreement, dated February 5, 2008, among the Issuer, Networks, and the Harbinger Funds (the "Master Investment Agreement"). Under the Master Investment Agreement, the Harbinger Funds will purchase $50,000,000 in principal amount of 6.5% Senior Exchangeable PIK Notes (the "Exchangeable Notes") issued by TerreStar Networks Inc., a majority-owned subsidiary of the Issuer ("Networks") pursuant to an Indenture, dated February 7, 2008 among the Issuer, Networks, other guarantors party thereto and U.S. Bank National Association, as trustee (the "Indenture"). The Exchangeable Notes are guaranteed by TerreStar License Inc. and TerreStar National Services, Inc. and are due on June 15, 2014. Networks has an obligation to repurchase the Exchangeable Notes under certain circumstances, including upon the occurrence of a change of control of Networks or certain other subsidiaries thereof. Subject to Issuer stockholder approval, the principal and any accrued and unpaid interest on the Exchangeable Notes held by the Harbinger Funds will be exchangeable for shares of Series E Junior Participating Preferred Stock of the Issuer (the "Junior Preferred Stock") at an exchange ratio of 7.176. The Junior Preferred Stock is non-voting, participating in dividends and upon liquidation on an as-converted basis with the issued and outstanding Shares and transferable. Subject to certain restrictions, each share of Junior Preferred Stock is convertible into 25 Shares. A full description of the terms of the Junior Preferred Stock is set forth in the Certificate of Designations of the Series E Junior Participating Preferred Stock, Series C Preferred Stock and Series D Preferred Stock of the Issuer (the "Certificate of Designations"). Also under the Master Investment Agreement, the Master Fund will acquire one share of Series D Preferred Stock of the Issuer (the "Series D Stock"). So long as the Harbinger Funds own at least 10% of the outstanding Shares (on a fully-diluted basis), then the Series D Stock provides the Harbinger Funds the right to nominate two persons to the Board of Directors of the Issuer, and consent rights with respect to the following: (i) any sale of 10% or more of the assets of the Issuer or any subsidiary of the Issuer other than the equity interests of SkyTerra Communications, Inc.; (ii) the consummation of any merger, consolidation, recapitalization, liquidation, or dissolution of the Issuer or any subsidiary of the Issuer; (iii) the amendment of the certificate of incorporation, by-laws, or other organizational documents of the Issuer or any subsidiary of the Issuer; (iv) the redemption or repurchase of any equity securities of the Issuer, except for the redemption of any shares of Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock or pursuant to any compensatory plan or arrangement, in each case solely in accordance with the terms thereof; (v) any material change in the line of business of the Issuer; (vi) the acquisition of any asset or assets in one or more transactions with a value in excess of $5,000,000; (vii) any capital expenditure in excess of $5,000,000 not contemplated by the annual budget of the Issuer which budget was approved by the Board of Directors of the Issuer; (viii) the appointment of any new officers, executives or other key employees of the Issuer; or (ix) any increase in the size of the Board of Directors above eight, except for any increase resulting from the election of additional directors by Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock in accordance with the terms thereof. If the Harbinger Funds own less than 10% but greater than 5% of the outstanding Shares (on a fully diluted basis), then the Series D Stock provides the Harbinger Funds the right to nominate one person to the Board of Directors of the Issuer, and no consent rights with respect to such transactions. Only the Master Fund or any affiliate thereof may own the Series D Stock. A full description of the terms of the Series D Stock is set forth in the Certificate of Designations. Subject to the satisfaction of certain conditions including stockholder and regulatory approval, the Harbinger Funds will acquire additional shares of the Junior Preferred Stock pursuant to the Spectrum Contribution Agreement, dated February 5, 2008, among the Issuer and the Harbinger Funds (the "Spectrum Contribution Agreement"). Under the Spectrum Contribution Agreement, the Harbinger Funds will assign to the Issuer all of the Harbinger Funds' right, title and interest in an option to acquire certain technology assets and will pay an aggregate amount equal to $162,500,000, on behalf of the Issuer to exercise such option, in exchange for 1,200,000 shares of Junior Preferred Stock. In connection with the acquisition of the option, the Harbinger Funds previously have paid $50,000,000 (which is in addition to the amount of $162,500,000 to be paid to exercise the option and acquire the technology). Under a Registration Rights Agreement, dated February 5, 2008, the Issuer is required to file shelf registration statements in respect of the Shares issuable upon conversion of the Junior Preferred Stock that is issuable upon exchange of the Exchangeable Notes and that is to be delivered under the Spectrum Contribution Agreement. In connection with the foregoing transactions, each of the Issuer and Networks granted the Harbinger Funds a right of first offer under a Right of First Offer Agreement, dated February 5, 2008, among the Harbinger Funds, the Issuer and Networks. Pursuant thereto, the Issuer and/or Networks (as applicable) must first offer to the Harbinger Funds the right to purchase a proportionate amount (based on the Exchangeable Notes held by Harbinger Funds as compared to another holder of the Exchangeable Notes) of any securities of the Issuer or Networks, as applicable, to be issued, sold or otherwise transferred, subject to certain exclusions (including, among other exclusions, securities issued as dividends paid in kind or upon conversion or exchange of convertible or exchangeable securities) prior to offering, selling or transferring such securities to other potential purchasers. The Harbinger Funds also entered into a senior secured Purchase Money Credit Agreement in the principal amount of up to $100,000,000, among Networks, U.S. Bank National Association, as collateral agent (the "Collateral Agent"), the Harbinger Funds and EchoStar Corporation, pursuant to which the Harbinger Funds will provide Networks a purchase money loan of up to $50,000,000 for purposes of paying certain satellite construction costs (the "Loan"). Pursuant to a Security Agreement from Networks in favor of the Collateral Agent dated February 5, 2008 (the "Security Agreement"), Networks granted a security interest to the Collateral Agent in certain of Networks' assets financed by the proceeds of the Loan, including, among other things, the satellite and related raw materials, work-in-progress, and finished goods. All of the descriptions set forth herein, are qualified in their entirety by reference to copies of the Indenture, the Master Investment Agreement, the Spectrum Contribution Agreement, the Registration Rights Agreement, the Right of First Offer Agreement, the Purchase Money Credit Agreement, the Security Agreement and the Certificate of Designations, copies of which are attached as exhibits hereto. The foregoing is intended to supplement the Reporting Persons' response to Item 4 of Schedule 13D as set forth in Amendment No. 1 to Schedule 13D filed by the Reporting Persons on March 7, 2007 ("Amendment No. 1"). The Reporting Persons continue to reserve all rights reserved in Amendment No. 1, including the right to propose transactions in addition to those described above. - -------------------------------------------------------------------------------- Item 5. Interest in Securities of the Issuer. (a, b) As of the date hereof, the Master Fund may be deemed to be the beneficial owner of 29,909,389 Shares, constituting 32.8% of the Shares of the Issuer, based upon 91,112,869* Shares outstanding as of the date of this filing. The Master Fund has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 29,909,389 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 29,909,389 Shares. (a, b) As of the date hereof, Harbinger Management may be deemed to be the beneficial owner of 29,909,389 Shares, constituting 32.8% of the Shares of the Issuer, based upon 91,112,869* Shares outstanding as of the date of this filing. Harbinger Management has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 29,909,389 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 29,909,389 Shares. Harbinger Management specifically disclaims beneficial ownership in the Shares reported herein except to the extent of its pecuniary interest therein. (a, b) As of the date hereof, HMC Investors may be deemed to be the beneficial owner of 29,909,389 Shares, constituting 32.8% of the Shares of the Issuer, based upon 91,112,869* Shares outstanding as of the date of this filing. HMC Investors has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 29,909,389 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 29,909,389 Shares. HMC Investors specifically disclaims beneficial ownership in the Shares reported herein except to the extent of its pecuniary interest therein. (a, b) As of the date hereof, the Special Fund may be deemed to be the beneficial owner of 11,011,640 Shares, constituting 12.5% of the Shares of the Issuer, based upon 88,146,053* Shares outstanding as of the date of this filing. The Special Fund has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 11,011,640 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 11,011,640 Shares. The Special Fund specifically disclaims beneficial ownership in the Shares reported herein except to the extent of its pecuniary interest therein. (a, b) As of the date hereof, HCPSS may be deemed to be the beneficial owner of 11,011,640 Shares, constituting 12.5% of the Shares of the Issuer, based upon 88,146,053* Shares outstanding as of the date of this filing. HCPSS has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 11,011,640 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 11,011,640 Shares. HCPSS specifically disclaims beneficial ownership in the Shares reported herein except to the extent of its pecuniary interest therein. (a, b) As of the date hereof, HMCNY may be deemed to be the beneficial owner of 11,011,640 Shares, constituting 12.5% of the Shares of the Issuer, based upon 88,146,053* Shares outstanding as of the date of this filing. HMCNY has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 11,011,640 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 11,011,640 Shares. HMCNY specifically disclaims beneficial ownership in the Shares reported herein except to the extent of its pecuniary interest therein. (a, b) As of the date hereof, HMC may be deemed to be the beneficial owner of 40,921,029 Shares, constituting 44.6% of the Shares of the Issuer, based upon 91,832,989* Shares outstanding as of the date of this filing. HMC has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 40,921,029 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 40,921,029 Shares. HMC specifically disclaims beneficial ownership in the Shares reported herein except to the extent of its pecuniary interest therein. (a, b) As of the date hereof, Philip Falcone may be deemed to be the beneficial owner of 40,921,029 Shares, constituting 44.6% of the Shares of the Issuer, based upon 91,832,989* Shares outstanding as of the date of this filing. Mr. Falcone has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 40,921,029 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 40,921,029 Shares. Mr. Falcone specifically disclaims beneficial ownership in the Shares reported herein except to the extent of his pecuniary interest therein. (a, b) As of the date hereof, Raymond J. Harbert may be deemed to be the beneficial owner of 40,921,029 Shares, constituting 44.6% of the Shares of the Issuer, based upon 91,832,989* Shares outstanding as of the date of this filing. Mr. Harbert has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 40,921,029 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 40,921,029 Shares. Mr. Harbert specifically disclaims beneficial ownership in the Shares reported herein except to the extent of his pecuniary interest therein. (a, b) As of the date hereof, Michael D. Luce may be deemed to be the beneficial owner of 40,921,029 Shares, constituting 44.6% of the Shares of the Issuer, based upon 91,832,989* Shares outstanding as of the date of this filing. Mr. Luce has the sole power to vote or direct the vote of 0 Shares; has the shared power to vote or direct the vote of 40,921,029 Shares; has sole power to dispose or direct the disposition of 0 Shares; and has shared power to dispose or direct the disposition of 40,921,029 Shares. Mr. Luce specifically disclaims beneficial ownership in the Shares reported herein except to the extent of his pecuniary interest therein. * The number of outstanding shares is based on the 87,425,933 shares the Company reported outstanding as of November 2, 2007, adjusted for warrants and convertible preferred stock held by the Reporting Persons. (c) The trading dates, number of Shares purchased and sold and price per share for all transactions in the Shares by the Reporting Persons are set forth in Exhibit B. - -------------------------------------------------------------------------------- Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. A description of each of the following documents is set forth in response to Item 4 above: (i) the Indenture, dated February 7, 2008 among the Issuer, Networks, other guarantors party thereto and U.S. Bank National Association, as trustee; (ii) the Master Investment Agreement, dated February 5, 2008, among the Issuer, Networks, and the Harbinger Funds; (iii) the Certificate of Designations of Series E Junior Participating Preferred Stock, Series C Preferred Stock and Series D Preferred Stock of Terrestar Corporation; (iv) the Spectrum Contribution Agreement, dated February 5, 2008, among the Issuer and the Harbinger Funds; (v) the Registration Rights Agreement, dated February 5, 2008, among EchoStar, the Harbinger Funds and the Issuer; (vi) the Right of First Offer Agreement, dated February 5, 2008, among the Harbinger Funds, the Issuer and Networks; (vii) the Purchase Money Credit Agreement, dated February 5, 2008, among Networks, Collateral Agent, the Harbinger Funds and EchoStar; and (viii) the Security Agreement from Networks in favor of the Collateral Agent, dated February 5, 2008. - -------------------------------------------------------------------------------- Item 7. Material to be Filed as Exhibits. ITEM 7 FROM THE SCHEDULE 13D, AMENDMENT NO. 13, FILED ON SEPTEMBER 19, 2007 IS HEREBY AMENDED TO INCLUDE THE FOLLOWING EXHIBITS: Exhibit A: Agreement between the Reporting Persons to file jointly Exhibit B: Schedule of Transactions in the Shares of the Issuer Exhibit C: The Indenture, dated February 7, 2008 among the Issuer, Networks, other guarantors party thereto and U.S. Bank National Association, as trustee Exhibit D: The Master Investment Agreement, dated February 5, 2008, among the Issuer, Networks, and the Harbinger Funds Exhibit E: The Certificate of Designations of Series E Junior Participating Preferred Stock, Series C Preferred Stock and Series D Preferred Stock of Terrestar Corporation Exhibit F: The Spectrum Contribution Agreement, dated February 5, 2008, among the Issuer and the Harbinger Funds Exhibit G: The Registration Rights Agreement, dated February 5, 2008, among EchoStar, the Harbinger Funds and the Issuer Exhibit H: The Right of First Offer Agreement, dated February 5, 2008, among the Harbinger Funds, the Issuer and Networks Exhibit I: The Purchase Money Credit Agreement, dated February 5, 2008, among Networks, Collateral Agent, the Harbinger Funds and EchoStar Exhibit J: The Security Agreement from Networks in favor of the Collateral Agent, dated February 5, 2008 - -------------------------------------------------------------------------------- SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. Harbinger Capital Partners Master Fund I, Ltd. By: Harbinger Capital Partners Offshore Manager, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- Harbinger Capital Partners Offshore Manager, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- HMC Investors, L.L.C. By: /s/ William R. Lucas, Jr. - ----------------------------- Harbinger Capital Partners Special Situations Fund, L.P. By: Harbinger Capital Partners Special Situations GP, LLC By: HMC - New York, Inc., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- Harbinger Capital Partners Special Situations GP, LLC By: HMC - New York, Inc., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- HMC - New York, Inc. By: /s/ William R. Lucas, Jr. - ----------------------------- Harbert Management Corporation By: /s/ William R. Lucas, Jr. - ----------------------------- /s/ Philip Falcone - --------------------- Philip Falcone /s/ Raymond J. Harbert - ------------------------ Raymond J. Harbert /s/ Michael D. Luce - --------------------- Michael D. Luce February 7, 2008 Attention. Intentional misstatements or omissions of fact constitute federal criminal violations (see 18 U.S.C. 1001). Exhibit A AGREEMENT The undersigned agree that this Amendment No. 14 to Schedule 13D dated February 7, 2008 relating to the Common Stock, $0.01 par value of TerreStar Corporation shall be filed on behalf of the undersigned. Harbinger Capital Partners Master Fund I, Ltd. By: Harbinger Capital Partners Offshore Manager, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- Harbinger Capital Partners Offshore Manager, L.L.C. By: HMC Investors, L.L.C., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- HMC Investors, L.L.C. By: /s/ William R. Lucas, Jr. - ----------------------------- Harbinger Capital Partners Special Situations Fund, L.P. By: Harbinger Capital Partners Special Situations GP, LLC By: HMC - New York, Inc., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- Harbinger Capital Partners Special Situations GP, LLC By: HMC - New York, Inc., Managing Member By: /s/ William R. Lucas, Jr. - ----------------------------- HMC - New York, Inc. By: /s/ William R. Lucas, Jr. - ----------------------------- Harbert Management Corporation By: /s/ William R. Lucas, Jr. - ----------------------------- /s/ Philip Falcone - --------------------- Philip Falcone /s/ Raymond J. Harbert - ---------------------- Raymond J. Harbert /s/ Michael D. Luce - --------------------- Michael D. Luce February 7, 2008 Exhibit B TRANSACTIONS BY HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. Transactions in Common Stock Date of Number of Shares Price of Shares Transaction Purchase/(Sold) 10/16/07 409,163 * TRANSACTIONS BY HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. Transactions in Common Stock Date of Number of Shares Price of Shares Transaction Purchase/(Sold) 10/15/07 79,957 * * Shares received in a spin-off. No price was paid for these shares. SK 03773 0003 853059 EX-99.C 2 d853044_ex99-c.txt Execution Version ================================================================================ TERRESTAR NETWORKS INC. TERRESTAR CORPORATION CERTAIN SUBSIDIARIES OF TERRESTAR NETWORKS INC. $150,000,000 Aggregate Principal Amount 6.5% Senior Exchangeable PIK Notes due 2014 INDENTURE Dated as of February 7, 2008 U.S. BANK NATIONAL ASSOCIATION, As Trustee ================================================================================ TABLE OF CONTENTS ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01 Definitions....................................................1 SECTION 1.02 Other Definitions.............................................34 SECTION 1.03 Trust Indenture Act Provisions................................34 SECTION 1.04 Rules of Construction.........................................35 ARTICLE 2 THE SECURITIES SECTION 2.01 Form, Dating and Denominations................................35 SECTION 2.02 Execution and Authentication; Additional Notes................37 SECTION 2.03 Registrar, Calculation Agent and Paying Agent.................38 SECTION 2.04 Paying Agent to Hold Money in Trust...........................39 SECTION 2.05 Noteholder Lists..............................................39 SECTION 2.06 Replacement Notes.............................................40 SECTION 2.07 Outstanding Notes.............................................40 SECTION 2.08 Temporary Notes...............................................41 SECTION 2.09 Cancellation..................................................41 SECTION 2.10 CUSIP Numbers.................................................41 SECTION 2.11 Registration, Transfer and Exchange...........................41 SECTION 2.12 Restrictions on Transfer and Exchange.........................44 SECTION 2.13 Temporary Regulation S Global Notes...........................47 SECTION 2.14 Defaulted Interest............................................47 SECTION 2.15 Payment of Interest...........................................48 ARTICLE 3 REPURCHASE SECTION 3.01 Repurchase Offers.............................................48 SECTION 3.02 Selection.....................................................51 SECTION 3.03 Notes Redeemed in Part........................................52 ARTICLE 4 AFFIRMATIVE COVENANTS SECTION 4.01 Reports.......................................................52 SECTION 4.02 Payment of Obligations........................................53 SECTION 4.03 Corporate Existence...........................................53 SECTION 4.04 FCC License Subsidiary; Licenses..............................53 SECTION 4.05 Compliance Certificates.......................................54 SECTION 4.06 Designation of Unrestricted Subsidiaries......................54 SECTION 4.07 Additional Guarantees.........................................55 SECTION 4.08 Maintenance of Insurance......................................56 SECTION 4.09 Covenants with Respect to the Canadian Entities...............57 SECTION 4.10 Change of Control.............................................57 SECTION 4.11 Financial Covenants ..........................................57 SECTION 4.11 Stockholder Approval..........................................58 ARTICLE 5 NEGATIVE COVENANTS SECTION 5.01 Indebtedness..................................................58 SECTION 5.02 Limitation on Liens...........................................62 SECTION 5.03 Merger, Consolidation and Sale of Assets......................63 SECTION 5.04 Restricted Payments...........................................64 SECTION 5.05 Transactions with Affiliates..................................69 SECTION 5.06 Limitation on Lines of Business...............................72 SECTION 5.07 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.......................................72 SECTION 5.08 Asset Sales and Recovery Events...............................74 SECTION 5.09 Corporate Actions.............................................77 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01 Events of Default and Remedies................................78 SECTION 6.02 Acceleration..................................................80 SECTION 6.03 Other Remedies................................................81 SECTION 6.04 Rescission of Acceleration; Waiver of Past Defaults...........81 SECTION 6.05 Control by Majority...........................................81 SECTION 6.06 Limitation on Suits...........................................82 SECTION 6.07 Rights of Holders to Receive Payment..........................82 SECTION 6.08 Collection Suit by Trustee....................................82 SECTION 6.09 Trustee May File Proofs of Claim..............................82 SECTION 6.10 Priorities....................................................83 SECTION 6.11 Undertaking for Costs.........................................83 SECTION 6.12 Waiver of Stay or Extension Laws..............................83 SECTION 6.13 Rights and Remedies Cumulative................................84 SECTION 6.14 Delay or Omission Not Waiver..................................84 ARTICLE 7 TRUSTEE SECTION 7.01 Duties of Trustee.............................................84 SECTION 7.02 Rights of Trustee.............................................85 SECTION 7.03 Individual Rights of Trustee..................................87 SECTION 7.04 Trustee's Disclaimer..........................................87 SECTION 7.05 Notice of Defaults............................................87 SECTION 7.06 Compensation and Indemnity....................................88 SECTION 7.07 Replacement of Trustee........................................89 SECTION 7.08 Successor Trustee by Merger, Etc..............................90 SECTION 7.09 Eligibility; Disqualification.................................90 SECTION 7.10 Preferential Collection of Claims against the Issuer..........90 SECTION 7.11 Disqualification; Conflicting Interests.......................90 ARTICLE 8 EXCHANGE RIGHT SECTION 8.01 Exchange Right of the Holders.................................90 SECTION 8.02 Closing Price.................................................92 SECTION 8.03 Market Disruption Event.......................................93 SECTION 8.04 Taxes on Exchange.............................................94 SECTION 8.05 Parent to Provide Underlying Stock............................94 SECTION 8.06 Adjustment Events.............................................95 SECTION 8.07 Other Adjustments............................................100 SECTION 8.08 Notice of Adjustment.........................................100 SECTION 8.09 Notice of Certain Transactions...............................100 SECTION 8.10 Effect of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or Sales on Exchange Privilege.......101 SECTION 8.11 Rights Distributions Pursuant to Stockholders' Rights Plans..102 ARTICLE 9 AMENDMENTS SECTION 9.01 Without Consent of Holders...................................103 SECTION 9.02 With Consent of Holders......................................103 SECTION 9.03 Revocation and Effect of Consents and Waivers................105 SECTION 9.04 Notation on or Exchange of Notes.............................105 SECTION 9.05 Trustee to Sign Amendments...................................105 SECTION 9.06 Compliance with TIA..........................................106 ARTICLE 10 GUARANTEES SECTION 10.01 Guarantee....................................................106 SECTION 10.02 Limitation on Liability......................................108 SECTION 10.03 Successors and Assigns.......................................108 SECTION 10.04 No Waiver....................................................108 SECTION 10.05 Modification.................................................108 SECTION 10.06 Execution and Delivery of the Guarantee......................108 SECTION 10.07 Release of Guarantees........................................109 ARTICLE 11 MISCELLANEOUS SECTION 11.01 Notices......................................................109 SECTION 11.02 Certificate and Opinion as to Conditions Precedent...........110 SECTION 11.03 Statements Required in Certificate or Opinion................110 SECTION 11.04 When Notes Disregarded.......................................111 SECTION 11.05 Rules by Trustee, Paying Agent and Registrar.................111 SECTION 11.06 Legal Holidays...............................................111 SECTION 11.07 GOVERNING LAW................................................111 SECTION 11.08 No Recourse Against Others...................................111 SECTION 11.09 Successors...................................................111 SECTION 11.10 Multiple Originals...........................................111 SECTION 11.11 Table of Contents; Headings..................................111 SECTION 11.12 Severability.................................................112 SECTION 11.13 No Adverse Interpretation of Other Agreements................112 SECTION 11.14 Trust Indenture Act Controls.................................112 SECTION 11.15 Communications by Holders with other Holders.................112 SECTION 11.16 Submission to Jurisdiction; Agent for Service of Process.....112 SECTION 11.17 Agents; Determinations.......................................113 EXHIBITS EXHIBIT A FORM OF NOTE EXHIBIT B DTC LEGEND EXHIBIT C REGULATION S LEGEND EXHIBIT D PRIVATE PLACEMENT LEGEND EXHIBIT E REGULATION S CERTIFICATE EXHIBIT F RULE 144A CERTIFICATE EXHIBIT G IAI CERTIFICATE EXHIBIT H FORM OF CERTIFICATE OF BENEFICIAL OWNERSHIP EXHIBIT I TEMPORARY REGULATION S GLOBAL NOTE LEGEND EXHIBIT J FORM OF SUPPLEMENTAL INDENTURE EXHIBIT K FORM OF EXCHANGE NOTICE INDENTURE dated as of [ ], 2008, among TERRESTAR NETWORKS INC., a Delaware corporation (the "Issuer"), TERRESTAR CORPORATION, a Delaware corporation (the "Parent") the other guarantors from time to time party hereto and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized under the laws of the United States (or any successor trustee, the "Trustee"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders of (i) the Issuer's Senior Exchangeable PIK Notes due 2014 issued on the Issue Date and (ii) any Additional Notes (as defined herein) that may be issued on any other issue date: ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE ------------------------------------------ SECTION 1.01 Definitions. "2 GHz MSS S-Band Spectrum": any spectrum between 1 GHz and 3 GHz that can be used to provide mobile satellite service. "Acquired Debt": with respect to any specified Person, (1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "Additional Assets": -------------------- (1) all or substantially all of the assets of another Permitted Business; (2) Capital Stock of another Permitted Business if the Permitted Business is or, after giving effect to such acquisition, becomes a Restricted Subsidiary of the Issuer; (3) capital expenditures relating to an asset used or useful in a Permitted Business; or (4) other assets that are not classified as current assets under GAAP and that are used or useful in a Permitted Business. "Additional Notes": any Notes issued under this Indenture in addition to the Initial Notes, having the same terms in all respects as the Initial Notes except that interest will accrue on the Additional Notes from their issue date. "Affiliate": with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," 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 or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "Agent": any Registrar, Paying Agent or Authenticating Agent. "Agent Member": a member of, or a participant in, the Depositary. "Aggregate Amount": as set forth in Section 8.06(e). "Asset Sale": (1) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole will be governed by Sections 5.03 and 4.10 and not by Section 5.08; and (2) the issuance of Equity Interests in any of the Issuer's Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (1) any single transaction or series of related transactions that involves assets having a fair market value of less than $10.0 million; (2) a disposition of assets between or among the Issuer and any Guarantors; (3) a transfer of assets between or among Restricted Subsidiaries that are not Guarantors or from a Restricted Subsidiary that is not a Guarantor to the Issuer or a Guarantor; (4) an issuance of Equity Interests by a Restricted Subsidiary of the Issuer to the Issuer or to another Restricted Subsidiary of the Issuer; (5) the sale, lease or other disposition of equipment, inventory or products in the ordinary course of business and any sale or other disposition of damaged, worn-out, uneconomic or obsolete assets in the ordinary course of business; (6) the creation of a Permitted Lien and dispositions in connection with Permitted Liens; (7) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property; (8) foreclosure on assets, except to the extent that the value of the assets exceeds the amount of the obligation secured; (9) the sale or other disposition of cash or Cash Equivalents; provided that, if such cash or Cash Equivalents arise as the result of an Asset Sale or Recovery Event, such sale or disposition is in accordance with the provisions of this Indenture; (10) the sale or other disposition of Equity Interests in Unrestricted Subsidiaries; (11) a Restricted Payment that is permitted by Section 5.04 or a Permitted Investment; and (12) any transfer contemplated by the Transfer Agreements. "Attributable Debt": in respect of a Sale/Leaseback Transaction, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided, however, that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "Capital Lease Obligation." "Authenticating Agent": a Person engaged to authenticate the Notes in the stead of the Trustee. "Bankruptcy Law": Title 11, United States Code, or any similar federal or state law for the relief of debtors. "Beneficial Owner": as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable, or is exercisable only upon the occurrence of a subsequent condition. The term "Beneficially Own" has a corresponding meaning. "Board of Directors": (1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such Person; (2) with respect to a partnership, the board of directors of the general partner of the partnership; (3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (4) with respect to any other Person, the board of directors or committee of such Person serving a similar function. If not otherwise specified, Board of Directors shall mean the board of directors of the Issuer. "Business Day": each day that is not a Saturday, Sunday or other day on which banking institutions in New York, New York are authorized or required by law to close. "Business Plan": means a business plan for the Company and the Parent adopted following the Closing but prior to February 29, 2008. "Calculation Agent": U.S. Bank National Association, or the successor thereto, as determined in accordance with Section 2.03. "Canadian Entities": TerreStar Canada Holdings and TerreStar Canada. "Capital Lease Obligation": at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "Capital Stock": (1) in the case of a corporation, corporate stock; (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (3) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "Cash Equivalents": (1) United States dollars and in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by them from time to time in the ordinary course of business; (2) securities issued or directly and fully guaranteed or insured by the United States or the Canadian government or any agency or instrumentality of the United States or the Canadian government (provided that the full faith and credit of the United States or Canada, as applicable, is pledged in support of those securities) having maturities of not more than twelve months from the date of acquisition; (3) marketable general obligations issued by any state of the United States or province of Canada, or any political subdivision of any such state or province or any public instrumentality thereof maturing within one year from the date of acquisition (provided that the full faith and credit of the United States or Canada, as applicable, is pledged in support thereof) and, at the time of acquisition, having a credit rating of "A" or better from either S&P or Moody's; (4) certificates of deposit and eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers' acceptances with maturities not exceeding twelve months and overnight bank deposits with any U.S. domestic or Canadian commercial bank having capital and surplus in excess of $500.0 million and a Thomson Bank Watch Rating of "B" or better; (5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2), (3) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above; (6) commercial paper having a rating of at least A-3 from Moody's Investors Service, Inc. or P-3 from Standard & Poor's Rating Services and in each case maturing within nine months after the date of acquisition; and (7) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (6) of this definition. "Certificate of Beneficial Ownership": a certificate substantially in the form of Exhibit H. "Certificated Note": a Note in registered individual form without interest coupons. "Change of Control": the occurrence of any of the following: (1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) other than a Permitted Holder; (2) the adoption of a plan relating to the liquidation or dissolution of the Issuer; (3) any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Parent or the Issuer, other than a Permitted Holder, measured by voting power rather than number of shares; or (4) the first day on which a majority of the members of the Board of Directors of the Parent or the Issuer are not Continuing Directors. "Closing Price": as set forth in Section 8.02. "Collective Election": as set forth in Section 8.10. "Commission": the Securities and Exchange Commission or any successor agency. "Consolidated EBITDA": for any period means, without duplication, the Consolidated Net Income for such period, plus the following to the extent deducted in calculating such Consolidated Net Income: (1) Consolidated Interest Expense; plus (2) Consolidated Income Taxes; plus (3) consolidated depreciation expense; plus (4) consolidated amortization expense or impairment charges recorded in connection with the application of Financial Accounting Standard No. 142 "Goodwill and Other Intangibles" and Financial Accounting Standard No. 144 "Accounting for the Impairment or Disposal of Long Lived Assets"; plus (5) the amount of any restructuring charges or reserves (including, without limitation, for retention, severance, contract termination costs, and costs to consolidate facilities and relocate employees); plus (6) other non-cash charges reducing Consolidated Net Income (excluding any such non-cash charge to the extent it represents amortization of a prepaid cash expense that was paid in a prior period not included in the calculation); plus (7) any net gain resulting from Hedging Obligations; less (8) non-cash items increasing Consolidated Net Income of such Person for such period (excluding any items which represent the reversal of any accrual of, or reserve for, anticipated cash charges made in any prior period); less (9) any net loss resulting from Hedging Obligations. Notwithstanding the preceding sentence, clauses (2) through (7) relating to amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary was included in calculating the Consolidated Net Income of such Person and, to the extent the amounts set forth in clauses (2) through (7) are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Issuer by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its stockholders. "Consolidated Income Taxes": with respect to any Person for any period, taxes imposed upon such Person or other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits (including franchise taxes) of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), regardless of whether such taxes or payments are required to be remitted to any governmental authority. "Consolidated Interest Expense": for any period, the total interest expense of the Issuer and its consolidated Restricted Subsidiaries, whether paid or accrued, plus, (a) to the extent not included in such interest expense: (1) interest expense attributable to Capital Lease Obligations and the interest component of any deferred payment obligations; (2) amortization of original issue discount, non-cash interest payments (other than imputed interest as a result of purchase accounting); (3) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing; (4) the interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries; (5) costs associated with Hedging Obligations (excluding amortization of fees) provided, however, that if Hedging Obligations result in net benefits rather than costs, such benefits shall be credited to reduce Consolidated Interest Expense unless, pursuant to GAAP, such net benefits are otherwise reflected in Consolidated Net Income; (6) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period, whether paid or accrued; (7) the product of (a) all dividends paid or payable, in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on preferred stock of its Restricted Subsidiaries that are not Guarantors payable to a party other than the Company or a wholly-owned Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state, provincial and local statutory tax rate of such Person, expressed as a decimal, in each case, on a consolidated basis and in accordance with GAAP; and (8) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Issuer and its Restricted Subsidiaries) in connection with Indebtedness incurred by such plan or trust; less (b) interest income actually received in cash for such period. Notwithstanding anything to the contrary contained herein, commissions, discounts, yield and other fees and charges Incurred in connection with any transaction pursuant to which the Issuer or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense. "Consolidated Net Income": with respect to any Person for any period, the aggregate of the Net Income of such Person and its Restricted Subsidiaries for such period, on a consolidated basis, determined in accordance with GAAP; provided that: (1) the Net Income (but not loss) of any specified Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of such Person; (2) the Net Income of any Restricted Subsidiary (other than a Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that Net Income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its shareholders or members, except as permitted by Section 5.07; and (3) the cumulative effect of a change in accounting principles shall be excluded (effected either through cumulative effect adjustment or a retroactive application, in each case in accordance with GAAP). Notwithstanding the foregoing, for the purpose of Section 5.04 only, there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by the Issuer and its Restricted Subsidiaries. "Consolidated Total Assets": the total assets of the Issuer and its consolidated Restricted Subsidiaries, as shown on the most recent balance sheet of the Issuer, determined on a consolidated basis in accordance with GAAP. "Continuing Directors": as of any date of determination, any member of the Board of Directors of the Issuer who: (1) was a member of such Board of Directors on the Issue Date; or (2) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or by the Permitted Holders. "Corporate Trust Office": the office of the Trustee specified in Section 11.01 or any other office specified by the Trustee from time to time pursuant to such Section. "Default": any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "Depositary": the depositary of each Global Note, which will initially be DTC. "Designated Equity Contributions": Net Proceeds received by the Issuer (to the extent the net proceeds thereof are contributed to the equity capital of the Issuer (other than in the form of Disqualified Stock) or are used to purchase Capital Stock of the Issuer (other than Disqualified Stock)) from the issuance or sales of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date and designated in an Officer's Certificate as Designated Equity Contributions executed by the principal financial officer of the Issuer. "Designated Equity Election": the delivery to the Trustee of an Officer's Certificate stating that the Issuer elects to include Designated Equity Contributions in Section 5.04(a)(4)(C)(ii). "Disqualified Stock": any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Issuer to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Issuer may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 5.04. "Domestic Subsidiary": any Restricted Subsidiary of the Issuer that was formed under the laws of the United States or any state of the United States or the District of Columbia. "DTC": The Depository Trust Company, a New York corporation, and its successors. "DTC Legend": the legend set forth in Exhibit B. "EchoStar": EchoStar Corporation and its Affiliates. "EchoStar Master Investment Agreement" shall mean the Master Investment Agreement among Issuer, Parent and EchoStar, dated as of February 5, 2008. "Electing Holders": the Holders specified in Section 6.02. "Equity Interests": Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "Event of Default": any of the events specified in Section 6.01; provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Exchange Act": the Securities Exchange Act of 1934, as amended. "Exchange Date": with respect to any exchange of a Note pursuant to Article 8, the first day that is both a Business Day and a day on which all Exchange Requirements have been satisfied with respect to such exchange by 3:00 P.M., New York City time, on such day. If the Exercise Requirements have been satisfied with respect to an exchange on a day that is a Business Day but after 3:00 P.M., New York City time, the next day that is a Business Day will be the Exchange Date for such exchange, subject to the proviso in the prior sentence. Notwithstanding the foregoing, the Exchange Date may be postponed as provided in Section 8.01(e), in which case the Exchange Date shall be the date to which it is so postponed. "Exchange Ratio": 179.400, with respect to Notes exchanged for Common Shares and 7.176, with respect to Notes exchanged for Junior Preferred Stock, in each case subject to adjustment (rounded to three decimal places) for certain corporate events relating to Parent, as described in Article 8. "Exchange Settlement Date": with respect to any exchange of a Note pursuant to Article 8, the fifth Business Day after the Exchange Date for such exchange. Notwithstanding the foregoing, the Exchange Settlement Date may be postponed as provided in Section 8.01(e), in which case the Exchange Settlement Date shall be the date to which it is so postponed. "Ex-Dividend Date": (i) when used with respect to any issuance or distribution, means the first date on which the Parent Common Stock trades the regular way on the relevant exchange or in the relevant market without the right to receive such issuance or distribution, (ii) when used with respect to any subdivision or combination of shares of Parent Common Stock , means the first date on which the Parent Common Stock trades the regular way on such exchange or in such market after the time at which such subdivision or combination becomes effective, and (iii) when used with respect to any tender offer or exchange offer means the first date on which the Parent Common Stock trades the regular way on such exchange or in such market after the expiration time of such tender offer or exchange offer (as it may be amended or extended). For purposes of determining the Ex-Dividend Date with respect to an issuance or distribution under this Indenture, the Calculation Agent may conclusively assume (and such assumption shall be binding upon the Holders) that purchases and sales of the relevant security with respect to which such issuance or distribution is being made will settle based on the customary settlement cycle for purchases or sales of such security. "Exercise Requirements": as set forth in Section 8.01(b). "Existing Indebtedness": Indebtedness of the Issuer and the Restricted Subsidiaries in existence on the Issue Date, until such amounts are repaid. "Existing Change-of-Control Restriction": as set forth in Section 8.01(g). "Existing Indenture": the Indenture dated as of February 14, 2007 relating to the Issuer's 15% Senior Secured PIK Notes due 2014 as supplemented by the First Supplemental Indenture and Second Supplemental Indenture thereto, each dated as of the Issue Date. "Expiration Date": as set forth in Section 8.06(e). "Expiration Time": as set forth in Section 8.06(e). "FCC": the U.S. Federal Communications Commission, or any successor thereto. "FCC License": any license, authorization, approval, or permit granted by the FCC pursuant to the Communications Act of 1934, as amended, to the Issuer or its Subsidiaries. "FCC License Subsidiary": TerreStar License Inc., a Delaware corporation. "Foreign Subsidiary": any Restricted Subsidiary of the Issuer that is not a Domestic Subsidiary. "Full In-Orbit Insurance": insurance coverage of satellites following the period of time that is customarily covered by launch insurance that provides coverage against partial losses, constructive total losses and complete losses. "GAAP": generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board of the Public Company Accounting Oversight Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States, which are in effect from time to time. "Global Note": a Note in registered global form without interest coupons. "Government Notes": non-redeemable, direct obligations (or certificates representing an ownership interest in such obligations) of, or obligations guaranteed by, the United States of America (including any agency or instrumentality thereof) for the payment of which guarantee or obligations the full faith and credit of the United States is pledged. "Guarantee": a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). Unless the context otherwise indicates, "Guarantee" shall mean a guarantee by a Guarantor of the Issuer's payment Obligations pursuant to the terms of this Indenture and the Notes. "Guarantor": TerreStar National Services, Inc., the FCC License Subsidiary and any other Person that guarantees the Notes; provided that upon the release or discharge of such Person from its Guarantee in accordance with the provisions of this Indenture, such Person shall cease to be a Guarantor. "Harbinger": Harbinger Capital Partners, Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. "Hedging Obligations": with respect to any specified Person, the obligations of such Person incurred in the ordinary course of business and not for speculative purposes under: (1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (2) foreign exchange contracts and currency protection agreements entered into with one of more financial institutions and designed to protect the person or entity entering into the agreement against fluctuations in currency exchanges rates with respect to Indebtedness incurred; and (3) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "Hedging Restrictions": as set forth in Section 8.10. "Holder" or "Noteholder": the Person in whose name a Note is registered on the Registrar's books. "IAI" means an institutional accredited investor within the meaning of Rule 501(a)(1), (2), (3) or (7) of the Securities Act. "IAI Certificate": (i) a certificate substantially in the form of Exhibit G hereto or (ii) a written certification addressed to the Issuer and the Trustee to the effect that the Person making such certification is acquiring such Note (or beneficial interest) as an IAI. "IAI Global Note": a Global Note containing the Private Placement Legend and representing Notes issued and sold to an IAI under the Securities Act (or Additional Notes issued pursuant to the terms of this Indenture). "Indebtedness": (without duplication), with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (1) in respect of borrowed money; (2) evidenced by bonds, notes, debentures or similar instruments; (3) in respect of letters of credit, banker's acceptances or other similar instruments; (4) representing Capital Lease Obligations and Attributable Debt; (5) representing the balance deferred and unpaid of the purchase price of any property or services due more than 12 months after such property is acquired or such services are completed; (6) all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Guarantor, any preferred stock (but excluding, in each case, any accrued dividends); or (7) representing any Hedging Obligations; provided, however, that Indebtedness shall be deemed not to include (1) Guarantees incurred in the ordinary course of business and not in respect of borrowed money; (2) obligations to make payments to one or more insurers under satellite insurance policies in respect of premiums or the requirement to remit to such insurer(s) a portion of the future revenues generated by a satellite which has been declared a constructive total loss, in each case in accordance with the terms of the insurance policies relating thereto; (3) any obligations to make progress or incentive payments under any satellite manufacturing contract or to make payments under satellite launch contracts in respect of launch services provided thereunder, in each case, to the extent not overdue by more than 90 days; (4) obligations of such Person arising from agreements of such Person providing for indemnities, guarantees of performance, adjustments of purchase price, contingency payment obligations based on the performance of acquired or disposed assets or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; or (5) purchase price holdbacks in connection with purchasing in the ordinary course of business of such Person; provided, however, that: (a) in the case of clauses (1) and (4), such obligations are not reflected on the balance sheet of such Person (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this definition); (b) in the case of clauses (2) and (3), such amounts are not required by GAAP to be treated as indebtedness on the balance sheet of such Person; and (c) in the case of clause (4), the maximum assumable liability in respect of all such obligations shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by such Person in connection with such disposition. In addition, the term "Indebtedness" includes all Indebtedness secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (2) in the case of any Disqualified Stock of the specified Person or any Guarantor or preferred stock of a Restricted Subsidiary that is not a Guarantor, the repurchase price calculated in accordance with the terms of such Disqualified Stock or preferred stock as if such Disqualified Stock or preferred stock were repurchased on the date on which Indebtedness is required to be determined pursuant to this Indenture; provided that if such Disqualified Stock or preferred stock is not then permitted to be repurchased, the greater of the liquidation preference and the book value of such Disqualified Stock or preferred stock; (3) in the case of Indebtedness of others secured by a Lien on any asset of the specified Person, the lesser of (A) the fair market value of such asset on the date on which Indebtedness is required to be determined pursuant to this Indenture and (B) the amount of the Indebtedness so secured; (4) in the case of the guarantee by the specified Person of any Indebtedness of any other Person, the maximum liability to which the specified Person may be subject upon the occurrence of the contingency giving rise to the obligation; (5) in the case of any Hedging Obligations, the net amount payable if such Hedging Obligations were terminated at that time due to default by such Person (after giving effect to any contractually permitted set-off); and (6) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness. "Indenture": this Indenture as amended or supplemented from time to time. "Industry Canada": the Canadian Federal Department of Industry or any successor thereto. "Industry Canada License": the Approval in Principle issued by Industry Canada to TMI Communications and Company, Limited Partnership, dated May 6, 2002, as amended from time to time, which was transferred to TerreStar Canada and which authorizes TerreStar Canada to operate a 2GHz MSS satellite in a Canadian orbital position, and in addition, to use associated service, feeder link and telemetry, telecommand and control radio spectrum for the purposes of providing MSS services in Canada. "Initial Notes": the Notes issued on the Issue Date and any Notes issued in replacement thereof. "Interest Step-Ups": means the interest rate step-ups indicated in Section 1(d)(i) and (ii) on the reverse side of each Note. "Invested Capital": at any time of determination, the sum of, without duplication, (i) total consolidated Indebtedness of the Issuer, its Restricted Subsidiaries and, to the extent they are required to be consolidated with the Issuer under GAAP, the Canadian Entities, in each case determined in accordance with GAAP; (ii) cash capital contributions in the aggregate amount of $307.0 million made by the Parent and its Subsidiaries other than the Issuer or any Subsidiaries of the Issuer to the Issuer prior to the Issue Date; (iii) Net Proceeds received by the Issuer since the Issue Date from the sale of Equity Interests of the Issuer (other than proceeds of Disqualified Stock) or capital contributions by the Parent or any Subsidiary of Parent other than the Issuer or any Subsidiaries of the Issuer or any other Person other than the Issuer or any Subsidiaries of the Issuer; and (iv) in respect of the TerreStar Funding Agreement, the greater of $95.0 million and (x) the sum of the amount of cash contributed plus (y) the net value (determined as of the date of contribution after deducting estimated expenses of sale) of shares of SkyTerra common stock contributed to the Issuer pursuant thereto. "Investment Agreements": the Investment Agreements, dated as of the Issue Date, among the Parent, the Issuer and the initial purchasers of the Notes. "Investments": with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (excluding Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Issuer or any Restricted Subsidiary of the Issuer sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Issuer such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Issuer, the Issuer will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in Section 5.04(c). The acquisition by the Issuer or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment made by the Issuer or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person on the date of any such acquisition in an amount determined as provided in Section 5.04(c). Except as otherwise provided in this Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value. "IRU Agreement": the Indefeasible Right of Use Agreement that the Issuer has agreed to enter into with TerreStar Canada as such agreement may be modified from time to time in a manner not materially disadvantageous to the Holders of the Notes. "Issue Date": February 7, 2008. "Issuer": the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor. "Junior Preferred Stock": the Series E Junior Participating Preferred Stock of the Parent. "Leverage Ratio": as of any date of determination, means the ratio of: (1) the sum of the aggregate outstanding Indebtedness of the Issuer and its Restricted Subsidiaries as of the date of calculation on a consolidated basis in accordance with GAAP to (2) Consolidated EBITDA of the Issuer and its Restricted Subsidiaries for the most recent four fiscal quarters ended prior to the date of such determination for which financial statements are required to have been delivered under Section 4.01; provided, however, that: (a) if the Issuer or any Restricted Subsidiary: (i) has incurred any Indebtedness since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio is an incurrence of Indebtedness, Consolidated EBITDA and Consolidated Interest Expense will be calculated after giving effect on a pro forma basis to such Indebtedness (but excluding any Indebtedness incurred on such date pursuant to Section 5.01(b)) as if such Indebtedness had been incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving credit facility outstanding on the date of such calculation will be deemed to be: (A) the average daily balance of such Indebtedness during the relevant fiscal quarters or such shorter period for which such facility was outstanding or (B) if such facility was created after the end of such period, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation) and the discharge of any other Indebtedness repaid, repurchased, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or (ii) has repaid, repurchased, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Leverage Ratio involves a discharge of Indebtedness (in each case other than Indebtedness Incurred under any revolving credit facility unless such Indebtedness has been permanently repaid and the related commitment terminated), Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such discharge had occurred on the first day of such period; (b) if since the beginning of such period the Issuer or any Restricted Subsidiary will have made any Asset Sale or disposed of any company, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Leverage Ratio is such an Asset Sale: (i) Indebtedness at the end of such period will be reduced by an amount equal to the Indebtedness discharged, defeased or retired with the Net Proceeds of such Asset Sale and the assumption of Indebtedness by the Transferee; (ii) Consolidated EBITDA for such period will be reduced by an amount equal to Consolidated EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Sale for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and (iii) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Issuer or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Issuer and its continuing Restricted Subsidiaries in connection with such Asset Sale for such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Issuer and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (c) if since the beginning of such period the Issuer or any Restricted Subsidiary (by merger or otherwise) will have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary or is merged with or into the Issuer) or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a company, division, operating unit, segment, business or group of related assets or line of business, Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the Incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and (d) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Issuer or any Restricted Subsidiary since the beginning of such period) will have incurred any Indebtedness or discharged any Indebtedness or made any Asset Sale or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (a), (b) or (c) above if made by the Issuer or a Restricted Subsidiary during such period, Indebtedness, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such Incurrence of Indebtedness or Asset Sale or Investment occurred on the first day of such period. The pro forma calculations will be determined in good faith by one of the Issuer's responsible financial or accounting officers (including the pro forma effect of net cost savings from operating improvements or synergies reasonably expected to result from any acquisition, merger or disposition as determined in good faith by such officer to be realizable within 12 months following such acquisition, merger or disposition). If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any interest rate agreement applicable to such Indebtedness if such interest rate agreement has a remaining term in excess of 12 months). If any Indebtedness that is being given pro forma effect bears an interest rate at the Issuer's option, the interest rate shall be calculated by applying such optional rate chosen by the Issuer. "Lien": with respect to any asset, any mortgage, lien, hypothec, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease in the nature thereof. "Maturity Date": June 15, 2014. "Marketable Security" shall mean any security listed on the New York Stock Exchange, the Nasdaq Global Market or the Nasdaq Global Select Market. "Market Disruption Event": the occurrence or existence of any of the events as described in Section 8.03. "Mortgages": the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents securing Liens on the Premises, as well as the other Collateral secured by and described in the mortgages, deeds of trust, deeds to secure Indebtedness or other similar documents. "Net Award": any awards or proceeds in respect of any condemnation or other eminent domain proceeding. "Net Income": with respect to any specified Person and its Restricted Subsidiaries, the net income (loss) of such Person, determined in accordance with GAAP and before any reduction in respect of preferred stock dividends, excluding, however: (1) any gain (or loss), together with any related provision for taxes on such gain (or loss), realized in connection with (a) any Asset Sale (including dispositions pursuant to Sale/Leaseback Transactions) or (b) the disposition of any securities by such Person or any of its Restricted Subsidiaries or the extinguishment of any Indebtedness of such Person or any of its Restricted Subsidiaries; (2) any extraordinary or non-recurring gain (or loss), together with any related provision for taxes on such extraordinary or non-recurring gain (or loss); (3) any after-tax effect of income (or loss), from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments; (4) any impairment charge or asset write-off, in each case, pursuant to GAAP and the amortization of intangibles pursuant to GAAP; (5) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options, restricted stock or other rights; and (6) expenses related to the offering of the Notes. "Net Insurance Proceeds": any awards or proceeds in respect of any casualty insurance or title insurance claim. "Net Proceeds": (i) with respect to any Asset Sale or Recovery Event, the aggregate cash proceeds received by the Issuer or any of the Restricted Subsidiaries in respect of such Asset Sale (including any cash received upon the sale or other disposition of any non-cash consideration received in any such Asset Sale) or any such Recovery Event (including any Net Insurance Proceeds in respect thereof), net of the direct costs relating to such Asset Sale or Recovery Event, including legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale or Recovery Event, taxes paid or payable as a result of the Asset Sale or Recovery Event, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, amounts required to be applied to the repayment of Indebtedness, and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP, and any deduction of appropriate amounts to be provided by the Issuer or any Restricted Subsidiary as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such Asset Sale and retained by the Issuer and/or any Restricted Subsidiary and (ii) with respect to any issuance or sale of Capital Stock or Indebtedness, or any capital contribution, the proceeds of such issuance, sale or capital contribution, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant or other fees actually incurred in connection with such issuance, sale or capital contribution, and net of taxes paid or payable as a result thereof. "Non-Recourse Debt": Indebtedness, (1) as to which neither the Issuer nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (b) is directly or indirectly liable as a guarantor or otherwise, or (c) is the lender; (2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Issuer or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or to cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (3) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Issuer or any of its Restricted Subsidiaries. "Non Stock Reference Property": as set forth in Section 8.10. "Non Stock Reference Property Value": as set forth in Section 8.10. "Noteholder": any Holder of Notes. "Notes": any securities authenticated and delivered under this Indenture. From and after the issuance of any Additional Notes (but not for purposes of determining whether such issuance is permitted hereunder), "Notes" shall include such Additional Notes for purposes of this Indenture. All Notes, including any such Additional Notes, shall vote together as one series of Notes under this Indenture. "Obligations": any principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto. "Officers": any of the Chairman, President, Chief Executive Officer, Treasurer, Chief Financial Officer, Executive Vice President, Senior Vice President, Vice President, Assistant Vice President, Secretary or Assistant Secretary. "Officers' Certificate": a certificate signed by two Officers or by one Officer and any Assistant Treasurer or Assistant Secretary of the Issuer and which complies with the provisions of this Indenture. "Opinion of Counsel": a signed written opinion from legal counsel. The counsel may be an employee of or counsel to the Issuer, any Guarantor or the Trustee. As to matters of fact, an Opinion of Counsel may conclusively rely on an Officers' Certificate, without any independent investigation. "Parent": TerreStar Corporation, a Delaware corporation. "Parent Common Stock": the common stock of the Parent. "Pari Passu Indebtedness": any Indebtedness of the Issuer or any Restricted Subsidiary that ranks pari passu in right of payment with the Notes or the Guarantees. "Permanent Regulation S Global Note": a Regulation S Global Note that does not bear the Temporary Regulation S Global Note Legend. "Permitted Business": (i) prior to adoption of the Business Plan, the lines of business in which the Parent and the Company are engaged on the date hereof and (ii) after the adoption of the Business Plan, the lines of business indicated in the Business Plan and any business incidental or reasonably related thereto or which is a reasonable extension thereof as determined in good faith by the Issuer's Board of Directors and set forth in an Officers' Certificate delivered to the Trustee. "Permitted Holder": each of Parent, Motient Ventures Holding Inc., MVH Holdings Inc., EchoStar and Harbinger. "Permitted Investments": (1) any Investment in the Issuer or any Restricted Subsidiary of the Issuer; (2) any Investment in cash and Cash Equivalents; (3) any Investment by the Issuer or any Restricted Subsidiary of the Issuer in a Person, if as a result of such Investment: (a) such Person becomes a Restricted Subsidiary of the Issuer; or (b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Issuer or a Restricted Subsidiary of the Issuer; (4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale or Recovery Event that was made pursuant to and in compliance with Section 5.08 or any non-cash consideration received in connection with a disposition of assets excluded from the definitions of "Asset Sale" and "Recovery Event"; (5) workers' compensation, utility, lease and similar deposits and prepaid expenses in the ordinary course of business and endorsements of negotiable instruments and documents in the ordinary course of business; (6) loans or advances to employees (other than executive officers) made in the ordinary course of business of the Issuer or such Restricted Subsidiary in an aggregate amount not to exceed $2.5 million at any one time outstanding; (7) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Issuer or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (B) litigation, arbitration or other disputes with Persons who are not Affiliates; (8) Hedging Obligations; (9) advances or extensions of credit on terms customary in the industry in the form of accounts or other receivables incurred, and loans and advances made in settlement of such accounts receivable, all in the ordinary course of business; (10) Investments existing on the Issue Date; (11) advances, loans or extensions of credit to suppliers and vendors in the ordinary course of business; (12) Investments in the Canadian Entities required to be made by the Issuer under the Transfer Agreements; and (13) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (13) that are at the time outstanding, not to exceed $10.0 million in any calendar year and $60.0 million in the aggregate since the Issue Date. "Permitted Liens": (1) Liens in favor of the Issuer or any Guarantor; (2) Liens on property of a Person existing at the time such Person is merged with or into or consolidated with the Issuer or any Restricted Subsidiary of the Issuer or becomes a Restricted Subsidiary of the Issuer; provided that such Liens were in existence prior to and not incurred in connection with the contemplation of such merger or consolidation and do not extend to any assets other than those of the Person merged into or consolidated with the Issuer or the Restricted Subsidiary; (3) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Issuer or any Restricted Subsidiary; provided that such Liens were in existence prior to such acquisition and not incurred in contemplation of such acquisition; (4) Liens to secure the performance of statutory obligations, surety or appeal bonds, performance bonds or other obligations of a like nature incurred in the ordinary course of business; (5) Liens existing on the Issue Date and disclosed on Schedule 1 to the Indenture; (6) Liens securing Hedging Obligations so long as the related Indebtedness is, and is permitted to be under this Indenture, secured by a Lien on the same property securing such Hedging Obligation; (7) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by clause (3), clause (4) (with respect to Indebtedness refinancing Indebtedness initially incurred pursuant to clause (3) or clause (13)), clause (5) or clause (13) of Section 5.01(b) covering only the assets acquired with or financed by such Indebtedness; (8) statutory Liens or landlords and carriers', warehouseman's, mechanics', suppliers', materialmen's, repairmen's or other like Liens arising in the ordinary course of business; (9) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (10) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, in connection with satellite construction agreements and the related escrow agreements (including the satellite construction agreements in existence on the Issue Date and the related escrow agreements) or in connection with launch services agreements; (11) survey exceptions, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person; (12) Liens created for the benefit of (or to secure) the Issuer's 15% Senior Secured PIK Notes due 2014 or the guarantees thereof or any other obligations under the Existing Indenture; (13) rights of banks to set off deposits against debts owed to said bank; (14) Liens upon specific items of inventory or other goods and proceeds of the Issuer or its Subsidiaries securing the Issuer's or any Restricted Subsidiary's Obligations in respect of bankers' acceptances issued or created for the account of any such Person to facilitate the purchase, shipment or storage of such inventory or other goods; (15) Liens securing reimbursement obligations with respect to letters of credit which encumber documents and other property relating to such letters of credit and the products and proceeds thereof; (16) Liens in favor of customs and revenue authorities arising as a matter of law to secure payment of customs duties in connection with the importation of goods; (17) Liens encumbering property or assets under construction arising from progress or partial payments by a customer of the Issuer or any of its Subsidiaries relating to such property or assets; (18) Liens to secure Indebtedness permitted by clause (11) of Section 5.01(b) which lien is not applicable to any property or assets other than the property or assets financed thereby; (19) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, however, that: (a) the new Lien shall be limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); (b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge; (20) Liens to secure any Indebtedness permitted by clause (12) of Section 5.01(b); (21) Liens securing Guarantees permitted to be incurred under clause (6) of Section 5.01(b), to the extent such Guarantees relate to Indebtedness permitted to be secured by clauses (1), (6), (7), (18) or (19) of this definition. "Permitted Refinancing Indebtedness": any Indebtedness of the Issuer or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, refund or discharge other Indebtedness of the Issuer or any of its Subsidiaries (other than intercompany Indebtedness); provided that: (1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased, refunded or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses and premiums incurred in connection therewith); (2) (a) if the Stated Maturity of the Indebtedness being refinanced is the same as or earlier than the Stated Maturity of the Notes, such Permitted Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, such Permitted Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Notes; (3) such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged; (4) if the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged is subordinated in right of payment to the Notes or any Subsidiary Guarantee, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or the Subsidiary Guarantees, as the case may be, on terms at least as favorable to the Holders of the Notes as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged; and (5) such Indebtedness is incurred either by the Issuer, a Guarantor or by a Restricted Subsidiary that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged. "Person": any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "Private Placement Legend": the legend set forth in Exhibit D hereto. "Purchase Money Indebtedness": Indebtedness, (1) consisting of the deferred purchase price of an asset, conditional sale obligations, obligations under any title retention agreement and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed; and (2) incurred to finance the acquisition, lease or construction by the Issuer or a Restricted Subsidiary of such asset, including additions and improvements; provided, however, that such Indebtedness is incurred within 180 days after the acquisition, or the completion of construction or improvement by the Issuer or such Restricted Subsidiary of such asset. "Purchase Money Credit Agreement" shall be the Purchase Money Credit Agreement, dated as of February 5, 2008, by and among the Issuer, the Company, the guarantors party thereto, U.S. Bank National Association, as Collateral Agent, Harbinger, EchoStar, and the other lenders party thereto. "Purchased Shares": as set forth in Section 8.06(e). "Recovery Event": any event, occurrence, claim or proceeding that results in any Net Award or Net Insurance Proceeds of $10.0 million or more. "Reference Basket Stocks": as set forth in Section 8.10. "Reference Property": as set forth in Section 8.10. "Registration Rights Agreement" shall mean the Registration Rights Agreement, dated as of February 5, 2008, in substantially the form attached as Exhibit D to the EchoStar Master Investment Agreement. "Regulation S": Regulation S under the Securities Act. "Regulation S Certificate": a certificate substantially in the form of Exhibit E hereto. "Regulation S Global Note": a Global Note containing the Regulation S Legend and representing Notes issued and sold pursuant to Regulation S (or Additional Notes issued pursuant to the terms of this Indenture). "Regulation S Legend": the legend set forth in Exhibit C hereto. "Reorganization": a consolidation, merger, amalgamation or statutory arrangement or similar transaction involving the Issuer. "Restricted Investment": an Investment other than a Permitted Investment. "Restricted Legend": the Regulation S Legend or the Private Placement Legend. "Restricted Period": the relevant 40-day distribution compliance period as defined in Regulation S. "Restricted Subsidiary": with respect to a Person, any Subsidiary of the referent Person that is not an Unrestricted Subsidiary. Unless otherwise specified, "Restricted Subsidiary" refers to a Restricted Subsidiary of the Issuer. "Rights Shares": as set forth in Section 8.06(b). "Rule 144A": Rule 144A under the Securities Act. "Rule 144A Certificate": (i) a certificate substantially in the form of Exhibit F hereto or (ii) a written certification addressed to the Issuer and the Trustee to the effect that the Person making such certification (x) is acquiring such Note (or beneficial interest) for its own account or one or more accounts with respect to which it exercises sole investment discretion and that it and each such account is a qualified institutional buyer within the meaning of Rule 144A, (y) is aware that the transfer to it or exchange, as applicable, is being made in reliance upon the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A, and (z) acknowledges that it has received such information regarding the Issuer as it has requested pursuant to Rule 144A(d)(4) or has determined not to request such information. "Rule 144A Global Note": a Global Note containing the Private Placement Legend and representing Notes issued and sold pursuant to Rule 144A of the Securities Act (or Additional Notes issued pursuant to the terms of this Indenture). "S&P": Standard & Poor's Ratings Group, Inc., or any successor to the rating agency business thereof. "Sale/Leaseback Transaction": an arrangement relating to property or assets owned by the Issuer or a Restricted Subsidiary on the Issue Date or thereafter acquired by the Issuer or a Restricted Subsidiary whereby the Issuer or a Restricted Subsidiary transfers such property or assets to a Person (other than the Issuer or a Restricted Subsidiary of the Issuer) and the Issuer or a Restricted Subsidiary leases such property or assets from such Person. "Securities Act": the Securities Act of 1933, as amended. "SIC Code" as set forth in Section 8.10. "Significant Subsidiary": any Restricted Subsidiary that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation is in effect on the Issue Date. "SkyTerra": SkyTerra Communications, Inc. "Spectrum Contribution": the transactions contemplated by (i) the Spectrum Contribution Agreement dated as of February 5, 2008 among Parent, Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. and (ii) the Spectrum Agreement dated as of February 5, 2008 among Parent and EchoStar. "Spin-Off" as set forth in Section 8.06(c). "Stated Maturity": with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Issue Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "Stockholder Approval": the approval of the stockholders of the Parent (i) to the issuance of Parent Common Stock and Junior Preferred Stock (and Parent Common Stock upon conversion of such Junior Preferred Stock) issuable in connection with the Spectrum Contribution and upon exchange of the Notes and (ii) to the extent required for such issuances, to increase the number of shares of Capital Stock authorized under the Parent's Certificate of Incorporation. "Subsidiary": with respect to any specified Person, (1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (2) any partnership (a) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (b) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). Unless otherwise specified, "Subsidiary" refers to a Subsidiary of the Issuer. "Subsidiary Guarantee": any Guarantee by a Subsidiary of the Issuer's payment Obligations pursuant to the terms of this Indenture and the Notes. "Subsidiary Guarantor": any Subsidiary of the Issuer that is a Guarantor, which term does not refer to the Canadian Entities. "Temporary Regulation S Global Note": Regulation S Global Note that bears the Temporary Regulation S Global Note Legend. "Temporary Regulation S Global Note Legend": the legend set forth in Exhibit I. "TerreStar-1": the main satellite designed for the Issuer's communications system and currently under construction. "TerreStar Canada": TerreStar Networks (Canada) Inc., a corporation incorporated under the laws of the province of Ontario. "TerreStar Canada Holdings": TerreStar Networks Holdings (Canada) Inc., a corporation incorporated under the laws of the province of Ontario. "TerreStar Funding Agreement": the agreement among the Parent and Motient Ventures Holding Inc. entered into in connection with the issuance of the notes under the Existing Indenture in favor of the Issuer relating to certain funding commitments to the Issuer. "TerreStar Shareholders Agreement": the Amended and Restated Shareholders Agreement dated as of May 6, 2006 between 437158 Canada Inc. (the transferee of TMI's shares in the capital of TerreStar Canada Holdings), the Issuer, TerreStar Canada Holdings and TerreStar Canada, as amended from time to time in a manner not materially disadvantageous to the Holders of the Notes. "TMI": TMI Communications and Company, Limited Partnership, a limited partnership formed under, and governed by, the laws of the Province of Quebec, or any successor thereto. "Trading Day": means any day during which (i) trading in the Parent Common Stock generally occurs on the primary U.S. national or regional securities exchange on which it is then listed or, if the Parent Common Stock is not listed on a U.S. national or regional securities exchange, on the principal other market on which the Parent Common Stock is then admitted for trading and (ii) there is no Market Disruption Event. "Transfer Agreements": the Master Agreement dated as of October 24, 2006 by and among Telesat Canada, BCE Inc., the Issuer, TerreStar Canada Holdings, TerreStar Canada, TMI Communications and Company, Limited Partnership and the Parent, along with the series of agreements attached thereto that the parties thereto have subsequently entered or will hereafter subsequently enter into, including a Shareholders Agreement of TerreStar Canada Holdings, a Rights and Services Agreement, a Tax Indemnity Agreement, a TerreStar Canada Guarantee in favor of Loral, a TerreStar Canada Guarantee in favor of the Issuer, a security agreement, a Release and Indemnity Agreement, a Guarantee and Share Pledge Agreement in favor of the Issuer, a Satellite Delivery Agreement, an Indefeasible Right of Use Agreement and an Intellectual Property License Agreement, as such agreements have been or hereafter may be modified from time to time in a manner not materially disadvantageous to the Holders. "Trigger Event" as set forth in Section 8.06(c). "Trust Officer": when used with respect to the Trustee or Paying Agent, any officer within the corporate trust department of the Trustee or Paying Agent, as applicable, including any vice president, assistant vice president, assistant secretary, assistant treasurer, trust officer or any other officer of the Trustee or Paying Agent who customarily performs functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such person's knowledge of and familiarity with the particular subject and who shall have direct responsibility for the administration of this Indenture. "Trustee": the party named as such in this Indenture until a successor replaces it, and, thereafter, means the successor. "Underlying Stock": (a) Parent Common Stock, with respect to any Notes held by an entity other than Harbinger or its Affiliates at the time of the exchange of such Notes pursuant to Article 8 or (b), the Junior Convertible Preferred Stock, with respect to any Notes held by Harbinger or its Affiliates at the time of the exchange of such Notes pursuant to Article 8. "Uniform Commercial Code": the New York Uniform Commercial Code as in effect from time to time. "United States": the United States of America. "Unrestricted Subsidiary": any Subsidiary of the Issuer that is designated by the Board of Directors of the Issuer as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary: (1) has no Indebtedness other than Non-Recourse Debt; (2) except as permitted by Section 5.05, is not party to any agreement, contract, arrangement or understanding with the Issuer or any Restricted Subsidiary of the Issuer unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Issuer; (3) is a Person with respect to which neither the Issuer nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Issuer or any of its Restricted Subsidiaries. "U.S. FCC Letter of Intent Authorization": the reservation of spectrum granted to TMI Communications and Company, Limited Partnership and thereafter modified by listing it in the name of the Issuer for a 2 GHz mobile satellite system pursuant to a letter of intent authorization reinstated by the FCC on June 29, 2004, as modified. "Voting Stock": of any specified Person as of any date, the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "Weighted Average Life to Maturity": when applied to any Indebtedness at any date, the number of years obtained by dividing: (1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (2) the then outstanding principal amount of such Indebtedness. SECTION 1.02 Other Definitions. Affiliate Transaction 5.05(a) Change of Control Offer 3.01(a) Change of Control Payment 4.10(a) Covered Transaction 4.09 Excess Proceeds 5.08(a)(4) Excess Proceeds Offer 5.08(a)(4)(i) Guaranteed Obligations 10.01(a) Indemnified Party 7.06 Legal Holiday 11.06 Offer Amount 3.01(a)(1)(ii) Paying Agent 2.03 protected purchaser 2.06 Purchase Date 3.01(a)(1)(ii) record date 8.06 Register 2.11(a) Registrar 2.03 Repurchase Offer 3.01(a) Restricted Payments 5.04(a)(4) retiring Trustee 7.07 Successor Person 5.03(a)(1) Stockholder Approval Offer 3.01(a) TIA 1.03 SECTION 1.03 Trust Indenture Act Provisions. Whenever this Indenture refers to a provision of the Trust Indenture Act of 1939, as amended (the "TIA"), that provision is incorporated by reference in and made a part of this Indenture. This Indenture shall also include those provisions of the TIA required to be included herein by the provisions of the Trust Indenture Reform Act of 1990. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Notes; "indenture security holder" mean a Noteholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Issuer or any other obligor on the Notes. All other terms used in this Indenture that are defined in the TIA, defined by TIA reference to another stature or defined by any rule of the Commission and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.04 Rules of Construction. Unless the context otherwise requires: (a) a term has the meaning assigned to it; (b) an accounting term not otherwise defined has the meaning assigned to it, and all accounting determinations shall be made, in accordance with GAAP; (c) "or" is not exclusive; (d) "including" means (whether or not expressly stated) "including without limitation"; (e) words in the singular include the plural and words in the plural include the singular; (f) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (g) all references to "principal" of the Notes include repurchase price; and (h) all exhibits are incorporated by reference herein and expressly made a part of this Indenture. ARTICLE 2 THE SECURITIES -------------- SECTION 2.01 Form, Dating and Denominations. (a) The Notes and the Trustee's certificate of authentication will be substantially in the form attached as Exhibit A. The terms and provisions contained in the form of the Notes annexed as Exhibit A constitute, and are hereby expressly made, a part of this Indenture (except as otherwise provided herein). The Initial Notes and any Additional Notes subsequently issued under this Indenture will have the same terms and will be treated as a single class. The Notes may have notations, legends or endorsements required by law, rules of or agreements with national securities exchanges to which the Issuer is subject, or usage. Each Note will be dated the date of its authentication. The Notes will be issuable in denominations of $1,000 in principal amount and any multiple of $1,000 in excess thereof, except that Additional Notes issued in payment of interest may be issued in other denominations. The Initial Notes will be issued in the form of IAI Certificated Notes. (b) (1) Each Global Note will bear the DTC Legend. (2) Each Regulation S Global Note will bear the Regulation S Legend and be issued as provided in Section 2.13. (3) Each Rule 144A Global Note will bear the Private Placement Legend. (4) Each IAI Global Note will bear the Private Placement Legend. (5) Each Temporary Regulation S Global Note and each Additional Note issued in payment of interest on the Regulation S Global Notes or any Temporary Regulation S Global Note will bear the Temporary Regulation S Global Note Legend. (c) (1) If the Issuer determines (upon the advice of counsel and such other certifications and evidence as the Issuer may reasonably require) that a Note is eligible for resale in a single transaction at one time pursuant to Rule 144 under the Securities Act (or a successor provision) and that a Restricted Legend is no longer necessary or appropriate in order to ensure that subsequent transfers of the Note (or a beneficial interest therein) are effected in compliance with the Securities Act, or (2) after an Initial Note or any Additional Note is sold pursuant to an effective registration statement under the Securities Act, the Issuer may instruct the Trustee to cancel the Note and issue to the Holder thereof (or to its transferee) a new Note of like tenor and amount, registered in the name of the Holder thereof (or its transferee), that does not bear a Restricted Legend, and the Trustee will comply with such instruction. (d) By its acceptance of any Note bearing a Restricted Legend (or any beneficial interest in such a Note), each Holder thereof and each owner of a beneficial interest therein acknowledges the restrictions on transfer of such Note (and any such beneficial interest) set forth in this Indenture and in a Restricted Legend and agrees that it will transfer such Note (and any such beneficial interest) only in accordance with this Indenture and such legend. SECTION 2.02 Execution and Authentication; Additional Notes. (a) An Officer shall execute the Notes for the Issuer by facsimile or manual signature in the name and on behalf of the Issuer. If an Officer whose signature is on a Note no longer holds that office at the time the Note is authenticated, the Note will still be valid. (b) A Note will not be valid until the Trustee manually signs the certificate of authentication on the Note, with the signature conclusive evidence that the Note has been authenticated under this Indenture. (c) At any time and from time to time after the execution and delivery of this Indenture, the Issuer may deliver Notes executed by the Issuer to the Trustee for authentication. The Trustee will authenticate and deliver (i) Initial Notes for original issue in the initial aggregate principal amount not to exceed $100,000,000 and (ii) Additional Notes for original issue on or before February 25, 2008, in the initial aggregate principal amount not to exceed $50,000,000, in each case after receipt by the Trustee of an Officers' Certificate specifying: (i) the principal amount of each of the Notes to be authenticated and the date on which the Notes are to be authenticated; (ii) the registered Holder of each of the said Notes; (iii) delivery instructions for each such Note; (iv) whether the Notes are to be issued as one or more Global Notes or Certificated Notes; and (v) other information the Issuer may determine to include or the Trustee may reasonably request. (d) The Issuer shall deliver to the Trustee and the Paying Agent, no later than 10:00 a.m., New York City time one Business Day prior to each interest payment date (i) with respect to Notes that are in certificated form, the required amount of new Certificated Additional Notes and an order to authenticate and deliver such Additional Notes or (ii) with respect to Notes that are in the form of Global Notes, an order to increase the principal amount of such Global Notes by the relevant amount on such interest payment date (or, if necessary, to authenticate new Global Notes executed by the Issuer with such increased principal amounts). On each interest payment date, the Trustee will, at the Issuer's request, authenticate and deliver Additional Notes for original issuance to the Holders of the Notes on the relevant record date, as shown in the records of the registrar, in the aggregate principal amount required to pay such interest. Any Additional Note so issued will be dated the applicable interest payment date, will bear interest from and after such date, will mature on the Maturity Date and will be governed by, and subject to the terms, provisions and conditions of, this Indenture, except as otherwise provided herein, and will have the same rights and benefits as the Initial Notes and will bear the same Restricted Legend as the Note with respect to which the Additional Note is being issued, provided that any Additional Note representing interest on any Note bearing the Regulation S Legend shall bear the Temporary Regulation S Legend. SECTION 2.03 Registrar, Calculation Agent and Paying Agent. The Issuer shall maintain an office or agency where Notes may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Notes may be presented for payment (the "Paying Agent") and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Registrar shall keep a register of the Notes and of their transfer and exchange. The Issuer may have one or more co-registrars and one or more additional paying agents. The term "Paying Agent" includes any additional paying agent. The Issuer shall give prompt written notice to the Trustee of the location, and any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.01. The Issuer may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations. The Issuer shall give prompt notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency. The Issuer initially designates the Corporate Trust Office as such office of the Issuer in accordance with this Section 2.03. The Issuer shall enter into an appropriate agency agreement with any Registrar, Calculation Agent or Paying Agent or co-registrar not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such agent. The Issuer shall notify the Trustee of the name and address of any such agent. If the Issuer fails to maintain a Registrar, Calculation Agent or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.06. The Issuer may change the Registrar, Calculation Agent or Paying Agent without prior notice to the Noteholders. The Issuer or any of its Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent. The Issuer initially appoints the Trustee as Registrar, Calculation Agent and Paying Agent in connection with the Notes. Upon issuance of any Global Notes, the Issuer shall appoint The Depository Trust Company ("DTC") to act as Depositary with respect to the Global Notes, and the Trustee shall initially be the securities custodian with respect to any Global Notes. The Issuer may remove any Registrar, Calculation Agent or Paying Agent upon written notice to such Registrar, Calculation Agent or Paying Agent and to the Trustee, provided that no such removal shall become effective until (1) acceptance of an appointment by a successor as evidenced by an appropriate agreement entered into by the Issuer and such successor Registrar, Calculation Agent or Paying Agent, as the case may be, and delivered to the Trustee or (2) notification to the Trustee that the Trustee shall serve as Registrar, Calculation Agent or Paying Agent until the appointment of a successor in accordance with clause (1) above. The Registrar, Calculation Agent or Paying Agent may resign at any time upon not less than 10 Business Days' prior written notice to the Issuer; provided, however, that the Trustee may resign as Paying Agent or Registrar only if the Trustee also resigns as Trustee in accordance with Section 7.07. SECTION 2.04 Paying Agent to Hold Money in Trust. By 3:00 p.m., New York City time one Business Day prior to each due date of the principal and cash interest on any Note, the Issuer shall deposit with the Paying Agent (or if the Issuer or any of its Subsidiaries is acting as Paying Agent, segregate and hold in trust for the benefit of the Persons entitled thereto) a sum sufficient to pay such principal and cash interest when so becoming due. The Issuer shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Noteholders or the Trustee all money held by the Paying Agent for the payment of principal of or cash interest on the Notes and shall notify the Trustee in writing of any default by the Issuer in making any such payment within one Business Day thereof. If the Issuer or any of its Subsidiaries acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Issuer at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. Any money deposited with any Paying Agent, or then held by the Issuer or a permitted Subsidiary in trust for the payment of principal or cash interest on any Note and remaining unclaimed for two years after such principal and interest has become due and payable shall be paid to the Issuer at its request, or, if then held by the Issuer or a permitted Subsidiary, shall be discharged from such trust; and the Noteholders shall thereafter, as general unsecured creditors, look only to the Issuer for payment thereof, and all liability of the Paying Agent with respect to such money, and all liability of the Issuer or such permitted Subsidiary as trustee thereof, shall thereupon cease. SECTION 2.05 Noteholder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Noteholders. If the Trustee is not the Registrar, the Issuer shall furnish, or cause the Registrar to furnish, to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Noteholders. SECTION 2.06 Replacement Notes. If a mutilated Note is surrendered to the Registrar or if the Holder of a Note claims that the Note has been lost, destroyed or wrongfully taken, the Issuer shall issue and the Trustee shall authenticate a replacement Note if the requirements of Section 8-405 of the Uniform Commercial Code are met, such that the Holder (i) notifies the Issuer or the Trustee within a reasonable time after he has notice of such loss, destruction or wrongful taking and the Registrar does not register a transfer prior to receiving such notification, (ii) makes such request to the Issuer or the Trustee prior to the Note being acquired by a protected purchaser as defined in Section 8-303 of the Uniform Commercial Code (a "protected purchaser") and (iii) satisfies any other reasonable requirements of the Trustee and the Issuer including evidence of the destruction, loss or theft of the Note. Such Holder shall furnish an indemnity bond sufficient in the judgment of the Trustee to protect the Issuer, the Trustee, the Paying Agent, the Registrar and any co-registrar from any cost, expense or loss that any of them may suffer if a Note is replaced and subsequently presented or claimed for payment. The Issuer and the Trustee may charge the Holder for their expenses in replacing a Note including the payment of a sum sufficient to cover any tax or other governmental charge that may be required. In the event any such mutilated, lost, destroyed or wrongfully taken Note has become or is about to become due and payable, the Issuer in its discretion may pay such Note instead of issuing a new Note in replacement thereof. Every replacement Note is an additional obligation of the Issuer. The provisions of this Section 2.06 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, lost, destroyed or wrongfully taken Notes. SECTION 2.07 Outstanding Notes. Notes outstanding at any time are all Notes authenticated by the Trustee under this Indenture (including Additional Notes) except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. Subject to Section 11.04, a Note does not cease to be outstanding because the Issuer or an Affiliate of the Issuer holds the Note. If a Note is replaced pursuant to Section 2.06, it ceases to be outstanding unless the Trustee and the Issuer receive proof satisfactory to them that the replaced Note is held by a protected purchaser. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a repurchase date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Notes (or portions thereof) to be redeemed or repurchased or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Noteholders on that date pursuant to the terms of this Indenture, then on and after that date such Notes (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.08 Temporary Notes. Until definitive Notes are ready for delivery, the Issuer may prepare and the Trustee shall authenticate and deliver temporary Notes. Temporary Notes shall be substantially in the form of definitive Notes but may have variations that the Issuer considers appropriate for temporary Notes. Without unreasonable delay, the Issuer shall prepare and the Trustee shall authenticate definitive Certificated Notes or Global Notes, as the case may be, and deliver them in exchange for temporary Notes upon surrender of such temporary Notes at the office or agency of the Issuer, without charge to the Holder. SECTION 2.09 Cancellation. The Issuer at any time may deliver Notes to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Notes surrendered to them for transfer, exchange, purchase or payment. The Trustee and no one else shall cancel, in accordance with the Trustee's customary procedures, all Notes surrendered for registration of transfer, exchange, purchase, payment or cancellation and deliver canceled Notes to the Issuer, or if the Issuer so agrees, may destroy canceled Notes, in accordance with the Trustee's customary procedures. The Issuer shall not issue new Notes to replace Notes that have been redeemed, paid or delivered to the Trustee for cancellation. The Trustee shall not authenticate Notes in place of canceled Notes other than pursuant to the terms of this Indenture. SECTION 2.10 CUSIP Numbers. The Issuer in issuing the Notes may use one or more "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of purchase as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Notes or as contained in any notice of a repurchase and that reliance may be placed only on the other identification numbers printed on the Notes, and any such repurchase shall not be affected by any defect in or omission of such numbers. The Issuer shall promptly notify the Trustee of any change in "CUSIP" numbers. SECTION 2.11 Registration, Transfer and Exchange. (a) The Notes will be issued in registered form only, without interest coupons, and the Issuer shall cause the Trustee to maintain a register (the "Register") of the Notes, for registering the record ownership of the Notes by the Holders and transfers and exchanges of the Notes. (b) (1) Each Global Note will be registered in the name of the Depositary or its nominee and, so long as DTC is serving as the Depositary thereof, will bear the DTC Legend. (2) Each Global Note will be delivered to the Trustee as custodian for the Depositary. Transfers of a Global Note (but not a beneficial interest therein) will be limited to transfers thereof in whole, but not in part, to the Depositary, its successors or their respective nominees, except (i) as set forth in Section 2.11(b)(4) and (ii) transfers of portions thereof in the form of Certificated Notes may be made upon request of an Agent Member (for itself or on behalf of a beneficial owner) by written notice given to the Trustee by or on behalf of the Depositary in accordance with customary procedures of the Depositary and in compliance with this Section and Section 2.12. (3) Agent Members will have no rights under this Indenture with respect to any Global Note held on their behalf by the Depositary, and the Depositary may be treated by the Issuer, the Trustee and any agent of the Issuer or the Trustee as the absolute owner and Holder of such Global Note for all purposes whatsoever. Notwithstanding the foregoing, the Depositary or its nominee may grant proxies and otherwise authorize any Person (including any Agent Member and any Person that holds a beneficial interest in a Global Note through an Agent Member) to take any action which a Holder is entitled to take under this Indenture or the Notes, and nothing herein will impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any security. (4) If (x) the Depositary notifies the Issuer that it is unwilling or unable to continue as Depositary for a Global Note and a successor depositary is not appointed by the Issuer within 90 days of the notice or (y) an Event of Default has occurred and is continuing and the Trustee has received a request from the Depositary, the Trustee will promptly exchange each beneficial interest in the Global Note for one or more Certificated Notes in authorized denominations having an equal aggregate principal amount registered in the name of the owner of such beneficial interest, as identified to the Trustee by the Depositary, and thereupon the Global Note will be deemed canceled. If such Note does not bear a Restricted Legend, then the Certificated Notes issued in exchange therefor will not bear a Restricted Legend. If such Note bears a Restricted Legend, then the Certificated Notes issued in exchange therefor will bear a Restricted Legend. (c) Each Certificated Note will be registered in the name of the Holder thereof or its nominee. (d) A Holder may transfer a Note (or a beneficial interest therein) to another Person or exchange a Note (or a beneficial interest therein) for another Note or Notes of any authorized denomination by presenting to the Trustee a written request therefor stating the name of the proposed transferee or requesting such an exchange, accompanied by any certification, opinion or other document required by Section 2.12. The Trustee will promptly register any transfer or exchange that meets the requirements of this Section by noting the same in the register maintained by the Trustee for such purpose; provided that (1) no transfer or exchange will be effective until it is registered in such register; and (2) the Trustee will not be required (i) to issue, register the transfer of or exchange any Note for a period of 15 days before a selection of Notes to be redeemed or purchased pursuant to a Repurchase Offer, (ii) to register the transfer of or exchange any Note so selected for purchase in whole or in part, except, in the case of a partial purchase, that portion of any Note not being redeemed or purchased, or (iii) if a purchase pursuant to a Repurchase Offer is to occur after a regular record date but on or before the corresponding interest payment date, to register the transfer of or exchange any Note on or after the regular record date and before the date of purchase. Prior to the registration of any transfer, the Issuer, the Trustee and their agents will treat the Person in whose name the Note is registered as the owner and Holder thereof for all purposes (whether or not the Note is overdue), and will not be affected by notice to the contrary. From time to time the Issuer will execute and the Trustee will authenticate additional Notes as necessary in order to permit the registration of a transfer or exchange in accordance with this Section. No service charge will be imposed in connection with any transfer or exchange of any Note, but the Issuer and the Trustee/Registrar may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than a transfer tax or other similar governmental charge payable upon exchange pursuant to subsection (b)(4)). (e) (1) Global Note to Global Note. If a beneficial interest in a Global Note is transferred or exchanged for a beneficial interest in another Global Note, the Trustee will (x) record a decrease in the principal amount of the Global Note being transferred or exchanged equal to the principal amount of such transfer or exchange and (y) record a like increase in the principal amount of the other Global Note. Any beneficial interest in one Global Note that is transferred to a Person who takes delivery in the form of an interest in another Global Note, or exchanged for an interest in another Global Note, will, upon transfer or exchange, cease to be an interest in such Global Note and become an interest in the other Global Note and, accordingly, will thereafter be subject to all transfer and exchange restrictions, if any, and other procedures applicable to beneficial interests in such other Global Note for as long as it remains such an interest. (2) Global Note to Certificated Note. If a beneficial interest in a Global Note is transferred or exchanged for a Certificated Note, the Trustee will (x) record a decrease in the principal amount of such Global Note equal to the principal amount of such transfer or exchange and (y) deliver one or more new Certificated Notes in authorized denominations having an equal aggregate principal amount to the transferee (in the case of a transfer) or the owner of such beneficial interest (in the case of an exchange), registered in the name of such transferee or owner, as applicable. (3) Certificated Note to Global Note. If a Certificated Note is transferred or exchanged for a beneficial interest in a Global Note, the Trustee will (x) cancel such Certificated Note, (y) record an increase in the principal amount of such Global Note equal to the principal amount of such transfer or exchange and (z) in the event that such transfer or exchange involves less than the entire principal amount of the canceled Certificated Note, deliver to the Holder thereof one or more new Certificated Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Certificated Note, registered in the name of the Holder thereof. (4) Certificated Note to Certificated Note. If a Certificated Note is transferred or exchanged for another Certificated Note, the Trustee will (x) cancel the Certificated Note being transferred or exchanged, (y) deliver one or more new Certificated Notes in authorized denominations having an aggregate principal amount equal to the principal amount of such transfer or exchange to the transferee (in the case of a transfer) or the Holder of the canceled Certificated Note (in the case of an exchange), registered in the name of such transferee or Holder, as applicable, and (z) if such transfer or exchange involves less than the entire principal amount of the canceled Certificated Note, deliver to the Holder thereof one or more Certificated Notes in authorized denominations having an aggregate principal amount equal to the untransferred or unexchanged portion of the canceled Certificated Note, registered in the name of the Holder thereof. SECTION 2.12 Restrictions on Transfer and Exchange. (a) The transfer or exchange of any Note (or a beneficial interest therein) may only be made in accordance with this Section and Section 2.11 and, in the case of a Global Note (or a beneficial interest therein), the applicable rules and procedures of the Depositary. The Trustee shall refuse to register any requested transfer or exchange that does not comply with the preceding sentence. (b) Subject to paragraph (c), the transfer or exchange of any Note (or a beneficial interest therein) of the type set forth in column A below for a Note (or a beneficial interest therein) of the type set forth opposite in column B below may only be made in compliance with the certification requirements (if any) described in the clause of this paragraph set forth opposite in column C below. A B C - ------------------------ -------------------------------------------- ------ Rule 144A Global Note Rule 144A Global Note (1) Rule 144A Global Note Regulation S Global Note (2) Rule 144A Global Note Certificated Note (3) Rule 144A Global Note Global Note (3) Rule 144A Global Note IAI Global Note (3) IAI Global Note IAI Global Note (6) IAI Global Note Rule 144A Global Note (3) IAI Global Note Regulation S Global Note (2) IAI Global Note Certificated Note (3) IAI Global Note Global Note (3) Regulation S Global Note IAI Global Note (6) Regulation S Global Note Rule 144A Global Note (4) Regulation S Global Note Regulation S Global Note (1) Regulation S Global Note Certificated Note (5) Regulation S Global Note Global Note (5) Certificated Note Rule 144A Global Note (3) Certificated Note Regulation S Global Note (2) Certificated Note IAI Global Note (6) Certificated Note Certificated Note (3) Global Note Rule 144A Global Note (3) Global Note Regulation S Global Note (2) Global Note IAI Global Note (6) (1) No certification is required. (2) The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee a duly completed Regulation S Certificate; provided that if the requested transfer or exchange is made by the Holder of a Certificated Note or Global Note that does not bear a Restricted Legend, then no certification is required. (3) The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee (x) a duly completed Rule 144A Certificate, (y) a duly completed Regulation S Certificate or (z) a duly completed Institutional Accredited Investor Certificate, and/or an Opinion of Counsel and such other certifications and evidence as the Issuer may reasonably require in order to determine that the proposed transfer or exchange is being made in compliance with the Securities Act and any applicable securities laws of any state of the United States; provided that if the requested transfer or exchange is made by the Holder of a Certificated Note or Global Note that does not bear a Restricted Legend, then no certification is required. In the event that (i) the requested transfer or exchange takes place after the Restricted Period and a duly completed Regulation S Certificate is delivered to the Trustee or (ii) a Certificated Note or Global Note, as the case may be, that does not bear a Restricted Legend is surrendered for transfer or exchange, upon transfer or exchange the Trustee will deliver a Certificated Note or Global Note, as the case may be, that does not bear a Restricted Legend. (4) The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee a duly completed Rule 144A Certificate. (5) Notwithstanding anything to the contrary contained herein, no such exchange is permitted if the requested exchange involves a beneficial interest in a Temporary Regulation S Global Note. If the requested transfer or exchange involves a beneficial interest in a Permanent Regulation S Global Note, no certification is required and the Trustee will deliver a Certificated Note that does not bear a Restricted Legend. (6) The Person requesting the transfer or exchange must deliver or cause to be delivered to the Trustee a duly completed IAI Certificate. (c) No certification is required in connection with any transfer or exchange of any Note (or a beneficial interest therein) (1) after such Note is eligible for resale in a single transction at one time pursuant to Rule 144 under the Securities Act (or a successor provision); provided that the Issuer has provided the Trustee with an Officers' Certificate to that effect, and the Issuer may require from any Person requesting a transfer or exchange in reliance upon this clause (1) an opinion of counsel and any other reasonable certifications and evidence in order to support such certificate; or (2) sold pursuant to an effective registration statement. Any Certificated Note delivered in reliance upon this paragraph will not bear a Restricted Legend. (d) The Trustee will retain copies of all certificates, opinions and other documents received in connection with the transfer or exchange of a Note (or a beneficial interest therein), and the Issuer will have the right to inspect and make copies thereof at any reasonable time upon written notice to the Trustee. SECTION 2.13 Temporary Regulation S Global Notes. (a) Each Note originally sold in reliance upon Regulation S will be evidenced by one or more Regulation S Global Notes that bear the Temporary Regulation S Global Note Legend. (b) An owner of a beneficial interest in a Temporary Regulation S Global Note (or a Person acting on behalf of such an owner) may provide to the Trustee (and the Trustee will accept) a duly completed Certificate of Beneficial Ownership at any time after the Restricted Period (it being understood that the Trustee will not accept any such certificate during the Restricted Period). Promptly after acceptance of a Certificate of Beneficial Ownership with respect to such a beneficial interest, the Trustee will cause such beneficial interest to be exchanged for an equivalent beneficial interest in a Permanent Regulation S Global Note, and will (x) permanently reduce the principal amount of such Temporary Regulation S Global Note by the amount of such beneficial interest and (y) increase the principal amount of such Permanent Regulation S Global Note by the amount of such beneficial interest. (c) Notwithstanding paragraph (b), if after the Restricted Period any Initial Purchaser owns a beneficial interest in a Temporary Regulation S Global Note, such Initial Purchaser may, upon written request to the Trustee accompanied by a certification as to its status as an Initial Purchaser, exchange such beneficial interest for an equivalent beneficial interest in a Permanent Regulation S Global Note, and the Trustee will comply with such request and will (x) permanently reduce the principal amount of such Temporary Regulation S Global Note by the amount of such beneficial interest and (y) increase the principal amount of such Permanent Regulation S Global Note by the amount of such beneficial interest. (d) Notwithstanding anything to the contrary contained herein, any owner of a beneficial interest in a Temporary Regulation S Global Note shall not be entitled to receive payment of principal or interest on such beneficial interest or other amounts in respect of such beneficial interest until such beneficial interest is exchanged for an interest in a Permanent Regulation S Global Note or transferred for an interest in another Global Note or a Certificated Note. SECTION 2.14 Defaulted Interest. If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay the defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner (including, in the form of Additional Notes). The Issuer may pay the defaulted interest to the persons who are Noteholders on a subsequent special record date. The Issuer shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail or cause to be mailed to each Noteholder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. The Issuer may make payment of any defaulted interest in any other lawful manner not inconsistent with the requirements (if applicable) of any securities exchange on which the Notes may be listed, and upon such notice as may be required by such exchange, if, after notice given by the Issuer to the Trustee of the proposed payment pursuant to this paragraph, such manner of payment shall be deemed practicable by the Trustee. SECTION 2.15 Payment of Interest. Interest accruing on the Notes shall be paid in the form of Additional Notes as provided in Section 2.02(d). Notwithstanding anything else in this Indenture or the Notes to the contrary, all interest shall accrue and be payable in cash and not in Additional Notes commencing on the earlier of (i) acceleration of the Notes pursuant to Section 6.02 (unless such acceleration shall be rescinded in accordance with Section 6.04, in which case this clause (i) shall not apply ab initio and such interest shall be payable in Additional Notes, subject to clause (ii) of this paragraph), (ii) the occurrence of an Event of Default under Section 6.01(a)(8) (with respect to the Issuer or any of its Restricted Subsidiaries) and (iii) March 16, 2011. In addition, interest payable on any Notes in connection with a repurchase under this Indenture shall be paid in cash. ARTICLE 3 REPURCHASE ---------- SECTION 3.01 Repurchase Offers. (a) If the Issuer shall be required to commence an offer to all Holders to purchase Notes (a "Repurchase Offer") pursuant to Section 4.10 (a "Change of Control Offer"), Section 4.12 (a "Stockholder Approval Offer") or Section 5.08(a)(4) (an Excess Proceeds Offer), the Issuer shall follow the procedures specified in this Section 3.01: (1) (A) Within 10 days after a Change of Control (unless the Issuer is not required to make such offer pursuant to Section 4.10), or (B) on the date on which the Issuer is required to make a Repurchase Offer pursuant to Section 5.08(a)(4) or (C) July 23, 2008 (unless the Issuer is not required to make such offer pursuant to Section 4.12), the Issuer shall commence a Repurchase Offer, which shall remain open for a period of at least 20 Business Days following its commencement, by sending a notice to the Trustee and each of the Holders, by first class mail, which notice shall contain all instructions and materials necessary to enable the Holders to tender Notes pursuant to such Repurchase Offer. Such notice, which shall govern the terms of the Repurchase Offer, shall describe the transaction or transactions that constitute the Change of Control or otherwise require the Repurchase Offer and shall state: (i) that the Repurchase Offer is being made pursuant to Section 5.08(a)(4) or Section 4.10 or Section 4.12, as the case may be, and this Section 3.01; (ii) the principal amount of Notes the Issuer is required to offer to repurchase or that the Issuer is required to offer to purchase all of the outstanding principal amount of Notes (such amount, the "Offer Amount"), the purchase price and that on the date specified in such notice (the "Purchase Date"), which date shall be 30 days, or if such day is not a Business Day, the next succeeding Business Day, from the date such notice is mailed, the Issuer shall repurchase an Offer Amount of Notes validly tendered and not withdrawn pursuant to Section 5.08(a)(4) or Section 4.10 or Section 4.12, as the case may be, and this Section 3.01; (iii) that any Note not tendered or accepted for payment shall continue to accrue interest; (iv) that, unless the Issuer defaults in making such payment, Notes accepted for payment pursuant to the Repurchase Offer shall cease to accrue interest after the Purchase Date; (v) that Holders electing to have a Note purchased pursuant to a Repurchase Offer may elect to have all or any portion of such Note purchased; (vi) that Holders electing to have a Note purchased pursuant to any Repurchase Offer shall be required to surrender the Note, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the Note, or such other customary documents of surrender and transfer as the Issuer may reasonably request, duly completed, or transfer the Note by book-entry transfer, to the Issuer, the Depositary, or the Paying Agent at the address specified in the notice prior to the Purchase Date; (vii) that Holders shall be entitled to withdraw their election if the Issuer, the Depositary or the Paying Agent, as the case may be, in each case with a copy to the Trustee, receives, not later than the Purchase Date, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing its election to have such Note purchased; (viii) that Holders electing to have a Note purchased pursuant to any Repurchase Offer shall be entitled to convert their Notes only if they validly withdraw their election; (ix) that Holders whose Notes are purchased only in part shall be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer); and (x) the CUSIP number, if any, printed on the Notes being repurchased and that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Notes. (2) On the Purchase Date, the Issuer shall, to the extent lawful, (A) accept for payment, on a pro rata basis to the extent necessary in the case of a Repurchase Offer that is not a Change of Control Offer or Stockholder Approval Offer, the Notes or portions thereof properly tendered pursuant to the Repurchase Offer and not theretofore withdrawn and shall deliver to the Trustee an Officers' Certificate stating that such Notes or portions thereof were accepted for payment by the Issuer in accordance with the terms of this Section 3.01, (B) deposit with the Paying Agent an amount equal to the cash payment required in respect of the repurchase of all Notes or portions thereof so tendered and (C) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers' Certificate stating the aggregate principal amount of the Notes or portions thereof being purchased by the Issuer. The Issuer, the Depositary or the Paying Agent, as the case may be, shall promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the Change of Control Payment (or other payment due in respect of such Repurchase Offer if not a Change of Control Offer) with respect to the Notes tendered by such Holder and accepted by the Issuer for purchase, and the Issuer shall promptly issue a new Note, and the Trustee, upon written request from the Issuer, shall authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Notes so surrendered, provided that each such new Note shall be in a minimum principal amount of $1,000 or an integral multiple of $1,000 in excess thereof (except that Additional Notes issued in payment of interest may be purchased in other denominations). Any Note not so accepted shall be promptly mailed or delivered by the Issuer to the Holder thereof. On the Purchase Date, all Notes purchased by the Issuer shall be delivered to the Trustee for cancellation. All Notes or portions thereof purchased pursuant to the Repurchase Offer shall be canceled by the Trustee. The Issuer shall publicly announce the results of the Repurchase Offer on or as soon as practicable after the Purchase Date, but in no case more than five Business Days thereafter. For the purposes of the preceding sentence, it shall be sufficient for the Issuer to publish the results of the Repurchase Offer on its website on the world wide web. If the Issuer complies with the provisions of the preceding paragraph, on and after the Purchase Date interest shall cease to accrue on the Notes or the portions of Notes repurchased. If a Note is repurchased on or after an interest payment record date but on or before the related interest payment date, then any accrued and unpaid interest shall be paid to the Holder in whose name such Note was registered at the close of business on such record date and no other interest will be payable to Holders who tender pursuant to the Repurchase Offer. If any Note called is not repurchased upon surrender because of the failure of the Issuer to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the Purchase Date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes. (b) The Issuer shall comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations to the extent such laws and regulations are applicable in connection with a Change of Control Offer or an Excess Proceeds Offer or a Stockholder Approval Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with this Section 3.01, the Issuer shall comply with such securities laws and regulations and shall not be deemed to have breached its obligations under this Section 3.01 by virtue thereof. (c) Once notice of repurchase is mailed in accordance with this Section 3.01, all Notes validly tendered and not withdrawn (or, in the case of a Repurchase Offer that is not a Change of Control Offer or Stockholder Approval Offer, if the Issuer is not required to repurchase all of such Notes then the pro rata portion of such Notes that the Issuer may be required to repurchase) become irrevocably due and payable on the Purchase Date at the purchase price specified herein. A notice of repurchase may not be conditional. (d) Other than as specifically provided in this Section 3.01 or Sections 5.08(a)(4), any purchase pursuant to this Section 3.01 or Section 5.08(a)(4) shall be made pursuant to Sections 3.02 and 3.03. SECTION 3.02 Selection. If less than all of the Notes are to be repurchased at any time, the Trustee will select Notes for repurchase as follows: (1) if the Notes are listed on any national securities exchange, in compliance with the requirements of the principal national securities exchange on which the Notes are listed; or (2) if the Notes are not listed on any national securities exchange, on a pro rata basis, by lot or by such method as the Trustee shall deem fair and appropriate; provided that no Notes of $1,000 or less shall be redeemed in part, except that (a) Additional Notes issued in payment of interest may be redeemed in other denominations and (b) if all of the Notes of a Holder are to be redeemed, the entire outstanding amount of Notes held by such Holder, even if not a multiple of $1,000, shall be redeemed. If any Note is to be redeemed in part only, the notice of repurchase that relates to such Note shall state the portion of the principal amount thereof to be redeemed. On and after the Purchase Date, unless the Issuer defaults in payment of the repurchase price or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest will cease to accrue on the Notes or portions of the Notes called for repurchase. SECTION 3.03 Notes Redeemed in Part. Upon surrender of a Note that is redeemed in part, the Issuer shall execute and the Trustee shall authenticate for the Holder (at the Issuer's expense) a new Note equal in principal amount to the unredeemed portion of the Note surrendered. ARTICLE 4 AFFIRMATIVE COVENANTS --------------------- So long as any Note remains outstanding: SECTION 4.01 Reports. The Issuer shall furnish to the Trustee and, upon written request, to Holders of the Notes a copy of all of the information and reports referred to in clauses (1) and (2) below: (1) (a) within 90 days after the end of each fiscal year, annual audited financial statements for such fiscal year (along with customary comparative results) and (b) within 60 days of the end of each of the first three fiscal quarters of every fiscal year, unaudited financial statements for the interim period as of, and for the period ending on, the end of such fiscal quarter (along with comparative results for the corresponding interim period in the prior year), in each case, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" with respect to the periods presented and, with respect to the annual information only, a report on the annual financial statements by the Issuer's certified independent accountants (all of the foregoing financial information to be prepared on a basis substantially consistent with the then applicable Commission requirements); and (2) within five Business Days of the occurrence of an event required to be therein reported, such other reports containing substantially the same information required to be contained in a Current Report on Form 8-K under the Exchange Act; provided that if the Issuer becomes subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the Issuer may satisfy the foregoing requirements by timely filing all reports within the periods specified in the Commission's rules and regulations and otherwise complying with the Commission's rules and regulations regarding public availability of such reports If the Issuer has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by this Section 4.01 shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the financial condition and results of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of its Unrestricted Subsidiaries to the extent such information would be required if the Issuer was subject to the periodic reporting requirements of the Exchange Act. In addition, for so long as any Notes remain outstanding, if at any time the Issuer and the Guarantors are not required to file with the Commission the reports required by the preceding paragraphs, the Issuer and the Guarantors shall furnish to the Holders of Notes and prospective investors, promptly upon their request, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. SECTION 4.02 Payment of Obligations. The Issuer shall, and shall cause each of its Restricted Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges levied or imposed upon the Issuer or any Restricted Subsidiary or upon the income, profits or property of the Issuer or any Restricted Subsidiary and (ii) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a material liability or Lien upon the property of the Issuer or any Restricted Subsidiary; provided, however, that the Issuer shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Issuer), are being maintained in accordance with GAAP or where the failure to effect such payment will not be materially disadvantageous to the Holders. SECTION 4.03 Corporate Existence. Except as otherwise permitted in this Indenture, the Issuer and the Guarantors shall do or cause to be done all things necessary to preserve and keep in full force and effect their corporate existences and the corporate, partnership, limited liability company or other existence of any Restricted Subsidiary in accordance with their respective organizational documents (as the same may be amended from time to time). SECTION 4.04 FCC License Subsidiary; Licenses. (a) All FCC Licenses acquired after the Issue Date shall, as soon as practicable after receipt thereof, be assigned to (subject to prior FCC approval) the FCC License Subsidiary, except as required by law or administrative action. All Industry Canada Licenses relating to the provision of MSS services in Canada in existence on the Issue Date or acquired after the Issue Date shall be held by TerreStar Canada or another entity designated by the Issuer that becomes a Guarantor, except as required by law or administrative action. The Issuer shall not transfer or dispose of any Capital Stock it directly or indirectly owns in each of the Canadian Entities; provided, that the Issuer may dispose of its Capital Stock of any of the Canadian Entities in compliance with Section 5.08 if such disposition does not adversely affect the rights of the Issuer under the IRU Agreement or result in the loss of the orbital slot granted by Industry Canada for TerreStar-1. (b) The Issuer shall maintain direct ownership of all of the Capital Stock of the FCC License Subsidiary. SECTION 4.05 Compliance Certificates. (a) The Issuer shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Issuer, an Officers' Certificate as to the signers' knowledge of the Issuer's compliance with all conditions and covenants on its part contained in this Indenture and stating whether or not the signer knows of any Default or Event of Default. For the purposes of this Section 4.05, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. (b) The Issuer shall promptly deliver to the Trustee and in any event within five Business Days of any Officer of the Issuer or the Parent becoming aware of the occurrence of any Default or Event of Default, an Officers' Certificate setting forth the details of such Default or Event of Default and the action which the Issuer or the Parent, as applicable, is taking or proposes to take to remedy the same. SECTION 4.06 Designation of Unrestricted Subsidiaries. (a) The Board of Directors of the Issuer may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by the Issuer and its Restricted Subsidiaries in the Subsidiary properly designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 5.04(a) (or clause (9) of Section 5.04(b)) or under one or more clauses of the definition of Permitted Investments, as determined by the Issuer. Such designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Issuer may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default or an Event of Default. (b) Any designation of a Subsidiary of the Issuer as an Unrestricted Subsidiary shall be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Issuer giving effect to such designation and an Officers' Certificate certifying that such designation complied with clause (a) of this Section 4.06 and was permitted under Section 5.04. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Issuer as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 5.01, the Issuer will be in default of such covenant. The Board of Directors of the Issuer may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Issuer; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Issuer of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (1) such Indebtedness is permitted under Section 5.01, calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable quarterly reference period; and (2) no Default or Event of Default would be in existence following such designation. SECTION 4.07 Additional Guarantees. (a) If the Issuer or any Restricted Subsidiary acquires or creates another Domestic Subsidiary (other than an acquired Domestic Subsidiary that is a direct or indirect Subsidiary of a Foreign Subsidiary) after the Issue Date, such newly acquired or created Domestic Subsidiary shall, on the date on which it is acquired or created, become a Guarantor by executing and delivering to the Trustee a supplemental indenture in the form of Exhibit J hereto, pursuant to which such Domestic Subsidiary will guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest on the Notes on a senior secured basis. (b) If any Restricted Subsidiary that is not a Guarantor shall Guarantee any Indebtedness of the Issuer or any Guarantor while the Notes are outstanding, then such Subsidiary shall become a Guarantor under this Indenture and shall execute and deliver to the Trustee a supplemental indenture in the form of Exhibit J hereto. (c) The Issuer may elect to make any Foreign Subsidiary or any Affiliate a Guarantor, with the consent of any such party, by causing such Person to execute and deliver to the Trustee a supplemental indenture in the form of Exhibit J hereto. (d) The Trustee shall execute an appropriate instrument prepared by the Issuer evidencing the release of a Guarantor from its obligations under its Guarantee upon receipt of an Officer's Certificate by the Issuer or such Guarantor stating that all conditions set forth in Section 4.07(f) or Section 5.03(f), as applicable, have been satisfied or that the Capital Stock of such Guarantor has been disposed of in accordance with the provisions of this Indenture. (e) The foregoing provisions shall not apply to Subsidiaries that have been properly designated as Unrestricted Subsidiaries in accordance with Section 4.06 for so long as they continue to constitute Unrestricted Subsidiaries. (f) Any Guarantee given by any Restricted Subsidiary that was required to be given by Section 4.07(b) hereof shall be automatically released upon the release by the holders of the Indebtedness described in Section 4.07(c) or the guarantee thereof by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Indebtedness), which resulted in the Notes being guaranteed by such Restricted Subsidiary, at such time as (a) no other Indebtedness of the Issuer and the other Guarantors has been guaranteed by such Restricted Subsidiary or (b) the holders of all such other Indebtedness which is guaranteed by such Restricted Subsidiary also release their guarantee by such Restricted Subsidiary (including any deemed release upon payment in full of all obligations under such Indebtedness). SECTION 4.08 Maintenance of Insurance. (a) The Issuer shall obtain, or cause to be obtained, prior to the launch of each satellite and shall maintain, or cause to be maintained, launch insurance with respect to each satellite launch covering the period from the launch to 180 days or more following the launch of each satellite on such terms (including coverage period, exclusions, limitations on coverage, co-insurance, deductibles and coverage amount) as is customary in the industry for similar persons at the time of such launch. (b) The Issuer shall procure and maintain, or cause to be procured and maintained, Full In-Orbit Insurance for each satellite; provided that such Full In-Orbit Insurance shall only be required if, and to the extent and on such terms (including coverage period, exclusions, limitations on coverage, co-insurance, deductibles and coverage amount) as is determined by the Board of Directors of the Issuer to be in the best interests of the Issuer as evidenced by a resolution of the Board of Directors. (c) Insurance policies required by the foregoing paragraphs obtained or renewed after the Issue Date shall: (1) contain no exclusions other than customary exclusions and such specific exclusions applicable to the performance of the satellite (or portion thereof, or the type of satellite or portion thereof, as applicable) being insured as are acceptable to the Board of Directors of the Issuer in order to obtain insurance for a price that is, and on other terms and conditions that are, commercially reasonable; and (2) subject to the proviso in clause (b) of this Section 4.08, provide coverage for all risks of loss and damage to the satellite. (d) In the event that the Issuer or any Guarantor receives Net Insurance Proceeds relating to any satellite, the Issuer or such Guarantor shall apply such Net Insurance Proceeds in the manner provided under Section 5.08. SECTION 4.09 Covenants with Respect to the Canadian Entities. At all times after the Transfer Agreements have become effective, the Issuer will exercise its rights under such Transfer Agreements so as not to permit the Canadian Entities to (each, a "Covered Transaction"): (a) engage in (i) any sale, lease, transfer or other disposition of any assets or rights; or (ii) the issuance of any Equity Interests in a Canadian Entity or the sale of any Equity Interests of a Canadian Entity; (b) incur any Indebtedness; or (c) directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien, other than Liens on their respective assets having an aggregate value of $500,000 or less, unless, in each case, such Canadian Entity would be permitted to engage in such Covered Transaction in compliance with the Existing Indenture. SECTION 4.10 Change of Control. (a) If a Change of Control occurs, the Issuer shall make an offer to each Holder to repurchase all or any part of such Holder's Notes pursuant to a Change of Control Offer made pursuant to Section 3.01 at an offer price in cash or, at the election of such Holder, in shares of TerreStar Corporation stock as described below (the "Change of Control Payment") equal to 111% of the principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, thereon to, but excluding, the date of purchase. (b) The Issuer shall not be required to make a Change of Control Offer upon a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in Section 3.01 applicable to a Change of Control Offer made by the Issuer and purchases all Notes properly tendered and not withdrawn under such Change of Control Offer. (c) If any Holder elects pursuant to Section 4.10 to receive the Change of Control Payment in shares of Parent Common Stock, such Change of Control Payment shall be in an amount of shares of TerreStar Common Stock (rounded to the nearest share) equal to 115% of the number of shares into which such Holder's Notes would otherwise be exchangeable pursuant to Article 11 below. SECTION 4.11 Financial Covenants. The Issuer shall not make any expenditures not contemplated by the Business Plan without the prior approval of at least 60% of its Board of Directors, including at least one director nominated by EchoStar and one director nominated by Harbinger; provided, however, that prior to the approval of the Business Plan the Issuer shall be permitted to make expenditures to fund operating expenses in the ordinary course of business. SECTION 4.12 Stockholder Approval. If Stockholder Approval is not obtained by July 23, 2008, the Issuer shall make an offer to each Holder to repurchase all or any part of such Holder's Notes pursuant to a Stockholder Approval Offer made pursuant to Section 3.01 at an offer price in cash equal to 100% of the principal amount of the Notes repurchased, plus accrued and unpaid interest, if any, thereon to, but excluding, the date of purchase. ARTICLE 5 NEGATIVE COVENANTS ------------------ So long as any Note remains outstanding: SECTION 5.01 Indebtedness. (a) The Issuer shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt); provided, however, that the Issuer and any Subsidiary Guarantor may incur Indebtedness (including Acquired Debt) if the Issuer's Leverage Ratio as of the date on which such additional Indebtedness is incurred would not be greater than 6.75 to 1.0, determined on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred at the beginning of the applicable reference period. (b) The provisions of clause (a) of this Section 5.01 will not apply to any of the following items of Indebtedness: (1) Existing Indebtedness; (2) the incurrence by the Issuer and the Subsidiary Guarantors of Indebtedness represented by the Notes, Additional Notes issued in payment of interest on the Notes and the related Guarantees to be issued on the Issue Date, additional notes issued in payment of interest on the notes issued under the Existing Notes Indenture and additional Guarantees issued on or after the Issue Date pursuant to Section 4.07; (3) the incurrence by the Issuer or any Subsidiary Guarantor of Indebtedness represented by Capital Lease Obligations, mortgage financings or Purchase Money Indebtedness with respect to assets other than Capital Stock or other Investments, including the incurrence of Indebtedness representing the financing of installments of Full In-Orbit Insurance, launch insurance premiums or launch services, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in a Permitted Business, and Attributable Debt, in an aggregate principal amount not to exceed $50.0 million at any time outstanding; (4) the incurrence by the Issuer or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, discharge, defease or replace Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 5.01(a) or under any other clause of this Section 5.01(b) (excluding clause (5)), provided that for purposes of any limit contained in any such other clause the aggregate amount of Indebtedness incurred pursuant to this clause (4) outstanding at any one time shall be treated as outstanding pursuant to such other clause; (5) the incurrence by the Issuer or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Issuer and any of its Restricted Subsidiaries; provided, however, that: (i) if the Issuer or any Subsidiary Guarantor is the obligor on such Indebtedness and the payee is not the Issuer or a Subsidiary Guarantor, such Indebtedness shall be expressly subordinated to the prior payment in full in cash of all Obligations with respect to the Notes, in the case of the Issuer, or such Subsidiary Guarantee, in the case of a Subsidiary Guarantor; and (ii) (A) any subsequent issuance or transfer of Equity Interests or any other event that results in any such Indebtedness being beneficially held by a Person other than the Issuer or a Restricted Subsidiary (B) any sale or other transfer of any such Indebtedness to a Person that is neither the Issuer nor a Restricted Subsidiary or (C) the designation of a Restricted Subsidiary which holds Indebtedness as an Unrestricted Subsidiary will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Issuer or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (5); (6) the incurrence by the Issuer or any of its Restricted Subsidiaries of Hedging Obligations; (7) the Guarantee by the Issuer or any of the Subsidiary Guarantors of Indebtedness of the Issuer or any Restricted Subsidiary that was permitted to be incurred by another provision of this Section 5.01(b); provided that if the Indebtedness being guaranteed is (A) pari passu in right of payment to the Notes or any Subsidiary Guarantee, then the Guarantee related to such Indebtedness shall rank equally in right of payment to the Notes or such Subsidiary Guarantee, as the case may be, or (B) subordinated in right of payment to the Notes or any Subsidiary Guarantee, then the Guarantee of such Indebtedness shall be subordinated in right of payment to the same extent to the Notes or such Subsidiary Guarantee, as the case may be; (8) the incurrence of Indebtedness by the Issuer or any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) in the ordinary course of business inadvertently drawn against insufficient funds, provided, however, that such Indebtedness is extinguished within five Business Days of incurrence; (9) the incurrence of Indebtedness by the Issuer or any of its Restricted Subsidiaries incurred in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, performance, surety and similar bonds and completion guarantees provided by the Issuer or any Restricted Subsidiary, in each case, in the ordinary course of business; (10) Indebtedness of a Restricted Subsidiary incurred and outstanding on the date on which such Restricted Subsidiary was acquired by, or merged into, the Issuer or any Restricted Subsidiary (other than Indebtedness incurred (A) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was otherwise acquired by the Issuer or (B) otherwise in connection with, or in contemplation of, such acquisition); provided, however, that at the time such Restricted Subsidiary is acquired by the Issuer, the Issuer would have been able to incur $1.00 of additional Indebtedness pursuant to Section 5.01(a) after giving effect to the incurrence of such Indebtedness pursuant to this clause (10); (11) the incurrence of Purchase Money Indebtedness constituting Indebtedness pursuant to the Purchase Money Credit Agreement by the Issuer or any Subsidiary Guarantor to finance the procurement, construction and launch of one or more satellites and/or ground-based beam-forming earth stations in the aggregate principal amount at any time outstanding not to exceed $100.0 million; (12) the incurrence by the Issuer or any Subsidiary Guarantor of additional Indebtedness consisting solely of the Issuer's 15% Senior Secured PIK Notes due 2014 issued to EchoStar under the Existing Indenture on the Issue Date, in an aggregate principal amount not to exceed $50.0 million; (13) the incurrence of Indebtedness by the Issuer or any Subsidiary Guarantor to finance the purchase or construction of property (real or personal) or equipment that is used for the construction of the Issuer's terrestrial network so long as, at the time of incurrence thereof, the ratio of total consolidated Indebtedness of the Issuer and its Restricted Subsidiaries determined in accordance with GAAP (including Indebtedness under all financings under this clause (13)) to Invested Capital does not exceed 75%. (c) The Issuer shall not permit any of the Unrestricted Subsidiaries to incur any Indebtedness other than Non-Recourse Debt. If any Non-Recourse Debt of an Unrestricted Subsidiary shall at any time cease to constitute Non-Recourse Debt or such Unrestricted Subsidiary shall be redesignated a Restricted Subsidiary and such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary. (d) For purposes of determining compliance with this Section 5.01: (1) in the event that any Indebtedness meets the criteria of more than one of the categories described in clauses (1) through (13) of Section 5.01(b), the Issuer, in its sole discretion, will be permitted to classify such item of Indebtedness at the time of such incurrence in any manner that complies with this Section 5.01; (2) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same, or less onerous, terms, the reclassification of preferred stock of the Issuer or any Subsidiary Guarantor as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock, the accrual of dividends on Disqualified Stock or preferred stock and the accretion of the liquidation preference of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness for purposes of this Section 5.01; (3) Indebtedness permitted by this Section 5.01 need not be permitted solely by reference to one provision permitting such Indebtedness, but may be permitted in part by one such provision and in part by one or more other provisions of this Section 5.01 permitting such Indebtedness; and (4) for the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this Section 5.01, the maximum amount of Indebtedness that the Issuer or any Restricted Subsidiary may incur pursuant to this Section 5.01 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such refinancing Indebtedness is denominated that is in effect on the date of such refinancing. SECTION 5.02 Limitation on Liens. The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind securing Indebtedness or trade payables (other than Permitted Liens) upon any of their property or assets, now owned or hereafter acquired. SECTION 5.03 Merger, Consolidation and Sale of Assets. (a) The Issuer shall not, directly or indirectly: (x) consolidate or merge with or into another Person (whether or not the Issuer is the surviving corporation); or (y) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially all of the properties or assets of the Issuer and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person unless: (1) either: (A) the Issuer is the surviving corporation; or (B) the Person formed by or surviving any such consolidation or merger (if other than the Issuer) or to which such sale, assignment, transfer, conveyance, lease or other disposition has been made (the "Successor Person") is an entity organized or existing under the laws of the United States, any state of the United States or the District of Columbia; provided that if such surviving person is not a corporation, a corporate wholly-owned Restricted Subsidiary of such Person organized under the laws of the United States, any state or the District of Columbia becomes a co-issuer of the Notes in connection therewith; (2) the Successor Person (if other than the Issuer) expressly assumes all the obligations of the Issuer under the Notes and this Indenture pursuant to agreements reasonably satisfactory to the Trustee; (3) immediately after such transaction, no Default or Event of Default exists; (4) the Issuer or the Successor Person (if other than the Issuer) shall, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable annualized quarterly period, be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 5.01(a); and (5) the Issuer shall have delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, sale, assignment, transfer, conveyance, lease or other disposition complies with the provisions of this Indenture. (b) For purposes of this Section 5.03, the sale, assignment, transfer, conveyance, lease or other disposition of all or substantially all of the properties and assets of one or more Restricted Subsidiaries of the Issuer, which properties and assets, if held by the Issuer instead of such Restricted Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer. (c) The Successor Person shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture but, in the case of a lease of all or substantially all its assets, the Issuer will note be released from the obligation to pay the principal of and interest on the Notes. (d) Notwithstanding the preceding, any Restricted Subsidiary may consolidate with, merge into, sell, assign, convey, lease or otherwise transfer all or part of its properties and assets to the Issuer or to any Guarantor. (e) A Guarantor may not consolidate, amalgamate or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Issuer or another Guarantor, unless: (1) immediately after giving effect to such transaction, no Default or Event of Default exists; and (2) subject to the provisions of Section 5.03(f), the Person formed by or surviving any such consolidation, amalgamation or merger (if other than the Guarantor) assumes all the obligations of such Guarantor under this Indenture (including its Guarantee) pursuant to agreements reasonably satisfactory to the Trustee. (f) In the event of: (1) a sale or disposition of all or substantially all of the assets of any Guarantor by way of merger, consolidation, amalgamation or otherwise; or (2) the sale or other disposition of Capital Stock of any Guarantor if, as a result of such disposition, such Person ceases to be a Subsidiary of the Issuer, then the Person acquiring such assets (in the case of clause (f)(1)) or such Guarantor (in the case of clause (f)(2)) will be automatically released and relieved of any obligations under its Guarantee; provided, that such sale or other disposition complies with Section 5.08. SECTION 5.04 Restricted Payments. (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (1) declare or pay any dividend or make any other payment or distribution on or in respect of the Issuer's or any of its Restricted Subsidiaries' Equity Interests (including any payment in connection with any merger or consolidation involving the Issuer or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Issuer's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Issuer and other than dividends or distributions payable to the Issuer or a Restricted Subsidiary of the Issuer); (2) purchase, redeem or otherwise acquire or retire for value (including in connection with any merger or consolidation involving the Issuer) any Equity Interests of the Issuer or the Parent; (3) make any principal payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Issuer or any Guarantor (other than Indebtedness among the Issuer and the Guarantors) that is contractually subordinated to the Notes or to any Guarantee, except a payment of principal at the Stated Maturity thereof, or within one year prior to such Stated Maturity; or (4) make any Restricted Investment (all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as "Restricted Payments"), unless, at the time of and after giving effect to such Restricted Payment: (A) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment; (B) the Issuer would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable quarterly period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Leverage Ratio test set forth in Section 5.01(a); and (C) such Restricted Payment, together with the aggregate amount of all other Restricted Payments declared or made by the Issuer and its Restricted Subsidiaries after the Issue Date, is less than the sum, without duplication, of: (i) the sum of (a) 50% of Consolidated EBITDA accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter during which the Notes were initially issued to the fiscal quarter in which the Issuer first generates positive Consolidated EBITDA plus (b) 100% of Consolidated EBITDA accrued during the period (treated as one accounting period) from the beginning of the fiscal quarter during which the Issuer first generates positive Consolidated EBITDA to the end of the most recent fiscal quarter for which financial statements were published less 1.4 times the Consolidated Interest Expense of the Issuer for the same period (if such amount in this clause (i) is a negative amount, minus the amount by which such amount is less than zero), plus (ii) 100% of the aggregate Net Proceeds received by the Issuer since the Issue Date as a contribution to its common equity capital or from the issue or sale of Equity Interests (other than Disqualified Stock) of the Issuer or from the issue or sale of convertible or exchangeable Disqualified Stock or convertible or exchangeable debt securities of the Issuer that have been converted into or exchanged for such Equity Interests (other than Equity Interests or Disqualified Stock or debt securities) sold to a Subsidiary of the Issuer or an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Issuer or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that there shall be excluded from the calculation of Net Proceeds under this clause (ii) any Net Proceeds received by the Issuer from the issue or sale of its Capital Stock or cash capital contributions received by the Issuer and which is deemed to be used to incur Indebtedness pursuant to clauses (1) and (13) of Section 5.01(b); provided, further that Designated Equity Contributions shall be excluded from the calculation of Net Proceeds under this clause (ii), plus (iii) 100% of the aggregate Net Proceeds received by the Issuer or a Restricted Subsidiary since the Issue Date from (A) Restricted Investments, whether through interest payments, principal payments, dividends or other distributions and payments, or the sale or other disposition (other than to the Issuer or a Restricted Subsidiary) thereof made by the Issuer and its Restricted Subsidiaries and (B) a cash dividend from, or the sale (other than to the Issuer or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary, in each case to the extent not otherwise included in Consolidated Net Income of the Issuer for such period. (b) So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit: (1) the payment of any dividend or the consummation of any irrevocable redemption within 60 days after the date of declaration of the dividend or giving of the redemption notice, as the case may be, if at the date of declaration or notice the dividend or redemption payment would have complied with the provisions of this Indenture; (2) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Issuer) of, Equity Interests of the Issuer (other than Disqualified Stock and other than Equity Interests issued or sold to an employee stock ownership plan or similar trust or from the substantially concurrent contribution of common equity capital to the Issuer; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will be excluded from clause (a)(4)(C)(ii) of Section 5.04; provided, further that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (3) the defeasance, redemption, repurchase or other acquisition or retirement for value of Indebtedness of the Issuer or any Guarantor that is contractually subordinated to the Notes or to any Guarantee in exchange for, or out of the net cash proceeds of the substantially concurrent incurrence of, Permitted Refinancing Indebtedness (other than to a Subsidiary of the Issuer); provided that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (4) the payment of any dividend or distribution by a Restricted Subsidiary of the Issuer to the holders of its Equity Interests on a pro rata basis; provided that payments of amounts to the Issuer or any of its Restricted Subsidiaries pursuant to this clause (4) shall be excluded from subsequent calculations of the amount of Restricted Payments; (5) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Issuer or any Restricted Subsidiary of the Issuer or any direct or indirect parent of the Issuer held by any current or former officer, director or employee of the Issuer or any of its Restricted Subsidiaries or their estates or heirs pursuant to any equity subscription agreement, stock option agreement, shareholders' agreement or similar agreement; provided that the aggregate price paid for all such Equity Interests repurchased, redeemed, acquired or retired pursuant to this clause may not exceed $2.5 million in the aggregate since the Issue Date; provided further that cancellation in connection with a repurchase of Equity Interests of the Issuer of Indebtedness owing to the Issuer from employees, directors, officers or consultants of the Issuer or any of its Subsidiaries incurred to finance the acquisition of such Equity Interests by such individuals shall not be deemed to constitute a Restricted Payment; provided, further that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (6) repurchases of Equity Interests deemed to occur upon the exercise of stock options, warrants or other convertible securities to the extent such Equity Interests represent a portion of the exercise price thereof; provided that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (7) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Issuer or any Restricted Subsidiary of the Issuer issued on or after the Issue Date in accordance with the Leverage Ratio test set forth in Section 5.01(a); provided that payments pursuant to this clause shall be excluded from subsequent calculations of Restricted Payments; (8) the declaration and payment of dividends by the Issuer to, or the making of loans to, any direct or indirect parent in amounts required for any direct or indirect parent to pay: (i) franchise taxes and other fees, taxes and expenses required to maintain their corporate existence; provided that payments of amounts pursuant to this clause (i) shall be excluded from subsequent calculations of the amount of Restricted Payments; (ii) federal, state and local income taxes, to the extent such income taxes are attributable to the income of the Issuer and its Subsidiaries; provided that payments of amounts pursuant to this clause (ii) shall be excluded from subsequent calculations of the amount of Restricted Payments; (iii) (A) reasonable salary, bonus and other benefits payable to directors, officers and employees of any direct or indirect parent company of the Issuer to the extent such salaries, bonuses and other benefits are payable in cash and substantially attributable to the ownership or operation of the Issuer and its Restricted Subsidiaries and (B) general corporate overhead expenses of any direct or indirect parent company of the Issuer to the extent such expenses are payable in cash and substantially attributable to the ownership or operation of the Issuer and its Restricted Subsidiaries; provided that payments of amounts pursuant to this clause (iii), shall not exceed $5.0 million for any fiscal year of the Issuer; (iv) costs, fees and expenses incident to a private placement or public offering of any securities of such parent, so long as all of the net proceeds of such offering (if it is completed) are contributed to the Issuer; provided that payments of amounts pursuant to this clause (iv) shall be excluded from subsequent calculations of the amount of Restricted Payments; and (v) taxes payable by any direct or indirect parent in connection with a contribution of shares of SkyTerra common stock to the Issuer pursuant to the TerreStar Funding Agreement provided that such taxes relate to increases in the value of such shares after their issuance to Motient Ventures Holding Inc., and provided, further that payments of amounts pursuant to this clause (v) shall be excluded from subsequent calculations of the amount of Restricted Payments; (9) other Restricted Payments in an aggregate amount since the Issue Date not to exceed $5.0 million; and (10) Restricted Payments made pursuant to the Transfer Agreements; provided that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments. (c) The amount of all Restricted Payments (other than cash) will be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Issuer or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment that is required to be valued by this covenant shall be determined by the Board of Directors of the Issuer acting in good faith, whose resolution with respect thereto will be delivered to the Trustee. The Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the fair market value exceeds $10 million. SECTION 5.05 Transactions with Affiliates. (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Issuer (each, an "Affiliate Transaction"), unless: (1) the Affiliate Transaction is on terms that are no less favorable to the Issuer or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction in arm's-length dealings by the Issuer or such Restricted Subsidiary with a Person who is not an Affiliate; and (2) the Issuer delivers to the Trustee: (a) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million, a written resolution of the Board of Directors of the Issuer set forth in an Officers' Certificate certifying that a majority of the disinterested members of the Board of Directors, if any, have approved such Affiliate Transaction and determined that such Affiliate Transaction complies with this Section 5.05; and (b) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $15.0 million, a written opinion as to the fairness to the Issuer or such Restricted Subsidiary of such Affiliate Transaction from a financial point of view issued by an independent accounting, appraisal or investment banking firm of national standing. (b) Notwithstanding the foregoing, none of the following shall be prohibited by Section 5.05(a) or be deemed to be Affiliate Transactions: (1) reasonable and customary (A) directors' fees and indemnification and similar arrangements, (B) consulting fees in an amount not to exceed $250,000 per fiscal year, (C) employee salaries, bonuses and employment agreements (including indemnification arrangements) and (D) compensation or employee benefit arrangements and incentive arrangements with any officer, director or employee entered into in the ordinary course of business (including customary benefits thereunder) and payments pursuant thereto; (2) transactions between or among the Issuer and/or any of its Restricted Subsidiaries and Guarantees issued by and other transactions of the Issuer or any of its Restricted Subsidiaries for the benefit of the Issuer or any of its Restricted Subsidiaries, as the case may be; (3) transactions with a Person (other than an Unrestricted Subsidiary of the Issuer) that is an Affiliate of the Issuer or any Restricted Subsidiary solely because the Issuer or any Restricted Subsidiary owns an Equity Interest in, or controls, such Person; (4) the pledge of Equity Interests of Unrestricted Subsidiaries to support the Indebtedness thereof; (5) issuances and sales of Equity Interests (other than Disqualified Stock) of the Issuer to Affiliates of the Issuer and the granting of registration and other customary rights in connection therewith, or the receipt of capital contributions from Affiliates of the Issuer that are not Restricted Subsidiaries of he Issuer solely in exchange for Equity Interests (other than Disqualified Stock) of the Issuer; (6) Restricted Payments that are permitted by Section 5.04 and Permitted Investments (other than pursuant to clause (1) or clause (3) of the definition of "Permitted Investments"); (7) the performance of obligations of the Issuer or any of its Restricted Subsidiaries under the terms of any agreement to which the Issuer or any Restricted Subsidiaries is a party as of or on the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be permitted to the extent that its terms are not materially more disadvantageous to the Holders than the terms of the agreements in effect on the Issue Date; (8) the performance of obligations of the Issuer or any of its Subsidiaries under the terms of the Transfer Agreements, the TerreStar Funding Agreement and the TerreStar Shareholders Agreement as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, however, that any future amendment, modification, supplement, extension or renewal entered into after the Issue Date will be permitted to the extent that its terms are not more disadvantageous in any material respect to the Holders of the Notes than the terms of the agreements in effect on the Issue Date; (9) any transaction in which the Issuer or any of its Restricted Subsidiaries delivers to the Trustee a letter issued by an investment banking, appraisal or accounting firm of national standing stating that such transaction is fair from a financial point of view or meets the requirements of clause (1) of Section 5.05(a); (10) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are fair to the Issuer and its Restricted Subsidiaries, in the reasonable determination of the Board of Directors or the senior management of the Issuer, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party; and (11) transactions contemplated under the Investment Agreements. SECTION 5.06 Limitation on Lines of Business. The Issuer shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses. SECTION 5.07 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries. (a) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (1) pay dividends or make any other distributions on its Capital Stock to the Issuer or any of its Restricted Subsidiaries (it being understood that the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock) or pay any Indebtedness owed to the Issuer or any of its Restricted Subsidiaries; (2) make loans or advances to the Issuer or any of its Restricted Subsidiaries (it being understood that the subordination of loans or advances made to the Issuer or any of its Restricted Subsidiaries to other Indebtedness incurred by the Issuer or any of its Restricted Subsidiaries shall not be deemed a restriction on the ability to make loans or advances); or (3) sell, lease or transfer any of its properties or assets to the Issuer or any of its Restricted Subsidiaries. (b) The preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (1) agreements governing Existing Indebtedness and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive in any material respect, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Issue Date; (2) this Indenture, the Notes, the related Guarantees, and the Transfer Agreements; (3) applicable law or any applicable rule, regulation or order; (4) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Issuer or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, including any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of any such agreements or instruments; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive in any material respect, taken as a whole, than those contained in the agreements governing such original agreement or instrument; provided, further, that, in the case of Indebtedness, such Indebtedness was permitted by Section 5.01; (5) in the case of Section 5.07(a)(3): (i) a lease, license or similar contract that restricts in a customary manner the subletting, assignment or transfer of any subject property or asset, or the assignment or transfer of any such lease, license or other contract; (ii) mortgages, pledges or other security agreements otherwise permitted under this Indenture securing Indebtedness of the Issuer or any of its Restricted Subsidiaries to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or (iii) reciprocal easement agreements of the Issuer or any of its Restricted Subsidiaries containing customary provisions restricting dispositions of the subject real property interests; (6) leases and other agreements containing net worth provisions entered into by the Issuer or any Restricted Subsidiary in the ordinary course of business; (7) Purchase Money Indebtedness for property acquired in the ordinary course of business and Capital Lease Obligations permitted under this Indenture that, in each case, impose restrictions on the property purchased or leased of the nature described in Section 5.07(a)(3); (8) any agreement for the sale or other disposition of assets or Capital Stock of a Restricted Subsidiary permitted under this Indenture that restricts the sale of assets, distributions or loans by that Restricted Subsidiary pending its sale or other disposition; (9) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive in any material respect, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (10) Liens securing Indebtedness otherwise permitted to be incurred under Section 5.02 that limit the right of the debtor to dispose of the assets subject to such Liens; (11) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; provided that such restrictions apply only to the assets or property subject to such agreements; (12) any agreement or instrument entered into after the Issue Date, provided that the encumbrances or restrictions in such agreement or instrument are not materially more restrictive, taken as a whole, than those contained in this Indenture or the Notes; and (13) restrictions on cash or other deposits or net worth under contracts or leases entered into in the ordinary course of business. SECTION 5.08 Asset Sales and Recovery Events. (a) (1) The Issuer shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, consummate an Asset Sale unless: (i) the Issuer or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the fair market value of the assets or Equity Interests issued or sold or otherwise disposed of (such fair market value to be determined on the date of contractually agreeing to such Asset Sale); (ii) the fair market value is determined by the Issuer's Board of Directors and evidenced by a resolution of such Board of Directors set forth in an Officers' Certificate delivered to the Trustee; and (iii) at least 75% of the consideration received in the Asset Sale by the Issuer or such Restricted Subsidiary is in the form of cash or Cash Equivalents. (2) Within 180 days after the receipt of any Net Proceeds from an Asset Sale or a Recovery Event the Issuer or any Restricted Subsidiary may apply such Net Proceeds at its option to: (i) repay, purchase or otherwise retire the Notes or other Indebtedness (and to correspondingly reduce commitments with respect thereto) that is pari passu in right of payment with the Notes; provided that the Issuer shall also equally and ratably reduce Obligations under the Notes by making an offer (in accordance with the procedures set forth in Section 5.08(a)(4) for an Excess Proceeds Offer) to all Holders of Notes to purchase the pro rata principal amount of Notes (on the basis of the aggregate principal amount of the Notes and the principal amount of other Pari Passu Indebtedness tendered in such Excess Proceeds Offer) at a purchase price equal to 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, to the repurchase date (subject to the right of the Holders of record on the relevant record date to receive interest due on the relevant interest payment date); (ii) repay or repurchase Indebtedness of a Restricted Subsidiary that is not a Guarantor, other than Indebtedness owed to the Issuer or another of its Restricted Subsidiaries; or (iii) acquire or invest in Additional Assets. (3) Notwithstanding the foregoing, the Issuer or such Restricted Subsidiary shall be deemed to have applied Net Proceeds from an Asset Sale or Recovery Event within such 360-day period if, within such 180-day period, the Issuer or such Restricted Subsidiary has entered into a binding commitment or agreement to invest such Net Proceeds and continues to use all commercially reasonable efforts to so apply such Net Proceeds as soon as practicable thereafter, and no Excess Proceeds Offer needs to be launched unless there occurs any abandonment or termination of such commitment or agreement after such 360-day period, in which case the Net Proceeds not so applied will constitute Excess Proceeds at such time. (4) Any Net Proceeds from Asset Sales or Recovery Events that are not applied or invested as provided in Section 5.08(a)(2) will constitute "Excess Proceeds." Subject to Section 5.08(a)(2), no later than the 180th day after the Asset Sale or Recovery Event (or, at the Issuer's option, an earlier date), if the aggregate amount of Excess Proceeds exceeds $10.0 million, the Issuer shall: (i) make an offer (an "Excess Proceeds Offer") to all Holders of Notes; and (ii) prepay, purchase or redeem (or make an offer to do so) any other Indebtedness of the Issuer that is pari passu in right of payment with the Notes in accordance with provisions governing such Indebtedness requiring the Issuer to prepay, purchase or redeem such Indebtedness with the proceeds from any Asset Sales (of offer to do so), pro rata in proportion to the principal amount of the Notes and the respective principal or accreted amounts of such other Indebtedness required to be prepaid, purchased or redeemed or tendered for, in the case of the Notes pursuant to such Excess Proceeds Offer, to purchase the maximum aggregate principal amount of Notes that may be purchased out of such pro rata portion of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of their aggregate principal amount plus accrued and unpaid interest, if any, to the date of purchase subject to the right of Holders of record on a record date to receive interest on the relevant interest payment date in accordance with the procedures set forth in Section 3.01(a). The offer price in any Excess Proceeds Offer will be equal to 100% of the aggregate principal amount of the Notes and such other Pari Passu Indebtedness, plus accrued and unpaid interest if any, to, but excluding, the date of purchase, and will be payable in cash, in each case, in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof, except that if a premium is to be paid to the Holders of such other Indebtedness, such premium shall not be paid with the Net Proceeds from Asset Sales. If any Excess Proceeds remain after consummation of an Excess Proceeds Offer, the Issuer may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and the principal amount or accreted value of the other Pari Passu Indebtedness tendered in such Excess Proceeds Offer exceeds the amount of Excess Proceeds, the Excess Proceeds will be allocated by the Issuer to the Notes and such other Pari Passu Indebtedness on a pro rata basis as nearly as practicable (on the basis of the aggregate principal amount of the Notes and the principal amount of other Pari Passu Indebtedness tendered in such Excess Proceeds Offer) and the portion of each Note to be purchased will thereafter be determined by the Trustee on a pro rata basis among the Holders of such Notes with appropriate adjustments such that the Notes may only be purchased in minimum denominations of $1,000 and integral multiples of $1,000 in excess thereof. Upon completion of each Excess Proceeds Offer, the amount of Excess Proceeds will be reset at zero. (b) If the purchase date of an Excess Proceeds Offer is on or after an interest payment record date and on or before the related interest payment date, any accrued and unpaid interest, if any, will be paid to the Holder in whose name a Note is registered at the close of business on such record date, and no interest will be payable to Holders who tender Notes pursuant to the Excess Proceeds Offer. (c) Pending the final application of any Net Proceeds from an Asset Sale or Recovery Event, the Issuer and its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture. (d) For purposes of this Section 5.08, each of the following shall be deemed to be cash: (1) the amount of any liabilities, as shown on the most recent consolidated balance sheet or in the notes thereto, of the Issuer or such Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Subsidiary Guarantee) that are assumed by the transferee of any such assets, provided that the Issuer or such Restricted Subsidiary is released from further liability; (2) any securities, Notes or other obligations received by the Issuer or any such Restricted Subsidiary from such transferee that are converted by the Issuer or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received in that conversion) within 180 days of receipt thereof; and (3) any stock or assets received as consideration for such Asset Sale that would otherwise constitute a permitted application of Net Proceeds (or other cash in such amount) under clauses (1), (2) or (4) of the definition of "Additional Assets." SECTION 5.09 Corporate Actions. Until Harbinger, EchoStar and their Affiliates are no longer holders of at least 30% in aggregate principal amount of the Notes, neither the Issuer nor the Parent shall: (a) split, combine or reclassify its outstanding shares of capital stock, issue or sell any shares of any class of its capital stock, or any securities convertible into or exchangeable for any shares, or issue, sell, grant or enter into any subscriptions, options, warrants, conversion or other rights, agreements, commitments, arrangements or understandings of any kind, contingent or otherwise, to purchase or otherwise acquire any such shares or any securities convertible into or exchangeable for any such shares, except (A) pursuant to the terms of such subscriptions, options, warrants, conversion or other rights, agreements, commitments, arrangements or understandings existing on the Issue Date or pursuant to compensatory plans or arrangements , (B) for shares of capital stock of the issuer issued and sold to the Parent; (b) amend any of its certificate of incorporation or bylaws; or (c) adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization or other reorganization; (d) take, or permit to be taken, any of the actions described in Section 8.06 unless action has been approved by written consent of holders of a majority in aggregate principal amount of the Notes. ARTICLE 6 DEFAULTS AND REMEDIES --------------------- SECTION 6.01 Events of Default and Remedies. (a) Each of the following is an "Event of Default" under this Indenture: (1) default for three Business Days in the payment of interest on any Notes (including the failure to deliver properly authorized and authenticated Additional Notes issued in payment of interest and including any additional interest payable pursuant to Interest Step-Ups) when due; (2) default in the payment when due (at maturity, upon repurchase or otherwise) of the principal of or premium, if any, on, the Notes; (3) failure by the Issuer or any of its Restricted Subsidiaries to comply with Sections 5.03 or for three Business Days of the Exchange Date relating to an Issuer's notice of the "Official Notice of Exchange" pursuant to Section 8.01(b) to deliver the Underlying Shares upon Exchange of the Notes in accordance with Section 8.01; (4) failure by the Issuer or any of its Restricted Subsidiaries for 30 days after notice to the Issuer by the Trustee or the Holders of at least 30% in aggregate principal amount of the Notes then outstanding to comply with any term, covenant or agreement in this Indenture or the Notes (including Articles 4 or 5); (5) failure to pay when due, at final maturity or otherwise or a default or other event that results in acceleration of the due date of all or any portion of the principal of any Indebtedness of the Issuer or of any Guarantor or other Restricted Subsidiary, whether such Indebtedness now exists or is created after the Issue Date, in each case if the principal amount of such Indebtedness aggregates $10.0 million or more; (6) failure by the Issuer or any Restricted Subsidiary to pay final judgments entered by a court or courts of competent jurisdiction (not subject to appeal) aggregating in excess of $10.0 million, which judgments are not paid, discharged or stayed for a period of 60 days after the date on which the right to appeal has expired; (7) except as permitted by this Indenture, any Guarantee, shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or the Issuer or any Guarantor or any Person acting on behalf of the Issuer or any such Guarantor, shall deny or disaffirm its obligations under the Notes or any Guarantee; (8) (i) the Issuer, any Guarantor or any Restricted Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or the Issuer, any Guarantor or any Restricted Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Issuer, any Guarantor or any Restricted Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Issuer, any Guarantor or any Restricted Subsidiary, any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Issuer, any Guarantor or any Restricted Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; (9) a denial, revocation, cancellation or relinquishment, as applicable, of (i) the U.S. FCC Letter of Intent Authorization or (ii) any FCC authorization held by the Issuer or a Restricted Subsidiary of the Issuer to operate satellite and ancillary terrestrial component facilities, unless the denial, revocation, cancellation or relinquishment (x) remains subject to reconsideration, review, or appeal at the FCC or any court, provided that during the pendency of such reconsideration, review or appeal the Issuer is permitted to exercise its rights under the applicable authorization and continues to conduct its business in the ordinary course, or (y) is accompanied by the issuance of a substitute or successor license, permit, or authorization of substantially equivalent utility or the Issuer or a Restricted Subsidiary of Issuer already holds a license, permit, or authorization of substantially equivalent utility; (10) a revocation, cancellation or relinquishment as applicable of the Industry Canada License, which results in a loss of the orbital slot for TerreStar-1 or any replacement satellite for TerreStar-1, unless such revocation, cancellation or relinquishment (x) remains subject to reconsideration, review or appeal of Industry Canada or any court, provided that during the pendency of such reconsideration, review or appeal TerreStar Canada is permitted to exercise its rights under the Industry Canada License and continues to conduct its businesses in the ordinary course or (y) is accompanied by the issuance of a substitute or successor license, permit, or authorization of substantially equivalent utility; and (11) the occurrence of an "Event of Default" as such term is defined in the Existing Indenture. (b) The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. SECTION 6.02 Acceleration. (a) In the case of an Event of Default specified in clause (8) of Section 6.01, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 30% in aggregate principal amount of the then outstanding Notes, or, with respect to any Event of Default relating to Section 4.11 hereof, Harbinger and EchoStar collectively, so long as Harbinger and EchoStar collectively hold at least 30% in aggregate principal amount of the then outstanding Notes (in each case, the "Electing Holders"), by notice in writing to the Trustee and the Issuer, may declare all the Notes to be due and payable. Notwithstanding anything contained in this Indenture or the Notes to the contrary, upon such a declaration, the principal of, premium, if any, and accrued and unpaid interest, if any, on the Notes will become immediately due and payable. (b) In the event of a declaration of acceleration of the Notes by the Electing Holders pursuant to clause (a) of this Section 6.02, each Holder, other than the Electing Holders, shall have the right to purchase for cash, and the Electing Holders shall have the obligation to sell, all of such Electing Holders' right, title and interest in and to the Notes, for a purchase price consisting of 100% of the principal of and the accrued and unpaid interest, fees, costs and expenses on the outstanding amount of Notes held by such Electing Holders. SECTION 6.03 Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Notes or to enforce the performance of any provision of the Notes or the Guarantees. The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Noteholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative (to the extent permitted by law). SECTION 6.04 Rescission of Acceleration; Waiver of Past Defaults. The Holders of at least 70% in aggregate principal amount of the Notes then outstanding by notice to the Trustee may on behalf of the Holders of all of the Notes rescind an acceleration or waive any existing Default or Event of Default and its consequences under this Indenture except a continuing Default or Event of Default in the payment of principal of, or interest or premium, if any, on the Notes. When a Default is waived, it is deemed cured and ceases to exist and any Event of Default arising therefrom shall be deemed to have been cured and waived for every purpose under this Indenture, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05 Control by Majority. The Holders of a majority in aggregate principal amount of the Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee by this Indenture. However, the Trustee may refuse to follow any direction (a) that conflicts with law, (b) that conflicts with the provisions of this Indenture, (c) if the board of directors or trustees, or executive committee, or trust committee of directors or trustees or trust officers of the Trustee determines in good faith that the action or proceeding so directed would involve the Trustee in personal liability or expense for which it is not adequately indemnified (as determined by such body) or (d) subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Noteholders; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all liability, losses and expenses caused by taking or not taking such action. SECTION 6.06 Limitation on Suits. Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Noteholder may pursue any remedy with respect to this Indenture, the Notes or any Guarantee unless: (a) such Holder has previously given the Trustee notice that an Event of Default is continuing; (b) Holders of at least 30% in aggregate principal amount of the then outstanding Notes have requested the Trustee to pursue the remedy; (c) such Holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense; (d) the Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and (e) the Holders of a majority in aggregate principal amount of the then outstanding Notes have not given the Trustee a direction inconsistent with such request within such 60-day period. SECTION 6.07 Rights of Holders to Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Notes held by such Holder, on or after the respective due dates expressed in the Notes, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08 Collection Suit by Trustee. If an Event of Default specified in Section 6.01(a)(1) or (2) occurs and is continuing, the Trustee may obtain judgment in its own name and as trustee of an express trust against the Issuer for the whole amount then due and owing (together with interest on any unpaid interest to the extent lawful) and the amounts provided for in Section 7.06. SECTION 6.09 Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Noteholders allowed in any judicial proceedings relative to the Issuer, any Subsidiary or any Guarantor, their creditors or their property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.06. SECTION 6.10 Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.06; SECOND: to Noteholders for amounts due and unpaid on the Notes for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal and interest, respectively; and THIRD: to the Issuer. The Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section. At least 15 days before such record date, the Trustee shall mail to each Noteholder and the Issuer a notice that states the record date, the payment date and amount to be paid. SECTION 6.11 Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.06 or a suit by Holders of more than 10% in principal amount of the Notes. SECTION 6.12 Waiver of Stay or Extension Laws. Neither the Issuer nor any Guarantor (to the extent they may lawfully do so) shall at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Issuer and each Guarantor (to the extent that they may lawfully do so) hereby expressly waive all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. SECTION 6.13 Rights and Remedies Cumulative. No right or remedy conferred or reserved to the Trustee or to the Holders under this Indenture is intended to be exclusive of any other right or remedy, and all such rights and remedies are, to the extent permitted by law, cumulative and in addition to every other right and remedy hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or exercise of any right or remedy hereunder, or otherwise, will not prevent the concurrent or subsequent assertion or exercise of any other right or remedy. SECTION 6.14 Delay or Omission Not Waiver. No delay or omission of the Trustee or of any Holder to exercise any right or remedy accruing upon any Event of Default will impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article 6 or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or by the Holders, as the case may be. ARTICLE 7 TRUSTEE ------- SECTION 7.01 Duties of Trustee. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon statements, certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, in the case of any such statements, certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall examine the statements, certificates and opinions to determine whether or not they conform on their face to the requirements of this Indenture (but need not confirm or investigate the accuracy of mathematical calculations or other facts stated therein). (c) The Trustee shall not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: (1) this paragraph does not limit the effect of Section 7.01(b); (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer or Trust Officers unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it from any party authorized to direct the Trustee under this Indenture. (d) Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b) and (c) of this Section. (e) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Issuer. (f) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (g) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any potential or actual liability or expense (financial or otherwise) in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability or expense is not reasonably assured to it. SECTION 7.02 Rights of Trustee. Subject to Section 7.01: (a) The Trustee may conclusively rely, and shall be protected in acting or refraining from acting, upon any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in any such document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute willful misconduct or gross negligence. (e) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, debenture, note or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney at the sole cost of the Issuer and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. (g) The Trustee shall not be required to give any note, bond or surety in respect of the execution of the trusts and powers under this Indenture. (h) The permissive rights of the Trustee to take any action enumerated in this Indenture shall not be construed as a duty to take such action. (i) The rights, privileges, protections, immunities and benefits given to the Trustee, including its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, and to each agent, custodian and other Person employed to act hereunder. (j) The Trustee may request that the Issuer deliver an Officers' Certificate setting forth the names of individuals and/or titles of officers authorized at such time to take specified actions pursuant to this Indenture, which Officers' Certificate may be signed by any person authorized to sign an Officers' Certificate, including any person specified as so authorized in any such certificate previously delivered and not superseded. (k) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Issuer will be sufficient if signed by an Officer of the Issuer. (l) [Reserved]. (m) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders, unless such Holders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that might be incurred by it in compliance with such request or direction. (n) In no event shall the Trustee be responsible or liable for special, indirect or consequential loss or damage of any kind whatsoever (including, but not limited to, loss of profit) irrespective of whether the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action. (o) The Trustee shall not be responsible or liable for any failure or delay in the performance of its obligations under this Indenture arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including acts of God, earthquakes, fire, flood, terrorism, wars and other military disturbances, sabotage, epidemics, riots, interruptions, loss or malfunction of utilities, computer (hardware or software) or communications services, accidents, labor disputes, acts of civil or military authorities and governmental action. (p) The Trustee shall have no duty to inquire as to the performance of the Issuer with respect to the covenants contained in Articles 4 or 5. Delivery of reports, information and documents to the Trustee under Article 4 is for informational purposes only, and the Trustee's receipt of the foregoing shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including Issuer's compliance with any of its covenants hereunder. SECTION 7.03 Individual Rights of Trustee. The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Trustee. However, the Trustee is subject to Sections 7.09, 7.10 and 7.11. SECTION 7.04 Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in this Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Trustee's certificate of authentication. SECTION 7.05 Notice of Defaults. If a Default occurs and is continuing and is known to the Trustee, the Trustee shall mail to each Holder notice of the Default. Except in the case of a Default in the payment of principal of, premium, if any, or interest on any Note, the Trustee may withhold notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of Noteholders. The Issuer shall deliver to the Trustee, forthwith upon any Officer obtaining actual knowledge of any Default, written notice of any event which would constitute such Default, its status and what action the Issuer is taking or proposes to take in respect thereof. Notwithstanding anything to the contrary expressed in this Indenture, the Trustee shall not be deemed to have knowledge of any Default or Event of Default hereunder, except in the case of an Event of Default under Section 6.01(a)(1) or (2) (provided that the Trustee is Paying Agent), unless and until a Trust Officer receives written notice thereof at its Corporate Trust Office, from the Issuer or a Holder that such Default has occurred and such notice references this Indenture and the Notes. SECTION 7.06 Compensation and Indemnity. The Issuer shall pay to the Trustee from time to time such compensation as is agreed to in writing by the Trustee and Issuer for the Trustee's services hereunder. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall reimburse the Trustee upon request for all reasonable out-of-pocket disbursements, advances and expenses incurred or made by it, including but not limited to costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses of the Trustee's agents, counsel, accountants and experts. The Issuer and each Guarantor, jointly but not severally, shall indemnify and defend the Trustee and its officers, directors, shareholders, agents and employees (each, an "Indemnified Party") for and hold each Indemnified Party harmless against any and all loss, damage, claims, liability or expense (including reasonable attorneys' fees and expenses) including taxes (other than taxes based upon, measured by or determined by the income of the Trustee) incurred by them without negligence or bad faith on their part arising out of or in connection with the acceptance or administration of this Indenture or the Notes and the performance of their duties hereunder, including the cost and expense of enforcing this Indenture against the Issuer (including this Section 7.06), and defending itself against or investigating any claim or liability (whether asserted by a Holder or any other person). The Trustee, in its capacity as Paying Agent, Registrar, Custodian and agent for service of notice and demands, and the Trustee's officers, directors, shareholders, agents and employees, when acting in such other capacity, shall have the full benefit of the foregoing indemnity as well as all other benefits, rights and privileges accorded to the Trustee in this Indenture when acting in such other capacity. The Trustee shall notify the Issuer of any claim for which it may seek indemnity promptly upon obtaining actual knowledge thereof; provided that any failure so to notify the Issuer shall not relieve the Issuer or any Guarantor of its indemnity obligations hereunder. The Issuer shall defend the claim and the Indemnified Parties shall provide reasonable cooperation at the Issuer's expense in the defense. Such Indemnified Parties may have separate counsel and the Issuer shall pay the fees and expenses of such counsel; provided that the Issuer shall not be required to pay such fees and expenses if it assumes such Indemnified Parties' defense and, in such Indemnified Parties' reasonable judgment, there is no conflict of interest between the Issuer and such parties in connection with such defense. The Issuer need not reimburse any expense or indemnify against any loss, liability or expense incurred by an Indemnified Party through such party's own willful misconduct, negligence or bad faith. The Issuer need not pay any settlement made without its consent (which consent shall not be unreasonably withheld). The Trustee's right to receive payment of any amounts due under this Indenture shall not be subordinated to any other Indebtedness of the Issuer, and the Notes shall be subordinate to the Trustee's rights to receive such payment. The Issuer's payment obligations pursuant to this Section shall survive the satisfaction or discharge of this Indenture, any rejection or termination of this Indenture under any Bankruptcy Law or the resignation or removal of the Trustee. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(a)(8) with respect to the Issuer, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.07 Replacement of Trustee. The Trustee may resign at any time by so notifying the Issuer in writing. The Holders of a majority in principal amount of the Notes may remove the Trustee by so notifying the Trustee and the Issuer in writing and may appoint a successor Trustee. The Issuer shall remove the Trustee if: (a) the Trustee is adjudged bankrupt or insolvent; (b) a receiver or other public officer takes charge of the Trustee or its property; or (c) the Trustee otherwise becomes incapable of acting. If the Trustee resigns, is removed by the Issuer or by the Holders of a majority in principal amount of the Notes and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the "retiring Trustee"), the Issuer shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a notice of its succession to Noteholders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of at least 10% in aggregate principal amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Issuer. Notwithstanding the replacement of the Trustee pursuant to this Section, the Issuer's and Guarantors' obligations under Section 7.06 shall continue for the benefit of the retiring Trustee. SECTION 7.08 Successor Trustee by Merger, Etc. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee, provided, that such Person shall be qualified and eligible under this Article 7. In case at the time such successor or successors by consolidation, merger, conversion or transfer shall succeed to the trusts created by this Indenture, any of the Notes shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and in all such cases such certificate shall have the full force which it is anywhere in the Notes or this Indenture provided that the certificate of the Trustee shall have. SECTION 7.09 Eligibility; Disqualification. The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA Section 310(a). The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000. If at any time the Trustee shall cease to satisfy any such requirements, it shall resign immediately in the manner and with the effect specified in this Article 7. The Trustee shall be subject to the provisions of TIA Section 310(b). Nothing herein shall prevent the Trustee from filing with the Commission the application referred to in the penultimate paragraph of TIA Section 310(b). SECTION 7.10 Preferential Collection of Claims against the Issuer. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. SECTION 7.11 Disqualification; Conflicting Interests. If the Trustee has or shall acquire a conflicting interest within the meaning of the TIA, the Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the TIA and this Indenture. ARTICLE 8 EXCHANGE RIGHT -------------- SECTION 8.01 Exchange Right of the Holders. (a) Any Holder may elect to exchange the principal amount of such Holder's Notes, plus any accrued and unpaid interest thereupon, in whole or in part, on any day on or after the date of effectiveness of the Stockholder Approval to and including the Maturity Date, for each $1,000 principal amount of the Notes exchanged, for a number of shares of the Underlying Stock equal to the Exchange Ratio on the Exchange Date. Upon any such exchange, the Parent and/or the Issuer shall, on the Exchange Settlement Date, deliver such shares of the Underlying Stock to such Holder. The right of the Holders to exchange the Notes pursuant to this Article 8 is herein called the "Exchange Right". (b) In order for the exercise of such option to be effective and the Notes to be exchanged, any material filing, registration or approval required pursuant to the first sentence of Section 8.05(c) shall have been obtained and the Issuer must receive at the applicable address of the Issuer set forth below (or at such other place or places of which the Issuer shall from time to time notify the Holders of the notes), not later than 3:00 P.M., New York City Time, on the Exchange Date (or, if the Exchange Date is not a Business Day, the next succeeding Business Day) or if the Exchange Date is a Purchase Date or a Maturity Date, on the Business Day preceding such date, either (i) the Notes to be exchanged, with the "Official Notice of Exchange" substantially in the form of Exhibit K, duly completed and signed, or (ii) a telegram, telex, facsimile transmission or letter from a member of a national securities exchange or the National Association of Securities Dealers, Inc., a commercial bank or a trust company in the United States of America setting forth (a) the name, address and telephone number of the Holder of such Notes to be exchanged, (b) the principal amount of such Notes and the amount of such Notes to be repaid, (c) a statement that the Exchange Right is being exercised thereby and (d) a guarantee stating that the Issuer will receive such Notes, with the "Official Notice of Exchange" substantially in the form of Exhibit K duly completed and signed, not later than five Business Days after the date of such telegram, telex, facsimile transmission or letter (provided that such Notes and form duly completed and signed are received by the Issuer by such fifth Business Day). Any such election shall be irrevocable. If the Issuer receives the Official Notice of Exchange after 3:00 P.M., New York City time, then it shall be deemed to have been received on the next Business Day. The address to which such deliveries are to be made is TerreStar Networks Inc., 12010 Sunset Hills Road, 9th Floor, Reston, VA 20190 Attn: Jeffrey W. Epstein (or at such other places as the Issuer shall have notified the Holders of the Notes). The foregoing requirements shall mean, with respect to any exchange of the Notes pursuant to this Article 8, the "Exercise Requirements" and shall apply to any such exchange. (c) The Issuer shall deliver such shares of the Underlying Stock to the Trustee for delivery to such Holder on the Exchange Settlement Date, but not before delivery of the Notes to be exchanged to the Trustee. (d) If upon exchange of any Notes, the Issuer is to deliver shares of the Underlying Stock, it shall not pay cash in lieu of delivering any fractional share of the Underlying Stock and the number of shares of Underlying Stock to be delivered shall instead be rounded to the nearest whole number. (e) If a Market Disruption Event occurs or is continuing on a day that would otherwise be an Exchange Date, then such Exchange Date will be postponed to the first succeeding Business Day on which a Market Disruption Event does not occur and is not continuing. In no event, however, will any Exchange Date be postponed by more than five Business Days. If an Exchange Date is postponed, the related Exchange Settlement Date will also be postponed, to the fifth Business Day after the day to which such Exchange Date is postponed. If an Exchange Date is postponed to the last possible day, and a Market Disruption Event occurs or is continuing on that day, that day will nevertheless be such Exchange Date. (f) Partial exchanges of the Notes held by any Holder will be permitted only in multiples of $1,000. References herein to any portion of the Notes being exchanged shall mean the entire amount of such Notes if the entire amount is being exchanged. (g) Notwithstanding the provisions of this Section 8.01, a Holder shall not be entitled to exchange a principal amount of the Notes to the extent that the exchange of such principal amount of Notes would constitute a change-of-control of the Issuer or the Parent, as applicable, pursuant to (a) the Existing Indenture, (b) the Series A Cumulative Exchangeable Preferred Stock, (c) the Series B Cumulative Preferred Stock or (d) Section 382 of the Internal Revenue Code (such exchange restrictions, the "Existing Change-of-Control Restrictions"; provided, however, that any Holder affected by an Existing Change-of-Control Restriction shall have the right to exchange a lesser principal amount of the Notes to the extent that the exchange of such lesser principal amount of the Notes would not trigger any Existing Change-of-Control Restriction. SECTION 8.02 Closing Price. (a) The Closing Price for one share of the Underlying Stock (or one unit of any other security for which a Closing Price must be determined) on any Business Day means: (1) if the Parent Common Stock (or any such other security) is listed or admitted to trading on a national securities exchange, the last reported sale price, regular way, of the principal trading session on such day on the principal United States securities exchange registered under the Securities Exchange Act of 1934, as amended, on which the Parent Common Stock (or any such other security) is listed or admitted to trading, or (2) if the Parent Common Stock (or any such other security) is not listed or admitted to trading on any national securities exchange but is included in the OTC Bulletin Board Service operated by the National Association of Securities Dealers, Inc., the last reported sale price of the principal trading session on the OTC Bulletin Board Service on such day. If the Parent Common Stock (or any such other security) is listed or admitted to trading on any national securities exchange but the last reported sale price is not available pursuant to the preceding sentence, then the Closing Price for one share of the Underlying Stock (or one unit of any such other security) on any Business Day shall mean the last reported sale price of the principal trading session of the Parent Common Stock on the over-the-counter market as reported on the OTC Bulletin Board Service on such day. If the last reported sale price for the Parent Common Stock (or any such other security) is not available pursuant to either of the two preceding sentences, then the Closing Price for one share of the Underlying Stock for any Business Day will be the mean, as determined by the Calculation Agent, of the bid prices for the Parent Common Stock (or any such other security) obtained from as many recognized dealers in such security, but not exceeding three, as will make such bid prices available to the Calculation Agent. The term OTC Bulletin Board Service shall include any successor service thereto. SECTION 8.03 Market Disruption Event. A "Market Disruption Event", as determined by the Calculation Agent, shall mean the occurrence or existence of any of the following events: (i) a suspension, absence or material limitation of trading in the Parent Common Stock on its primary market for more than two hours of trading or during the one-half hour before the close of trading in that market; (ii) a suspension, absence or material limitation of trading in option or futures contracts relating to the Parent Common Stock, if available, in the primary market for those contracts for more than two hours of trading or during the one-half hour before the close of trading in that market; (iii) the Parent Common Stock does not trade on the New York Stock Exchange, the American Stock Exchange, the Nasdaq Global Market or what was the primary market for the Parent Common Stock; or (iv) any other event that materially interferes with the Issuer's ability or the ability of any of the Issuer's Affiliates to unwind all or a material portion of a hedge with respect to the Notes that the Issuer or its Affiliates have effected or may effect. The following events shall not be Market Disruption Events: (i) a limitation on the hours or number of days of trading in the Parent Common Stock on its primary market, but only if the limitation results from an announced change in the regular business hours of the relevant market; and (ii) a decision to permanently discontinue trading in the option or futures contracts relating to the Parent Common Stock. An "absence of trading" in the primary market on which option or futures contracts relating to the Parent Common Stock, if available, are traded shall not include any time when that market is itself closed for trading under ordinary circumstances. However, a suspension or limitation of trading in option or futures contracts relating to the Parent Common Stock, if available, in the primary market for such option or futures contracts, by reason of any of: (i) a price change exceeding limits set by that market; (ii) an imbalance of orders relating to such option or futures contracts; or (iii) a disparity in bid and asked quotes relating to such option or futures contracts shall constitute a suspension or material limitation of trading in option or futures contracts, as the case may be, relating to the Parent Common Stock in the primary market for those contracts. SECTION 8.04 Taxes on Exchange. The issue of stock certificates on exchange of Notes shall be made without charge to the exchanging Holder for any documentary, stamp or similar issue or transfer taxes in respect of the issue thereof, and the Issuer shall pay any and all documentary, stamp or similar issue or transfer taxes that may be payable in respect of the issue or delivery of shares of Underlying Stock on exchange of Notes pursuant hereto. The Issuer shall not, however, be required to pay any such tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Underlying Stock or the portion, if any, of the Notes which are not so exchanged in a name other than that in which the Notes so exchanged were registered, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to the Issuer the amount of such tax or has established to the satisfaction of the Issuer that such tax has been paid. SECTION 8.05 Parent to Provide Underlying Stock. (a) The Parent shall at all times reserve out of its authorized but unissued capital stock or capital stock held in its treasury enough shares of Underlying Stock to permit the exchange, in accordance herewith, of all of the Notes and shall deliver to the Issuer in connection with the exchange of any Notes, such number of shares of Underlying Stock as the is required deliver pursuant to Issuer this Article 8. (b) Parent covenants that all shares of Underlying Stock which may be issued upon exchange of the Notes shall be validly issued, fully paid and non-assessable and shall be free of preemptive or similar rights and free of any lien or adverse claim created by the Parent or Issuer. (c) If the issuance of any shares of Underlying Stock or other securities which would be issuable upon exchange of Notes hereunder or the acquisition thereof by any Holder requires a material filing or registration with or approval of any governmental authority before such shares or securities may be issued upon such exchange, the Parent will use its commercially reasonable efforts to cause such material filing, registration or approval or to cooperate with such Holder to satisfy such requirements, as the case may be. The Parent further covenants that so long as the Parent Common Stock shall be quoted on the Nasdaq Global Market, the Parent will use its commercially reasonable efforts, if permitted by the rules of the Nasdaq Global Market, to have and keep approved for quoting on the Nasdaq Global Market (subject to notice of official issuance) all Parent Common Stock issuable upon exchange of the Notes or conversion of the Junior Preferred Stock, and Parent will use its commercially reasonable efforts to list the shares of Parent Common Stock required to be delivered upon exchange of the Notes or conversion of the Junior Preferred Stock prior to such delivery upon any other national securities exchange upon which the outstanding Common Stock is listed at the time of such delivery. (d) The Parent shall comply with all securities laws regulating the offer and delivery of shares of Underlying Stock upon exchange of the Notes or Parent Common Stock upon conversion of the Junior Preferred Stock. SECTION 8.06 Adjustment Events. The Calculation Agent shall adjust the Exchange Ratio for the Underlying Stock as provided in this Section 8.06. (a) In case the Parent shall (1) pay a dividend in shares of Parent Common Stock to all holders of Parent Common Stock, (2) make a distribution in shares of Parent Common Stock to all holders of Parent Common Stock, (3) subdivide the outstanding shares of Parent Common Stock into a greater number of shares of Parent Common Stock or (4) combine the outstanding shares of Parent Common Stock into a smaller number of shares of Parent Common Stock, the Exchange Ratio shall be adjusted by multiplying the Exchange Ratio in effect immediately prior to the Ex-Dividend Date of such dividend, distribution, subdivision or combination by the number of shares of Parent Common Stock which a person who owns only one share of Parent Common Stock immediately before such Ex-Dividend Date and who is entitled to participate in such dividend, distribution, subdivision or combination would own immediately after giving effect to such dividend, distribution, subdivision or combination (without giving effect to any arrangement pursuant to such dividend, distribution, subdivision or combination not to issue fractional shares of Parent Common Stock). Any adjustment made pursuant to this Section 8.06(a) shall become effective immediately after the open of business on such Ex-Dividend Date. (b) In case the Parent shall issue rights or warrants to all or substantially all holders of Parent Common Stock, entitling them, for a period expiring not more than sixty (60) days immediately following the date of issuance of such rights or warrants, to subscribe for or purchase shares of Parent Common Stock (or securities convertible into or exchangeable or exercisable for Parent Common Stock), at a price per share (or having a conversion, exchange or exercise price per share) that is less than the current market price (as determined pursuant to Section 8.06(g)) per share of Parent Common Stock on the Trading Day immediately preceding the announcement of the issuance of such rights or warrants, the Exchange Ratio shall be increased by multiplying the Exchange Ratio in effect immediately prior to the Ex-Dividend Date corresponding to such record date by a fraction of which (A) the numerator shall be the sum of (I) the number of shares of Parent Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date and (II) the aggregate number of shares (the "Rights Shares") of Parent Common Stock underlying all such issued rights or warrants (whether by exercise, conversion, exchange or otherwise), and (B) the denominator shall be the sum of (I) number of shares of Parent Common Stock outstanding immediately prior to the open of business on such Ex-Dividend Date and (II) the number of shares of Parent Common Stock which the aggregate exercise, conversion, exchange or other price at which the Rights Shares may be subscribed for or purchased pursuant to such rights or warrants would purchase at such current market price per share of Parent Common Stock. Such increase shall become effective immediately after the open of business on such Ex-Dividend Date. In no event shall the Exchange Ratio be decreased pursuant to this Section 8.06(b). (c) Except as set forth in the immediately following paragraph, in case the Parent shall dividend or distribute to all or substantially all holders of Parent Common Stock shares of Capital Stock of the Parent or any Subsidiary (other than Parent Common Stock), evidences of Indebtedness or other assets (other than dividends or distributions requiring an adjustment to the Exchange Ratio in accordance with Sections 8.06(d) or 8.06(e), or shall dividend or distribute to all or substantially all holders of Parent Common Stock rights or warrants to subscribe for or purchase securities (other than dividends or distributions of rights or warrants requiring an adjustment to the Exchange Ratio in accordance with Section 8.06(b)), then in each such case the Exchange Ratio shall be increased by multiplying the Exchange Ratio in effect immediately prior to the open of business on the Ex-Dividend Date corresponding to the record date for the determination of stockholders entitled to such dividend or distribution by a fraction of which (A) the numerator shall be the current market price per share of Parent Common Stock (as determined pursuant to Section 8.06(g)) on the Trading Day immediately preceding the announcement of such dividend or distribution and (B) the denominator shall be an amount equal to (I) such current market price per share of Parent Common Stock less (II) the fair market value (as determined in good faith by the Calculation Agent, whose determination shall be conclusive), on such Ex-Dividend Date, of the portion of the shares of Capital Stock, evidences of Indebtedness, assets, rights and warrants to be dividended or distributed applicable to one share of Parent Common Stock, such increase to become effective immediately after the open of business on such Ex-Dividend Date; provided, however, that if such denominator is equal to or less than $1.00, then, in lieu of the foregoing adjustment to the Exchange Ratio, adequate provision shall be made so that each Holder shall have the right to receive upon exchange of its Notes, in addition to any consideration otherwise payable as herein provided upon such exchange, an amount of shares of Capital Stock, evidences of Indebtedness, assets, rights and/or warrants that such Holder would have received had such Holder converted all of its Notes on such Ex-Dividend Date. Notwithstanding anything to the contrary in this Section 8.06(c), if, in a distribution requiring an adjustment to the Exchange Ratio pursuant to the immediately preceding paragraph, the property distributed by the Parent to all Holders of Parent Common Stock consists solely of Capital Stock, or similar equity interests in, a Subsidiary or other business unit of the Parent, which Capital Stock or interests are, or will be upon completion of such distribution, listed on a national or regional securities exchange or quoted on an automated quotation system (a "Spin-Off"), then in lieu of adjusting the Exchange Ratio in accordance with the immediately preceding paragraph, the Exchange Ratio shall be increased (subject to the other terms of this Indenture) by multiplying the Exchange Ratio in effect immediately prior to the opening of business on the thirteenth (13th) Trading Day following the Ex-Dividend Date for such distribution by a fraction (I) whose numerator is the sum of (A) the average of the Closing Prices per share of Parent Common Stock for the ten (10) consecutive Trading Days commencing on, and including, the third (3rd) Trading Day after the Ex-Dividend Date for such distribution and (B) the product of (i) the average of the Closing Prices per share or unit, as applicable, of such Capital Stock or interests (determined as if such shares or units were shares of Common Stock for purposes of the definition of "Closing Price") for the ten (10) consecutive Trading Days commencing on, and including, the third (3rd) Trading Day after the Ex-Dividend Date for such distribution and (ii) the number of shares or units, as applicable, of such Capital Stock or interests distributed per share of Parent Common Stock; and (II) whose denominator is the average of the Closing Prices per share of Parent Common Stock for the ten (10) consecutive Trading Days commencing on, and including, the third (3rd) Trading Day after the Ex- Dividend Date for such distribution. The average Closing Prices referred to in the immediately preceding sentence shall be subject to appropriate adjustments, in the Calculation Agent's good faith determination, to account for other distributions, stock splits and combinations, stock dividends, reclassifications and similar events. Each adjustment to the Exchange Ratio made pursuant to this paragraph shall become effective immediately after the open of business on the thirteenth (13th) Trading Day following the Ex-Dividend Date for such distribution. Rights or warrants distributed by the Parent to all holders of Parent Common Stock entitling the holders thereof to subscribe for or purchase shares of the Parent's Capital Stock (either initially or under certain circumstances), which rights, options or warrants, until the occurrence of a specified event or events ("Trigger Event"): (i) are deemed to be transferred with such shares of Parent Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Parent Common Stock, shall be deemed not to have been distributed for purposes of this Section 8.06 (and no adjustment to the Exchange Ratio under this Section 8.06 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights, options and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Exchange Ratio shall be made under this Section 8.06(c). In no event shall the Exchange Ratio be decreased pursuant to this Section 8.06(c). (d) In case the Parent shall, by dividend or otherwise, at any time make a distribution of cash (excluding any cash that is distributed as part of a distribution requiring an Exchange Ratio adjustment pursuant to Section 8.06(e)) to all or substantially all holders of Parent Common Stock, the Exchange Ratio shall be increased by multiplying the Exchange Ratio in effect immediately prior to the open of business on the Ex-Dividend Date for such distribution by a fraction (A) whose numerator shall be the current market price per share of Parent Common Stock (as determined pursuant to Section 8.06(g)) on the Trading Day immediately preceding the Ex-Dividend Date and (B) whose denominator shall be an amount equal to (I) such current market price per share of Parent Common Stock less (II) the amount of the distribution per share of Parent Common Stock; provided, however, that the Exchange Ratio shall not be adjusted pursuant to this Section 8.06(d) to the extent, and only to the extent, such adjustment would cause the Exchange Ratio to be less than one cent ($0.01) (which minimum amount shall be subject to appropriate adjustments, in the good faith determination of the Board of Directors, to account for stock splits and combinations, stock dividends, reclassifications and similar events); provided further that, if the denominator of such fraction shall be equal to or less than zero, the Exchange Ratio shall be instead adjusted so that the Exchange Ratio is equal to one cent ($0.01) (as adjusted in accordance with the immediately preceding proviso). An adjustment to the Exchange Ratio pursuant to this Section 8.06(d) shall become effective immediately after the open of business on the Ex-Dividend Date. In no event shall the Exchange Ratio be decreased pursuant to this Section 8.06(d). (e) In case the Parent or any Subsidiary of the Parent shall distribute cash or other consideration in respect of a tender offer or exchange offer made by the Parent or any Subsidiary of the Parent for all or any portion of the Parent Common Stock where the sum of the aggregate amount of such cash distributed and the aggregate fair market value (as determined in good faith by the Company, whose determination shall be conclusive), as of the Expiration Date (as defined below), of such other consideration distributed (such sum, the "Aggregate Amount") expressed as an amount per share of Parent Common Stock validly tendered or exchanged, and not withdrawn, pursuant to such tender offer or exchange offer as of the Expiration Time (as defined below) (such tendered or exchanged shares of Parent Common Stock, the "Purchased Shares") exceeds the Closing Price per share of Parent Common Stock on the first Trading Day after the last date (such last date, the "Expiration Date") on which tenders or exchanges could have been made pursuant to such tender offer or exchange offer (as the same may be amended through the Expiration Date), then the Exchange Ratio shall be increased by multiplying the Exchange Ratio in effect immediately prior to the close of business on the first Trading Day after the Expiration Date by a fraction (A) whose numerator is equal to the sum of (I) the Aggregate Amount and (II) the product of (a) the Closing Price per share of Parent Common Stock on the first Trading Day after the Expiration Date and (b) an amount equal to (i) the number of shares of Parent Common Stock outstanding as of the last time (the "Expiration Time") at which tenders or exchanges could have been made pursuant to such tender offer or exchange offer (including all Purchased Shares) less (ii) the Purchased Shares and (B) whose denominator is equal to the product of (I) the number of shares of Parent Common Stock outstanding as of the Expiration Time (including all Purchased Shares) and (II) such Closing Price per share of Parent Common Stock. An increase, if any, to the Exchange Ratio pursuant to this Section 8.06(e) shall become effective immediately after the open of business on the Trading Day following the first Trading Day after the Expiration Date. In the event that the Parent or a Subsidiary of the Parent is obligated to purchase shares of Parent Common Stock pursuant to any such tender offer or exchange offer, but the Parent or such Subsidiary is permanently prevented by applicable law from effecting any such purchases, or all such purchases are rescinded, then the Exchange Ratio shall again be adjusted to be the Exchange Ratio which would then be in effect if such tender offer or exchange offer had not been made. If the application of this Section 8.06(e) to any tender offer or exchange offer would result in a decrease in the Exchange Ratio, no adjustment shall be made for such tender offer or exchange offer under this Section 8.06(e). (f) In addition to the foregoing adjustments in subsections (a), (b), (c), (d) and (e) above, the Issuer, from time to time and to the extent permitted by law, may increase the Exchange Ratio by any amount for a period of at least twenty (20) days or such longer period as may be required by law, if the Board of Directors of the Issuer has made a determination, which determination shall be conclusive, that such increase would be in the best interests of the Issuer. Such Exchange Ratio increase shall be irrevocable during such period. The Issuer shall give notice to the Trustee and cause notice of such increase to be mailed to each Holder of Notes at such Holder's address as the same appears on the registry books of the Registrar, at least fifteen (15) days prior to the date on which such increase commences. (g) For the purpose of any computation under this Section 8.06, (i) the current market price per share of Parent Common Stock on any date shall be deemed to be the average of the Closing Prices for the ten (10) consecutive Trading Days ending on, but excluding, the earlier of such date and the close of business on the Trading Day immediately preceding the Ex-Dividend Date with respect to the issuance or distribution requiring such computation, provided, however, that such current market price per share of Parent Common Stock shall be appropriately adjusted by the Calculation Agent, in its good faith determination, to account for any adjustment, pursuant hereto, to the Exchange Ratio that shall become effective, or any event requiring, pursuant hereto, an adjustment to the Exchange Ratio where the Ex-Dividend Date of such event occurs, at any time during the period that begins on, and includes, the first day of such ten (10) consecutive Trading Days and ends on, and includes, the date when the adjustment to the Exchange Ratio on account of the event requiring the computation of such current market price becomes effective, and (ii) the number of shares of Parent Common Stock at any time outstanding shall not include shares held in the treasury of the Parent. Unless the context requires otherwise, the term "record date" means, with respect to any dividend, distribution or other transaction or event in which the holders of shares of Parent Common Stock have the right to receive any cash, securities or other property or in which the shares of Parent Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or by statute, contract or otherwise). SECTION 8.07 Other Adjustments. Except as prohibited by law or by the continued listing requirements of the Nasdaq Global Market or any other securities exchange on which the Parent Common Stock may then be listed, the Issuer may make such increases in the Exchange Ratio, in addition to those required by Section 8.06 hereof, as it determines to be advisable in order that any stock dividend, subdivision of shares, distribution of rights to purchase stock or securities or distribution of securities convertible into or exchangeable for stock made by the Parent or to its stockholders will not be taxable to the recipients thereof or in order to diminish any such taxation. SECTION 8.08 Notice of Adjustment. Whenever the Exchange Ratio is adjusted, the Issuer shall promptly mail, or cause to be mailed, to Holders at the addresses appearing on the Registrar's books a notice of the adjustment and file with the Trustee an Officer's Certificate briefly stating the facts requiring the adjustment and the manner of computing it. The certificate shall be conclusive evidence of the correctness of such adjustment. SECTION 8.09 Notice of Certain Transactions. In the event that: (1) the Parent takes any action, or becomes aware of any event, which would require an adjustment in the Exchange Ratio, (2) the Parent takes any action that would require a supplemental indenture pursuant to Section 8.10, or (3) there is a dissolution or liquidation of the Parent or the Issuer, the Issuer shall mail, or caused to be mailed, to Holders at the addresses appearing on the Registrar's books and the Trustee a written notice stating the proposed record, effective or expiration date, as the case may be, of any transaction referred to in clause (1), (2) or (3) of this Section 8.09. The Issuer shall mail, or cause to be mailed, such notice at least twenty (20) days before such date; however, failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 8.09. SECTION 8.10 Effect of Reclassifications, Consolidations, Mergers, Binding Share Exchanges or Sales on Exchange Privilege. If any of the following shall occur, namely: (i) any reclassification or change in the Parent Common Stock issuable upon exchange of Notes (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 subdivision or combination of Parent Common Stock), (ii) any consolidation, merger or binding share exchange to which the Parent is a party other than a merger in which the Parent is the continuing Person and which does not result in any reclassification of, or change (other than a change in name, or par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination) in, the Parent Common Stock or (iii) any sale, transfer, lease, conveyance or other disposition of all or substantially all of the property or assets of the Parent and its Subsidiaries, taken as a whole, in each case pursuant to which the Parent Common Stock would be converted into or exchanged for, or would constitute solely the right to receive, cash, securities or other property, then the Parent or such successor or purchasing Person, as the case may be, and the Issuer shall, as a condition precedent to such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, execute and deliver to the Trustee a supplemental indenture in form reasonably satisfactory to the Trustee providing that, at and after the effective time of such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, the Holder of each Note then outstanding shall have the right to exchange such Note (if otherwise exchangeable pursuant to this Article 8) into the kind and amount of cash, securities or other property (collectively, "Reference Property") receivable upon such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition by a holder of a number of shares of Parent Common Stock equal to a fraction whose denominator is one thousand (1,000) and whose numerator is the product of the principal amount of such Note and the Exchange Ratio in effect immediately prior to such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition (assuming, if holders of Parent Common Stock shall have the opportunity to elect the form of consideration to receive pursuant to such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, that the Collective Election shall have been made with respect to such election); provided, however, that at and after the effective time of such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, the Notes will thereafter to be convertible into cash, Reference Property or a combination of cash and Reference Property, at the Holder's election, at the Exchange Ratio. If holders of Parent Common Stock shall have the opportunity to elect the form of consideration to receive pursuant to such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, then the Parent and Issuer shall make adequate provision to give Holders, treated as a single class, a reasonable opportunity to elect (the "Collective Election") the form of such consideration for purposes of determining the composition of the Reference Property referred to in the immediately preceding sentence, and once such election is made, such election shall apply to all Holders after the effective time of such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition. The supplemental indenture referred to in the first sentence of this Section 8.10 shall provide for adjustments of the Exchange Ratio (including any components of the Reference Property) which shall be as nearly equivalent as may be practicable to the adjustments of the Exchange Ratio provided for in this Article 8. The foregoing, however, shall not in any way affect the right a Holder of a Note may otherwise have, pursuant to Section 8.06(b) or Section 8.11, to receive rights or warrants upon exchange of a Note. If, in the case of any such consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, the stock or other securities and property (including cash) receivable thereupon by a holder of Parent Common Stock includes shares of stock or other securities and property of a Person other than the successor or purchasing Person, as the case may be, in such consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition, then such supplemental indenture shall also be executed by such other Person and shall contain such additional provisions to protect the interests of the Holders of the Notes as the Board of Directors in good faith shall reasonably determine necessary by reason of the foregoing. The provisions of this Section 8.10 shall similarly apply to successive consolidations, mergers, binding share exchanges, sales, transfers, leases, conveyances or dispositions. In the event the Parent or such successor or purchasing Person, as the case may be, and the Issuer shall execute a supplemental indenture pursuant to this Section 8.10, the Issuer shall promptly file with the Trustee an Officer's Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or securities or property (including cash) receivable by Holders of the Notes upon the exchange of their Notes after any such reclassification, change, consolidation, merger, binding share exchange, sale, transfer, lease, conveyance or disposition and any adjustment to be made with respect thereto. SECTION 8.11 Rights Distributions Pursuant to Stockholders' Rights Plans. Upon exchange of any Note or a portion thereof, the Parent shall make provision for the Holder thereof to receive, to the extent such Holder receives shares of Parent Common Stock upon such exchange or upon the conversion of Junior Preferred Stock, in addition to, and concurrently with the delivery of, the consideration otherwise payable hereunder upon such exchange, the rights described in any stockholders' rights plan the Parent may have in effect at such time and no adjustment to the Exchange Ratio shall be made on account thereof, unless such rights have been separated from the Parent Common Stock prior to the time of exchange or conversion, in which case the Exchange Ratio shall be adjusted upon such separation in accordance with Section 8.06(c). ARTICLE 9 AMENDMENTS ---------- SECTION 9.01 Without Consent of Holders. The Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or the Guarantees, without notice to or consent of any Holder of Notes to: (a) cure any ambiguity, defect or inconsistency; (b) provide for uncertificated Notes in addition to or in place of certificated Notes; (c) provide for the assumption of the Issuer's or any Guarantor's obligations to Holders of Notes and Guarantees in the case of a merger, consolidation or sale of all or substantially all of the Issuer's or such Guarantor's assets, as applicable; (d) make any change that would provide any additional rights or benefits to the Holders of Notes or that does not adversely affect the legal rights of any such Holder under this Indenture, the Notes or the Guarantees in any material respect; (e) evidence and provide for the acceptance of an appointment of a successor trustee; (f) release a Guarantor from its obligations under its Guarantee, the Notes or this Indenture in accordance with the applicable provisions of this Indenture; (g) add Guarantees with respect to the Notes; or (h) comply with the rules of any applicable securities depositary or, if required, with the requirements of the Commission in order to effect or maintain the qualification of this Indenture under the TIA. After an amendment under this Section becomes effective, the Issuer shall mail to the Holders a notice briefly describing such amendment. The failure to give such notice to all the Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.02 With Consent of Holders. The Issuer, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or the Guarantees without notice to any Holder but with the written consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes), and any existing Default or Event of Default or compliance with any provision of this Indenture, the Notes or the Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount, of the then outstanding Notes (including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Notes). Notwithstanding the foregoing, without the consent of each Holder affected, an amendment or waiver shall not (with respect to any Notes held by a non-consenting Holder): (a) reduce the principal amount of the Notes whose Holders must consent to an amendment, supplement or waiver; (b) reduce the principal of (or premium on) or change the fixed maturity of any Note, reduce any premium payable upon, , repurchase of any Note (other than Section 4.10 or 5.08); (c) reduce the rate of or change the time for payment of interest on any Note; (d) waive a Default or Event of Default in the payment of principal of or interest or premium, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration); (e) make any Note payable in currency other than that stated in the Notes; (f) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, or interest or premium, if any, on, the Notes or to institute suit for the enforcement of any payment on or with respect to such Holder's Notes; (g) release any Guarantor that is a Significant Subsidiary from any of its obligations under its Subsidiary Guarantee or this Indenture, except in accordance with the terms of this Indenture; (h) modify the provisions in this Indenture dealing with the application of trust moneys in any manner adverse to the Holders of the Notes; or (i) make any change in Section 9.01 or this Section 9.02. It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or waiver, but it shall be sufficient if such consent approves the substance thereof. A consent to any amendment or waiver under this Indenture by any Holder of Notes given in connection with a tender of such Holder's Notes will not be rendered invalid by such tender. After an amendment under this Section becomes effective, the Issuer shall mail to the Holders a notice briefly describing such amendment. However, the failure to give such notice to all the Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.03 Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Note shall bind the Holder and every subsequent Holder of that Note or portion of the Note that evidences the same debt as the consenting Holder's Note, even if notation of the consent or waiver is not made on the Note. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Note or portion of the Note if the Trustee receives written notice of revocation before the date the requisite number of consents are received by the Issuer or the Trustee. After an amendment or waiver becomes effective, it shall bind every Noteholder. An amendment or waiver becomes effective once the requisite number of consents are received by the Issuer or the Trustee and any other conditions to effectiveness of such consent specified in the amendment or waiver are satisfied. The Issuer may, but shall not be obligated to, fix a record date for the purpose of determining the Noteholders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Noteholders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. SECTION 9.04 Notation on or Exchange of Notes. If an amendment changes the terms of a Note, the Trustee may require the Holder of the Note to deliver it to the Trustee. The Trustee may place an appropriate notation on the Note regarding the changed terms and return it to the Holder. Alternatively, if the Issuer or the Trustee so determines, the Issuer in exchange for the Note shall issue and the Trustee shall authenticate a new Note that reflects the changed terms. Failure to make the appropriate notation or to issue a new Note shall not affect the validity of such amendment. SECTION 9.05 Trustee to Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such amendment is authorized or permitted by this Indenture that such amendment is the legal, valid and binding obligation of the Issuer and the Guarantors enforceable against them in accordance with its terms, subject to customary exceptions, and complies with the provisions hereof. SECTION 9.06 Compliance with TIA. Every amendment to or supplement of this Indenture or the Notes shall comply with the TIA, if required, as in effect at the date of such amendment or supplement. ARTICLE 10 GUARANTEES ---------- SECTION 10.01 Guarantee. (a) Each Guarantor hereby jointly and severally unconditionally and irrevocably guarantees, as a primary obligor and not merely as a surety, to each Holder and to the Trustee and its successors and assigns (i) the full and punctual payment of principal of, premium, if any, and interest on the Notes when due, whether at maturity, by acceleration, by repurchase or otherwise, subject to any applicable grace period, and all other monetary obligations of the Issuer under this Indenture (including obligations to the Trustee) and the Notes and (ii) the full and punctual performance within applicable grace periods of all other obligations of the Issuer, whether for expenses, indemnification or otherwise under this Indenture and the Notes (all of the foregoing being hereinafter collectively called the "Guaranteed Obligations"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article 10 notwithstanding any extension or renewal of any Guaranteed Obligation. (b) Each Guarantor waives presentation to, demand of, payment from and protest to the Issuer of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Notes or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (i) the failure of any Holder or the Trustee to assert any claim or demand or to enforce any right or remedy against the Issuer or any other Person under this Indenture, the Notes or any other agreement or otherwise; (ii) any extension or renewal of any Guaranteed Obligations; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Indenture, the Notes or any other agreement; (iv) the release of any security held by any Holder or the Trustee for the Guaranteed Obligations or any of them; (v) the failure of any Holder or Trustee to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) any change in the ownership of such Guarantor, except as provided in Section 5.03. (c) Each Guarantor further agrees that its Guarantee herein constitutes a Guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Holder or the Trustee to any security held for payment of the Guaranteed Obligations. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Issuer or any other Person. The obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Holder or the Trustee to assert any claim or demand or to enforce any remedy under this Indenture, the Notes or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity. (d) Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Holder or the Trustee upon the bankruptcy or reorganization of the Issuer or otherwise. (e) In furtherance of the foregoing and not in limitation of any other right which any Holder or the Trustee has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Issuer to pay the principal of or premium, if any, or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by repurchase or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Trustee, forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest or premium, if any, on such Guaranteed Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Guaranteed Obligations of the Issuer to the Holders and the Trustee. (f) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Holders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Holders and the Trustee, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article 6 for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article 6, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section. SECTION 10.02 Limitation on Liability. Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be guaranteed without rendering this Indenture and the respective Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 10.03 Successors and Assigns. This Article 10 shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Trustee and the Holders and, in the event of any transfer or assignment of rights by any Holder or the Trustee, the rights and privileges conferred upon that party in this Indenture and in the Notes shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Indenture. SECTION 10.04 No Waiver. Neither a failure nor a delay on the part of either the Trustee or the Holders in exercising any right, power or privilege under this Article 10 shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise of any right, power or privilege. The rights, remedies and benefits of the Trustee and the Holders herein expressly specified are cumulative and not exclusive of any other rights, remedies or benefits which either may have under this Article 10 at law, in equity, by statute or otherwise. SECTION 10.05 Modification. No modification, amendment or waiver of any provision of this Article 10, nor the consent to any departure by any Guarantor therefrom, shall in any event be effective unless the same shall be in writing and signed by the Trustee, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on any Guarantor in any case shall entitle such Guarantor to any other or further notice or demand in the same, similar or other circumstances. SECTION 10.06 Execution and Delivery of the Guarantee. The execution by each Guarantor of this Indenture (or a supplemental indenture in the form of Exhibit J hereto) evidences the Guarantee of such Guarantor, whether or not the person signing as an officer of the Guarantor still holds that office at the time of authentication of any Note. The delivery of any Note after authentication by the Trustee constitutes due delivery of the Guarantee set forth in this Indenture on behalf of each Guarantor. SECTION 10.07 Release of Guarantees. (a) The Guarantee of a Guarantor will be automatically released: (i) in accordance with the provisions in Section 4.07(d) or 5.03(f); (ii) with respect to any Foreign Subsidiary, if the other Guarantee which resulted in the creation of the Guarantee pursuant to Section 4.07(b) is released or discharged, except a discharge or release by or as a result of payment under such Guarantee; (iii) if the Issuer designates such Guarantor as an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture; or (iv) upon the Legal or Covenant Defeasance or satisfaction and discharge of the Notes and the Subsidiary Guarantees as provided under Sections 8.01, 8.02 and 8.03. ARTICLE 11 MISCELLANEOUS ------------- SECTION 11.01 Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows: if to the Issuer or a Guarantor: TerreStar Networks Inc. 12010 Sunset Hills Road, 9th Floor Reston, VA 20190 Attn: Jeffrey W. Epstein with a copy to: Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166 Attention: Joerg Esdorn if to the Trustee: U.S. Bank National Association EP-MN-WS3C 60 Livingston Avenue St. Paul MN 55107-1419 Attn: Corporate Trust Services Fax: (651) 495-8097 The Issuer or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Failure to mail a notice or communication to a Noteholder or any defect in it shall not affect its sufficiency with respect to other Noteholders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 11.02 Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Issuer to the Trustee to take or refrain from taking any action under this Indenture, at the request of the Trustee the Issuer shall furnish to the Trustee: (a) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.03) stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (b) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which shall include the statements set forth in Section 11.03) stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 11.03 Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture shall include: (a) a statement that the individual making such certificate or opinion has read such covenant or condition; (b) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (c) a statement that, in the opinion of such individual, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with or satisfied; and (d) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with. SECTION 11.04 When Notes Disregarded. In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Issuer or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Issuer shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Notes which the Trustee actually knows are so owned shall be so disregarded. Also, subject to the foregoing, only Notes outstanding at the time shall be considered in any such determination. SECTION 11.05 Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Noteholders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 11.06 Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York or the state where the Corporate Trust Office is located. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. SECTION 11.07 GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. SECTION 11.08 No Recourse Against Others. A director, officer, incorporator, employee or stockholder of the Issuer or any Guarantor, as such, shall not have any liability for any obligations of the Issuer or any Guarantor under the Notes, this Indenture, the Guarantees, or for any claim based on, in respect of, or by reason of, such obligations or their creation. By accepting a Note, each Noteholder waives and releases all such liability. The waiver and release shall be part of the consideration for the issue of the Notes. SECTION 11.09 Successors. All agreements of the Issuer and each Guarantor in this Indenture and the Notes shall bind their successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 11.10 Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 11.11 Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. SECTION 11.12 Severability. In case any one or more of the provisions in this Indenture, in the Notes or in the Guarantee shall be held invalid, illegal or unenforceable, in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions shall not in any way be affected or impaired thereby, it being intended that all of the provisions hereof shall be enforceable to the full extent permitted by law. SECTION 11.13 No Adverse Interpretation of Other Agreements. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Issuer or any of its Subsidiaries. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 11.14 Trust Indenture Act Controls. If any provision hereof limits, qualifies or conflicts with another provision of the TIA which is required hereunder to be a part of and govern this Indenture, the required provision shall control. SECTION 11.15 Communications by Holders with other Holders. Noteholders may communicate pursuant to Section 312(b) of the TIA with other Noteholders with respect to their rights under this Indenture or the Notes. The Trustee shall comply with Section 312(b) of the TIA relating to Noteholder communications. The Issuer, the Trustee, the Registrar and any other person shall have the protection of Section 312(c) of the TIA. SECTION 11.16 Submission to Jurisdiction; Agent for Service of Process. Any legal action or proceeding with respect to this Indenture, the Notes, the Guarantees or the Security Agreements may be instituted in the federal courts of the United States of America located in the City of New York or the courts of the State of New York in each case located in the Borough of Manhattan in the City of New York and by execution and delivery of this Indenture, each of the Issuer, the Guarantors and the Trustee consents, for itself and in respect of its property, to the non-exclusive jurisdiction of those courts. Each of the Issuer, the Guarantors and the Trustee irrevocably waives any objection, including an objection to the laying of venue or based on the grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action or proceeding in such jurisdiction in respect of this Indenture, the Notes, the Guarantees, the Security Agreements or any other document related thereto. Each of the Issuer, the Guarantors and the Trustee agrees that service of any process, summons, notice or document by mail to such party's address set forth above shall be effective service of process for any lawsuit, action or other proceeding brought in any such court. Each party not located in the United States hereby irrevocably appoints CT Corporation System, which currently maintains a New York City office at 111 Eighth Avenue-13th Floor, New York, New York 10011, United States of America, as its agent to receive service of process or other legal summons for purposes of any such action or proceeding that may be instituted in any state or federal court in the City and State of New York. SECTION 11.17 Agent; Determinations. All determinations made by the Calculation Agent shall be at the sole discretion of the Calculation Agent and, absent a determination of a manifest error, shall be conclusive for all purposes and binding on the Issuer and the Holders and beneficial owners of the Notes. The Issuer, with the approval of at least a majority of its Board of Directors, may at any time change the Registrar, Paying Agent, Authenticating Agent and Calculation Agent with notice to the Holders. IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. TERRESTAR NETWORKS INC. By: /s/ Robert H. Brumley ---------------------------- Name: Robert H. Brumley Title: President and CEO TERRESTAR CORPORATION By: /s/ Robert H. Brumley ---------------------------- Name: Robert H. Brumley Title: President and CEO TERRESTAR NATIONAL SERVICES, INC. By: /s/ Robert H. Brumley ---------------------------- Name: Robert H. Brumley Title: President TERRESTAR LICENSE INC. By: /s/ Robert H. Brumley ---------------------------- Name: Robert H. Brumley Title: President U.S. BANK NATIONAL ASSOCIATION, as Trustee By: /s/ Richard Prokosch ---------------------------- Name: Richard Prokosch Title: Vice President [Indenture Signature Page] EXHIBIT A [FACE OF NOTE] TERRESTAR NETWORKS INC. 6.5% Senior Exchangeable PIK Note due 2014 [CUSIP] [CINS]__________ No.____________ $________ TerreStar Networks Inc., a Delaware corporation (the "Issuer," which term includes any successor under the Indenture hereinafter referred to), for value received, promises to pay to , or its registered assigns, the principal sum of DOLLARS ($ ) [or such other amount as indicated on the Schedule of Increases and Decreases of Notes attached hereto](1) on the earlier of (a) May 15, 2008, if the shareholders of TerreStar Corporation fail to approve the [Spectrum Contribution] on or prior to such date and (b) June 15, 2014 (the "Maturity Date"). Interest Rate: As set forth on the reverse hereof. Interest Payment Dates: March 15, June 15, September 15 and December 15. Regular Record Dates: March 1, June 1, September 1 and December 1. Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which will for all purposes have the same effect as if set forth at this place. - ---------- (1) For Global Securities only IN WITNESS WHEREOF, the Issuer has caused this Note to be signed manually or by facsimile by its duly authorized officers. Date: TERRESTAR NETWORKS INC. By: ____________________________________ Name: Title: (Form of Trustee's Certificate of Authentication) This is one of the 6.5% Senior Exchangeable PIK Note due 2014 described in the Indenture referred to in this Note. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: ____________________________________ Authorized Signatory [REVERSE SIDE OF SECURITY] TERRESTAR NETWORKS INC. 6.5% Senior Exchangeable PIK Note due 2014 1. Principal and Interest. The Issuer promises to pay the principal of this Note on the Maturity Date. The Issuer promises to pay interest on the principal amount of this Note as follows: (a) Interest on this Note will accrue at a rate of 6.5% per annum from the issue date of the Note and will be payable quarterly in arrears on each Interest Payment Date as set forth on the face of this Note commencing on March 15, 2008 to the Holders of record on the Regular Record Date set forth on the face of this Note immediately preceding each Interest Payment Date; provided, that Additional Notes issued (A) after an Interest Payment Date and prior to the next succeeding Regular Record Date will accrue such interest from, and including, the immediately preceding Interest Payment Date as though such Additional Notes had been outstanding since such date; (b) except as set forth in this Note and the Indenture accrued interest on this Note will be payable in Additional Notes; (c) Interest accruing on the Notes and payable on or before March 15, 2011 shall be paid in the form of Additional Notes as provided in Section 2.15 of the Indenture. All interest shall accrue and be payable in cash and not in Additional Notes commencing on the earliest of (i) November 16, 2011, (ii) acceleration of the Securities pursuant to Section 6.04 of the Indenture (unless such acceleration shall be rescinded in accordance with Section 6.02 of the Indenture, in which case this clause (ii) shall not apply ab initio and such interest shall be payable in additional Securities, subject to clauses (i) and (iii) of this paragraph) and (iii) the occurrence of an Event of Default under Section 6.01(viii) of the Indenture (with respect to the Company or any of its Subsidiaries). In addition, interest payable on this Note in connection with a repurchase under the Indenture shall be paid in cash; and (d) notwithstanding clause (a) above, (i) if by February 29, 2008, TerreStar Corporation fails to file an information statement (the "Information Statement") with the Securities and Exchange Commission that informs its shareholders that it has obtained the Stockholder Approval, the Issuer will pay additional interest on this Note from March 1, 2008 to the date of the Stockholder Approval, which additional interest shall equal an increase in the annual interest rate on this Note (in addition to any increases required pursuant to clause (ii) of this paragraph) by 1.0% per annum; (ii) if by April 30, 2008, TerreStar Corporation fails to mail the Information Statement that includes an irrevocable written consent executed by a majority of the shareholders of TerreStar Corporation that approves the Spectrum Contribution, the Issuer will pay additional interest on this Note from May 1, 2008 to the date of the Stockholder Approval, which additional interest shall equal an increase in the annual interest rate on this Note (in addition to any increases required pursuant to clause (i) of this paragraph) by 1.0% per annum; (iii) any certification required by the foregoing clauses (i) or (ii) shall be in the form of an Officers' Certificate provided to the Trustee signed by the Issuer's Chief Executive Officer and Chief Financial Officer. Interest on this Note will accrue from the most recent date to which interest has been paid on this Note (or, if there is no existing default in the payment of interest and if this Note is authenticated between a Regular Record Date and the next Interest Payment Date, from such Interest Payment Date) or, if no interest has been paid, from the date this Note was issued. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Interest not paid when due and any interest on principal, premium or interest not paid when due will be paid to the Persons that are Holders on a special record date determined in accordance with the Indenture. If the payment of interest as set forth in the preceding would be usurious under applicable law, then, in that event, notwithstanding anything to the contrary in this Note, the Indenture or any Guarantee, or any other agreement entered into in connection with or as security for this Note, the Indenture or any Guarantee, it is agreed that the aggregate of all consideration which constitutes interest under applicable law that is contracted for, taken, reserved, charged or received by any Holder under this Note, the Indenture or any Guarantee, or under any other agreement entered into in connection with or as security for this Note, the Indenture or any Guarantee, shall under no circumstances exceed the maximum amount allowed by such applicable law and any excess shall be canceled automatically and, if theretofore paid, shall be refunded by each applicable Holder to the Issuer. 2. Indenture; Guarantee. This is one of the Notes issued under an Indenture dated as of [ ], 2008 (as amended from time to time, the "Indenture"), among Parent, the Issuer, the guarantors from time to time party thereto and U.S. Bank National Association, as Trustee. Capitalized terms used herein are used as defined in the Indenture unless otherwise indicated. The terms of the Notes include those stated in the Indenture. The Notes are subject to all such terms, and Holders are referred to the Indenture for a statement of all such terms. To the extent permitted by applicable law, in the event of any inconsistency between the terms of this Note and the terms of the Indenture, the terms of the Indenture will control. The Notes are senior obligations of the Issuer. Subject to certain conditions, Additional Notes may be issued pursuant to the Indenture, and the originally issued Notes and all such Additional Notes vote together for all purposes as a single class. This Note is guaranteed by the Guarantors as set forth in the Indenture. 3. Repurchase. This Note may be the subject of a Repurchase Offer, as further described in the Indenture. Except for certain required Repurchase Offers, there is no sinking fund or mandatory repurchase applicable to this Note. 4. Paying Agent, Registrar, Authenticating Agent, and Calculation Agent. Initially, the Trustee will act as Paying Agent, Registrar, Authenticating Agent and Calculation Agent. The Company may change any Paying Agent, Registrar, Bid Solicitation Agent or Conversion Agent in accordance with Section 11.17 of the Indenture. 5. Registered Form; Denominations; Transfer; Exchange. The Notes are in registered form without coupons in denominations of $1,000 principal amount and any multiple of $1,000 in excess thereof, except that Additional Notes in payment of interest may be issued in other denominations. A Holder may register the transfer or exchange of Notes in accordance with the terms of the Indenture. The Trustee may require a Holder to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. Pursuant to the Indenture, there are certain periods during which the Trustee will not be required to issue, register the transfer of or exchange any Note or certain portions of a Note. 6. Defaults and Remedies. If an Event of Default, as defined in the Indenture, occurs and is continuing, the Trustee or the Holders may declare all the Notes to be due and payable in accordance with the terms of the Indenture. If a bankruptcy or insolvency default with respect to the Issuer, any Restricted Subsidiary of the Issuer that is a Significant Subsidiary, any group of Restricted Subsidiaries that, taken as a whole, would constitute a Significant Subsidiary, the FCC License Subsidiary or any Canadian Entity occurs and is continuing, the Notes will automatically become due and payable. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in principal amount of the Notes then outstanding may direct the Trustee in its exercise of remedies. Pursuant to the terms of the Indenture, any Holder of the Notes other than the Electing Holders has the right to purchase for cash, and the Electing Holders have the obligation to sell, all of such Electing Holders' right, title and interest in and to the Notes. 7. Amendment and Waiver. Subject to certain exceptions, the Indenture and the Notes may be amended, with the consent of the Holders of a majority in principal amount of the outstanding Notes and defaults may be waived with the consent of the Holders of 70%. Without notice to or the consent of any Holder, the Issuer and the Trustee may amend or supplement the Indenture or the Notes to cure any ambiguity, defect, inconsistency or similar correction. 8. Registration Rights. The Holders are entitled to registration rights as set forth in the Registration Rights Agreement. The Holders shall be entitled to receive additional interest in certain circumstances, all as set forth in the Registration Rights Agreement. 9. Authentication. This Note is not valid until the Trustee (or Authenticating Agent) signs the certificate of authentication on the other side of this Note. 10. Governing Law. This Note shall be governed by, and construed in accordance with, the laws of the State of New York. 11. Abbreviations. Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and U/G/M/A/ (= Uniform Gifts to Minors Act). The Issuer will furnish a copy of the Indenture to any Holder upon written request and without charge. [FORM OF TRANSFER NOTICE] FOR VALUE RECEIVED the undersigned registered Holder hereby sell(s), assign(s) and transfer(s) unto Insert Taxpayer Identification No. ________________________________________________________________________________ ________________________________________________________________________________ Please print or typewrite name and address including zip code of assignee the within Note and all rights thereunder, hereby irrevocably constituting and appointing ________________________________________________________________________________ attorney to transfer said Note on the books of the Issuer with full power of substitution in the premises. [THE FOLLOWING PROVISION TO BE INCLUDED ON ALL SECURITIES BEARING A RESTRICTED LEGEND] In connection with any transfer of this Note occurring prior to __________, the undersigned confirms that such transfer is made without utilizing any general solicitation or general advertising and further as follows: Check One |_| (1) This Note is being transferred to a "qualified institutional buyer" in compliance with Rule 144A under the Securities Act of 1933, as amended, and certification in the form of Exhibit F to the Indenture is being furnished herewith. |_| (2) This Note is being transferred to a non-U.S. person in compliance with the exemption from registration under the Securities Act of 1933, as amended, provided by Regulation S thereunder, and certification in the form of Exhibit E to the Indenture is being furnished herewith. or |_| (3) This Note is being transferred other than in accordance with (1) or (2) above and documents are being furnished which comply with the conditions of transfer set forth in this Note and the Indenture. If none of the foregoing boxes is checked, the Trustee is not obligated to register this Note in the name of any Person other than the Holder hereof unless and until the conditions to any such transfer of registration set forth herein and in the Indenture have been satisfied. Date:_________ ________________________________________ Seller By: ____________________________________ NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within mentioned instrument in every particular, without alteration or any change whatsoever. Signature Guarantee:(2) ________________________________________________________ By: ____________________________________________________ To be executed by an executive officer - ---------- (2) Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Association Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. OPTION OF HOLDER TO ELECT PURCHASE If you wish to have all of this Note purchased by the Issuer pursuant to Section 3.01 of the Indenture, check the box: |_| If you wish to have a portion of this Note purchased by the Issuer pursuant to Section 3.01 of the Indenture, state the amount (in original principal amount) below: $___________________________. Date:_______________________ Your Signature: __________________________________________________ (Sign exactly as your name appears on the other side of this Note) Signature Guarantee:(3) ____________________________ - ---------- (3) Signatures must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Registrar, which requirements include membership or participation in the Securities Transfer Association Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. SCHEDULE OF INCREASES AND DECREASES OF NOTES(4) The following increases or decreases of the principal amount of this Global Note have been made:
Principal amount of this Global Note Amount of decrease Amount of increase following such Signature of Date of increase in principal amount in principal amount decrease (or authorized officer or decrease of this Global Note of this Global Note increase) of Trustee - ---------------- ------------------- ------------------- ------------------- ------------------
- ---------- (4) For Global Securities EXHIBIT B DTC LEGEND UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS A BENEFICIAL INTEREST HEREIN. TRANSFERS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL NOTE ARE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE TRANSFER PROVISIONS OF THE INDENTURE. EXHIBIT C REGULATION S LEGEND THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS 40 DAYS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT. EXHIBIT D PRIVATE PLACEMENT LEGEND THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHER WISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS AN INSTITUTIONAL ACCREDITED INVESTOR ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE SECURITIES OF $250,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. EXHIBIT E REGULATION S CERTIFICATE _________, ____ [U.S. Bank National Association EP-MN-WS3C 60 Livingston Avenue St. Paul MN 55107-1419 Attn: Corporate Trust Services] Re: TerreStar Networks Inc. 6.5% Senior Exchangeable PIK Notes due 2014 (the "Notes") issued under the Indenture (the "Indenture") dated as of [_______] Ladies and Gentlemen: Terms are used in this certificate as used in Regulation S ("Regulation S") under the Securities Act of 1933, as amended (the "Securities Act"), except as otherwise stated herein. [CHECK A OR B AS APPLICABLE.] |_| A. This certificate relates to our proposed transfer of $___________ principal amount of Notes issued under the Indenture. We hereby certify as follows: 1. The offer and sale of the Notes was not and will not be made to a person in the United States (unless such person is excluded from the definition of "U.S. Person" pursuant to Rule 902(k)(2)(vi) or the account held by it for which it is acting is excluded from the definition of "U.S. Person" pursuant to Rule 902(k)(2)(i) under the circumstances described in Rule 902(h)(3)) and such offer and sale was not and will not be specifically targeted at an identifiable group of U.S. citizens abroad. 2. Unless the circumstances described in the parenthetical in paragraph 1 above are applicable, either (a) at the time the buy order was originated, the buyer was outside the United States or we and any person acting on our behalf reasonably believed that the buyer was outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market, and neither we nor any person acting on our behalf knows that the transaction was pre-arranged with a buyer in the United States. 3. Neither we, any of our affiliates, nor any person acting on our or their behalf has made any directed selling efforts in the United States with respect to the Notes. 4. The proposed transfer of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act. 5. If we are a dealer or a person receiving a selling concession, fee or other remuneration in respect of the Notes, and the proposed transfer takes place during the Restricted Period (as defined in the Indenture), or we are an officer or director of the Issuer or an Initial Purchaser (as defined in the Indenture), we certify that the proposed transfer is being made in accordance with the provisions of Rule 904(b) of Regulation S. |_| B. This certificate relates to our proposed exchange of $ principal amount of Notes issued under the Indenture for an equal principal amount of Notes to be held by us. We hereby certify as follows: 1. At the time the offer and sale of the Notes was made to us, either (i) we were not in the United States or (ii) we were excluded from the definition of "U.S. person" pursuant to Rule 902(k)(2)(vi) or the account held by us for which we were acting was excluded from the definition of "U.S. person" pursuant to Rule 902(k)(2)(i) under the circumstances described in Rule 902(h)(3); and we were not a member of an identifiable group of U.S. citizens abroad. 2. Unless the circumstances described in paragraph 1(ii) above are applicable, either (a) at the time our buy order was originated, we were outside the United States or (b) the transaction was executed in, on or through the facilities of a designated offshore securities market and we did not pre-arrange the transaction in the United States. 3. The proposed exchange of Notes is not part of a plan or scheme to evade the registration requirements of the Securities Act. You and the Issuer are entitled to rely upon this certificate and are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF SELLER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)] By: ____________________________________ Name: Title: Address: Date:________________ EXHIBIT F RULE 144A CERTIFICATE __________, ____ [U.S. Bank National Association EP-MN-WS3C 60 Livingston Avenue St. Paul MN 55107-1419 Attn: Corporate Trust Services] Re: TerreStar Networks Inc. 6.5% Senior Exchangeable PIK Notes due 2014 (the "Notes") issued under the Indenture (the "Indenture") dated as of [ ] Ladies and Gentlemen: This certificate relates to: [CHECK A OR B AS APPLICABLE.] |_| A. Our proposed purchase of $____________ principal amount of Notes issued under the Indenture. |_| B. Our proposed exchange of $____________ principal amount of Notes issued under the Indenture for an equal principal amount of Notes to be held by us. We and, if applicable, each account for which we are acting in the aggregate owned and invested more than $100,000,000 in securities of issuers that are not affiliated with us (or such accounts, if applicable), as of , 20 , which is a date on or since the close of our most recent fiscal year. We and, if applicable, each account for which we are acting, are a qualified institutional buyer within the meaning of Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended (the "Securities Act"). If we are acting on behalf of an account, we exercise sole investment discretion with respect to such account. We are aware that the transfer of Notes to us, or such exchange, as applicable, is being made in reliance upon the exemption from the provisions of Section 5 of the Securities Act provided by Rule 144A. Prior to the date of this certificate we have received such information regarding the Issuer as we have requested pursuant to Rule 144A(d)(4) or have determined not to request such information. You and the Issuer are entitled to rely upon this certificate and are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF PURCHASER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)] By: ____________________________________ Name: Title: Address: EXHIBIT G INSTITUTIONAL ACCREDITED INVESTOR CERTIFICATE(1) [U.S. Bank National Association EP-MN-WS3C 60 Livingston Avenue St. Paul MN 55107-1419 Attn: Corporate Trust Services] Re: TerreStar Networks Inc. 6.5% Senior Exchangeable PIK Notes due 2014 (the "Notes") issued under the Indenture (the "Indenture") dated as of [ ] Ladies and Gentlemen: This certificate relates to: [CHECK A OR B AS APPLICABLE.] |_| A. Our proposed purchase of $____________ principal amount of Notes issued under the Indenture. |_| B. Our proposed exchange of $____________ principal amount of Notes issued under the Indenture for an equal principal amount of Notes to be held by us. We hereby confirm that: 1. We are an institutional "accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the "Securities Act") (an "Institutional Accredited Investor"). 2. Any acquisition of Notes by us will be for our own account or for the account of one or more other Institutional Accredited Investors as to which we exercise sole investment discretion. 3. We have such knowledge and experience in financial and business matters that we are capable of evaluating the merits and risks of an investment in the Notes and we and any accounts for which we are acting are able to bear the economic risks of and an entire loss of our or their investment in the Notes. 4. We are not acquiring the Notes with a view to any distribution thereof in a transaction that would violate the Securities Act or the securities laws of any State of the United States or any other applicable jurisdiction; provided that the disposition of our property and the property of any accounts for which we are acting as fiduciary will remain at all times within our and their control. 5. We acknowledge that the Notes have not been registered under the Securities Act and that the Notes may not be offered or sold within the United States or to or for the benefit of U.S. persons except as set forth below. 6. The principal amount of Notes to which this certificate relates is at least equal to $250,000. We agree for the benefit of the Issuer, on our own behalf and on behalf of each account for which we are acting, that such Notes may be offered, sold, pledged or otherwise transferred only in accordance with the Securities Act and any applicable securities laws of any State of the United States and only (a) to the Issuer, (b) pursuant to a registration statement which has become effective under the Securities Act, (c) to a qualified institutional buyer in compliance with Rule 144A under the Securities Act, (d) in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities Act, (e) in a principal amount of not less than $250,000, to an Institutional Accredited Investor that, prior to such transfer, delivers to the Trustee a duly completed and signed certificate (the form of which may be obtained from the Trustee) relating to the restrictions on transfer of the Notes or (f) pursuant to an exemption from registration provided by Rule 144 under the Securities Act or any other available exemption from the registration requirements of the Securities Act. Prior to the registration of any transfer in accordance with (c) or (d) above, we acknowledge that a duly completed and signed certificate (the form of which may be obtained from the Trustee) must be delivered to the Trustee. Prior to the registration of any transfer in accordance with (e) or (f) above, we acknowledge that the Issuer reserves the right to require the delivery of such legal opinions, certifications or other evidence as may reasonably be required in order to determine that the proposed transfer is being made in compliance with the Securities Act and applicable state securities laws. We acknowledge that no representation is made as to the availability of any Rule 144 exemption from the registration requirements of the Securities Act. We understand that the Trustee will not be required to accept for registration of transfer any Notes acquired by us, except upon presentation of evidence satisfactory to the Issuer and the Trustee that the foregoing restrictions on transfer have been complied with. We further understand that the Notes acquired by us will be in the form of definitive physical certificates and that such certificates will bear a legend reflecting the substance of the preceding paragraph. We further agree to provide to any person acquiring any of the Notes from us a notice advising such person that resales of the Notes are restricted as stated herein and that certificates representing the Notes will bear a legend to that effect. We agree to notify you promptly in writing if any of our acknowledgments, representations or agreements herein ceases to be accurate and complete. We represent to you that we have full power to make the foregoing acknowledgments, representations and agreements on our own behalf and on behalf of any account for which we are acting. You and the Issuer are entitled to rely upon this certificate and are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF PURCHASER (FOR TRANSFERS) OR OWNER (FOR EXCHANGES)] By: ____________________________________ Name: Title: Address: Date:_____________ Upon transfer, the Notes would be registered in the name of the new beneficial owner as follows: By: _______________________________ Date: _____________________________ Taxpayer ID number: _______________ EXHIBIT H [COMPLETE FORM I OR FORM II AS APPLICABLE.] [FORM I] CERTIFICATE OF BENEFICIAL OWNERSHIP [U.S. Bank National Association EP-MN-WS3C 60 Livingston Avenue St. Paul MN 55107-1419 Attn: Corporate Trust Services] Re: TerreStar Networks Inc. 6.5% Senior Exchangeable PIK Notes due 2014 (the "Notes") issued under the Indenture (the "Indenture") dated as of [ ] Ladies and Gentlemen: We are the beneficial owner of $ principal amount of Notes issued under the Indenture and represented by a Temporary Regulation S Global Note (as defined in the Indenture). We hereby certify as follows: [CHECK A OR B AS APPLICABLE.] |_| A. We are a non-U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended). |_| B. We are a U.S. person (within the meaning of Regulation S under the Securities Act of 1933, as amended) that purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended. You and the Issuer are entitled to rely upon this certificate and are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Very truly yours, [NAME OF BENEFICIAL OWNER] By: ____________________________________ Name: Title: Address: Date:______________ [FORM II] CERTIFICATE OF BENEFICIAL OWNERSHIP [U.S. Bank National Association EP-MN-WS3C 60 Livingston Avenue St. Paul MN 55107-1419 Attn: Corporate Trust Services] Re: TerreStar Networks Inc. 6.5% Senior Exchangeable PIK Notes due 2014 (the "Notes") issued under the Indenture (the "Indenture") dated as of [ ] Ladies and Gentlemen: This is to certify that based solely on certifications we have received in writing, by tested telex or by electronic transmission from Institutions appearing in our records as persons being entitled to a portion of the principal amount of Notes represented by a Temporary Regulation S Global Note issued under the above-referenced Indenture, that as of the date hereof, $ principal amount of Notes represented by the Temporary Regulation S Global Note being submitted herewith for exchange is beneficially owned by persons that are either (i) non-U.S. persons (within the meaning of Regulation S under the Securities Act of 1933, as amended) or (ii) U.S. persons that purchased the Notes in a transaction that did not require registration under the Securities Act of 1933, as amended. We further certify that (i) we are not submitting herewith for exchange any portion of such Temporary Regulation S Global Note excepted in such certifications and (ii) as of the date hereof we have not received any notification from any Institution to the effect that the statements made by such Institution with respect to any portion of such Temporary Regulation S Global Note submitted herewith for exchange are no longer true and cannot be relied upon as of the date hereof. You and the Issuer are entitled to rely upon this certificate and are irrevocably authorized to produce this certificate or a copy hereof to any interested party in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby. Yours faithfully, [Name of DTC Participant] By: ____________________________________ Name: Title: Address: Date:____________ EXHIBIT I TEMPORARY REGULATION S GLOBAL NOTE LEGEND THIS NOTE IS A TEMPORARY GLOBAL NOTE. PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD APPLICABLE HERETO, BENEFICIAL INTERESTS HEREIN MAY NOT BE HELD BY ANY PERSON OTHER THAN (1) A NON-U.S. PERSON OR (2) A U.S. PERSON THAT PURCHASED SUCH INTEREST IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). BENEFICIAL INTERESTS HEREIN ARE NOT EXCHANGEABLE FOR PHYSICAL NOTES OTHER THAN A PERMANENT GLOBAL NOTE IN ACCORDANCE WITH THE TERMS OF THE INDENTURE. TERMS IN THIS LEGEND ARE USED AS USED IN REGULATION S UNDER THE SECURITIES ACT. NO BENEFICIAL OWNERS OF THIS TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF PRINCIPAL OR INTEREST HEREON UNTIL SUCH BENEFICIAL INTEREST IS EXCHANGED OR TRANSFERRED FOR AN INTEREST IN ANOTHER NOTE. EXHIBIT J SUPPLEMENTAL INDENTURE dated as of _________, ____ TERRESTAR NETWORKS INC., The Guarantor(s) Party Hereto [U.S. BANK NATIONAL ASSOCIATION,] as Trustee --------------- 6.5% Senior Exchangeable PIK Notes due 2014 THIS SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), entered into as of ________, ___, among TERRESTAR NETWORKS INC., a Delaware corporation (the "Issuer"), the existing Guarantors party thereto, [insert each new Guarantor executing this Supplemental Indenture and its jurisdiction of incorporation] (each an "Undersigned") and [U.S. BANK NATIONAL ASSOCIATION], as trustee (the "Trustee"). RECITALS WHEREAS, the Issuer and the Trustee entered into the Indenture, dated as of [_____________] (the "Indenture"), relating to the Issuer's 6.5% Senior Exchangeable PIK Notes due 2014 (the "Notes"); WHEREAS, as a condition to the Trustee entering into the Indenture and the purchase of the Notes by the Holders, the Issuer agreed pursuant to the Indenture to cause any newly acquired or created Domestic Subsidiaries to provide Guarantees, except in certain circumstances. AGREEMENT NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained and intending to be legally bound, the parties to this Supplemental Indenture hereby agree as follows: Section 1. Capitalized teams used herein and not otherwise defined herein are used as defined in the Indenture. Section 2. Each Undersigned, by its execution of this Supplemental Indenture, agrees to be a Guarantor under the Indenture and to be bound by the terms of the Indenture applicable to Guarantors, including, but not limited to, Article 10 thereof. Section 3. This Supplemental Indenture shall be governed by and construed in accordance with the laws of the State of New York. Section 4. This Supplemental Indenture may be signed in various counterparts which together will constitute one and the same instrument. Section 5. This Supplemental Indenture is an amendment supplemental to the Indenture and the Indenture and this Supplemental Indenture will henceforth be read together. IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed as of the date first above written. TERRESTAR NETWORKS INC., as Issuer By: ____________________________________ Name: Title: [GUARANTORS] By: ____________________________________ Name: Title: [U.S. BANK NATIONAL ASSOCIATION], as Trustee By: ____________________________________ Name: Title: Exhibit K --------- EXCHANGE NOTICE --------------- To exchange this Note in accordance with the Indenture, check the box: |_| To exchange only part of this Note, state the principal amount to be exchanged (must be in multiples of $1,000, except that Notes issued in payment of interest may be converted in other denominations): $__________________ If you want the stock certificate representing the shares of Common Stock or Junior Preferred Stock, if any, issuable upon exchange made out in another person's name, fill in the form below: ________________________________________________________________________________ (Insert other person's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type other person's name, address and zip code) ________________________________________________________________________________ Date:______________ Signature(s): ___________________________________________ (Sign exactly as your name(s) appear(s) on the other side of this Note) Signature(s) guaranteed by: ____________________________________________________ (All signatures must be guaranteed by a guarantor institution participating in the Securities Transfer Agents Medallion Program or in such other guarantee program acceptable to the Trustee.) EX-99.D 3 d853013_ex99-d.txt Execution Version ================================================================================ MASTER INVESTMENT AGREEMENT by and among TERRESTAR CORPORATION, TERRESTAR NETWORKS INC., and HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. and HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. ================================================================================ Execution Version Table of Contents ----------------- ARTICLE I DEFINITIONS Section 1.01 Specific Definitions............................................2 Section 1.02 Other Terms.....................................................2 ARTICLE II SALE AND PURCHASE Section 2.01 Sale and Purchase...............................................2 Section 2.02 Closings........................................................2 Section 2.03 The Company's Deliveries to the Purchaser.......................2 Section 2.04 The Company's Deliveries to the Exchangeable Note Trustee.......3 Section 2.05 The Parent's Deliveries to the Purchaser........................4 Section 2.06 Purchaser's Deliveries to the Company...........................4 Section 2.07 Independent Nature of the Purchaser's Obligations and Rights....4 ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT Section 3.01 Organization, Good Standing and Qualification...................5 Section 3.02 Capital Structure...............................................5 Section 3.03 Corporate Authority; Approval and Fairness......................8 Section 3.04 The Indentures..................................................8 Section 3.05 The Notes and the Guarantees....................................8 Section 3.06 Valid Issuance of Parent Equity Securities......................9 Section 3.07 No Violation or Default.........................................9 Section 3.08 No Conflict.....................................................9 Section 3.09 No Consents Required...........................................10 Section 3.10 Company Financial Statements...................................10 Section 3.11 Undisclosed Liabilities; etc...................................11 Section 3.12 Absence of Certain Changes.....................................11 Section 3.13 Independent Accountants........................................12 Section 3.14 Litigation.....................................................12 Section 3.15 Tax Matters....................................................13 Section 3.16 Title to Real and Personal Property............................13 Section 3.17 Environmental Matters..........................................14 Section 3.18 Employee Benefits..............................................14 Section 3.19 Labor Matters..................................................16 Section 3.20 Insurance......................................................18 Section 3.21 Intellectual Property..........................................18 Section 3.22 No Undisclosed Relationships...................................19 Section 3.23 Related Party Transactions.....................................20 Section 3.24 Company Not an "Investment Company"............................20 Section 3.25 Accounting Controls............................................20 Section 3.26 Material Contracts.............................................20 Section 3.27 No Unlawful Payments; Compliance with Certain Laws.............21 Section 3.28 Solvency.......................................................21 Section 3.29 Brokers........................................................22 Section 3.30 Licenses and Permits...........................................22 Section 3.31 Rule 144A Eligibility..........................................22 Section 3.32 No Integration.................................................22 Section 3.33 No Stabilization...............................................22 Section 3.34 Margin Rules...................................................22 Section 3.35 No Restriction on Distributions................................23 Section 3.36 Contemporaneous Purchase.......................................23 Section 3.37 Regulatory.....................................................23 Section 3.38 Complete Disclosure............................................24 ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER Section 4.01 Authorization..................................................24 Section 4.02 No Conflicts...................................................24 Section 4.03 Certain Fees...................................................24 Section 4.04 Purchase in Ordinary Course....................................24 Section 4.05 Unregistered Securities........................................24 ARTICLE V CONDITIONS Section 5.01 Conditions Precedent to the Obligations of the Purchaser at each Closing...................................................26 Section 5.02 Conditions Precedent to the Obligations of the Company.........27 Section 5.03 Additional Conditions Precedent to the Final Closing...........28 Section 5.04 Additional Documents...........................................28 ARTICLE VI ADDITIONAL AGREEMENTS Section 6.01 Blue Sky Compliance............................................28 Section 6.02 Supplying Information..........................................29 Section 6.03 No Integration.................................................29 Section 6.04 No General Solicitation or Directed Selling Efforts............29 Section 6.05 No Stabilization...............................................29 Section 6.06 Offering of Exchangeable Notes to Existing Stockholders........29 Section 6.07 Network Capacity Agreement.....................................29 Section 6.08 Regulatory.....................................................29 Section 6.09 Stockholder Approval...........................................30 Section 6.10 Filings........................................................31 Section 6.11 Withholding Certificates.......................................31 Section 6.12 Company Board; Voting Rights...................................32 ARTICLE VII MISCELLANEOUS Section 7.01 Use of Proceeds................................................32 Section 7.02 Termination by Mutual Consent..................................32 Section 7.03 Termination by the Purchaser or the Company....................32 Section 7.04 Interpretation; Severability...................................32 Section 7.05 Survival.......................................................32 Section 7.06 Waivers; Remedies; Amendments..................................33 Section 7.07 Indemnification................................................33 Section 7.08 Binding Effect; Assignment.....................................34 Section 7.09 Non-Disclosure.................................................34 Section 7.10 Communications.................................................34 Section 7.11 Entire Agreement...............................................35 Section 7.12 Governing Law..................................................36 Section 7.13 Fees and Expenses..............................................36 Section 7.14 Execution in Counterparts......................................36 Schedules and Exhibits - ---------------------- Exhibit A - Defined Terms Exhibit B - Form of Indenture for Exchangeable Notes (including Form of Exchangeable Note) Exhibit C - Form of Spectrum Contribution Agreement Exhibit D - Form of Registration Rights Agreement Exhibit E - Form of Second Supplemental Indenture to the Indenture, dated February 14, 2007, between TerreStar Networks Inc., the guarantors party thereto and U.S. Bank National Association in respect of 15% Senior Secured PIK Notes due 2014 Exhibit F - Form of Certificate of Designations for the Series D Preferred Stock of TerreStar Corporation Exhibit G - Form of Gibson, Dunn & Crutcher LLP Opinion Exhibit H - Form of Dechert LLP Opinion Exhibit I - Form of General Counsel Opinion Exhibit J - Reserved Exhibit K - Form of Richards, Layton & Finger, P.A. Opinion Exhibit L - Form of Officers' Certificate MASTER INVESTMENT AGREEMENT This MASTER INVESTMENT AGREEMENT, dated as of February 5, 2008 (this "Agreement"), is by and among TERRESTAR CORPORATION, a Delaware corporation (the "Parent"), TERRESTAR NETWORKS INC., a Delaware corporation (the "Company"), and HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., ("Harbinger Master Fund"), and HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, LP ("Harbinger Special Situations Fund", and together with Harbinger Master Fund, "Harbinger," or the "Purchaser"). WHEREAS, the Company desires to issue and sell $150,000,000 in aggregate principal amount of its 6-1/2% Senior Exchangeable Paid-in-Kind Notes, due June 15, 2014 (the "Exchangeable Notes") pursuant to an Indenture (the "Exchangeable Notes Indenture") among the Company, Parent, the guarantors from time to time party thereto and U.S. Bank National Association, as Trustee substantially in the form attached as Exhibit A; WHEREAS, the Company has outstanding $537,500,000 in aggregate principal amount of its 15% Senior Secured PIK Notes, due February 15, 2014 (the "Secured Notes") issued under the Indenture (the "Secured Notes Indenture") dated as of February 14, 2007, between the Company, the guarantors party thereto, and U.S. Bank National Association, as Trustee, which Secured Notes are held by several investors including the Purchaser; WHEREAS, the Parent desires to issue and sell to the Purchaser one (1) share of its Series D Preferred Stock, par value $.01 per share (the "Series D Preferred"); WHEREAS, the Company desires to issue and sell to the Purchaser up to $75,000,000 in aggregate principal amount of the Exchangeable Notes; WHEREAS, (i) the Company intends to issue and sell up to $75,000,000 in aggregate principal amount of the Exchangeable Notes, (ii) Parent intends to issue and sell one (1) share of the Series C Preferred Stock, par value $.01 per share (the "Series C Preferred"), and (iii) the Company intends to issue and sell up to $50,000,000 in additional aggregate principal amount of the Secured Notes pursuant to the Supplemental Secured Notes Indenture to another party in transactions that are intended to be completed simultaneously with the completion of the transactions to be completed at the Initial Closing under this Agreement (such Exchangeable Notes, Secured Notes and share of Series C Preferred being referred to herein as the "Other Purchaser Securities"); and WHEREAS, the Parent may following, and subject to, the approval of its shareholders, issue up to 60 million shares of its common stock (or junior preferred stock convertible into common stock) in exchange for the contribution of the Spectrum from the Purchaser and a third party; NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 Specific Definitions. As used in this Agreement, and unless the context requires a different meaning, the terms defined in Exhibit A have the meanings specified or referred to therein. Section 1.02 Other Terms. Other terms defined elsewhere in the text of this Agreement shall, unless otherwise indicated, have the meanings indicated throughout this Agreement. ARTICLE II SALE AND PURCHASE Section 2.01 Sale and Purchase. Subject to the terms and conditions hereof each of the Company and the Parent, as applicable, hereby agrees to issue and sell to the Purchaser and the Purchaser hereby agrees to purchase from the Company, the Purchased Securities for the Purchase Price. Section 2.02 Closings. The consummation of the sale and purchase of the Initial Purchased Securities and the Additional Purchased Securities, if any, hereunder (the "Initial Closing") shall take place on the Initial Closing Date, and the consummation of the sale and purchase of the Spectrum Shares pursuant to the Spectrum Contribution Agreement shall take place in accordance with the terms of the Spectrum Contribution Agreement (the "Final Closing" and, together with the Initial Closing each a "Closing") shall take place in accordance with the terms of the Spectrum Contribution Agreement. Each Closing shall take place at the offices of Bingham McCutchen, 399 Park Avenue, New York, New York 10022. Section 2.03 The Company's Deliveries to the Purchaser. At each Closing, the Company will deliver, or cause to be delivered, to the Purchaser: (a) A certificate (or certificates) representing the Purchased Securities to be issued and delivered at such Closing; (b) In the case of the Initial Closing a cross-receipt executed by the Company certifying that it has received a wire transfer as of the relevant Closing Date in an amount equal to the aggregate Purchase Price of the Purchased Securities to be purchased by the Purchaser at such Closing; (c) A written opinion from Gibson Dunn & Crutcher LLP, special counsel for the Company and the Guarantors, dated the relevant Closing Date and addressed to the Purchaser, in substantially the form attached hereto as Exhibit G or otherwise in a form reasonably acceptable to the Purchaser; (d) A written opinion from Dechert LLP, investment company act counsel for the Company and the Guarantors, dated the relevant Closing Date and addressed to the Purchaser, in substantially the form attached hereto as Exhibit H or otherwise in a form reasonably acceptable to the Purchaser; (e) A written opinion from Jeffrey Epstein, the General Counsel of the Company, dated the relevant Closing Date and addressed to the Purchaser, in substantially the form attached hereto as Exhibit I or otherwise in a form reasonably acceptable to the Purchaser; (f) A written opinion from Richards, Layton & Finger, P.A., Delaware counsel for the Company and the Guarantors, dated the relevant Closing Date and addressed to the Purchaser, in substantially the form attached hereto as Exhibit K or otherwise in a form reasonably acceptable to the Purchaser; (g) An executed copy of each of the Operative Documents and executed copies of the Purchase Money Credit Agreement and the Purchase Money Security Agreement to be delivered on such Closing Date; (h) In the case of the Initial Closing, evidence reasonably satisfactory to the Purchaser of the issuance to another purchaser or purchasers of and payment by such other purchaser or purchasers for an aggregate principal amount of Exchangeable Notes equal to $150,000,000 less the principal amount of Exchangeable Notes required to be purchased by the Purchaser on such Initial Closing Date; (i) A certificate of the Secretary of the Company and the Parent, dated the relevant Closing Date, in form and substance reasonably satisfactory to the Purchaser, certifying as to (i) the certificate of incorporation of each of the Company and the Parent; (ii) the by-laws of each of the Company and the Parent; (iii) the resolutions of the board of directors of each of the Company and the Parent authorizing the execution and performance of each of the Operative Documents to be executed on or before such Closing Date by the Company and the valid issuance of the Purchased Securities to be issued and delivered on such Closing Date; and (iv) incumbency and signatures of the officers of each of the Company and the Parent executing each of the Operative Documents and any related certificates; and (j) In the case of the Initial Closing, a certificate of the Chief Executive Officer and the Chief Financial Officer of the Company and the Parent, dated as of the relevant Closing Date, in substantially the form attached hereto as Exhibit L. Section 2.04 The Company's Deliveries to the Exchangeable Note Trustee. At the Initial Closing, the Company will deliver, or cause to be delivered, to the Exchangeable Note Trustee: (a) An executed copy of the Exchangeable Notes Indenture; (b) A certificated note evidencing the Exchangeable Notes sold to the Purchaser at the Initial Closing; and (c) Such certificates, opinions and other documents as reasonably requested by the Exchangeable Notes Trustee. Section 2.05 The Parent's Deliveries to the Purchaser. At the Initial Closing, the Parent will deliver, or cause to be delivered to the Purchaser, a certificate representing one (1) share of the Series D Preferred issued to the Purchaser. The Parent will also deliver evidence of the issuance of the Series C Preferred in a manner reasonably satisfactory to the Purchaser. Section 2.06 Purchaser's Deliveries to the Company. At the Initial Closing, the Purchaser will deliver, or cause to be delivered, to the Company: (a) Payment to the Company of the Purchase Price of the Purchased Securities to be Purchased by the Purchaser at such Closing by wire transfer of immediately available funds to the account designated by the Company; (b) A cross-receipt executed by the Purchaser and delivered to the Company certifying that it has received the Purchased Securities to be Purchased by the Purchaser at such Closing as of the relevant Closing Date, as evidenced by the certificate referenced in Section 2.03(a) or Section 2.05(a), as applicable; (c) A copy of the Operative Documents, dated as of the Initial Closing Date and executed by the Purchaser; and (d) The Voting Agreement contemplated by Section 6.09(d). Section 2.07 Independent Nature of the Purchaser's Obligations and Rights. The obligations of the Purchaser under this Agreement are several and not joint with the obligations of any purchaser of the Other Purchased Securities, and the Purchaser shall not be responsible in any way for the performance of the obligations of any other person. The representations and warranties of the Purchaser under this Agreement are several and not joint with the representations and warranties of any other purchaser of the Other Purchased Securities and the Purchaser shall not be deemed to have made any representations and warranties with respect to any purchase of Other Purchased Securities. Nothing contained herein, and no action taken by the Purchaser related hereto, shall be deemed to constitute the Purchaser as a partner or a joint venturer or create a presumption that the Purchaser is in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement with any other person. The Purchaser shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other person to be joined as an additional party in any proceeding for such purpose. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND PARENT Each of the Parent and the Company acknowledges that (i) the representations and warranties in this Article III have been a material and necessary inducement for the Purchaser to agree to enter into this Agreement and the other Operative Documents and to acquire all of the Purchased Securities to be acquired by it and (ii) the Purchaser is relying on such representations and warranties. Except as set forth in the corresponding sections or subsections of the disclosure schedule delivered to the Purchaser by the Company and the Parent concurrently with the execution and delivery of this Agreement (the "Disclosure Schedule"), or to the extent that the qualifying nature of such disclosure with respect to another section or subsection is reasonably apparent on the face of the Disclosure Schedule, each of the Company and the Parent hereby represents and warrants to the Purchaser that: Section 3.01 Organization, Good Standing and Qualification. Each of the Parent and the Company and their respective Subsidiaries is a corporation duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of incorporation and has all requisite corporate or similar power and authority to own, lease and operate its properties and Assets and to carry on its business as presently conducted and is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership or operation of its properties or conduct of its business requires such qualification except to the extent that the failure to be so qualified has not had and would not reasonably be expected to have a Material Adverse Effect. Each of the Parent and the Company has made available to the Purchaser a complete and correct copy of the Parent's and the Company's and their respective Subsidiaries' certificates of incorporation and bylaws (collectively, "Organizational Documents"), each as amended to date. The Parent's and the Company's and their respective Subsidiaries' Organizational Documents so delivered are in full force and effect. Neither the Parent, the Company nor any of their respective Subsidiaries has violated any of the provisions of its Organizational Documents. Section 3.01(a) of the Disclosure Schedule contains a correct and complete list as of the date hereof of each jurisdiction where the Parent, the Company and/or each of their respective Subsidiaries is organized and/or qualified to do business. (b) A true and complete list as of the date hereof of all of the Parent's and the Company's respective Subsidiaries, together with the percentage of the outstanding capital stock of each Subsidiary owned by the Company or the Parent and each other Subsidiary, is set forth on Section 3.01(b) of the Disclosure Schedule. Except as disclosed in Section 3.01(b) of the Disclosure Schedule, neither the Parent nor the Company directly or indirectly owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity. Section 3.02 Capital Structure. As of the date hereof the authorized capital stock of the Company consists of 50,000,000 shares of common stock, par value $0.01 per share (the "Company Common Shares"), of which 37,885,230 shares were outstanding as of the close of business on September 30, 2007. Each Company Common Share is entitled to one (1) vote on all matters submitted to a vote or other action by the shareholders of the Company. All of the issued and outstanding Company Common Shares have been duly authorized, validly issued and are fully paid and nonassessable, and have been issued in compliance with all applicable federal and state securities laws. As of the date hereof other than 213,763 Company Common Shares reserved for issuance under the Company Stock Option Plan, the Company has no Company Common Shares reserved for issuance. Section 3.02 of the Disclosure Schedule contains a correct and complete list as of the date hereof of each outstanding option to purchase Company Common Shares under the Company Stock Option Plan, including (i) the number of Company Common Shares subject to such Company Stock Option, (ii) the exercise price of such Company Stock Option, (iii) the date on which such Company Stock Option was granted, (iv) the applicable vesting schedule and expiration date of such Company Stock Option. Except as set forth in Section 3.02 of the Disclosure Schedule, each of the outstanding shares of capital stock or other securities of each of the Company's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned by the Company, free and clear of any Lien. Except as set forth above and in Section 3.02 of the Disclosure Schedule, as of the date hereof, there are no outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, calls, commitments, preemptive or other rights or agreements of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of the Company or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or that give any Person a right to subscribe for or acquire, any securities of the Company or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding (collectively, the "Company Equity Rights"). There are no voting agreements, trusts, proxies or other agreements, instruments or undertakings with respect to the voting of the capital stock of the Company to which the Company nor, to the Company's knowledge, is there any such agreement, as of the date hereof to which a shareholder of the Company is a party. The Company does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of the Company on any matter other than, on and after the Initial Closing, the Exchangeable Notes. As of the date hereof, the outstanding shares of the Company's capital stock are owned as set forth in Section 3.02 of the Disclosure Schedule. (b) Each Company Stock Option (A) was granted in compliance with all applicable Laws and all of the terms and conditions of the Company Stock Option Plan pursuant to which it was issued, (B) qualifies for the tax and accounting treatment afforded to such Company Stock Option in the Company's Tax Returns and the Financial Statements, respectively, (C) was otherwise properly disclosed in the Financial Statements and (D) has an exercise price at least equal to the fair market value of a Company Common Share or Company Preferred Share, as applicable, on a date no earlier than the date of the corporate action authorizing the grant and has a grant date identical to the date of the corporate action authorizing the grant. The Company has provided to the Purchaser true and complete copies of the Company Stock Option Plans and the forms of all agreements evidencing the Company Stock Options. No consent of the holder of any Company Stock Option is required in connection with the actions contemplated by Article II hereof, and such actions so contemplated comport with the Company Stock Option Plan and the underlying agreements evidencing the Company Stock Options. (c) As of the date hereof the authorized capital stock of the Parent consists of (i) 200,000,000 shares of common stock, par value $0.01 per share (the "Parent Common Shares"), of which 86,359,015 shares were outstanding as of the close of business on September 30, 2007, and (ii) 5,000,000 shares of preferred stock, par value $0.01 per share of which (A) 450,000 shares are designated as Series A Cumulative Convertible Preferred Stock, par value $0.01 per share (the "Parent Series A Preferred Shares"), of which 90,000 shares were outstanding as of the close of business on September 30, 2007 and (B) 500,000 shares are designated as Series B Cumulative Convertible Preferred Stock, par value $0.01 per share (the "Parent Series B Preferred Shares"), of which 318,500 shares were outstanding as of the close of business on September 30, 2007. Each Parent Common Share and each Parent Preferred Share is entitled to one (1) vote on all matters submitted to a vote or other action by the shareholders of the Parent. All of the issued and outstanding Parent Common Shares and Parent Preferred Shares have been duly authorized and validly issued and are fully paid and nonassessable, and have been issued in compliance with all applicable federal and state securities laws. As of the date hereof, other than 11,984,503 Parent Common Shares reserved for issuance under the Parent Stock Option Plans, 12,256,226 Parent Common Shares reserved for issuance upon conversion of the Parent Preferred Shares and no more than 4,213,400 Parent Common Shares reserved for issuance upon exercise of outstanding warrants, the Parent has no Parent Common Shares or Parent Preferred Shares reserved for issuance. Section 3.02 of the Disclosure Schedule contains a correct and complete list as of the date hereof of each outstanding option to purchase Parent Common Shares under the Parent Stock Option Plans, including (i) the number of Parent Common Shares subject to such Parent Stock Option, (ii) the exercise price of such Parent Stock Option, (iii) the date on which such Parent Stock Option was granted, and (iv) the applicable vesting schedule and expiration date of such Parent Stock Option. Except as set forth in Section 3.02 of the Disclosure Schedule, each of the outstanding shares of capital stock or other securities of each of the Parent's Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and owned, directly or indirectly, by the Parent, free and clear of any Lien. Except as set forth above and in Section 3.02 of the Disclosure Schedule, as of the date hereof there are no outstanding rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, calls, commitments, preemptive or other rights or agreements of any kind that obligate the Company or any of its Subsidiaries to issue or sell any shares of capital stock or other securities of the Parent or any of its Subsidiaries or any securities or obligations convertible or exchangeable into or exercisable for, or that give any Person a right to subscribe for or acquire, any securities of the Parent or any of its Subsidiaries, and no securities or obligations evidencing such rights are authorized, issued or outstanding (collectively, the "Parent Equity Rights"). There are no voting agreements, trusts, proxies or other agreements, instruments or undertakings with respect to the voting of the capital stock of the Parent to which the Parent nor, to the Parent's knowledge, is there any such agreement as of the date hereof to which a shareholder of the Parent is a party. The Parent does not have outstanding any bonds, debentures, notes or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the shareholders of the Parent on any matter. (d) As of the date hereof, each Parent Stock Option (A) was granted in compliance with all applicable Laws and all of the terms and conditions of the Parent Stock Option Plan pursuant to which it was issued, (B) qualifies for the tax and accounting treatment afforded to such Parent Stock Option in the Parent's Tax Returns and the Financial Statements, respectively, (C) was otherwise properly disclosed in the Financial Statements and (D) has an exercise price at least equal to the fair market value of a Parent Common Share or Parent Preferred Share, as applicable, on a date no earlier than the date of the corporate action authorizing the grant and has a grant date identical to the date of the corporate action authorizing the grant. The Parent has provided to the Purchaser true and complete copies of the Parent Stock Option Plans and the forms of all agreements evidencing the Parent Stock Options. No consent of the holder of any Parent Stock Option is required in connection with the actions contemplated by Article II hereof, and such actions so contemplated comport with the Parent Stock Option Plans and the underlying agreements evidencing the Parent Stock Options. Section 3.03 Corporate Authority; Approval and Fairness. Each of the Company and the Parent has all requisite corporate power and authority and each has taken all corporate action necessary in order to execute, deliver and perform its obligations under each Operative Document except, in the case of the Initial Closing, for Stockholder Approval.. Assuming the due authorization, execution and delivery of each of the Operative Documents by the parties thereto, each Operative Document is a valid and binding agreement of the Company and/or the Parent, as applicable, enforceable against the Company and/or the Parent, as applicable, in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles. For the purposes of this Section 3.03(a), the term "Operative Documents" shall not include the Indentures. (b) The boards of directors of each of the Company and the Parent have (unanimously in the case of the Parent's board of directors and by an affirmative vote of all directors present at a meeting in the case of the Company's board of directors) (i) determined that the transactions contemplated by the Operative Documents are fair to and in the best interests of the Company or the Parent and its shareholders, as applicable, (ii) approved and authorized the execution, delivery and performance of the Operative Documents in accordance with the provisions of the DGCL and (iii) adopted a board resolution recommending to the shareholders of Parent that they approve the issuance of the Spectrum Shares and the other transactions under the Operative Agreements that are subject to a shareholder vote. No other corporate proceedings are necessary to authorize the Operative Documents or to complete the transactions contemplated by the Operative Documents. Section 3.04 The Indentures. Each of the Indentures has been duly authorized by the Company and each of the Guarantors and, when duly executed and delivered in accordance with its terms by each of the parties thereto, will constitute a valid and legally binding agreement of the Company and each of the Guarantors enforceable against the Company and each of the Guarantors in accordance with their respective terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally or by equitable principles relating to enforceability (collectively, the "Enforceability Exceptions"); and on the relevant Closing Date, each of the Indentures will conform in all material respects to the requirements of the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the rules and regulations of the Commission applicable to an indenture that is qualified thereunder. Section 3.05 The Notes and the Guarantees. The Exchangeable Notes and the Secured Notes have been duly authorized by the Company and, when duly executed, authenticated, issued and delivered as provided in the Indentures, as applicable, and paid for as provided herein, will be duly and validly issued and outstanding and will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indentures, as applicable; and the Guarantees have been duly authorized by each of the Guarantors and, when the Exchangeable Notes and the Secured Notes have been duly executed, authenticated, issued and delivered as provided in the relevant Indentures, as applicable, and paid for as provided herein, will be valid and legally binding obligations of each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms, subject to the Enforceability Exception, and will be entitled to the benefits of the Indentures, as applicable. Section 3.06 Valid Issuance of Parent Equity Securities. The Junior Preferred and the Parent Common Shares issuable upon exchange of the Exchangeable Notes and the Parent Common Shares issuable upon conversion of the Junior Preferred have been duly and validly reserved for issuance upon such conversion or exchange in accordance with their terms and, when issued upon such conversion or exchange or otherwise, will be duly authorized and validly issued, fully paid and nonassessable and free of any liens or encumbrances other than restrictions on transfer set forth in the Operative Documents and under applicable state and federal securities laws. The Series C Preferred to be issued pursuant to this Agreement at the Initial Closing, when paid for and then issued, as provided in this Agreement, will be duly authorized and validly issued, fully paid and nonassessable and free of any liens or encumbrances other than restrictions on transfer set forth in the Operative Documents and under applicable state and federal securities laws. The Junior Preferred to be issued pursuant to the Spectrum Contribution Agreement at the closing thereunder, when paid for and then issued, as provided in the Spectrum Contribution Agreement, will be duly authorized and validly issued, fully paid and nonassessable and free of any liens or encumbrances other than restrictions on transfer set forth in the Operative Documents and under applicable state and federal securities laws. Section 3.07 No Violation or Default. Except as disclosed in Section 3.07 of the Disclosure Schedule, neither any of the Guarantors, the Parent, nor the Company is (i) in violation of its Organizational Documents; (ii) in default, and no event has occurred that, with notice or lapse of time or both, would constitute such a default, in the due performance or observance of any term, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which any of the Guarantors or the Company is a party or by which any of the Guarantors or the Company is bound or to which any of the property or assets of the Guarantors or the Company is subject; or (iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority, except, in the case of clause (ii) above, for any such default or violation that would not, individually or in the aggregate, have a Material Adverse Effect. Section 3.08 No Conflict. Except as disclosed in Section 3.08 of the Disclosure Schedule, the execution, delivery and performance of the Operative Documents by the Company and the Parent, and the consummation by the Company and the Parent of the transactions contemplated thereby do not and will not constitute or result in (i) a conflict with, or a breach or violation of, the Company's, the Parent's or any of their respective Subsidiaries' Organizational Documents, (ii) assuming that all consents, approvals, authorizations and other actions described in Section 3.09 have been obtained and all filings and obligations described in Section 3.09 have been made or complied with, a conflict with or violation of any Law applicable to the Parent and the Company or any Subsidiary or by which any material property or Asset of the Company, the Parent or any Subsidiary is bound or affected, (iii) a breach or violation of, a default under, the acceleration of any obligations under, or the creation of any Lien (with or without notice, lapse of time or both) on the Assets of the Company, the Parent or any of their respective Subsidiaries pursuant to, any Contract binding upon the Company, the Parent or any of their respective Subsidiaries or any Law or governmental or non-governmental permit or license to which the Company, the Parent or any of their respective Subsidiaries is subject or (iv) any change in the rights or obligations of any party under any of the Contracts, except, in the case of clauses (iii) or (iv) above, for any conflict, breach, violation, default, acceleration, creation or change that, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect or prevent, materially delay or impair the ability of the Company or the Parent to consummate the transactions contemplated by this Agreement. Section 3.08 of the Disclosure Schedule sets forth a correct and complete list of Contracts of the Company, the Parent and their respective Subsidiaries pursuant to which consents or waivers are or may be required prior to consummation of the transactions contemplated by this Agreement (whether or not subject to the exception set forth with respect to clauses (iii) and (iv) above). Section 3.09 No Consents Required. No consent, approval, authorization, order, registration or qualification of or with any court or arbitrator or governmental or regulatory authority is required for the execution, delivery and performance by the Company, the Parent and each of the Guarantors of each of the Operative Documents to which each is a party, the issuance and sale of the Purchased Securities (including the Guarantees) and compliance by the Company, the Parent and each of the Guarantors with the terms thereof and the consummation of the transactions contemplated by the Operative Documents, except for (i) such consents, approvals, authorizations, orders, registrations or qualifications as may be required under applicable state securities laws in connection with the purchase of the Purchased Securities by the Purchaser ; (ii) such consents, approvals, authorizations, orders, registrations or qualifications as may be required (A) by the FCC in connection with the transactions contemplated by the Spectrum Contribution Agreement or (B) under the HSR Act in connection with the transactions contemplated by the Spectrum Contribution Agreement and in respect of the exchange of the Exchangeable Notes for Parent Common Shares; and (iii) such consents, approvals, authorizations, orders, registrations or qualifications the failure of which to obtain or make, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. Section 3.10 Company Financial Statements. Each of the Company and the Parent has delivered to the Purchaser: (i) such entity's unaudited consolidated balance sheet as of December 31, 2006 (the "FYE Date") and the related unaudited consolidated statements of operations, consolidated statements of convertible preferred stock and shareholders' deficit and consolidated statements of cash flows for the year ended December 31, 2006, together with all related notes and schedules (collectively the "2006 Financial Statements") and (ii) such entity's unaudited consolidated balance sheet as of September 30, 2007 (the "Most Recent Balance Sheet") and the related unaudited consolidated statements of operations and consolidated statements of cash flows for the nine months then ended (the "Interim Financial Statements" and, together with the 2006 Financial Statements, the "Financial Statements"). The Financial Statements fairly present the consolidated financial position of the Company, the Parent and their Subsidiaries and the results of operations and cash flows of the business of the Company, the Parent and their Subsidiaries as of the dates thereof and for the periods set forth therein, except as otherwise noted therein (subject, in the case of unaudited statements, to notes and normal, recurring year-end audit adjustments that are not expected to be material in effect). The Financial Statements have been prepared in accordance with GAAP consistently applied during the periods involved, except as noted in Section 3.10 of the Disclosure Schedule. Section 3.11 Undisclosed Liabilities; etc. Except as set forth on Section 3.11 of the Disclosure Schedule, the Company, the Parent and their respective Subsidiaries do not have any liabilities or obligations of any nature (whether known, unknown, absolute, accrued, contingent or otherwise, whether direct or indirect, or as guarantor or otherwise with respect to any liability or obligation of any other Person and whether due or to become due), except (i) as and to the extent disclosed on and adequately reserved against in the Financial Statements; (ii) for liabilities and obligations incurred in the ordinary course of business consistent with past practice; (iii) liabilities and obligations incurred under the Secured Notes, the Exchangeable Notes, and the vendor financing loan agreement executed concurrently herewith and expenses incurred in connection with the foregoing; (iv) liabilities and obligations incurred under and pursuant to the terms of Material Contracts or contracts publicly filed with the Commission (excluding any liabilities in respect of any breach or violation thereof); or (v) in the aggregate amount not exceeding $10,000,000 incurred since September 30, 2007. Section 3.12 Absence of Certain Changes. Since the FYE Date, except as specifically set forth on Section 3.12 of the Disclosure Schedule and except to the extent recorded or accrued on the consolidated balance sheet of the Company or the Parent as of September 30, 2007 and, as of any date after the Initial Closing, except as permitted by the terms of the Purchased Securities issued on the Initial Closing Date, the Company, the Parent and their respective Subsidiaries have conducted their respective businesses only in, and have not engaged in any material transaction other than according to, the ordinary and usual course of such business and since September 30, 2007, there has not been any Material Adverse Effect except as set forth in Section 3.12 of the Disclosure Schedule. Without limiting the generality of the foregoing, except as set forth on Section 3.12 of the Disclosure Schedule or subsequent to the date hereof as approved by the Purchaser, the Company, the Parent and their respective Subsidiaries have not since the FYE Date: (a) declared, set aside, made or paid any dividend or distribution, payable in cash, stock, property or otherwise, on any share of their capital stock or directly or indirectly redeemed, purchased or otherwise acquired any such shares; (b) issued or sold any shares of any class of their capital stock (other than options, warrants or other derivative securities exercisable for Parent Common Shares, Company Common Shares or common stock of any of the Parent's or the Company's Subsidiaries and any shares of such common stock issued pursuant to the exercise thereof); (c) suffered or permitted the creation of any Lien on any property of the Parent, the Company or any of their Subsidiaries, other than Permitted Liens; (d) written down the value of any asset of the Parent, the Company or their Subsidiaries or written off as uncollectible any accounts or notes receivable or any portion thereof except in the ordinary course of business; (e) except as required pursuant to existing written, binding agreements in effect prior to the date of this Agreement and set forth in Section 3.12 of the Disclosure Schedule or as otherwise required by applicable Law as of the date hereof, (i) increased the compensation, bonus or pension, welfare, severance or other benefits of, paid any bonus to, or made any new equity awards to any director, officer or employee of the Company, the Parent or any of their respective Subsidiaries having an annual salary or remuneration in excess of $350,000 or (ii) forgiven any loans to directors, officers or employees of the Company, the Parent or any of their respective Subsidiaries; (f) changed in any material respect its accounting practices, policies or principles, other than as required by GAAP; (g) sold, assigned, pledged, encumbered, transferred or otherwise disposed of (i) any Assets (excluding Intellectual Property) (other than the sales or the licensing of their products to customers in the ordinary course of business) or (ii) any Intellectual Property (other than licensing of their products in the ordinary course of business and on a non-exclusive basis); (h) instituted, settled or agreed to settle any litigation, action or proceeding before any court or government body, other than in the ordinary course of business; (i) adopted a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization; (j) terminated, or suffered the resignation of, any executive officer or group of employees of the Parent, the Company or their Subsidiaries; (k) as of the date hereof suffered any damage, destruction or loss (whether or not covered by insurance) affecting any Asset resulting in any liability, loss, claim, damages, costs or expenses in excess of $1,000,000 individually or $2,500,000 in the aggregate; or (l) agreed to, whether in writing or otherwise, or taken any other action or omitted to take any action that would result in the occurrence of, any of the foregoing. Section 3.13 Independent Accountants. Friedman LLP, who has certified certain financial statements of the Company and the Parent is the independent registered public accounting firm with respect to the Company within the applicable rules and regulations adopted by the Commission and the Public Company Accounting Oversight Board (United States) and as required by the Securities Act. Section 3.14 Litigation. As of the date hereof other than as set forth on Section 3.14 of the Disclosure Schedule, there are no civil, criminal or administrative actions, suits, claims, hearings, investigations or proceedings pending or, to the knowledge of the Company or the Parent, threatened against the Company, the Parent or any of their Subsidiaries. As of the date hereof none of the Company, the Parent or their Subsidiaries, or any material property or Asset of the Company, the Parent or any of their Subsidiaries is subject to any settlement or similar agreement with any Governmental Authority, or to any order, judgment, decree, injunction or award of any Governmental Authority. Section 3.15 Tax Matters. The Company, the Parent and their Subsidiaries have filed or caused to be filed all material Tax Returns that are or were required to be filed by or with respect to them, either separately or as a member of a group of corporations, pursuant to applicable Law. All Tax Returns filed by (or that include on a consolidated basis) the Company, the Parent and their Subsidiaries are true, complete and correct in all material respects. Section 3.15(a) of the Disclosure Schedule contains a true, complete and correct list of all such Tax Returns filed for taxable years ending 2006, 2005 and 2004, all of which have been made available to the Purchaser. The Company, the Parent and each of their Subsidiaries have paid, or made provision for the payment of, all material Taxes that have or are reasonably likely to have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by the Company, the Parent or any of their Subsidiaries, except such Taxes, if any, as are listed in Section 3.15(a) of the Disclosure Schedule and are being contested in good faith. There does not exist any material actual or proposed additional Tax assessment against the Company, the Parent or any of their Subsidiaries. (b) The Tax Returns of the Company, the Parent and each of their Subsidiaries have not been audited by the Internal Revenue Service (the "IRS") or relevant state tax authorities, and such returns are closed by the applicable statute of limitations for all taxable years through 2000. No waivers of statutes of limitations as to any Tax matters relating to the Company, the Parent or any of their Subsidiaries are in effect or have been requested by a Governmental Authority. Section 3.15(b) of the Disclosure Schedule contains a true, complete and correct list of all audits of all such Tax Returns, including a reasonably detailed description of the nature and outcome of each audit. All deficiencies proposed as a result of such audits have been paid, reserved against, settled, or are being contested in good faith by appropriate proceedings. (c) There exists no proposed Tax assessment against the Company, the Parent or any of their Subsidiaries except as disclosed in the Financial Statements. All Taxes that the Company, the Parent or any of their Subsidiaries is or was required by Law to withhold or collect have been duly withheld or collected and, to the extent required, have been paid to the proper Governmental Authority or other Person. (d) There are no Liens relating or attributable to Taxes with respect to, or in connection with, the assets of the Company, the Parent or their Subsidiaries other than Liens for Taxes that are not yet due. Section 3.16 Title to Real and Personal Property. Each of the Company and the Parent have good and marketable title in fee simple to, or have valid rights to lease or otherwise use, all items of real property and good and valid title to, or have valid rights to lease or otherwise use, all items of personal property, that, in each case, are material to the business of the Company or the Parent, as applicable, except, in each case, as would not reasonably be expected to have a Material Adverse Effect. Such property rights are in each case free and clear of all liens, encumbrances, claims and defects and imperfections of title except (i) those that do not materially interfere with the use made and proposed to be made of such property by the Company or the Parent or (ii) those that would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect or (iii) Permitted Lien. Section 3.17 Environmental Matters. (a) The Company, the Parent and their Subsidiaries have complied at all times in all material respects with all applicable Environmental Health and Safety Laws, hold all environmental permits material to the conduct of the business of the Company, the Parent and their Subsidiaries and are in compliance in all material respects with their respective environmental permits; (b) no property currently owned, leased or operated by the Company or the Parent (including soils, groundwater, surface water, buildings or other structures) is contaminated with any Hazardous Substance; (c) no property formerly owned, leased or operated by the Company, the Parent or any of their Subsidiaries was contaminated with any Hazardous Substance during or prior to such period of ownership or operation; (d) neither the Company, the Parent nor any of their Subsidiaries is subject to material liability for any Hazardous Substance disposal or contamination on any third party property; (e) neither the Company, the Parent nor any of their Subsidiaries has released or is aware of any past or present threat of release of any Hazardous Substance that has been or could reasonably be expected to be material; (f) neither the Company, the Parent nor any of their Subsidiaries has received any notice, demand, letter, claim or request for information alleging that the Company, the Parent or any of their Subsidiaries may be in violation of or subject to liability under any Environmental Health and Safety Law; (g) neither the Company, the Parent nor any of their Subsidiaries is subject to any order, decree, injunction or other agreement with any Governmental Authority or any indemnity or other agreement with any third party relating to liability under any Environmental Health and Safety Law or relating to Hazardous Substances; (h) there are no other circumstances or conditions involving the Company, the Parent or any of their Subsidiaries that could reasonably be expected to result in any material claim, liability, investigation, cost or restriction on the ownership, use or transfer of any property pursuant to any Environmental Health and Safety Law; and (i) the Company and the Parent have made available to the Purchaser copies of all written environmental reports, studies, assessments, sampling data and other environmental information in its possession relating to the Company, the Parent or their Subsidiaries or their respective current and former properties or operations. Section 3.18 Employee Benefits. All benefit and compensation plans, contracts, policies or arrangements covering current or former employees or other service providers of the Company, the Parent and their Subsidiaries and current or former directors of the Company or the Parent, including, but not limited to, "employee benefit plans" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and deferred compensation, severance, stock option, stock purchase, stock appreciation rights, stock based, incentive and bonus plans (the "Benefit Plans"), other than Benefit Plans maintained outside of the United States primarily for the benefit of employees working outside of the United States (such plans hereinafter being referred to as "Non-U.S. Benefit Plans") are listed on Section 3.18(a) of the Disclosure Schedule, and each Benefit Plan which has received a favorable opinion letter from the Internal Revenue Service National Office, including any master or prototype plan, has been separately identified. True and complete copies of all Benefit Plans listed on Section 3.18(a) of the Disclosure Schedule, including, but not limited to, any trust instruments, insurance contracts and, with respect to any employee stock ownership plan, loan agreements forming a part of any Benefit Plans, and all amendments thereto have been provided or made available to the Purchaser. (b) Section 3.18(b) of the Disclosure Schedule also sets forth the names, corporate and functional titles, hire dates and, the 2007 and target 2008 annual salaries, incentive compensation, bonuses and other compensation of all executive officers and current directors of each of the Company and the Parent as of the date hereof. (c) Each Benefit Plan complies in form and has been operated in substantial compliance with its terms and the requirements of ERISA, the Code and other applicable laws. Each U.S. Benefit Plan which is subject to ERISA (the "ERISA Plans") that is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and that is intended to be qualified under Section 401(a) of the Code, has received a favorable determination letter from the IRS, or is comprised of a master or prototype plan that has received an opinion from the IRS, covering all tax law changes prior to the Economic Growth and Tax Relief Reconciliation Act of 2001 or has applied to the IRS for such favorable determination letter within the applicable remedial amendment period under Section 401(b) of the Code, and to the knowledge of the Company and the Parent, no event has occurred that could reasonably be expected to result in revocation of any such favorable determination letter or the loss of the qualification of such ERISA Plan under Section 401(a) of the Code. Neither the Company, the Parent nor any of their Subsidiaries has engaged in a transaction with respect to any ERISA Plan that, assuming the taxable period of such transaction expired as of the date hereof, could subject the Company, the Parent or any Subsidiary to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which would be material. Neither the Company, the Parent nor any of their Subsidiaries has incurred or reasonably expects to incur a material tax or penalty imposed by Section 4980F of the Code or Section 502 of ERISA. (d) Neither the Company, the Parent, any or their Subsidiaries nor any entity which is considered one employer with the Company or the Parent under Section 4001 of ERISA or Section 414 of the Code (an "ERISA Affiliate") (x) maintains or contributes to or has within the past six years maintained or contributed to a Pension Plan that is subject to Subtitles C or D of Title IV of ERISA or (y) maintains or has an obligation to contribute to or has within the past six years maintained or had an obligation to contribute to a multiemployer plan as defined in Section 3(37) of ERISA. All contributions required to be made under each Benefit Plan, as of the date hereof, have been timely made and all obligations in respect of each Benefit Plan have been properly accrued and reflected in the Financial Statements. (e) As of the date hereof, there is no material pending or, to the knowledge of the Company or the Parent threatened, litigation relating to the Benefit Plans. Neither the Company, the Parent nor any of their Subsidiaries has any obligations for retiree health and life benefits under any Benefit Plan or collective bargaining agreement. The Company, the Parent or their Subsidiaries may amend or terminate any such plan at any time without incurring any liability thereunder other than in respect of claims incurred prior to such amendment or termination. (f) There has been no amendment to, announcement by the Company, the Parent or any of their Subsidiaries relating to, or change in employee participation or coverage under, any Benefit Plan which would increase materially the expense of maintaining such plan above the level of the expense incurred therefor for the most recent fiscal year. Neither the execution of this Agreement, shareholder approval of this Agreement nor the consummation of the transactions contemplated hereby will (w) entitle any employees of the Company, the Parent or any of their Subsidiaries to severance pay or any increase in severance pay upon any termination of employment after the date hereof, (x) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Benefit Plans, (y) limit or restrict the right of the Company or the Parent to merge, amend or terminate any of the Benefit Plans or (z) result in payments under any of the Benefit Plans which would not be deductible under Section 162(m) or Section 280G of the Code. No Benefit Plan or other agreement provides any employee, director or other service provider of the Company, the Parent or their Subsidiaries with any amount of additional compensation if such individual is provided amounts subject to excise or additional taxes imposed under Sections 409A or 4999 of the Code. (g) The Company, the Parent and their Subsidiaries have no material liability by reason of an individual who performs or performed services for the Company, the Parent or any of their Subsidiaries in any capacity being improperly excluded from participating in a Benefit Plan; and each of the employees of the Company, the Parent and their Subsidiaries has been properly classified by the Company, the Parent and their Subsidiaries as "exempt" or "non-exempt" under applicable Law. Section 3.19 Labor Matters. Except as set forth in Section 3.19 of the Disclosure Schedule: (a) Neither the Company, the Parent nor any of their Subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company, the Parent or their Subsidiaries, nor are they under any current obligation to bargain with any bargaining agent on behalf of any such persons, nor, to the knowledge of the Company and the Parent, are there or have there been any organizational campaigns, petitions or other unionization activities seeking recognition of a collective bargaining unit which could affect the Company, the Parent or any of their Subsidiaries; (b) There are no controversies, strikes, slowdowns or work stoppages pending or, to the knowledge of the Company or the Parent after due inquiry, threatened between the Company, the Parent or any of their Subsidiaries, on the one hand, and any of their respective employees, on the other hand, and neither the Company nor the Parent has experienced any such controversy, strike, slowdown or work stoppage within the past three years; (c) Neither the Company, the Parent nor any of their Subsidiaries has breached or otherwise failed to comply with the provisions of any collective bargaining or union Contract and, to the knowledge of the Company and the Parent, there are no grievances outstanding against the Company, the Parent or any of their Subsidiaries under any such contract that could have a Material Adverse Effect; (d) There are no unfair labor practice complaints pending against the Company, the Parent or any of their Subsidiaries before the National Labor Relations Board or any other Governmental Authority or any current union representation questions involving employees of the Company, the Parent or any of their Subsidiaries that could have a Material Adverse Effect; (e) The Company, the Parent and their Subsidiaries are currently in compliance in all material respects with all applicable Laws relating to the employment of labor, including those related to wages (including the payment of overtime), hours, worker classifications (including proper classification of any independent contractors or consultants), collective bargaining, unemployment insurance, workers' compensation, discrimination, record-keeping and the payment and withholding of Taxes and other sums as required by the appropriate Governmental Authority and have withheld and paid to the appropriate Governmental Authority or are holding for payment not yet due to such Governmental Authority all amounts required to be withheld from employees of the Company, the Parent or their Subsidiaries and are not liable for any arrears of wages, Taxes, penalties or other sums for failure to comply with any of the foregoing; (f) To the knowledge of the Company and the Parent, each employee of the Company or the Parent who is located in the United States and is not a United States citizen has all necessary approvals, authorizations and papers necessary to work in the United States in accordance with applicable Law; (g) Each of the Company, the Parent and their Subsidiaries has paid in full to all employees, or adequately reserved in accordance with the Company's and the Parent's historical accounting practices, policies and principles consistently applied, all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees except to the extent as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (h) There is no claim with respect to payment of wages, salary or overtime pay that has been asserted or, to the knowledge of the Company or the Parent, is now pending or threatened before any Governmental Authority with respect to any persons currently or formerly employed by the Company, the Parent or any of their Subsidiaries except to the extent as has not had, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (i) As of the date hereof neither the Company, the Parent nor any of their Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Authority relating to employees or employment practices; (j) There is no charge or proceeding with respect to a material violation of any occupational safety or health standards that has been asserted or is now pending or, to the knowledge of the Company or the Parent, threatened with respect to the Company or the Parent; (k) As of the date hereof there is no charge of discrimination in employment or employment practices, for any reason, including, without limitation, age, gender, race, religion or other legally protected category, or any alleged violation of any privacy Laws, which has been asserted or, to the knowledge of the Company or the Parent, is now pending or threatened before the United States Equal Employment Opportunity Commission, or any other Governmental Authority in any jurisdiction in which the Company, the Parent or any of their Subsidiaries has employed or currently employs any person; (l) As of the date hereof, neither the Company, the Parent nor any of their Subsidiaries has received written notice of the intent of any federal, state, local or foreign Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation with respect to or relating to the Company, the Parent or any of their Subsidiaries and no such investigation is in progress or has been conducted in the past; and (m) Except as set forth in Section 3.19(m) of the Disclosure Schedule, as of the date hereof neither the Company, the Parent nor any of their Subsidiaries is aware that any officer or key employee intends to terminate employment with the Company, the Parent or their Subsidiaries, as applicable. Section 3.20 Insurance. The Parent, the Company and each of their Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Parent, the Company and their Subsidiaries are engaged. As of the date hereof neither the Parent, the Company nor any Subsidiary has received notice of cancellation or termination of any insurance policy, nor has the Parent, the Company or any Subsidiary been denied or had revoked or rescinded any policy of insurance. Neither the Parent, the Company nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would be expected to have a Material Adverse Effect. Section 3.21 Intellectual Property. As of the date hereof, Section 3.21(a) of the Disclosure Schedule sets forth a true and complete list of all (x) Registered or otherwise material Owned Intellectual Property and (y) material Licensed Intellectual Property other than intellectual property rights licensed in conjunction with acquisition of computer hardware, software, and other products used in the ordinary course of business. (b) All Owned Intellectual Property is valid, subsisting and enforceable, and is not subject to any outstanding order, judgment or decree restricting its use or adversely affecting the Parent's, the Company's or their Subsidiaries' rights thereto. Except to the extent as would not have a Material Adverse Effect, all Licensed Intellectual Property is valid, subsisting and enforceable, and is not subject to any outstanding order, judgment or decree restricting its use or adversely affecting the Parent's, the Company's or their Subsidiaries' rights thereto. (c) Neither the Company, the Parent nor any of their Subsidiaries is violating or has violated any Intellectual Property rights except to the extent as has not had and would not reasonably be expected to have a Material Adverse Effect. Except as set forth in Section 3.21(c) of the Disclosure Schedule, as of the date hereof, there are no suits, actions, reissues, interferences, arbitrations, mediations, oppositions, cancellations, Internet domain name dispute proceedings or other proceedings (collectively, "Suits") pending, or to the knowledge of the Company and the Parent, threatened, concerning any claim that the Parent, the Company or any of their indemnitees have violated any Intellectual Property rights. (d) Except as set forth on Section 3.21(d) of the Disclosure Schedule, as of the date hereof there are no Suits or claims pending, or to the knowledge of the Company and the Parent, threatened, concerning the Owned Intellectual Property. Except as set forth on Section 3.21(d) of the Disclosure Schedule, as of the date hereof to the knowledge of the Company and the Parent, there are no Suits or claims pending or threatened concerning the Licensed Intellectual Property or the right of the Company, the Parent or any Subsidiary to use the Licensed Intellectual Property. (e) The Company, the Parent and their Subsidiaries own or otherwise hold valid rights to use all Business Intellectual Property used or contemplated to be used in the operation of the Business as currently contemplated to be conducted in the future. All such rights are free of all Liens (other than Permitted Liens). The completion of the transactions contemplated by this Agreement and the Operative Documents will not alter or impair the ownership or right of the Company, the Parent or any Subsidiary to use any of the Business Intellectual Property. The Business Intellectual Property constitutes all material Intellectual Property, Computer Software, Computer Hardware and Data that is contemplated to be used in, or necessary for the conduct of the Business as currently contemplated to be conducted in the future. To the knowledge of the Company and the Parent, as of the date hereof no Person is violating any Business Intellectual Property. (f) The Company, the Parent and their Subsidiaries have timely made all filings and payments with the appropriate foreign and domestic agencies required to maintain in subsistence all Registered Owned Intellectual Property, except to the extent any failure to make such payments or filings would not, individually or in the aggregate, have a Material Adverse Effect. All documentation necessary to confirm and effect the Company's, the Parent's and their Subsidiaries' ownership of the Owned Intellectual Property, if acquired from other Persons, has been recorded in the United States Patent and Trademark Office, the United States Copyright Office and other official offices, except to the extent as would not have a Material Adverse Effect. Section 3.22 No Undisclosed Relationships. No relationship, direct or indirect, exists between or among the Company or the Parent, on the one hand, and the directors, officers, stockholders or other affiliates of the Company or the Parent, on the other, that would be required by the Securities Act to be described in a registration statement to be filed with the Commission. Section 3.23 Related Party Transactions. Except as disclosed in Section 3.23 of the Disclosure Schedule, as of the date hereof neither the Company, the Parent nor any employee or Affiliate of the Company or the Parent: (a) has any cause of action or other claim whatsoever against, or owes any amounts to, the Company or the Parent except for claims of employees in the ordinary course of business, such as for accrued vacation pay or for accrued benefits under an employee benefit plan maintained by the Company or the Parent; (b) owns, directly or indirectly, in whole or in part, any tangible or intangible property which the Company or the Parent is using or which is necessary for the business of the Company or the Parent; (c) owns any direct or indirect interest of any kind in, or is an Affiliate or employee of, or consultant or lender to, or borrower from, or has the right to participate in the management, operations or profits of, any Person that is (i) a competitor, supplier, customer, client, distributor, lessor, tenant, creditor or debtor of the Company or the Parent, (ii) engaged in a business related to the business of the Company or the Parent or (iii) participating in any transaction to which the Company or the Parent is a party; or (d) otherwise is or has been a party to any Contract or transaction with the Company or the Parent. Section 3.24 Company Not an "Investment Company". Neither the Company nor the Parent is, nor, after receipt of payment for the Purchased Securities and application of the proceeds of this offering will then be, required to register as an "investment company" under the Investment Company Act and each of the Parent and the Company will take all reasonable steps to assure that it will not become subject to registration as an "investment company" under the Investment Company Act. Section 3.25 Accounting Controls. The Company and the Parent each maintain a system of internal accounting controls designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, including, but not limited to internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management's general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. Except as disclosed in Section 3.25 of the Disclosure Schedule, there are no material weaknesses or significant deficiencies in the Company's or the Parent's internal controls. Section 3.26 Material Contracts. Section 3.26 of the Disclosure Schedule contains a true, correct and complete list or description, as of the date hereof, of all Contracts to which the Parent, the Company or any of their Subsidiaries is a party or by which any of them are otherwise bound which: (a) are with any Governmental Authority, (b) are material to the Business Intellectual Property, including but not limited to Contracts granting the Parent, the Company or their Subsidiaries rights to use the Business Intellectual Property and trademark coexistence agreements, trademark consent agreements and nonassertion agreements, or (c) are otherwise material to the business of either the Parent and its Subsidiaries or the Company and its Subsidiaries, in each case taken as a whole, other than, in each of the foregoing cases, Contracts that have been publicly filed with the Commission (each such Contract referred to in clauses (a), (b) and (c), a "Material Contract"). All Material Contracts are valid, binding and in full force and effect as to the Parent, the Company and their Subsidiaries, and, except as disclosed on Section 3.07 of the Disclosure Schedule, there is no material default by the Parent, the Company or their Subsidiaries with respect to any such Material Contracts or, to the knowledge of the Company or the Parent, by any other party thereto. Section 3.27 No Unlawful Payments; Compliance with Certain Laws. (a) Neither the Company, the Parent nor, to the best knowledge of the Company or the Parent, any director, officer, agent, employee or other person associated with or acting on behalf of the Company or the Parent has (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; (iii) violated or is in violation of any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment. (b) The operations of the Company and the Parent are and have been conducted at all times in compliance, in all material respects, with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or the Parent with respect to the Money Laundering Laws is pending or, to the best knowledge of the Company or the Parent, threatened. (c) None of the Company, the Parent or, to the knowledge of the Company or the Parent, any director, officer, agent, employee or affiliate of the Company or the Parent is currently subject to any U.S. sanctions administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury ("OFAC"); and the Company and the Parent will not directly or indirectly use the proceeds of the offering of the Purchased Securities hereunder, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any U.S. sanctions administered by OFAC. Section 3.28 Solvency. On and immediately after the relevant Closing Date, each of the Company and the Parent (after giving effect to the issuance of the Purchased Securities and the other transactions related thereto) will be Solvent. As used in this paragraph, the term "Solvent" means, with respect to a particular date and with respect to a particular entity, that on such date (i) the present fair market value (or present fair saleable value) of the assets of such entity is not less than the total amount required to pay the liabilities of such entity on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured; (ii) assuming consummation of the issuance of the Purchased Securities as contemplated by this Agreement, such entity is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature; (iii) such entity is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such entity is engaged; and (iv) such entity is not a defendant in any civil action that would result in a judgment that such entity is or would become unable to satisfy. Section 3.29 Brokers. There is no broker, finder or other party that is entitled to receive from the Company or the Parent any brokerage or finder's fee or other fee or commission as a result of any transactions contemplated by this Agreement, excluding payments that may be due pursuant to Section 7.13(ii) hereof. Section 3.30 Licenses and Permits. Except as disclosed in Section 3.30 of the Disclosure Schedule, each of the Company and the Parent possesses all licenses, certificates, permits and other authorizations issued by, and has made all declarations and filings with, the appropriate federal, state, local or foreign governmental or regulatory authorities that are necessary for the ownership or lease of its respective properties or the conduct of its business, except where the failure to possess or make the same would not, individually or in the aggregate, have a Material Adverse Effect; and except as disclosed in Section 3.30 of the Disclosure Schedule, neither the Company nor the Parent has received notice of any revocation or modification of any such license, certificate, permit or authorization or has any reason to believe that any such license, certificate, permit or authorization will not be renewed in the ordinary course. Section 3.31 Rule 144A Eligibility. On the relevant Closing Date, the Purchased Securities issued on such Closing Date will not be of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in an automated inter-dealer quotation system, as of its respective date. Section 3.32 No Integration. Neither the Company, the Parent nor any of their affiliates (as defined in Rule 501(b) of Regulation D) has, directly or through any agent, sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Purchased Securities in a manner that would require registration of the Purchased Securities under the Securities Act. Section 3.33 No Stabilization. Neither the Company, the Parent nor any of the Guarantors has taken, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Purchased Securities. Section 3.34 Margin Rules. Neither the issuance, sale and delivery of the Purchased Securities nor the application of the proceeds thereof by the Company or the Parent will violate Regulation T, U or X of the Board of Governors of the Federal Reserve System or any other regulation of such Board of Governors. Section 3.35 No Restriction on Distributions. Except as disclosed in Section 3.35 of the Disclosure Schedule, no Subsidiary of the Company or the Parent is currently prohibited, directly or indirectly, from paying any dividends to the Company or the Parent, from making any other distribution on such Subsidiary's capital stock, from repaying to the Company or the Parent any loans or advances to such Subsidiary from the Company or the Parent or from transferring any of such Subsidiary's property or assets to the Company or the Parent or any other Subsidiary of the Company or the Parent. Section 3.36 Contemporaneous Purchase. The Company and Parent have entered into definitive agreements (the "Other Securities Agreements") in substantially the form made available to the Purchaser with respect to the issuance, sale and purchase of the Other Purchaser Securities. Such Other Securities Agreements have been duly authorized, executed and delivered by the Company and the Parent and each of them is a valid and binding agreement of the Company and/or the Parent, as applicable, enforceable against the Company and/or the Parent, as applicable, in accordance with its terms, subject to the Enforceability Exceptions. Section 3.37 Regulatory (a) Section 3.37 of the Disclosure Schedule includes a complete list as of the date hereof of all FCC licenses and authorizations held by the Company and all of the Industry Canada licenses and authorizations held by TerreStar Canada (the "FCC and Industry Canada Licenses"), and as of the date hereof all of the FCC and Industry Canada Licenses are in full force and effect. The FCC and Industry Canada Licenses are not subject to any condition other than (i) those conditions specifically included in such FCC and Industry Canada Licenses, (ii) such conditions as may appear in FCC or Industry Canada orders or decisions of general applicability that may be relevant to the FCC and Industry Canada licenses and (iii) such conditions as may appear in FCC or Industry Canada orders or decisions of general applicability that may be relevant to the FCC and Industry Canada Licenses \. Other than authorizations sought in the pending applications and not yet filed applications, all of which are included in Section 3.37 of the Disclosure Schedule (the "FCC and Industry Canada Applications"), the FCC and Industry Canada Licenses are, as of the date hereof, the only FCC and Industry Canada licenses, permits and authorizations required for the Company to provide mobile satellite communications service and to develop an integrated satellite and terrestrial communications network in the United States. Except as specified in Section 3.37 of the Disclosure Schedule, as of the date hereof, the pending FCC applications are complete in all material respects. (b) As of the date hereof, the FCC and Industry Canada Licenses are not subject to any proceeding other than the FCC and Industry Canada Application proceedings and those proceedings (i) affecting the mobile satellite industry, the wireless industry or telecommunications providers generally; or (ii) which would not reasonably be expected to result in suspension, termination, revocation, non-renewal or other material adverse effect on, the FCC and Industry Canada Licenses. As of the date hereof, none of the FCC or Industry Canada Licenses is threatened in writing by the FCC or Industry Canada with suspension or cancellation nor is the Company or TerreStar Canada the subject of any investigation or enforcement action by the FCC or Industry Canada. (c) Except as specified in Section 3.37 of the Disclosure Schedule, as of the date hereof, the Company and TerreStar Canada have made all material reports, met all the requirements and conditions of the FCC and Industry Canada Licenses, including meeting required milestones, and paid all fees required to date by the FCC and Industry Canada. Section 3.38 Complete Disclosure. No representation or warranty made by the Company or the Parent in this Agreement, including the Disclosure Schedule, or in any certificate furnished or to be furnished to the Purchaser pursuant to this Agreement, or in connection with the transactions contemplated hereby, contains or will contain any untrue statement of a material fact, or omits or will omit to state a material fact necessary to make the statements or facts contained herein or therein not misleading. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER The Purchaser acknowledges that (i) the representations and warranties in this Article IV have been a material and necessary inducement for each of the Parent and the Company to agree to enter into this Agreement and the other Operative Documents and to issue the Purchased Securities and (ii) each of the Parent and the Company is relying on such representations and warranties. The Purchaser represents and warrants to the Company that: Section 4.01 Authorization. The Purchaser has full power and authority to enter into this Agreement. This Agreement has been duly and validly authorized, executed and delivered by the Purchaser and constitutes a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms, subject to the Enforceability Exceptions. Section 4.02 No Conflicts. The execution, delivery and performance by the Purchaser of this Agreement and compliance by the Purchaser with the terms and provisions hereof and thereof, and the purchase of the Purchased Securities by the Purchaser do not and will not constitute a breach of, or a default under, the Organizational Documents of the Purchaser, or any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Purchaser is a party or by which it may be bound or to which its properties is subject, nor will any such action result in any violation of any existing Law (assuming compliance with the Securities Act and applicable securities and Blue Sky Laws of any other jurisdiction) to which the Purchaser or its property is subject. Section 4.03 Certain Fees. No fees or commissions for which the Company could be liable (including pursuant to Section 7.13 (ii) hereof) are or will be payable by the Purchaser to brokers, finders, or investment bankers with respect to the purchase of any of the Purchased Securities or the consummation of the transactions contemplated by this Agreement. Section 4.04 Purchase in Ordinary Course. The Purchaser is purchasing the Purchased Securities in the ordinary course of its business and the Purchaser has not entered into any arrangement with any person to resell the Purchased Securities or to participate in the distribution of the Purchased Securities. Section 4.05 Unregistered Securities. (a) Investment. The Purchased Securities are being acquired for its own account and with no intention of distributing the Purchased Securities or any part thereof, and the Purchaser has no present intention of selling or granting any participation in or otherwise distributing the same in any transaction in violation of the Securities Act or the securities or blue sky laws of any other jurisdiction. If the Purchaser should in the future decide to dispose of any of the Purchased Securities, the Purchaser understands and hereby agrees that it may do so only in compliance with the Securities Act and applicable securities and blue sky laws of any other jurisdiction, as then in effect, which may include a sale contemplated by any registration statement pursuant to which the Purchased Securities are then being offered. (b) Exemption. The Purchaser understands that (i) the Purchased Securities (A) have not been registered under the Securities Act or any state securities Laws, (B) will be issued in reliance upon an exemption from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) thereof and/or Regulation D promulgated thereunder and (C) will be issued in reliance upon exemptions from the registration and prospectus delivery requirements of state securities laws which relate to private offerings, and (ii) the Purchaser must therefore bear the economic risk of such investment indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt therefrom. The Purchaser acknowledges that the Company is relying in part upon the truth and accuracy of, and the Purchaser's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Purchaser set forth herein in order to determine the availability of such exemptions and the eligibility of the Purchaser to acquire the Purchased Securities. (c) Nature of Purchaser. The Purchaser represents and warrants to the Company that (i) it is an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act and (ii) by reason of its business and financial experience it has such knowledge, sophistication and experience in making similar investments and in business and financial matters generally so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Securities, is able to bear the economic risk of such investment and, at the present time, would be able to afford a complete loss of such investment; (d) Legend. It is understood that any certificates evidencing the Purchased Securities will bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER (A) UNDER THE INSTRUMENT PURSUANT TO WHICH THEY WERE ISSUED AND (B) UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (I) REGISTERED UNDER THE APPLICABLE SECURITIES LAWS, (II) SUCH TRANSACTION IS PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (III) AN OPINION OF COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, HAS BEEN DELIVERED TO THE COMPANY AND SUCH OPINION STATES THAT THE SECURITIES MAY BE TRANSFERRED WITHOUT SUCH REGISTRATION." The certificates evidencing the Purchased Securities shall not be required to contain such legend or any other legend after (i) such securities are registered for resale under the Securities Act, (ii) following any sale of such securities pursuant to and in accordance with Rule 144, (iii) if such securities are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the Commission). (e) No General Solicitation or Advertising. The Purchaser acknowledges that it is not purchasing the Purchased Securities as a result of any advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio or television. (f) Independent Evaluation. The Purchaser has independently evaluated the merits of its decision to purchase the Purchased Securities, has not relied on the advice of any placement agent or financial advisor in making such decision. The Purchaser has been afforded the opportunity, directly and through any advisors, to ask questions of the Company and the Parent. ARTICLE V CONDITIONS Section 5.01 Conditions Precedent to the Obligations of the Purchaser at each Closing. The obligation of the Purchaser to acquire the Purchased Securities at each Closing is subject to the satisfaction, at or before such Closing, of each of the following conditions: (a) Representations and Warranties. In the case of the Initial Closing, each of the representations and warranties of the Company and the Parent contained herein shall be true and correct as of the date when made and, unless expressly stated to refer to an earlier date, as of such Closing Date as though made on and as of such date. (b) Performance. Each of the Company and the Parent shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to such Closing, including, without limitation, delivering or causing the delivery of those items required to be delivered pursuant to Section 2.03, Section 2.04, Section 2.05 and .Section 2.06. (c) No Material Adverse Effect. No Material Adverse Effect (other than, and to the extent, disclosed in Section 3.12 of the Disclosure Schedule) shall have occurred since September 30, 2007. (d) Consents and Approvals. All consents, authorizations, approvals, permits, or waivers, if any, that are required in connection with the execution and delivery of the Operative Documents, the Purchase Money Credit Agreement and the Purchase Money Security Agreement or the consummation of the transactions contemplated thereby, (other than, in the case of the Initial Closing, the Spectrum Contribution Agreement) including, without limitation, the lawful issuance and sale of the Purchased Securities pursuant to this Agreement, shall be duly obtained and effective as of such Closing. (e) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement. (f) Preferred Stock. The Parent shall have filed with the Secretary of State of the State of Delaware: (i) a certificate of designations with respect to the Series C Preferred in substantially the form attached as Exhibit F hereto; and (ii) a certificate of designations with respect to the Series D Preferred in substantially the form attached as Exhibit G hereto. (g) Payment of Fees and Expenses. The Company and the Parent shall have paid or cause to have been paid the expenses of the Purchaser required to be paid by the Purchaser pursuant to Section 7.13(ii), including fees and expenses of counsel to the Purchaser billed through such Closing Date. (h) Board of Directors. Within seven (7) days of the Initial Closing, the Purchaser shall have received evidence reasonably satisfactory to it that, through resignations and appointments to the Board of Directors of the Parent and the Company, the Board of Directors of the Parent and the Company consist of eight individuals including two nominees of the Purchaser, all of whom shall meet the requirements of a Continuing Director as defined in the Secured Notes Indenture. (i) Stockholder Approval. In the case of the Initial Closing, the Purchaser shall have received evidence reasonably satisfactory to it that the voting agreements contemplated by Section 6.09(c) have been executed and delivered and remain in full force and effect. Section 5.02 Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Purchased Securities at each Closing is subject to the satisfaction or waiver by the Company, at or before such Closing, of each of the following conditions: (a) Representations and Warranties. Each of the representations and warranties of the Purchaser contained herein shall be true and correct as of the date when made and as of such Closing Date as though made on and as of such date. (b) Performance. The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to such Closing, including, without limitation, delivering or causing the delivery of those items required to be delivered pursuant to Section 2.06; and (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement. Section 5.03 Additional Conditions Precedent to the Final Closing. (a) Both Parties. The obligations of the parties to complete the transactions contemplated by the Spectrum Contribution Agreement at the Final Closing is subject to the satisfaction at or before the Final Closing of each of the following conditions, in addition to the conditions set forth in Section 5.01 and Section 5.02: (i) HSR. The waiting period applicable to the Parent's and the Purchaser's consummation of the transactions contemplated by the Spectrum Contribution Agreement under the HSR Act, shall have expired or been terminated. (ii) Stockholder Approval. The Stockholder Approval for the issuance of the Spectrum Shares contemplated to be issued pursuant to the Spectrum Contribution Agreement shall have been received. (b) The Purchaser. The obligations of the Purchaser to complete the transactions contemplated by the Spectrum Contribution Agreement at the Final Closing is subject to the condition that the Stockholder Approval contemplated by Section 6.09 shall be effective on or before July 23, 2008. Section 5.04 Additional Documents. On or prior to such Closing Date, the Company and the Guarantors shall have furnished to the Purchaser such further certificates and documents as the Purchaser may reasonably request. ARTICLE VI ADDITIONAL AGREEMENTS Section 6.01 Blue Sky Compliance. The Company will qualify the Purchased Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Purchaser shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Purchased Securities; provided that neither the Company, the Parent nor any of the Guarantors shall be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject. Section 6.02 Supplying Information. While the Purchased Securities remain outstanding and are "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act, the Company will, during any period in which the Company is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, furnish to holders of the Purchased Securities and prospective purchasers of the Purchased Securities designated by such holders, upon the request of such holders or such prospective purchasers, the information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act. Section 6.03 No Integration. Neither the Company, the Parent nor any of their affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Purchased Securities in a manner that would require registration of the Purchased Securities under the Securities Act. Section 6.04 No General Solicitation or Directed Selling Efforts. None of the Company, the Parent or any of their affiliates or any other person acting on its or their behalf (other than Harbinger and EchoStar, as to which no covenant is given) will (i) solicit offers for, or offer or sell, the Purchased Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed selling efforts within the meaning of Regulation S, and all such persons will comply with the offering restrictions requirement of Regulation S. Section 6.05 No Stabilization. Neither the Company nor the Parent will take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Purchased Securities. Section 6.06 Offering of Exchangeable Notes to Existing Stockholders. Prior to the Initial Closing Date, the Company shall offer (such offer, the "Exchangeables Offering") to issue and sell to up to nine (9) holders of the Parent Common Shares all of which are institutional "accredited investors," as defined in Rule 501(a) under the Securities Act such stockholder's share of an aggregate of $50,000,000 aggregate principal amount of Exchangeable Notes (the "Exchangeables Offering Securities"). Each such stockholder who agrees to purchase the Exchangeables Offering Securities must so specify in writing to the Company before 12:00 midnight on the day prior to the Initial Closing Date and shall purchase such Exchangeable Offering Securities at the Initial Closing. The Purchaser agrees to purchase from the Company 50% of the aggregate principal amount of the Exchangeables Offering Securities not purchased by such stockholders pursuant to this Section 6.06. Section 6.07 Network Capacity Agreement. During the period after execution of this Agreement and before October 1, 2008, the Company, the Parent and EchoStar agree to negotiate in good faith and to use commercially reasonable efforts to reach agreement on a commercial agreement between the Company, the Parent and EchoStar which would be consistent with the milestone set forth in section 1(d)(ii) of the Secured Notes. Section 6.08 Regulatory. (a) The Company shall (i) use its reasonable best efforts not to surrender, or to permit a materially adverse modification of, revocation of, forfeiture of, or failure to renew under regular terms, any of the FCC and Industry Canada Licenses that are material to its business, or cause the FCC or Industry Canada to institute any proceeding for the revocation, suspension, or materially adverse modification of any such FCC and Industry Canada Licenses that are material to its business; and (ii) comply in all material respects with all requirements and conditions of the FCC and Industry Canada Licenses. (b) On or before February 29, 2008, the Company shall file with the FCC a request for declaratory ruling pursuant to Section 310(b) of the Communications Act of 1934, as amended, for the purpose of bringing the Company into full compliance with the FCC's alien ownership rules and regulations. (c) The Company shall file with the FCC a request for an extension of the September 30, 2008 milestone for launching the satellite and the November 30, 2008 milestone for the satellite being operational. The Company shall use reasonable best efforts to cause TerreStar Canada to file with Industry Canada a request for an extension of the November 30, 2008 milestone for placing the satellite into its assigned orbital position. Such requests shall seek sufficient additional time so as to take into account the new satellite manufacturing delays and shall be filed sufficiently in advance of the current milestones so that the FCC and Industry Canada can reasonably be expected to act on the requests on a timely basis. Section 6.09 Stockholder Approval. (a) The Parent will take, in accordance with applicable law and its certificate of incorporation and bylaws, all actions reasonably necessary or advisable to obtain the vote of its stockholders necessary to approve (i) the issuance of the Spectrum Shares and the transactions contemplated by the Spectrum Contribution Agreement (ii) the issuance of Junior Preferred upon exchange of the Exchangeable Notes (and Parent Common Shares upon conversion of Junior Preferred) and (iii) the increase in the authorized number of Parent Common Shares necessary to give effect to the foregoing and issue the Spectrum Shares and Junior Preferred issuable upon exchange of the Exchangeable Notes (and Parent Common Shares upon conversion of the Junior Preferred) (the "Stockholder Approval"). The Parent's Board of Directors shall recommend such approval and take all lawful action to solicit such approval. The Parent shall use all commercially reasonable efforts to obtain from its stockholders written consents in favor thereof and if required by applicable law in order to consummate the transactions contemplated by the Spectrum Contribution Agreement, Parent, acting through its Board of Directors, shall take all action necessary to obtain written consent or convene a meeting of its stockholders as promptly as practicable for the purpose of voting upon the approval thereof. (b) The Parent represents and warrants that the affirmative vote in favor of the Stockholder Approval by holders of a majority of outstanding shares of Parent Common Stock is sufficient to obtain the Stockholder Approval in accordance with applicable law and the certificate of incorporation and bylaws of the Parent. (c) The Parent agrees with the Purchaser that on or prior to the Initial Closing Date it will obtain voting agreements in a form reasonably approved by the Purchaser from Parent stockholders, representing at least a majority of the outstanding shares of Common Stock, representing binding irrevocable commitments to vote in favor of the Stockholder Approval (each a "Voting Agreement") that are sufficient to obtain the Stockholder Approval in accordance with applicable law and the Parent's certificate of incorporation and bylaws (subject only to compliance with the requirements for filing and distribution of an information statement under Regulation 14C under the Exchange Act). (d) The Purchaser agrees to deliver a Voting Agreement with respect to all shares of Common Stock beneficially owned by it, as disclosed in the most recent form 13D (or an amendment thereto) of Purchaser or its affiliates filed with the SEC on September 19, 2007. Section 6.10 Filings. (a) If required by applicable securities legislation, or order, or if required by any securities commission, stock exchange or other regulatory authority, at the request of and at the sole expense of the Company, the Purchaser will provide reasonable assistance to the Company in filing reports, questionnaires, undertakings and other documents with respect to the issue of the Purchased Securities. (b) As soon as reasonably practicable after the date hereof, but in no event later than 30 days following the date hereof, the Parent and the Purchaser shall each file with the Federal Trade Commission and the Antitrust Division of the Department of Justice Notification and Report Forms relating to the transactions contemplated under the Spectrum Contribution Agreement and in respect of the potential exchange of the Exchangeable Notes as required by the HSR Act in order to consummate the transactions contemplated hereby and thereby. The Parent and the Purchaser shall (i) cooperate and coordinate with one another in the making of such filings, (ii) supply the other with any information that may be required to effectuate such filings, and (iii) promptly supply any additional information that may be required by, and use its commercially reasonable efforts (including, without limitation, meeting with any regulators and providing relevant materials and making available relevant employees), to seek to resolve promptly any objections that may be asserted by, the Federal Trade Commission, the Department of Justice or the competition or merger control authorities of any other Governmental Entity; provided, however, that the Purchaser shall not be required to agree to any divestiture of any properties, assets or businesses, or the imposition of any limitation on its ability to conduct businesses or to own or exercise control of its assets and properties. (c) The Purchaser shall provide all information reasonably requested by the Company to enable it to make FCC filings. Section 6.11 Withholding Certificates. The Purchaser shall deliver to the Company, as applicable, either (i) two copies of a properly completed and duly executed applicable Internal Revenue Service Form W-9 or (ii) a certificate to the effect that Buyer is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, is not a "10-percent shareholder" within the meaning of Section 881(c)(3)(B) of the Code and is not a controlled foreign corporation as described in Section 881(c)(3)(C) of the Code, and two copies of a properly completed and duly executed Internal Revenue Service Form W-8BEN or Form W-8IMY transmitting one or more for W-8BENs. At the reasonable request of the Company, the Purchaser shall provide replacement forms if previously provided forms are no longer effective. Section 6.12 Company Board; Voting Rights. The Parent and the Company will take all actions reasonably required such that (a) the Boards of Directors of the Parent and the Company would as promptly as practicable following the Initial Closing, but in no event more than seven (7) days following the Initial Closing, have eight (8) members, including two representatives nominated by the Purchaser and two representatives nominated by the purchaser(s) of the Other Purchased Securities and (b) the Purchaser and the purchaser(s) of Other Purchased Securities would have the same voting rights in respect of the Company as are set forth in the Certificate of Designations with respect to the Parent. ARTICLE VII MISCELLANEOUS Section 7.01 Use of Proceeds. The proceeds from the sale of the Securities will be used in a manner consistent with the Business Plan approved by the Board of Directors of Parent following the reconstitution of the Parent's Board of Directors as contemplated by Section 6.12. Section 7.02 Termination by Mutual Consent. This Agreement may be terminated and the sale and purchase of the Purchased Securities hereunder may be abandoned at any time prior to the Initial Closing, by mutual written consent of (a) the Company, (b) the Parent and (c) the Purchaser. Section 7.03 Termination by the Purchaser or the Company. This Agreement may be terminated and the sale and purchase of the Purchased Securities may be abandoned at any time prior to the Initial Closing by action of either (a) the Company or (b) the Purchaser if the Initial Closing shall not have been consummated by February 8, 2008, provided that the right to terminate this Agreement pursuant to this Section 7.03 shall not be available to any party that has breached its obligations under this Agreement in any manner that shall have proximately contributed to the occurrence of the failure of a condition to the consummation of the sale and purchase of the Purchased Securities . Section 7.04 Interpretation; Severability. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The word "including" shall mean "including but not limited to." Whenever any party has an obligation under this Agreement, the expense of complying with that obligation shall be an expense of such party unless otherwise specified. If any provision of this Agreement is held to be illegal, invalid, not binding, or unenforceable, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, not binding, or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions shall remain in full force and effect. Section 7.05 Survival. The indemnities, covenants, representations and warranties of the Company, the Parent and the Purchaser contained in this Agreement or made by or on behalf of the Company, the Parent or the Purchaser pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Purchased Securities and shall remain in full force and effect, regardless of any termination of this Agreement or any investigation made by or on behalf of the Company, the Parent or the Purchaser. Section 7.06 Waivers; Remedies; Amendments. (a) No Waiver; Remedies Cumulative. No failure or delay on the part of any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any right, power, or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise. (b) Amendments and Modifications. Except as otherwise provided herein, no amendment, waiver, consent or modification of any provision of this Agreement shall be effective unless signed by each of the parties hereto affected by such amendment, waiver, consent or modification. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by any party hereto from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on any party hereto in any case shall entitle any party hereto to any other or further notice or demand in similar or other circumstances. Section 7.07 Indemnification. In addition to all other rights and remedies available to the Purchaser, each of the Company and the Parent shall indemnify, defend and hold harmless the Purchaser and its affiliates and their respective partners, members, officers, directors, employees, agents and representatives (collectively, the "Purchaser Representatives"; and together with the Purchaser, the "Purchaser Indemnified Persons") against all losses, assessments, damages, liabilities, costs and expenses (including, but not limited to, interest, penalties and reasonable legal and accounting fees and expenses) (collectively, "Damages") and none of the Purchaser Indemnified Persons shall be liable to the Company, the Parent or any other stockholder of the Company or the Parent for or with respect to any and all Damages related thereto or incurred in enforcing this Section 7.07, in connection with: (i) any breach of a representation or warranty by the Company or the Parent under (a) this Agreement, including Article III of this Agreement, (b) any of the other Operative Documents, (c) any of the exhibits or schedules thereto, or (d) any of the certificates or other documents furnished pursuant thereto by or on behalf of the Company or the Parent; and (ii) any breach of any covenant or agreement by the Company or the Parent under (a) this Agreement (except Section 6.09(c) hereof); (b) any of the other Operative Documents; (c) any of the exhibits or schedules thereto; or (d) any of the certificates or other documents furnished pursuant thereto by or on behalf of the Company or the Parent. (b) All indemnification rights hereunder shall survive the execution and delivery of the Operative Documents and the consummation of the transactions contemplated herein and therein, notwithstanding any inquiry or examination made for or on behalf of, or any knowledge of the Purchaser and/or any of the other Purchaser Indemnified Persons or the acceptance by the Purchaser of any certificate or opinion. Section 7.08 Binding Effect; Assignment. This Agreement shall be binding upon the Company, the Parent, the Purchaser, and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns. Section 7.09 Non-Disclosure. Notwithstanding anything herein to the contrary, the Confidentiality Agreements shall remain in full force and effect according to their terms regardless of any termination of this Agreement. Section 7.10 Communications. All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, telecopy, air courier guaranteeing overnight delivery or personal delivery to the following addresses: (a) If to the Purchaser: Harbinger Capital Partners Master Fund I, Ltd. Harbinger Capital Partners Special Situations Fund, L.P. c/o Harbinger Capital Partners Funds 555 Madison Avenue, 16th Floor New York, New York 10022 Attn: Jeffrey T. Kirshner, Esq. Facsimile: 212-508-3721 with copies to (such copies not constituting notice hereunder): Harbert Management Corporation One Riverchase Parkway South Birmingham, Alabama 35244 Attn: General Counsel Facsimile: 205-987-5568 and Bingham McCutchen LLP 150 Federal Street Boston, Massachusetts 02110 Attention: Joseph J. Basile, Jr. Facsimile: (212) 752-5378 (b) If to the Company: TerreStar Networks Inc. 12010 Sunset Hills Road, 6th Floor Reston, VA 20190 Attention: Jeffrey Epstein Tel: (703) 483-7806 Fax: (703) 483-7973 with a copy (which shall not constitute notice) to: Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, NY 10166 Attention: Joerg H. Esdorn Tel: (212) 351-3851 Fax: (212) 351-5276 (c) If to the Parent: TerreStar Corporation 12010 Sunset Hills Road, 6th Floor Reston, VA 20190 Attention: Jeffrey Epstein Tel: (703) 483-7806 Fax: (703) 483-7973 with a copy (which shall not constitute notice) to: Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, NY 10166 Attention: Joerg H. Esdorn Tel: (212) 351-3851 Fax: (212) 351-5276 or to such other address as the Company or the Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified mail, return receipt requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery. Section 7.11 Entire Agreement. This Agreement and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those set forth or referred to herein or therein with respect to the rights granted by the Company, the Parent or any of their Affiliates or the Purchaser or any of its Affiliates set forth herein or therein. This Agreement and the other agreements and documents referred to herein supersede all prior agreements and understandings between the parties with respect to such subject matter. Section 7.12 Governing Law. This Agreement will be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of laws. Section 7.13 Fees and Expenses. The Company and the Parent shall bear (i) their own expenses and legal fees incurred on their behalf with respect to this Agreement and the transactions contemplated hereby and (ii) the expenses and legal fees (excluding any broker, finder or investment banker fees) incurred by the Purchaser with respect to this Agreement and the transactions contemplated hereby. Section 7.14 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. [SIGNATURE PAGES FOLLOW] IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth. TERRESTAR CORPORATION By: _____________________________________ Name: ______________________________ Title: ______________________________ TERRESTAR NETWORKS INC. By: _____________________________________ Name: ______________________________ Title: ______________________________ [Signature Page to Harbinger Master Investment Agreement] THE PURCHASER: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. By: Harbinger Capital Partners Offshore Manager, L.L.C., as investment manager By: _____________________________________ Name: ______________________________ Title: ______________________________ HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. By: Harbinger Capital Partners Special Situations GP, LLC, as general partner By: _____________________________________ Name: ______________________________ Title: ______________________________ [Signature Page to Harbinger Master Investment Agreement] SCHEDULE 2.02 Exchangeable Notes to be Issued by the Company ---------------------------------------------- Additional Purchased Purchaser Initial Purchased Securities Securities - --------------------- ------------------------------- ----------------------- HARBINGER ........... $50,000,000 aggregate principal 50% of the aggregate amount principal amount of any of the $50,000,000 aggregate principal amount of Exchangeable Notes offered to shareholders of the Parent pursuant to Section 6.06 and not purchased by such shareholders =============================== ======================= Series D Preferred to be Issued by the Parent --------------------------------------------- Purchaser Initial Purchased Securities - --------------------------------------- ------------------------------------- HARBINGER ..................... One (1) Share of Series D Preferred EXHIBIT A DEFINED TERMS "2007 Financial Statements" has the meaning specified in Section 3.10. "Additional Purchased Securities" means the Purchased Securities, if any, to be purchased by the Purchaser pursuant to Section 6.06 hereof. "Affiliate" means, with respect to a specified Person, any other Person, directly or indirectly controlling, controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control" (including, with correlative meanings, "controlling," "controlled by," and "under common control with") means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. "Agreement" has the meaning specified in the preamble to this Agreement. "Assets" means all of the properties and assets (real, personal or mixed, tangible or intangible, and including Intellectual Property), used or held for use in connection with or material to the continued operation of the business of the Company, the Parent and/or their Subsidiaries, as the case may be. "Benefit Plans" has the meaning specified in Section 3.18. "Business" means the respective businesses of the Company and the Company's Subsidiaries. "Business Day" has the meaning specified in the Exchangeable Note Indenture. "Business Intellectual Property" means the Owned Intellectual Property and the Licensed Intellectual Property, and all Computer Software, Computer Hardware and Data. "Business Plan" means a business plan for the Company and the Parent adopted following the Closing but prior to February 29, 2007. "CCTV" means CCTV Wireless, Inc. "Closing" has the meaning specified in Section 2.02. "Closing Date" means: (i) with respect to the Initial Closing, the Initial Closing Date; and (ii) with respect to the Final Closing, if any the Final Closing Date. "Code" means the Internal Revenue Code of 1986, as amended. "Commission" means the United States Securities and Exchange Commission. "Company" has the meaning specified in the preamble to this Agreement. "Company Common Shares" has the meaning specified in Section 3.02(a). "Company Equity Right" has the meaning specified in Section 3.02(a). "Company Preferred Shares" has the meaning specified in Section 3.02(a). "Company Stock Option" means any outstanding option to purchase Company Common Shares. "Company Stock Option Plan" means the TerreStar Networks Inc. 2002 Stock Incentive Plan. "Computer Hardware" means any computer hardware, equipment and peripherals of any kind and of any platform, including desktop and laptop personal computers, handheld computerized devices, servers, mid-range and mainframe computers, process control and distributed control systems, and all network and other communications and telecommunications equipment. "Computer Software" means any and all computer programs, including operating system and applications software, implementations of algorithms, and program interfaces, whether in source code or object code form (including, but not limited to, all of the foregoing that is installed on the Computer Hardware) and all documentation, including user manuals relating to the foregoing. "Confidentiality Agreement" means the Confidentiality Agreement, dated as of January 2, 2008, between the Parent and Harbinger. "Contract" means any loan agreement, indenture, letter of credit (including related letter of credit applications and reimbursement obligations), mortgage, security agreement, pledge agreement, deed of trust, bond, note, guarantee, surety obligation, warranty, license, franchise, permit, power of attorney, invoice, quotation, purchase order, lease, endorsement agreement, and any other agreement, contract, instrument, obligation, offer, commitment, plan, arrangement or understanding, written or oral, express or implied, to which a Person is a party or by which any of its properties, assets or Intellectual Property may be bound or affected, in each case as amended, supplemented, waived or otherwise modified "Damages" has the meaning specified in Section 7.07(a). "Data" means all information and data, whether in printed or electronic form and whether contained in a database or otherwise. "DGCL" means the General Corporation Law of the State of Delaware. "Disclosure Schedule" has the meaning specified in Article II. "DTC" means the Depository Trust Company. "Enforceability Exceptions" has the meaning specified in Section 3.04. "Environmental Health and Safety Laws" means any Federal, state, local or foreign statute, Law, regulation, order, decree, permit, authorization, opinion, common law or agency requirement relating to: (A) the protection, investigation or restoration of the environment, health, safety, or natural resources, (B) the handling, use, presence, disposal, release or threatened release of any Hazardous Substance or (C) noise, odor, indoor air, employee exposure, wetlands, pollution, contamination or any injury or threat of injury to persons or property. "ERISA" has the meaning specified in Section 3.18(a). "ERISA Affiliate" has the meaning specified in Section 3.18(d). "ERISA Plans" has the meaning specified in Section 3.18(c). "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder. "Exchangeable Notes Indenture" means the Indenture to be dated as of February 5, 2008 among the Company, the Guarantors and the Exchangeable Note Trustee, relating to the issuance of the Exchangeable Notes, in substantially the form attached as Exhibit B to the Agreement. "Exchangeable Note Trustee" means the Trustee, as defined in the Exchangeable Notes Indenture. "Exchangeable Notes" has the meaning specified in the recitals to this Agreement. "Exchangeables Offering" has the meaning specified in Section 6.06. "Exchangeables Offering Securities" has the meaning specified in Section 6.06. "FCC and Industry Canada Licenses" has the meaning specified in Section 3.37. "Financial Statements" has the meaning specified in Section 3.10. "FINRA" means the Financial Industry Regulatory Authority. "FYE Date" has the meaning specified in Section 3.10. "GAAP" means generally accepted accounting principles in the United States. "Governmental Authority" means, with respect to a particular Person, the country, state, county, city and political subdivisions in which such Person or such Person's Property is located or that exercises valid jurisdiction over any such Person or such Person's Property, and any court, agency, department, commission, board, bureau or instrumentality of any of them that exercises valid jurisdiction over any such Person or such Person's Property. "Guarantees" means the guarantees made by each of the Guarantors with respect to the Purchased Securities. "Guarantors" means with respect to a particular Indenture, the guarantors of the Company's obligations under such Indenture. "Harbinger" has the meaning specified in the recitals to this Agreement. "Harbinger Capital" has the meaning specified in the recitals to this Agreement. "Harbinger Master Fund" has the meaning specified in the recitals to this Agreement. "Harbinger Special Situations Fund" has the meaning specified in the recitals to this Agreement. "Hazardous Substance" means any substance that is: (A) listed, classified or regulated pursuant to any Environmental Health and Safety Law; (B) any petroleum product or by-product, asbestos-containing material, lead-containing paint, polychlorinated biphenyls, radioactive material or radon; or (C) any other substance that may be the subject of regulatory action by any Governmental Authority in connection with any Environmental Health and Safety Law. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of 1977, as amended. "Indentures" means the Exchangeable Note Indenture, the Secured Note Indenture and the Supplemental Secured Note Indenture. "Initial Closing" has the meaning specified in Section 2.02. "Initial Closing Date" shall mean the date on which conditions set forth in Sections 5.01 and 5.02 with respect to the Initial Closing shall be satisfied or waived in accordance with this Agreement, or at such other time and date as the parties hereto mutually shall agree. "Initial Purchased Securities" means the securities set forth opposite the Purchaser's name under the columns entitled "Initial Purchased Securities" on Schedule 2.02 hereto. "Intellectual Property" means all rights, priorities and privileges relating to intellectual property, including, without limitation, (a) foreign and domestic trademarks, service marks, brand names, certification marks, collective marks, d/b/a's, Internet domain names, logos and other source or business identifiers, symbols, trade dress, assumed names, fictitious names, trade names, corporate names, company names, business names, and other indicia of origin, all applications and registrations for all of the foregoing, and all goodwill associated therewith and symbolized thereby, registrations and recordings thereof, and all applications in connection therewith, including, but not limited to, all extensions, modifications and renewals of same; (b) foreign and domestic inventions, discoveries and ideas, whether patentable or not, and all patents, registrations, and applications therefor, including, but not limited to, divisions, continuations and continuations-in-part and including, but not limited to, extensions and reissues; (c) Trade Secrets; (d) foreign and domestic published and unpublished works of authorship, whether copyrightable or not, copyrights therein and thereto, and registrations and applications therefor, and all renewals, extensions, restorations and reversions thereof; and (e) all other intellectual property or proprietary rights and claims or causes of action arising out of or related to any infringement, misappropriation or other violation of any of the foregoing, including, but not limited to, rights to recover for past, present and future violations thereof. "Interim Financial Statements" has the meaning specified in Section 3.10. "Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder. "IRS" has the meaning set forth in Section 3.15(b). "Junior Preferred" means the Series E Junior Participating Preferred Stock of the Parent, par value $0.01 per share, (i) to be issued upon exchange of certain of the Exchangeable Notes issued to the Purchaser pursuant to the terms of the Exchangeable Note Indenture and (ii) to be issued pursuant to the terms of the Spectrum Contribution Agreement to the Purchaser. "Law" means any federal, state, local or foreign order, writ, injunction, judgment, settlement, award, decree, statute, law, rule or regulation or common law. "Licensed Intellectual Property" means Intellectual Property that the Parent, the Company and their Subsidiaries are licensed or otherwise permitted by other Persons to use. "Lien" has the meaning specified in the Exchangeable Note Indenture. "Material Adverse Effect" shall mean any change, event, occurrence, fact, condition, circumstance, development or effect (whether or not arising in the ordinary course of business) that, individually or in the aggregate with any other changes, events, occurrences, facts, conditions, developments or effects, has had or is reasonably likely to have a material adverse effect on (A) the Assets, business, financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, or the Parent and its Subsidiaries, taken as a whole or (B) the currently proposed development of the Company's or the Parent's products, technology or Intellectual Property, except, in the case of either (A) or (B), for any change, event, occurrence, fact, condition, development or effect resulting principally from or arising principally in connection with (i) any effect of the public announcement or pendency of the issuance of the Securities including any termination of any contractual relationships with any customers, vendor or employees of the Parent or the Company due to the Purchaser's participation in this Agreement, (ii) the taking of any action required by the terms of this Agreement, (iii) changes affecting the industry in which the Company operates or changes in global or national economic conditions (provided in each case that such changes do not have a unique or disproportionate impact on the Company or the Parent); or (iv) changes in law or in generally accepted accounting principles applicable to the Company or the Parent. "Material Contract" has the meaning specified in Section 3.26. "Money Laundering Laws" has the meaning specified in Section 3.27(b). "Most Recent Balance Sheet" has the meaning specified in Section 3.10. "Non-U.S. Benefit Plans" has the meaning specified in Section 3.18(a). "OFAC" has the meaning specified in Section 3.27(c). "Operative Documents" means this Agreement, the Guarantees, the Indentures, the Spectrum Contribution Agreement and the Registration Rights Agreement. "Organizational Documents" has the meaning specified in Section 3.01(a). "Other Purchaser Securities" has the meaning specified in the Recitals. "Other Securities Agreements" has the meaning specified in Section 3.36. "Owned Intellectual Property" means Intellectual Property owned by the Parent, the Company or their Subsidiaries. "Parent" has the meaning specified in the recitals to this Agreement. "Parent Common Shares" has the meaning specified in Section 3.02(c). "Parent Equity Right" has the meaning specified in Section 3.02(c). "Parent Preferred Shares" means the Parent Series A Preferred Shares and the Parent Series B Preferred Shares. "Parent Stock Option" means any outstanding option to purchase Parent Common Shares or Parent Preferred Shares. "Parent Stock Option Plans" means the Parent's 2004 Restricted Share Plan, its 2002 Stock Option Plan and its 2006 Equity Incentive Plan. "Pension Plan" has the meaning specified in Section 3.18(c). "Permitted Lien" has the meaning specified in the Exchangeable Note Indenture. "Person" means any individual, corporation, company, voluntary association, partnership, joint venture, trust, limited liability company, unincorporated organization or government or any agency, instrumentality or political subdivision thereof, or any other form of entity. "PORTAL Market" shall mean the Private Offerings, Resales and Trading through Automated Linkages Market. "Property" means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. "Purchase Money Credit Agreement" means the Purchase Money Credit Agreement, dated as of February 5, 2008, by and among the Company, the Parent, the guarantors party thereto, U.S. Bank National Association, as Collateral Agent, Harbinger, EchoStar Corporation, and the other lenders party thereto. "Purchase Money Security Agreement" means the Purchase Money Security Agreement, dated as of February 5 2008, by and among the Company, U.S. Bank National Association, as Collateral Agent, and the lenders party thereto. "Purchase Price" means: (i) with respect to Exchangeable Notes forming part of the Initial Purchased Securities, the aggregate principal amount of the Exchangeable Notes set forth opposite the Purchaser's name under the column "Initial Purchased Securities" on Schedule 2.02 hereto; (ii) with respect to Exchangeable Notes forming part of the Additional Purchased Securities, the aggregate principal amount of the Exchangeable Notes the Purchaser is required to purchase pursuant to 6.06. (iii) with respect to the Series D Preferred, $0.01. "Purchased Securities" means the Initial Purchased Securities and the Additional Purchased Securities. "Purchaser" has the meaning specified in the preamble to this Agreement. "Purchaser Indemnified Persons" has the meaning specified in Section 7.07(a). "Purchaser Representatives" has the meaning specified in Section 7.07(a). "Registered" means issued, registered, renewed or the subject of a pending application. "Registration Rights Agreement" shall mean the Registration Rights Agreement, dated as of February 5, 2008, in substantially the form attached as Exhibit D to the Agreement. "Regulation D" means Regulation D under the Securities Act. "Regulation S" means Regulation S under the Securities Act. "sale" (and "sell" shall have a correlative meaning) means, with respect to any shares, the sale, transfer, assignment or similar disposition (excluding pledge, encumbrance or hypothecation) of such shares in which cash, securities or other property is received as consideration. "Secured Notes Indenture" has the meaning specified in the recitals to this Agreement. "Secured Note Trustee" has the meaning specified in the Secured Notes Indenture. "Secured Notes" has the meaning specified in the recitals to this Agreement. "Securities Act" means the Securities Act of 1933, as amended from time to time, and the rules and regulations of the Commission promulgated thereunder. "Series C Preferred" has the meaning specified in the recitals to this Agreement. "Series D Preferred" has the meaning specified in the recitals to this Agreement. "Solvent" has the meaning specified in Section 3.28. "Spectrum" shall mean those certain 1.4 GHz band licenses described in the Spectrum Contribution Agreement. "Spectrum Contribution Agreement" shall mean the Spectrum Contribution Agreement, dated as of February 5, 2008, by and between the Parent and the Purchaser, in substantially the form attached as Exhibit C to the Agreement. "Spectrum Shares" shall mean the Junior Preferred issuable to the Purchaser pursuant to the terms of the Spectrum Contribution Agreement. "Stockholder Approval" has the meaning specified in Section 6.09. "Subsidiaries" shall mean, as to the Company or the Parent, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the Board or other persons performing similar functions of that entity are at the time directly or indirectly owned by the Company or the Parent, as applicable. "Suits" has the meaning specified in Section 3.21(c). "Supplemental Secured Notes Indenture" means the Second Supplemental Indenture dated as of February 5, 2008 among the Company, the Guarantors and the Secured Note Trustee, relating to the issuance of the Secured Notes, pursuant to this Agreement, in substantially the form attached as Exhibit E to the Agreement. "Tax" means all federal, state, local and foreign income, profits, franchise, gross receipts, environmental, customs, duties, capital stock, severances, stamp, payroll, sales, employment, unemployment, disability, use, property, withholding, excise, production, value added, occupancy, license, estimated, real property, personal property, windfall profits or other taxes, duties, fees or assessments of any nature whatsoever, together with all interest, penalties and additions imposed with respect to such amounts and any interest in respect of such penalties and additions. "Tax Return" means all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns) required to be supplied to a Tax authority relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof. "Trade Secrets" means confidential and proprietary information, trade secrets and know-how, including, but not limited to, processes, schematics, databases, formulae, drawings, prototypes, models, designs and customer lists. "Trust Indenture Act" has the meaning specified in Section 3.04. EXHIBIT B [FORM OF INDENTURE FOR EXCHANGEABLE NOTES (INCLUDING FORM OF EXCHANGEABLE NOTE)] [See attached] EXHIBIT C [FORM OF SPECTRUM CONTRIBUTION AGREEMENT] [See attached] EXHIBIT D [FORM OF REGISTRATION RIGHTS AGREEMENT] [See attached] EXHIBIT E [FORM OF SECOND SUPPLEMENTAL INDENTURE TO THE INDENTURE, DATED FEBRUARY 14, 2007, BETWEEN TERRESTAR NETWORKS INC., THE GUARANTORS PARTY THERETO AND U.S. BANK NATIONAL ASSOCIATION IN RESPECT OF 15% SENIOR SECURED PIK NOTES DUE 2014] [See attached] EXHIBIT F [FORM OF CERTIFICATE OF DESIGNATIONS FOR THE SERIES D PREFERRED STOCK OF TERRESTAR CORPORATION] [See attached] SK 03773 0003 853013 EX-99.E 4 d853014_ex99-e.txt CERTIFICATE OF DESIGNATIONS OF SERIES E JUNIOR PARTICIPATING PREFERRED STOCK, SERIES C PREFERRED STOCK AND SERIES D PREFERRED STOCK OF TERRESTAR CORPORATION (PURSUANT TO SECTION 151 OF THE DELAWARE GENERAL CORPORATION LAW) The undersigned does hereby certify that the following resolutions were duly adopted by the Board of Directors (the "Board of Directors") of TerreStar Corporation (the "Corporation"), a corporation organized and existing under the General Corporation Law of the State of Delaware (the "DGCL"), with the preferences and rights set forth therein relating to dividends, conversion, dissolution and distribution of assets of the Corporation having been fixed by the Board of Directors pursuant to authority granted to it under the Corporation's Restated Certificate of Incorporation (the "Certificate of Incorporation") and in accordance with Section 151 of the DGCL: A. SERIES E JUNIOR PARTICIPATING PREFERRED STOCK RESOLVED that, pursuant to authority conferred on the Board of Directors by the Certificate of Incorporation, the Board of Directors hereby authorizes the creation of 1,900,000 shares of Series E Junior Participating Preferred Stock of the Corporation, par value $0.01 and hereby fixes the designations, powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such shares, in addition to those set forth in the Certificate of Incorporation, as follows: 1. Designation and Amount. This series of preferred stock of the Corporation (the "Preferred Stock") shall be designated as "Series E Junior Participating Preferred Stock" (the "Junior Preferred Stock") and the number of shares constituting such series shall be 1,900,000. Such number of shares may be increased or decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Junior Preferred Stock then outstanding, plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon conversion of any outstanding securities issued by the Corporation and convertible into Junior Preferred Stock. 2. Dividends and Distributions. Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking senior to the Junior Preferred Stock, with respect to dividends, as and when dividends are declared or paid on the Common Stock of the Corporation (the "Common Stock"), the holders of Junior Preferred Stock shall be entitled to participate in such dividends ratably on a per share basis. 3. Voting Rights. Except as otherwise required under Delaware law, the holders of shares of Junior Preferred Stock shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation; provided, however, that each holder of Junior Preferred Stock shall be entitled to notice of all stockholders meetings at the same time and in the same manner as notice is given to the stockholders entitled to vote at such meeting. 4. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, the holders of shares of Junior Preferred Stock shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders an amount in cash equal to $.0001 per share, before any distribution shall be made or any assets distributed in respect of the Common Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the aggregate amount to which holders of shares of Junior Preferred Stock were entitled immediately prior to such event in the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. 5. Conversion; Restrictions. (a) Defined Terms. For purposes of this Section 5: (i) "Beneficial Ownership" has the meaning given to such term in Rule 13d-3 under the Securities Exchange Act of 1934, as amended. (ii) "Original Indenture" means that certain Indenture, dated February 14, 2007, by and among TerreStar Networks Inc., the guarantors party thereto and U.S. Bank National Association. (iii) "Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, governmental authority or other entity. (iv) "Transfer" means any sale, transfer, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire Beneficial Ownership, or any agreement to take any such actions or cause any such events, of Junior Preferred Stock or Common Stock (following the exercise of any conversion right in respect of the Junior Preferred Stock); in each case, whether voluntary or involuntary, or whether by operation of law or otherwise. The terms "Transferring" and "Transferred" shall have the correlative meanings. (v) "Transferee" means a person to whom a Transfer is made. (b) Optional Conversion Rights. Subject to the restrictions set forth in Section 5(f), each share of Junior Preferred Stock may be converted, at any time and from time to time, into twenty-five (25) shares of Common Stock, subject to adjustment as set forth below. (c) Mechanics of Conversion. Each conversion of shares of Junior Preferred Stock into shares of Common Stock pursuant to this Section 5 shall be effected by the surrender of the certificate or certificates representing the shares to be converted (the "Converting Shares") at the principal office of the Corporation or the transfer agent of the Junior Preferred Stock (if any) at any time during normal business hours, together with written notice by the holder of such Converting Shares, stating that such holder desires to convert the Converting Shares, and the number of shares of Common Stock into which the Converting Shares are to be converted (the "Converted Shares"). Such notice shall also state the name or names (with addresses) and denominations in which the certificate or certificates for Converted Shares are to be issued and shall include instructions for the delivery thereof. If the issuance of any Converted Shares or the acquisition thereof by the holder of Converting Shares requires filing or registration with or approval of any governmental authority before such shares may be issued upon conversion, the Corporation will use its commercially reasonable efforts to cause such filing, registration or approval or to cooperate with such holder to satisfy such requirements, as the case may be. Promptly after such filing, registration or approval and such surrender and the receipt of such by written notice, the Corporation will issue and deliver in accordance with the surrendering holder's instructions the certificate or certificates evidencing the Converted Shares issuable upon such conversion, and the Corporation will deliver to the converting holder a certificate (which shall contain such legends as were set forth on the surrendered certificate or certificates, if any) representing any shares which were represented by the certificate or certificates that were delivered to the Corporation in connection with such conversion, but which were not converted. Such conversion, to the extent permitted by law, shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates shall have been surrendered and such notice shall have been received by the Corporation, and at such time the rights of the holder of the Converting Shares as such holder shall cease and the person or persons in whose name or names the certificate or certificates for the Converted Shares are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the Converted Shares. Upon issuance of the shares in accordance with this Section 5, such Converted Shares shall be deemed to be fully authorized, validly issued, fully paid and non-assessable. The Corporation shall take all such actions as may be necessary to assure that all such shares of Common Stock may be so issued without violation of any applicable law or governmental regulation or any requirements of any domestic securities exchange upon which shares of Common Stock may be listed (except for official notice of issuance which will be immediately transmitted by the Corporation upon issuance). The issuance of certificates for shares of any class of Common Stock upon the conversion of Junior Preferred Stock as permitted by and pursuant to this Section 5 shall be made without charge to the holders for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such conversion and the related issuance of shares of Common Stock. The Corporation shall not close its books against the transfer of shares of Junior Preferred Stock in any manner which would interfere with the timely conversion of any shares of Junior Preferred Stock. In the event of the conversion of less than all of the shares of Junior Preferred Stock evidenced by a single certificate, the Corporation shall execute and deliver to the holder thereof, without charge to such holder, a new certificate or new certificates evidencing the shares of Junior Preferred Stock not so converted. (d) Adjustment. In the event that the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the number of shares of Common Stock into which the shares of Junior Preferred Stock are convertible shall be adjusted by multiplying the number of shares of Common Stock into which the Junior Preferred Stock would have been converted by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (e) Reservation of Shares. The Corporation shall at all times when the Junior Preferred Stock shall be outstanding, reserve and keep available out of its authorized but unissued shares of Common Stock, such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of all outstanding Junior Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Junior Preferred Stock, the Corporation shall take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purposes, including, without limitation, engaging in best efforts to obtain the requisite stockholder approval of any necessary amendment to the Certificate of Incorporation. (f) Limitations on Conversion. The original holder or Transferee of the shares of Junior Preferred Stock shall not have the right to convert such shares of Junior Preferred Stock into shares of Common Stock, if: (i) there are outstanding any shares of the Series A Cumulative Convertible Preferred Stock of the Corporation and such conversion would result in such original holder or Transferee thereof becoming the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of shares representing more than 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of the Corporation; or (ii) there are outstanding any shares of the Series B Cumulative Convertible Preferred Stock of the Corporation and such conversion would result in such original holder or Transferee thereof becoming the beneficial owners (as defined in Rule 13d-3 under the Exchange Act) of shares representing more than 50% of the aggregate ordinary voting power represented by issued and outstanding voting stock of the Corporation; or (iii) there are outstanding any notes issued pursuant to the Original Indenture and such conversion would result in such original holder or Transferee thereof becoming the beneficial owner (as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular holder or Transferee for purposes of this Section 1(f)(iii), such holder or Transferee will be deemed to have beneficial ownership of all securities that such holder or Transferee has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable, or is exercisable only upon the occurrence of a subsequent condition), directly or indirectly, of more than 50% of the voting corporate stock of the Corporation (which, at such time, is entitled to vote in the election of the Board of Directors) measured by voting power rather than number of shares. Notwithstanding anything to the contrary contained herein, the Junior Preferred shall not be subject to any of the foregoing conversion restrictions during any Excepted Period. For purposes of this Section 5, an "Excepted Period" means a period commencing upon, and lasting until 60 days following, the occurrence or consummation (as applicable) of any "Change of Control" under the terms of the Series A Cumulative Convertible Preferred Stock of the Corporation, the Series B Cumulative Convertible Preferred Stock of the Corporation or the Original Indenture. Within five (5) days following the commencement of any Excepted Period, the Corporation shall provide written notice thereof to any holder of shares of Junior Preferred Stock that are then outstanding. Such notice shall include a reference to the conversion rights set forth in this paragraph. 7. Rank. The Junior Preferred Stock, with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise (i) rank senior and prior to each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its express terms ranks junior to the Junior Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities, are collectively referred to herein as the "JPS Junior Securities"), (ii) rank on a parity with the Common Stock (except to the extent set forth herein), and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that does not by its terms expressly provide that it ranks senior to or junior to the Junior Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities are collectively referred to herein as the "JPS Parity Securities"), and (iii) rank junior to each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its express terms ranks senior to the Junior Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities are collectively referred to herein as the "JPS Senior Securities"). The respective definitions of JPS Junior Securities, JPS Parity Securities and JPS Senior Securities shall also include any rights or options exercisable or exchangeable for or convertible into any of the JPS Junior Securities, JPS Parity Securities or JPS Senior Securities, as the case may be. At the date of the initial issuance of the Junior Preferred Stock (i) shares of the Series A Cumulative Convertible Preferred Stock of the Corporation, the Series B Cumulative Convertible Preferred Stock of the Corporation, the Series C Preferred Stock of the Corporation and the Series D Preferred Stock shall be the only JPS Senior Securities issued and outstanding and (ii) shares of the Common Stock shall be the only JPS Parity Securities issued and outstanding. 8. Notices. All notices referred to herein shall be dated and in writing, to the Corporation at its principal executive offices and to any holder of Junior Preferred at such holder's address as it appears in the stock records of the Corporation (unless otherwise specified in a written notice to the Corporation by such holder), and shall be deemed to have been given (a) when delivered, if delivered personally, sent by confirmed facsimile or certified mail, return receipt requested, postage prepaid, (b) on the next business day if sent by overnight courier and (c) when received if delivered otherwise. 9. Amendment and Waiver. No amendment or waiver of any provision of the Certificate of Incorporation (including this Certificate of Designations) which would materially alter or change the powers, preferences or special rights of the Junior Preferred Stock so as to affect them adversely shall be effective without the affirmative vote or consent of the holders of at least two-thirds of the Junior Preferred Stock, either in writing or by resolution adopted at an annual or special meeting. B. SERIES C PREFERRED STOCK RESOLVED that, pursuant to authority conferred on the Board of Directors by the Certificate of Incorporation, the Board of Directors hereby authorizes the creation of one (1) share of Series C Preferred Stock of the Corporation, par value $0.01, and hereby fixes the designations, powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such share, in addition to those set forth in the Certificate of Incorporation, as follows: 1. Designation and Amount; Ownership. This series of Preferred Stock shall be designated as "Series C Preferred Stock" (the "Series C Preferred Stock") and the number of shares constituting such series shall be one (1). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series C Preferred Stock then outstanding. Series C Preferred Stock may only be issued to and beneficially owned by EchoStar Corporation or an affiliate thereof (the "Series C Holder"). For purposes of this Section B, the term "affiliate" shall have the meaning given such term as in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, and the term "beneficial ownership" shall have the meaning given such term as in Rule13d-3 of the Securities Exchange Act of 1934, as amended. 2. Voting Rights. (a) Defined Terms. For purposes of this Section 2: (i) "Fundamental Corporate Transaction Approval Right" means, that without first obtaining the affirmative vote or consent of the Series C Holder, either in writing or by resolution adopted at an annual or special meeting, and otherwise in accordance with the provisions hereof, the Corporation shall not: (A) sell or permit to be sold 10% or more of the assets of the Corporation or any subsidiary of the Corporation other than the equity interests of SkyTerra Communications, Inc.; (B) consummate or permit to be consummated any merger, consolidation, recapitalization, liquidation, or dissolution of the Corporation or any subsidiary of the Corporation; (C) amend or permit the amendment of the certificate of incorporation, by-laws, or other organizational documents of the Corporation or any subsidiary of the Corporation; (D) redeem or repurchase any equity securities of the Corporation, except for the redemption of any shares of Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock or pursuant to any compensatory plan or arrangement, in each case solely in accordance with the terms thereof; (E) make any material change in the line of business of the Corporation; (F) acquire any asset or assets in one or more transactions with a value in excess of $5,000,000; (G) make any capital expenditure in excess of $5,000,000 not contemplated by the annual budget of the Corporation which budget was approved by the Board of Directors; (H) appoint or permit to be appointed any new officers, executives or other key employees of the Corporation; or (I) increase the size of the Board of Directors above eight (8), except for any increase resulting from the election of additional directors by Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock in accordance with the terms thereof (the foregoing subsections (A)-(I) shall be referred to in this Section 2 as "Fundamental Corporate Transactions"). (ii) "Minimum Ownership Threshold" means (A) for purposes of Multiple Director Nomination Right, the beneficial ownership of at least ten percent (10%) of the then outstanding Common Stock, (B) for purposes of a Fundamental Corporate Transaction Approval Right, the beneficial ownership of at least ten percent (10%) of the then outstanding Common Stock, and (C) for purposes of a Single Director Nomination Right, the beneficial ownership of at least five percent (5%) of the then outstanding Common Stock, in each case on a fully diluted basis. (iii) "Multiple Director Nomination Right" means the exclusive right of the Series C Holder to nominate two (2) directors to the Board of Directors in accordance with the provisions hereof. (iv) "Nomination Submission Deadline" means the deadline for receipt by the Corporation of any names of candidates nominated to the Board of Directors. (v) "Single Director Nomination Right" means the exclusive right of the Series C Holder to nominate one (1) director to the Board of Directors in accordance with the provisions hereof. (b) Voting Rights. The Series C Holder, except as otherwise required under Delaware law or as set forth in paragraphs (i), (ii) and (iii) below, shall not be entitled to or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. (i) Nomination Rights. Upon the issuance of the Series C Preferred Stock, and thereafter, in connection with any annual or special meeting of the stockholders at which members of the Board of Directors are to be elected, so long as the Series C Holder meets the Minimum Ownership Threshold, the Series C Holder shall be entitled to exercise the Single Director Nomination Right or the Multiple Director Nomination Right, as applicable, as follows: (A) The Board of Directors shall set a date for the Nomination Submission Deadline in connection with any annual or special meeting of the stockholders at which members of the Board of Directors are to be elected and shall provide written notice of such date at least thirty (30) days prior thereto to the Series C Holder (the "Nomination Deadline Notice"). In such Nomination Deadline Notice, the Board of Directors shall inform the Series C Preferred Holder whether such Holder is entitled to exercise the Single Director Nomination Right, the Multiple Director Nomination Right, or no rights at all, dependent upon whether the Series C Holder meets the Minimum Ownership Threshold at such time. Prior to the Nomination Submission Deadline, the Series C Holder shall submit in writing the names of the individual or individuals, as applicable, to the Board of Directors for inclusion in any ballot or other materials to be provided to the stockholders of the Corporation in connection with such annual or special meeting of the stockholders. (B) In connection with any election at which the Series C Holder is entitled to exercise the Single Director Nomination Right or the Multiple Director Nomination Right, the Board of Directors agrees that it shall nominate no greater than that number of directors for election to the Board of Directors which is equal to the aggregate number of positions on the Board of Directors up for election at such time less the sum of the number of directors the Series C Holder is entitled to nominate pursuant to the provisions of this Section 2 at such time and the number of directors that any holder of Series C Parity Securities (defined below) is entitled to nominate at such time, if any. To the extent that if at such time any Series C Senior Securities (defined below) are entitled to nominate and elect any members of the Board of Directors, such elected members shall be in addition to the directors so nominated by the Series C Holder, any Series C Parity Securities and/or the Board of Directors, and shall result in an increase of the size of the Board of Directors. (ii) Fundamental Corporate Transaction. Upon the issuance of the Series C Stock, and thereafter, so long as the Series C Holder meets the Minimum Ownership Threshold, the Series C Holder shall be entitled to exercise the Fundamental Corporate Transaction Approval Right, as follows: (A) The Corporation must provide to the Series C Holder written notice of any proposed Fundamental Corporate Transaction at least five (5) days prior to the consummation of the Fundamental Corporate Transaction. In such notice, the Corporation shall state whether the Series C Holder meets the Minimum Ownership Threshold to exercise the Fundamental Corporate Transaction Approval Right, and provide the material terms of the Fundamental Corporate Transaction, including, without limitation, the consideration to be paid to the Corporation and/or any monetary obligation the Corporation will incur in connection with such Fundamental Corporate Transaction. The Series C Holder may reasonably request that additional information be provided by the Corporation, if the Series C Holder determines that such information is necessary to make a prudent decision in exercising its Fundamental Corporate Transaction Approval Right. The Series C Holder may withhold its consent to or affirmative vote in favor of any Fundamental Corporate Transaction, in its sole discretion. (iii) Approval of New Classes of Securities. (A) Hereafter, so long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not authorize or issue any class of Series C Parity Securities (as defined below) without the prior consent or affirmative vote of the Series C Holder, either in writing or by resolution adopted at an annual or special meeting. (B) Hereafter, so long as any shares of Series C Preferred Stock are outstanding, the Corporation shall not authorize or issue any class of Series C Senior Securities (as defined below) without the prior consent or affirmative vote of the Series C Holder, either in writing or by resolution adopted at an annual or special meeting. 3. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, no distribution shall be made (a) to the holders of any shares of capital stock of the Corporation ranking junior (with respect to rights upon liquidation, dissolution or winding up) to the Series C Preferred Stock, unless the Series C Holder shall have received $1000 per share, or (b) to the holders of shares of capital stock of the Corporation ranking on a parity (with respect to rights upon liquidation, dissolution or winding up) with the Series C Preferred Stock, except for distributions made ratably on the Series C Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. 4. Rank. Series C Preferred Stock shall, with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise, rank (i) senior and prior (to the extent set forth herein) to the Common Stock, the Junior Preferred Stock, and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its express terms ranks junior to the Series C Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities, including the Common Stock, are collectively referred to herein as the "Series C Junior Securities"), (ii) rank on a parity with the Series D Preferred Stock, and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that does not by its terms expressly provide that it ranks senior to or junior to the Series C Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities are collectively referred to herein as the "Series C Parity Securities"), provided that any such Series C Parity Securities that were not approved by the Series C Holder in accordance with Section B(2)(b)(iii)(A) hereof shall be deemed to be Series C Junior Securities and not Series C Parity Securities, and (iii) rank junior to the Series A Cumulative Convertible Preferred Stock, the Series B Cumulative Convertible Preferred Stock, and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its express terms ranks senior to the Series C Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities are collectively referred to herein as the "Series C Senior Securities"), provided that any such Series C Senior Securities that were not approved by the Series C Holder in accordance with Section B(2)(b)(iii)(B) hereof shall be deemed to be Series C Junior Securities and not Series C Senior Securities. The respective definitions of Series C Junior Securities, the Series C Parity Securities and the Series C Senior Securities shall also include any rights or options exercisable or exchangeable for or convertible into any of the Series C Junior Securities, the Series C Parity Securities or the Series C Senior Securities, as the case may be. At the date of the initial issuance of the Series C Preferred Stock (i) shares of Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock shall be the only Series C Senior Securities issued and outstanding, (ii) shares of Series D Preferred Stock shall be the only Series D Parity Securities issued and outstanding, and (iii) shares of Common Stock and Junior Preferred Stock shall be the only Series C Junior Securities issued and outstanding. 5. Notices. All notices referred to herein shall be dated and in writing, to the Corporation at its principal executive offices and to the Series C Holder at such holder's address as it appears in the stock records of the Corporation (unless otherwise specified in a written notice to the Corporation by such holder), and shall be deemed to have been given (a) when delivered, if delivered personally, sent by confirmed facsimile or certified mail, return receipt requested, postage prepaid, (b) on the next business day if sent by overnight courier and (c) when received if delivered otherwise. 6. Conversion. The Series C Preferred Stock is not convertible into any other class of capital stock of the Corporation. 7. Transfers. The Series C Holder may not effect any offer, sale, pledge, transfer, or other disposition or distribution (collectively a "Transfer"), or enter into any agreement with respect to any Transfer, or grant any proxy with respect to, and the Series C Preferred Stock or any beneficial or other interest therein to any person or entity other than an Affiliate of the Series C Holder. Any purported Transfer to any person or entity other than the Series C Holder shall be void ab initio, and the voting rights set forth in Section 2 hereof may only be exercised by the Series C Holder only so long as the Series C Preferred Stock is beneficially owned by EchoStar Corporation or an affiliate thereof. The certificate representing the share of Series C Preferred Stock shall bear the following legend: THE SHARE OF SERIES C PREFERRED STOCK OF TERRESTAR CORPORATION REPRESENTED BY THIS CERTIFICATE MAY ONLY BE ISSUED TO AND BENEFICIALLY OWNED BY ECHOSTAR CORPORATION OR AN AFFILIATE THEREOF, AND ANY PURPORTED TRANSFER TO ANY OTHER PERSON OR ENTITY IS NULL AND VOID. 8. Amendment and Waiver. No amendment or waiver of any provision of the Certificate of Incorporation (including this Certificate of Designations) which would materially alter or change the powers, preferences or special rights of the Series C Preferred Stock so as to affect them adversely shall be effective without the prior consent or affirmative vote of the Series C Holder, either in writing or by resolution adopted at an annual or special meeting. C. SERIES D PREFERRED STOCK RESOLVED that, pursuant to authority conferred on the Board of Directors by the Certificate of Incorporation, the Board of Directors hereby authorizes the creation of one (1) shares of Series D Preferred Stock of the Corporation, par value $0.01and hereby fixes the designations, powers, preferences and relative participating, optional or other special rights, and the qualifications, limitations or restrictions thereof, of such share, in addition to those set forth in the Certificate of Incorporation, as follows: 1. Designation and Amount. This series of Preferred Stock shall be designated as "Series D Preferred Stock" (the "Series D Preferred Stock") and the number of shares constituting such series shall be one (1). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided that no decrease shall reduce the number of shares of Series D Preferred Stock then outstanding. Series D Preferred Stock may only be issued to and beneficially owned by Harbinger Capital Partners Master Fund I, Ltd. or an affiliate thereof (the "Series D Holder"). For purposes of this Section C, the term "affiliate" shall have the meaning given such term as in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, and the term "beneficial ownership" shall have the meaning given such term as in Rule13d-3 of the Securities Exchange Act of 1934, as amended. 2. Voting Rights. (a) Defined Terms. For purposes of this Section 2: (i) "Fundamental Corporate Transaction Approval Right" means, that without first obtaining the affirmative vote or consent of the Series D Holder, either in writing or by resolution adopted at an annual or special meeting, and otherwise in accordance with the provisions hereof, the Corporation shall not: (A) sell or permit to be sold 10% or more of the assets of the Corporation or any subsidiary of the Corporation other than the equity interests of SkyTerra Communications, Inc.; (B) consummate or permit to be consummated any merger, consolidation, recapitalization, liquidation, or dissolution of the Corporation or any subsidiary of the Corporation; (C) amend or permit the amendment of the certificate of incorporation, by-laws, or other organizational documents of the Corporation or any subsidiary of the Corporation; (D) redeem or repurchase any equity securities of the Corporation, except for the redemption of any shares of Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock or pursuant to any compensatory plan or arrangement, in each case solely in accordance with the terms thereof; (E) make any material change in the line of business of the Corporation; (F) acquire any asset or assets in one or more transactions with a value in excess of $5,000,000; (G) make any capital expenditure in excess of $5,000,000 not contemplated by the annual budget of the Corporation which budget was approved by the Board of Directors; (H) appoint or permit to be appointed any new officers, executives or other key employees of the Corporation; or (I) increase the size of the Board of Directors above eight (8), except for any increase resulting from the election of additional directors by Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock in accordance with the terms thereof (the foregoing subsections (A)-(I) shall be referred to in this Section 2 as "Fundamental Corporate Transactions"). (ii) "Minimum Ownership Threshold" means (A) for purposes of a Multiple Director Nomination Right, the beneficial ownership of at least ten percent (10%) of the then outstanding Common Stock, (B) for purposes of Fundamental Corporate Transaction Approval Right, the beneficial ownership of at least ten percent (10%) of the then outstanding Common Stock, and (C) for purposes of a Single Director Nomination Right, the beneficial ownership of at least five percent (5%) of the then outstanding Common Stock, in each case on a fully diluted basis. (iii) "Multiple Director Nomination Right" means the exclusive right of the Series D Holder to nominate two (2) directors to the Board of Directors in accordance with the provisions hereof. (iv) "Nomination Submission Deadline" means the deadline for receipt by the Corporation of any names of candidates nominated to the Board of Directors. (v) "Single Director Nomination Right" means the exclusive right of the Series D Holder to nominate one (1) director to the Board of Directors in accordance with the provisions hereof. (b) Voting Rights. The Series D Holder, except as otherwise required under Delaware law or as set forth in paragraphs (i), (ii) and (iii) below, shall not be entitled to or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. (i) Nomination Rights. Upon the issuance of the Series D Preferred Stock, and thereafter, in connection with any annual or special meeting of the stockholders at which members of the Board of Directors are to be elected, so long as the Series D Holder meets the Minimum Ownership Threshold, the Series D Holder shall be entitled to exercise the Single Director Nomination Right or the Multiple Director Nomination Right, as applicable, as follows: (A) The Board of Directors shall set a date for the Nomination Submission Deadline in connection with any annual or special meeting of the stockholders at which members of the Board of Directors are to be elected and shall provide written notice of such date at least thirty (30) days prior thereto to the Series D Holder (the "Nomination Deadline Notice"). In such Nomination Deadline Notice, the Board of Directors shall inform the Series D Preferred Holder whether such Holder is entitled to exercise the Single Director Nomination Right, the Multiple Director Nomination Right, or no rights at all, dependent upon whether the Series D Holder meets the Minimum Ownership Threshold at such time. Prior to the Nomination Submission Deadline, the Series D Holder shall submit in writing the names of the individual or individuals, as applicable, to the Board of Directors for inclusion in any ballot or other materials to be provided to the stockholders of the Corporation in connection with such annual or special meeting of the stockholders. (B) In connection with any election at which the Series D Holder is entitled to exercise the Single Director Nomination Right or the Multiple Director Nomination Right, the Board of Directors agrees that it shall nominate no greater than that number of directors for election to the Board of Directors which is equal to the aggregate number of positions on the Board of Directors up for election at such time less the sum of the number of directors the Series D Holder is entitled to nominate pursuant to the provisions of this Section 2 at such time and the number of directors that any holder of Series D Parity Securities (defined below) is entitled to nominate at such time, if any. To the extent that if at such time any Series D Senior Securities (defined below) are entitled to nominate and elect any members of the Board of Directors, such elected members shall be in addition to the directors so nominated by the Series D Holder, any Series D Parity Securities and/or the Board of Directors, and shall result in an increase of the size of the Board of Directors. (ii) Fundamental Corporate Transaction. Upon the issuance of the Series D Stock, and thereafter, so long as the Series D Holder meets the Minimum Ownership Threshold, the Series D Holder shall be entitled to exercise the Fundamental Corporate Transaction Approval Right, as follows: (A) The Corporation must provide to the Series D Holder written notice of any proposed Fundamental Corporate Transaction at least five (5) days prior to the consummation of the Fundamental Corporate Transaction. In such notice, the Corporation shall state whether the Series D Holder meets the Minimum Ownership Threshold to exercise the Fundamental Corporate Transaction Approval Right, and provide the material terms of the Fundamental Corporate Transaction, including, without limitation, the consideration to be paid to the Corporation and/or any monetary obligation the Corporation will incur in connection with such Fundamental Corporate Transaction. The Series D Holder may reasonably request that additional information be provided by the Corporation, if the Series D Holder determines that such information is necessary to make a prudent decision in exercising its Fundamental Corporate Transaction Approval Right. The Series D Holder may withhold its consent to or affirmative vote in favor of any Fundamental Corporate Transaction, in its sole discretion. (iii) Approval of New Classes of Securities. (A) Hereafter, so long as any shares of Series D Preferred Stock are outstanding, the Corporation shall not authorize or issue any class of Series D Parity Securities (as defined below) without the prior consent or affirmative vote of the Series D Holder, either in writing or by resolution adopted at an annual or special meeting. (B) Hereafter, so long as any shares of Series D Preferred Stock are outstanding, the Corporation shall not authorize or issue any class of Series D Senior Securities (as defined below) without the prior consent or affirmative vote of the Series D Holder, either in writing or by resolution adopted at an annual or special meeting. 3. Liquidation Preference. In the event of any voluntary or involuntary liquidation, dissolution or winding-up of the affairs of the Corporation, no distribution shall be made (a) to the holders of any shares of capital stock of the Corporation ranking junior (with respect to rights upon liquidation, dissolution or winding up) to the Series D Preferred Stock, unless the Series D Holder shall have received $1000 per share, or (b) to the holders of shares of capital stock of the Corporation ranking on a parity (with respect to rights upon liquidation, dissolution or winding up) with the Series D Preferred Stock, except for distributions made ratably on the Series D Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. 4. Rank. Series D Preferred Stock shall, with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise, rank (i) senior and prior (to the extent set forth herein) to the Common Stock, the Junior Preferred Stock, and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its express terms ranks junior to the Series D Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities, including the Common Stock, are collectively referred to herein as the "Series D Junior Securities"), (ii) rank on a parity with the Series C Preferred Stock, and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that does not by its terms expressly provide that it ranks senior to or junior to the Series D Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities are collectively referred to herein as the "Series D Parity Securities"), provided that any such Series D Parity Securities that were not approved by the Series D Holder in accordance with Section C(2)(b)(iii)(A) hereof shall be deemed to be Series D Junior Securities and not Series D Parity Securities, and (iii) rank junior to the Series A Cumulative Convertible Preferred Stock, the Series B Cumulative Convertible Preferred Stock, and each other class or series of equity securities of the Corporation, whether currently issued or issued in the future, that by its express terms ranks senior to the Series D Preferred Stock (whether with respect to payment of dividends, redemption payments, rights upon liquidation, dissolution or winding up of the affairs of the Corporation, or otherwise) (all of such equity securities are collectively referred to herein as the "Series D Senior Securities"), provided that any such Series D Senior Securities that were not approved by the Series D Holder in accordance with Section C(2)(b)(iii)(B) hereof shall be deemed to be Series D Junior Securities and not Series D Senior Securities. The respective definitions of Series D Junior Securities, the Series D Parity Securities and the Series D Senior Securities shall also include any rights or options exercisable or exchangeable for or convertible into any of the Series D Junior Securities, the Series D Parity Securities or the Series D Senior Securities, as the case may be. At the date of the initial issuance of the Series D Preferred Stock (i) shares of Series A Cumulative Convertible Preferred Stock and the Series B Cumulative Convertible Preferred Stock shall be the only Series D Senior Securities issued and outstanding, (ii) shares of Series C Preferred Stock shall be the only Series D Parity Securities issued and outstanding, and (iii) shares of Common Stock and Junior Preferred Stock shall be the only Series D Junior Securities issued and outstanding. 5. Notices. All notices referred to herein shall be dated and in writing, to the Corporation at its principal executive offices and to the Series D Holder at such holder's address as it appears in the stock records of the Corporation (unless otherwise specified in a written notice to the Corporation by such holder), and shall be deemed to have been given (a) when delivered, if delivered personally, sent by confirmed facsimile or certified mail, return receipt requested, postage prepaid, (b) on the next business day if sent by overnight courier and (c) when received if delivered otherwise. 6. Conversion. The Series D Preferred Stock is not convertible into any other class of capital stock of the Corporation. 7. Transfers. The Series D Holder may not effect any offer, sale, pledge, transfer, or other disposition or distribution (collectively a "Transfer"), or enter into any agreement with respect to any Transfer, or grant any proxy with respect to, and the Series D Preferred Stock or any beneficial or other interest therein to any person or entity other than an Affiliate of the Series D Holder. Any purported Transfer to any person or entity other than the Series D Holder shall be void ab initio, and the voting rights set forth in Section 2 hereof may only be exercised by the Series D Holder only so long as the Series D Preferred Stock is beneficially owned by Harbinger Capital Partners Master Fund I, Ltd. or an affiliate thereof. The certificate representing the share of Series D Preferred Stock shall bear the following legend: THE SHARE OF SERIES D PREFERRED STOCK OF TERRESTAR CORPORATION REPRESENTED BY THIS CERTIFICATE MAY ONLY BE ISSUED TO AND BENEFICIALLY OWNED BY HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. OR AN AFFILIATE THEREOF, AND ANY PURPORTED TRANSFER TO ANY OTHER PERSON OR ENTITY IS NULL AND VOID. 8. Amendment and Waiver. No amendment or waiver of any provision of the Certificate of Incorporation (including this Certificate of Designations) which would materially alter or change the powers, preferences or special rights of the Series D Preferred Stock so as to affect them adversely shall be effective without the prior consent or affirmative vote of the Series D Holder, either in writing or by resolution adopted at an annual or special meeting. IN WITNESS WHEREOF, the undersigned officer of the Corporation has executed this Certificate of Designations as of ___________ day of February, 2008. By: ___________________________ Name:__________________________ Title: ________________________ SK 03773 0003 853014 EX-99.F 5 d853033_ex99-f.txt SPECTRUM CONTRIBUTION AGREEMENT by and among TERRESTAR CORPORATION, HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. AND HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. SPECTRUM CONTRIBUTION AGREEMENT This SPECTRUM CONTRIBUTION AGREEMENT, dated as of February 5, 2008 (this "Agreement"), is by and among TERRESTAR CORPORATION, a Delaware corporation (the "Company"), HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., an exempted company organized under the laws of the Cayman Islands ("Harbinger Master") and HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P., a Delaware limited partnership ("Harbinger Special" and collectively with Harbinger Master, the "Purchaser"). WHEREAS, as of January 30, 2008, Purchaser and the equityholders (the "Owners") of CCTV Wireless I, LLC, a Delaware limited liability company ("CCTV Parent") have entered into that certain option agreement, a true and correct copy of which has been provided to the Company (the "Option Agreement"); WHEREAS, CCTV Parent owns all of the outstanding equity interests in and capital stock of CCTV Wireless, Inc., a Delaware corporation ("CCTV"); WHEREAS, CCTV holds certain 1.4 GHz band licenses as described in the Option Agreement (the "CCTV Spectrum Licenses") and CCTV Parent has the right to certain intellectual property interests related to the CCTV Spectrum Licenses; WHEREAS, pursuant to the Option Agreement, the Owners have granted Purchaser an irrevocable option to indefeasibly purchase from the Owners all of the issued and outstanding equity of CCTV Parent for an aggregate price of $212,500,000.00, subject to certain terms and conditions set forth in the Option Agreement (collectively, the "Option") ; WHEREAS, the Company desires to issue and sell to Purchaser 1,200,000 shares of its Series E Junior Participating Preferred Stock, par value $0.01 per share (the "Purchased Securities") having the terms, conditions, qualifications, rights and preferences set forth in the form of certificate of designations attached to the Master Investment Agreement as Exhibit F; WHEREAS, Purchaser desires to assign all of its right, title and interest in and under the Option Agreement to the Company, all upon the terms and conditions set forth herein, pursuant to which the Company shall be entitled to exercise the Option, and as a result of the consummation of transactions related to the exercise of such Option, will control the CCTV Spectrum Licenses (collectively, the "Spectrum Contribution"); NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 Specific Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings specified in this Section 1.01. "Agreement" has the meaning specified in the preamble to this Agreement. "Assignment" has the meaning specified in Section 2.01 of this Agreement. "CCTV" has the meaning specified in the recitals to this Agreement. "CCTV Parent" has the meaning specified in the recitals to this Agreement. "CCTV Spectrum Licenses" has the meaning specified in the recitals to this Agreement. "Damages" has the meaning specified in Section 7.06(a) of this Agreement. "Dividends" shall mean any dividends, distributions or payments made or declared in cash, stock or other property, in respect of the common stock of the Company, on or after the date of this Agreement. "EchoStar" means EchoStar Corporation, a Nevada corporation. "EchoStar Spectrum" means the 1.4 GHz band FCC licenses held by PORT L.L.C. "EchoStar Spectrum Agreement" means that certain Spectrum Agreement by and between EchoStar Corporation and the Company, dated as of the date hereof. "Escrow Agreement" means that certain agreement by and among the Company, the Purchaser, and an escrow agent, dated as of the Initial Closing Date. "Escrowed Shares" has the meaning specified in Section 2.03(a) of this Agreement. "Exercise Notice" means written notice to the Owners specifying that the Company is exercising the Option, to be delivered by the Company concurrently with the Exercise Payment on a date which is during and prior to the expiration of the Exercise Period, in accordance with Section 2.2(a) of the Option Agreement. "Exercise Payment" means the payment of $50,000,000 by the Purchaser to the Owners, on behalf of the Company, to be delivered concurrently with the Exercise Notice and in accordance with Section 2.2(a) of the Option Agreement. "Exercise Period" means the period of time from April 15, 2008 through and including July 30, 2008. "FCC" shall mean the United States Federal Communications Commission or any successor agency. "FCC Consent" has the meaning specified in Section 5.06(b) of this Agreement. "Final Order" means an action taken or order issued by the FCC as to which: (i) no request for stay of the action or order is pending, no such stay is in effect, and, if any deadline for filing any such request is designated by statute or regulation, it is passed, including any extensions thereof; (ii) no petition for reconsideration or review of the action or order, or protest of any kind, is pending and the time for filing any such petition or protest is passed; (iii) the action or order is not subject to reconsideration or review sua sponte and the time for such reconsideration or review has passed; and (iv) the action or order is not then under judicial review, there is no notice of appeal or other application for judicial review pending, and the deadline for filing such notice of appeal or other application for judicial review has passed, including any extensions thereof. "HSR Act" means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as amended. "Initial Closing" means the assignment of the Option, the delivery and issuance of one-half of the Purchased Securities by the Company to Purchaser and the delivery of the Exercise Notice by the Company to the Owners accompanied by the Exercise Payment by the Purchaser to the Owners on behalf of the Company. "Initial Closing Date" means the date that is the second Business Day following the day on which the last to be satisfied or waived of the conditions set forth in Sections 5.01, 5.02 and 5.03 (other than those conditions that by their terms are to be satisfied at the Initial Closing, but subject to the satisfaction or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement, or at such other time and date as the parties hereto mutually shall agree, but which shall in any event, be no earlier than the commencement of the Exercise Period and no later than its expiration. "Liens" means any lien, pledge, charge, security interest, encumbrance, mortgage, reversionary interest, transfer restriction, right of first refusal, preemptive right, or other adverse claim, defect of title, limitation or restriction of any type or nature whatsoever. "Master Investment Agreement" means the Master Investment Agreement, of even date herewith, by and among the Company, TerreStar, and Purchaser. "Option Agreement" has the meaning specified in the recitals to this Agreement. "Option Closing" shall mean the consummation of the Spectrum Contribution. "Option Closing Date" shall mean that date that is the second Business Day following the day on which the last to be satisfied or waived of the conditions set forth in Sections 5.04, 5.05 and 5.06 (other than those conditions that by their terms are to be satisfied at the Option Closing, but subject to the satisfaction or waiver of those conditions) shall be satisfied or waived in accordance with this Agreement, or at such other time and date as the parties hereto mutually shall agree, but which shall in any event, be later than the Outside Date. "Option Closing Payment" means an amount equal to $112,500,000, plus any other amounts to be paid by Harbinger (as defined in the Option Agreement) under the Option Agreement (in the form in which it is assigned to the Company at the Initial Closing) and not previously paid, which the Purchaser shall pay on the Company's behalf to the persons specified in, and in compliance with, Section 2.3 of the Option Agreement. "Order" means any order, injunction, judgment, decision, decree, ruling, writ, assessment or arbitration award of any governmental or quasi-governmental body, whether administrative, executive, judicial, legislative or other, or any combination thereof, including without limitation any federal, state, territorial, county, local, municipal or other government or governmental or quasi-governmental agency, arbitrator, authority, board, body, branch, bureau, or comparable agency, commission, corporation, court, department, instrumentality, mediator, panel, system or other political unit or subdivision or other entity of any of the foregoing, whether domestic or foreign. "Organizational Documents" means, with respect to any Person that is a corporation, its certificate of incorporation and bylaws, with respect to any Person that is a partnership or limited partnership, its partnership agreement, and with respect to any Person that is a limited liability company, its limited liability company or operating agreement, in each case, or such other comparable instruments or governing documents, as applicable. "Outside Date" means the "Outside Date" as defined in Section 2.4(a)(i) of the Option Agreement or as extended pursuant to the Option Agreement, whichever is later. "Owners" has the meaning specified in the recitals to this Agreement. "Purchased Securities" has the meaning specified in the recitals to this Agreement. "Purchaser" has the meaning specified in the preamble to this Agreement. "Purchaser Indemnified Persons" has the meaning specified in Section 7.06(a) of this Agreement. "Purchaser Representatives" has the meaning specified in Section 7.06(a) of this Agreement. "Stockholder Approval" shall mean the affirmative vote or consent of the stockholders of the Company holding more than 50% of the voting stock of the Company, of this Agreement and the transactions contemplated hereby (including, without limitation, the issuance of the Purchased Securities to the Purchaser hereunder) and the EchoStar Spectrum Agreement and the transactions contemplated thereby (including, without limitation, the issuance of shares of common stock of the Company to EchoStar thereunder), all in accordance with the requirements of the Company's Organizational Documents and the DGCL. "Spectrum Closings" means, collectively, the Initial Closing and the Option Closing. "Spectrum Contribution" has the meaning specified in the recitals to this Agreement. "TerreStar" means TerreStar Networks Inc., a Delaware corporation. Section 1.02 Other Terms. Other terms defined elsewhere in the text of this Agreement shall, unless otherwise indicated, have the meaning indicated throughout this Agreement. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Master Investment Agreement. ARTICLE II ASSIGNMENT; CLOSINGS Section 2.01 Assignment. At the Initial Closing, the Purchaser shall assign, convey, transfer and deliver, all of its rights, title, interest and obligations, legal and equitable, including all rights of Harbinger (as defined in the Option Agreement) in, to and under the Option Agreement to the Company, free and clear of all Liens, and the Company shall accept in full and assume all of the Purchaser's rights, title, interests and obligations, legal and equitable, in, to and under the Option Agreement (the "Assignment"). Section 2.02 Spectrum Closings. The Spectrum Closings shall take place on the Initial Closing Date and the Option Closing Date, as applicable, at the offices of Bingham McCutchen LLP, 399 Park Avenue, New York, NY 10022. Section 2.03 Initial Closing Deliveries. (a) At the Initial Closing, the Company will deliver: (i) to the Purchaser, evidence, satisfactory to the Purchaser, that the Company has obtained Stockholder Approval; (ii) to the Purchaser, one or more certificates representing one-half (1/2) of the Purchased Securities in such denominations and registered in such names as the Purchaser shall specify, together with an amount or stock or property (as applicable) equal to all Dividends that would have been paid on such Purchased Securities if they had been outstanding on and after the date hereof and to which the Purchaser is entitled under Section 6.04; (iii) the Escrow Agreement, duly executed by the Company and the escrow agent; (iv) into escrow, one or more certificates representing the remaining one-half of the Purchased Securities in such denominations and registered in such names as the Purchaser shall specify (the "Escrowed Shares"), together with an amount or stock or property (as applicable) equal to all Dividends that would have been paid on such Purchased Securities if they had been outstanding on and after the date hereof and to which the Purchaser is entitled under Section 6.04; (v) to the Owners, the Exercise Notice, duly executed by an authorized officer of the Company. (b) At the Initial Closing, the Purchaser will deliver: (i) to the Owners, the Exercise Payment, on behalf of the Company; and (ii) to the Company, the Assignment, in form satisfactory to the Company, together with evidence, satisfactory to the Company, that all consents required to be obtained to effect the Assignment shall have been obtained by all applicable parties, in compliance with applicable law (other than the FCC consent required thereunder or the waiting period applicable to the consummation of the transactions contemplated by the Option Agreement or this Agreement (if required) under the HSR Act); and (iii) the Escrow Agreement, duly executed by the Purchaser. Section 2.04 Option Closing. (a) At the Option Closing, the Company will deliver to the Purchaser: (i) a certificate, duly executed by an authorized officer of the Company, certifying that each of the conditions to closing set forth in Article VII of the Option Agreement has been satisfied or waived in accordance with the terms of the Option Agreement; (ii) a certificate, duly executed by an authorized officer of the Company, certifying that each of the conditions to closing set forth in the EchoStar Spectrum Agreement has been satisfied or waived in accordance with the terms of the EchoStar Spectrum Agreement; (iii) evidence, satisfactory to the Purchaser, that all consents required to be obtained from the FCC with respect to Spectrum Contribution and the transactions contemplated by this Agreement and the Option Agreement shall have been obtained by all applicable parties, in compliance with applicable law; (iv) evidence, satisfactory to the Purchaser, that the applicable waiting period(s) under the HSR Act in respect of the transactions contemplated under the Option Agreement and this Agreement (if required) have terminated or expired; and (v) or cause to be delivered to the Purchaser, the Escrowed Shares, together with an amount or stock or property (as applicable) equal to all Dividends that would have been paid on the Escrowed Shares if they had been outstanding on and after the date hereof and to which the Purchaser is entitled under Section 6.04. (b) At the Option Closing, the Purchaser will deliver: (i) to the Company, a certificate, duly executed by an authorized officer of the Purchaser, certifying that it has delivered the Option Closing Payment to the Owners on behalf of the Company in accordance with the provisions of the Option Agreement; and (ii) to the Owners, the Option Closing Payment, on behalf of the Company. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby makes to the Purchaser as of the date hereof the representations and warranties of the Company and TerreStar contained in Article III of the Master Investment Agreement, each of which is hereby incorporated herein by reference, and the Company further represents and warrants to the Purchaser, as of the date hereof: Section 3.01 FCC Licensee Status. (a) The Company is an FCC licensee, and/or controls an FCC licensee when its license was granted. (b) The Company is not the subject of an FCC investigation or Order to Show Cause that, based on FCC precedent, entails a material risk of a resulting license cancellation or revocation or is not in "red light status" under applicable FCC rules. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER The Purchaser represents and warrants to the Company, as of the date hereof and as of the Initial Closing Date (unless an earlier date is specified): Section 4.01 Authorization. Purchaser has full power and authority to enter into this Agreement. This Agreement constitutes a valid and legally binding obligation of the Purchaser, enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors' rights generally, and as limited by laws relating to the availability of a specific performance, injunctive relief, or other equitable remedies. Section 4.02 No Conflicts. The execution, delivery and performance by the Purchaser of this Agreement and compliance by the Purchaser with the terms and provisions hereof and thereof, and the purchase of the Purchased Securities by the Purchaser do not and will not constitute a breach of, or a default under, the Organizational Documents of the Purchaser, or any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Purchaser is a party or by which it may be bound or to which its properties is subject, nor will any such action result in any violation of any existing Law (assuming compliance with the Securities Act and applicable securities and Blue Sky Laws of any other jurisdiction) to which the Purchaser or its property is subject. Section 4.03 Certain Fees. No fees or commissions for which the Company could be liable are or will be payable by the Purchaser to brokers, finders, or investment bankers with respect to the purchase of any of its Purchased Securities or the consummation of the transactions contemplated by this Agreement. Section 4.04 Purchase in Ordinary Course. The Purchaser is purchasing its Purchased Securities in the ordinary course of its business and the Purchaser has not entered into any arrangement with any person to resell its Purchased Securities or to participate in the distribution of such Purchased Securities. Section 4.05 Unregistered Securities. (a) Investment. The Purchased Securities are being acquired for its own account and with no intention of distributing the Purchased Securities or any part thereof, and the Purchaser has no present intention of selling or granting any participation in or otherwise distributing the same in any transaction in violation of the Securities Act or the securities or blue sky laws of any other jurisdiction. If the Purchaser should in the future decide to dispose of any of the Purchased Securities, the Purchaser understands and hereby agrees that it may do so only in compliance with the Securities Act and applicable securities and blue sky laws of any other jurisdiction, as then in effect, which may include a sale contemplated by any registration statement pursuant to which the Purchased Securities are then being offered. (b) Exemption. The Purchaser understands that (i) the Purchased Securities (A) have not been registered under the Securities Act or any state securities Laws, (B) will be issued in reliance upon an exemption from the registration and prospectus delivery requirements of the Securities Act pursuant to Section 4(2) thereof and/or Regulation D promulgated thereunder and (C) will be issued in reliance upon exemptions from the registration and prospectus delivery requirements of state securities laws which relate to private offerings, and (ii) the Purchaser must therefore bear the economic risk of such investment indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt therefrom. (c) Nature of Purchaser. The Purchaser represents and warrants to the Company that (i) it is an "accredited investor" as defined in Rule 501(a) promulgated under the Securities Act and (ii) by reason of its business and financial experience it has such knowledge, sophistication and experience in making similar investments and in business and financial matters generally so as to be capable of evaluating the merits and risks of the prospective investment in the Purchased Securities, is able to bear the economic risk of such investment and, at the present time, would be able to afford a complete loss of such investment; (d) Legend. It is understood that any certificates evidencing the Purchased Securities will bear a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND STATE SECURITIES LAWS, AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF UNLESS (I) REGISTERED UNDER THE APPLICABLE SECURITIES LAWS, (II) SUCH TRANSACTION IS PURSUANT TO RULE 144, RULE 144A OR REGULATION S UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (III) AN OPINION OF COUNSEL, WHICH OPINION IS REASONABLY SATISFACTORY TO THE COMPANY, HAS BEEN DELIVERED TO THE COMPANY AND SUCH OPINION STATES THAT THE SECURITIES MAY BE TRANSFERRED WITHOUT SUCH REGISTRATION." Certificates evidencing the Purchased Securities shall not be required to contain such legend or any other legend after (i) such securities are registered for resale under the Securities Act, (ii) following any sale of such securities pursuant to and in accordance with Rule 144, (iii) if such securities are eligible for sale under Rule 144(k), or (iv) if such legend is not required under applicable requirements of the Securities Act (including controlling judicial interpretations and pronouncements issued by the Staff of the Commission). Section 4.06 Enforceability of Option Agreement. (a) The Option Agreement is in full force and effect and has not been amended or modified except for any amendments or modifications that have been approved by the Company in writing. (b) The Purchaser and, to the Purchaser's knowledge, the Owners have in all material respects performed all the obligations under the Option Agreement required to be performed by any of them to date. (c) In reliance upon the Company's representations and warranties set forth in Section 3.01, Purchaser is not required to obtain from the Owners any consent for the Assignment of all rights under the Option Agreement to the Company in compliance with the terms thereunder. Section 4.07 No Other Representations or Warranties. The Company acknowledges and agrees that the Purchaser is not making and has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Agreement. ARTICLE V CONDITIONS Section 5.01 Conditions Precedent to the Obligations of the Purchaser at the Initial Closing. The obligations of the Purchaser to assign the Option Agreement and deliver the Exercise Payment is subject to the satisfaction, or waiver by the Purchaser, at or before the Initial Closing, of each of the following conditions: (a) Representations and Warranties. Each of the representations and warranties of the Company contained herein and in the Master Investment Agreement shall be true and correct in all material respects as of the date hereof and as of the Initial Closing Date as though made on and as of such date; (b) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Initial Closing, including, without limitation, delivering or causing the delivery of those items required to be delivered pursuant to Section 2.03(a); (c) No Material Adverse Effect. No Material Adverse Effect shall have occurred or shall exist and be continuing; (d) Consents and Approvals. All consents, authorizations, approvals, permits, or waivers, if any, that are required in connection with the execution and delivery of the Operative Documents or the consummation of the transactions contemplated thereby, including, without limitation, the lawful issuance and sale of the Purchased Securities pursuant to this Agreement, shall be duly obtained and effective as of the Initial Closing (including that the waiting period applicable to the consummation of the transactions contemplated by this Agreement (if required) under the HSR Act, shall have expired or been terminated); (e) Registration Rights Agreement. The Company shall have entered into the Registration Rights Agreement with the Purchaser in substantially the form attached as Exhibit D to the Master Investment Agreement; (f) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement; (g) Additional Documents. On or prior to the Initial Closing Date, the Company shall have furnished to the Purchaser such further certificates and documents as the Purchaser may reasonably request; and (h) Exercise Period. The Exercise Period shall have commenced but not yet expired. Section 5.02 Conditions Precedent to the Obligations of the Company at the Initial Closing. The obligations of the Company to sell the Purchased Securities and to exercise the Option at the Initial Closing is subject to the satisfaction, or waiver by the Company, at or before the Initial Closing, of each of the following conditions: (a) Representations and Warranties. Each of the representations and warranties of the Purchaser contained herein shall be true and correct as of the date when made and as of the Initial Closing Date as though made on and as of such date; (b) Performance. The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Initial Closing, including, without limitation, delivering or causing the delivery of those items required to be delivered pursuant to Section 2.03(b); (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by this Agreement; and (d) Option Agreement. The Option Agreement shall be in full force and effect, shall not have been amended or modified except for any amendments or modifications that have been approved by the Company in writing and each of the parties thereunder shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Option Agreement to be performed, satisfied or complied with by them prior to delivery of the Exercise Notice (including without limitation that all amounts required to be paid by the Purchaser prior to delivery of the Exercise Notice shall have been paid). All consents required to be obtained to effect the Assignment (other than the FCC consent required thereunder or the waiting period applicable to the consummation of the transactions contemplated by the Option Agreement or this Agreement (if required) under the HSR Act) shall have been obtained by all applicable parties, in compliance with applicable law. (e) HSR. The waiting period applicable to the consummation of the transactions contemplated by this Agreement (if required) under the HSR Act shall have expired or been terminated. Section 5.03 Conditions Precedent to the Obligations of the Parties at the Initial Closing. The obligation of the Company to sell the Purchased Securities at the Initial Closing and the obligations of the Purchaser to assign the Option and deliver the Exercise Payment are subject to the satisfaction, or unanimous waiver by all parties hereto, at or before the Initial Closing, of the receipt of Stockholder Approval. Section 5.04 Conditions Precedent to the Obligations of the Purchaser at the Option Closing. The obligation of the Purchaser to deliver the Option Closing Payment to the Owners on behalf of the Company is subject to the satisfaction, or waiver by the Purchaser, at or before the Option Closing, of each of the following conditions: (a) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by it at or prior to the Option Closing, including, without limitation, delivering or causing the delivery of those items required to be delivered pursuant to Section 2.04(a); (b) Satisfaction of Conditions to Close Under Option Agreement. Each of the conditions to closing set forth in Article VII of the Option Agreement shall have been satisfied or waived in accordance with the terms of the Option Agreement; and (c) EchoStar Spectrum Agreement. The closing under the EchoStar Spectrum Agreement shall have occurred or be occurring concurrently with the Closing. Section 5.05 Conditions Precedent to the Obligations of the Company at the Option Closing. The obligation of the Company to consummate the Spectrum Contribution is subject to the satisfaction, or waiver by the Company, at or before the Option Closing, of each of the following conditions: (a) Performance. The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Option Closing, including, without limitation, delivering or causing the delivery of those items required to be delivered pursuant to Section 2.04(b); (b) EchoStar Spectrum Agreement. The closing under the EchoStar Spectrum Agreement shall have occurred or shall occur concurrently with the Closing unless the failure of such closing under the EchoStar Spectrum Agreement to occur shall be due to (i) a breach or default by TerreStar Parent or TerreStar Networks under the EchoStar Spectrum Agreement, (ii) any waiver or modification of, or failure to enforce, any term of the EchoStar Spectrum Agreement by TerreStar Parent or TerreStar Networks, or (iii) any failure of a condition to such closing to be satisfied that would reasonably have been expected to be satisfied with reasonable best efforts on the part of TerreStar Parent and TerreStar Networks to achieve satisfaction of such condition; and (c) Delivery of Option Closing Payment. The Purchaser shall have delivered the Option Closing Payment on behalf of the Company in accordance with the provisions of the Option Agreement. Section 5.06 Conditions Precedent to the Obligations of the Parties to the Option Closing. The obligation of the Company to consummate the Spectrum Contribution at the Option Closing and the obligation of the Purchaser to deliver the Option Closing Payment, are subject to the satisfaction, or unanimous waiver by all parties hereto, at or before the Option Closing: (a) Initial Closing. The Initial Closing shall have been consummated; and (b) FCC Consent. All consents required to be obtained from the FCC with respect to Spectrum Contribution and the transactions contemplated by the Option Agreement and this Agreement (the "FCC Consent") shall have been obtained, free of any materially adverse conditions (other than those applicable to FCC assignments and transfers or to licenses under Part 27 of the FCC Rules generally), and such FCC Consent shall have become a Final Order; provided, however, that Purchaser may waive the requirement that the FCC Consent become a Final Order. (c) HSR. The waiting period applicable to the consummation of the transactions contemplated by the Option Agreement and this Agreement (if required) under the HSR Act, shall have expired or been terminated. ARTICLE VI ADDITIONAL AGREEMENTS Section 6.01 Assumption of Obligations of the Purchaser under the Option Agreement. At and after the Initial Closing, in connection with the Assignment, the Company agrees to, and shall assume any and all obligations of the Purchaser pursuant to the Option Agreement, including without limitation, performing any obligation or covenant under the Option Agreement of Purchaser necessary or advisable to exercise the Option and to satisfy the conditions to closing thereunder, other than the payment of the Option Closing Payment (and related representations), which shall be and remain obligations of the Purchaser to the extent provided hereunder. Section 6.02 FCC Matters. The parties hereto shall cooperate and use their reasonable best efforts to persuade CCTV and the Owners to file, and to consent to the Company filing, with the FCC an application seeking the FCC Consent within fourteen (14) days after the date hereof or as soon thereafter as practicable. Upon obtaining such consent from CCTV and the Owners for the Company, the Company shall take all such actions necessary or desirable to file such application as soon as practicable. The Company shall use its reasonable best efforts to prosecute any such application and obtain the FCC Consent, cooperate with CCTV and the Owners in providing all information requested by the FCC and taking all steps reasonably necessary or appropriate to expedite the preparation, filing, prosecution and granting of any such application. Without limiting the foregoing, the parties hereto shall (i) use their reasonable best efforts to work with the Owners to cause all requisite filings and notifications to the FCC and other governmental or regulatory bodies requested or necessary in connection with the FCC Consent, the Assignment, the Initial Closing and the Option Closing and the transactions contemplated by this Agreement; (ii) furnish to the other parties such information and assistance as such parties reasonably may request and as may be reasonably necessary in connection with the preparation or prosecution of any such filings and notifications; (iii) keep the other parties promptly apprised of any communications with, and inquiries or requests for information from, such governmental or regulatory bodies with respect to the transactions contemplated by this Agreement; (iv) keep the other parties apprised of the status of all applications filed with the FCC and all other governmental or regulatory bodies responsible for communications matters; (v) permit the other parties to review any material communication given by it to, and consult with the other parties in advance of any meeting or conference with, any such governmental or regulatory body; and (vi) use their reasonable best efforts to cause the FCC Consent-related conditions to closing to be satisfied. Section 6.03 Escrow Arrangements. Prior to the Initial Closing, the Company and the Purchaser shall mutually agree upon an escrow agent, and negotiate (in good faith, each acting reasonably) the Escrow Agreement, upon terms mutually satisfactory to the Company and the Purchaser, to provide for the escrow arrangements referenced herein. Section 6.04 Dividends. The Company hereby agrees that each issuance of Purchased Securities to the Purchaser hereof (no matter when delivered to the Purchaser hereunder) shall be made together with an amount or stock or property (as applicable) equal to all Dividends that would have been paid on such Purchased Securities if they had been outstanding on and after the date hereof. Accordingly, at the Initial Closing, an amount or stock or property (as applicable) equal to all Dividends that would have been paid on one-half of the Purchased Securities if they had been outstanding on and after the date hereof shall be delivered to the Purchaser, together with the Purchased Securities, and an amount or stock or property (as applicable) equal to all Dividends that would have been paid on the Escrowed Shares if they had been outstanding on and after the date hereof shall be delivered into escrow. Thereafter and until the Option Closing Date, an amount or stock or property (as applicable) equal to all Dividends that would have been paid on the Escrowed Shares if they had been outstanding on and after the date hereof, shall be paid into escrow and released upon the release of the Escrowed Shares. Section 6.05 Blue Sky Compliance. The Company will qualify the Purchased Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Purchaser shall reasonably request and will continue such qualifications in effect so long as required for the offering and resale of the Purchased Securities; provided that the Company shall not be required to (i) qualify as a foreign corporation or other entity or as a dealer in securities in any such jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent to service of process in any such jurisdiction or (iii) subject itself to taxation in any such jurisdiction if it is not otherwise so subject. Section 6.06 Current Public Information. While the Purchased Securities remain outstanding, the Company will at all times make available adequate current public information within the meaning of Rule 144(c) under the Securities Act. Section 6.07 No Integration. Neither the Company nor any of its affiliates (as defined in Rule 501(b) of Regulation D) will, directly or through any agent, sell, offer for sale, solicit offers to buy or otherwise negotiate in respect of, any security (as defined in the Securities Act), that is or will be integrated with the sale of the Purchased Securities in a manner that would require registration of the Purchased Securities under the Securities Act. Section 6.08 No General Solicitation or Directed Selling Efforts. None of the Company or any of its affiliates or any other person acting on its or their behalf will (i) solicit offers for, or offer or sell, the Purchased Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(2) of the Securities Act or (ii) engage in any directed selling efforts within the meaning of Regulation S, and all such persons will comply with the offering restrictions requirement of Regulation S. Section 6.09 No Stabilization. The Company will not take, directly or indirectly, any action designed to or that could reasonably be expected to cause or result in any stabilization or manipulation of the price of the Purchased Securities. Section 6.10 Option Agreement. Prior to the Assignment, and subject to the provisions of that certain Confidentiality Agreement between the Purchaser and the Company dated as January 2, 2007, the Purchaser will provide to the Company such information as it reasonably requests regarding the Option Agreement and matters relating thereto, including the information obtained by the Purchaser or its representatives from the Owners or their representatives. Upon the reasonable request of the Company, the Purchaser shall request additional information from the Owners for the Company. The Purchaser shall take such actions as may reasonably be requested by the Company to assist in ensuring that the closing occurs under the Option Agreement, including that the Owners are taking the necessary steps to achieve the closing thereunder. ARTICLE VII MISCELLANEOUS Section 7.01 Termination Prior to the Initial Closing. This Agreement may be terminated and the transactions contemplated hereunder may be abandoned at any time prior to the Initial Closing, by mutual written consent of (a) the Company and (b) the Purchaser. Section 7.02 Termination. The obligations of the Parties under this Agreement (other than this Section 7.02) shall be terminated and the transactions contemplated hereby abandoned automatically, and without any action on the part of any party, if (i) the Option Agreement is terminated, or (ii) the closing of the transactions contemplated by the Option Agreement does not occur by the Outside Date; provided that if this Agreement is terminated pursuant to this Section 7.02 (unless such termination is due to a breach or default thereunder by the Company other than as a result of any action or inaction by the Purchaser), (w) the Assignment shall be null and void, and of no further force or effect, (x) the Purchaser shall be obligated to forfeit the Purchased Securities (including any rights with respect to those being held in escrow), return any certificate or certificates representing such Purchased Securities to the Company, (y) the Company shall forfeit any rights with respect to the Option Closing Payment and (z) the escrow agent shall release the certificates representing the Escrowed Shares to the Company. If the Company receives any refund of any amounts paid by the Purchaser under the Option Agreement, including without limitation, the Exercise Payment and/or an amount equal to $50,000,000 which was delivered by the Purchaser at the execution of the Option Agreement, the Company shall deliver such amounts to the Purchaser, as soon as practicable, and in any event, no later than five (5) Business Days after receipt thereof. Section 7.03 Interpretation; Severability. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The word "including" shall mean "including but not limited to." Whenever any party has an obligation under this Agreement, the expense of complying with that obligation shall be an expense of such party unless otherwise specified. If any provision of this Agreement is held to be illegal, invalid, not binding, or unenforceable, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, not binding, or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions shall remain in full force and effect. Section 7.04 Survival. The indemnities, covenants, representations and warranties of the Company and the Purchaser contained in this Agreement or made by or on behalf of the Company or the Purchaser pursuant to this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and payment for the Purchased Securities and shall remain in full force and effect, regardless or any termination of this Agreement or any investigation made by or on behalf of the Company or the Purchaser. Section 7.05 Waivers; Remedies; Amendments. (a) No Waiver; Remedies Cumulative. No failure or delay on the part of any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any right, power, or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise. (b) Amendments and Modifications. Except as otherwise provided herein, no amendment, waiver, consent or modification of any provision of this Agreement shall be effective unless signed by each of the parties hereto affected by such amendment, waiver, consent or modification. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by any party hereto from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on any party hereto in any case shall entitle any party hereto to any other or further notice or demand in similar or other circumstances. Section 7.06 Indemnification. (a) In addition to all other rights and remedies available to the Purchaser, the Company shall indemnify, defend and hold harmless each Purchaser and its affiliates and their respective partners, members, officers, directors, employees, agents and representatives (collectively, the "Purchaser Representatives"; and together with the Purchaser, the "Purchaser Indemnified Persons") against all losses, assessments, damages, liabilities, costs and expenses (including, but not limited to, interest, penalties and reasonable legal and accounting fees and expenses) (collectively, "Damages") and none of the Purchaser Indemnified Persons shall be liable to the Company or any other stockholder of the Company for or with respect to any and all Damages related thereto or incurred in enforcing this Section 7.06, in connection with: (i) any breach of a representation or warranty by the Company under (a) this Agreement, including Article III of this Agreement, (b) any of the Operative Documents, (c) any of the exhibits or schedules thereto, or (d) any of the certificates or other documents furnished pursuant thereto by or on behalf of the Company; and (ii) any breach of any covenant or agreement by the Company (a) this Agreement; (b) any of the Operative Documents; (c) any of the exhibits or schedules thereto; or (d) any of the certificates or other documents furnished pursuant thereto by or on behalf of the Company. (b) All indemnification rights hereunder shall survive the execution and delivery of the Operative Documents and the consummation of the transactions contemplated herein and therein, notwithstanding any inquiry or examination made for or on behalf of, or any knowledge of the Purchaser and/or any of the other Purchaser Indemnified Persons or the acceptance by the Purchaser of any certificate or opinion. Section 7.07 Binding Effect; Assignment. This Agreement shall be binding upon the Company, the Purchaser, and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns. Section 7.08 Non-Disclosure. Notwithstanding anything herein to the contrary, the Confidentiality Agreement shall remain in full force and effect according to its terms regardless of any termination of this Agreement. Section 7.09 Communications. All notices and demands provided for hereunder shall be in writing and shall be given by registered or certified mail, return receipt requested, telecopy, air courier guaranteeing overnight delivery or personal delivery to the following addresses: (a) If to a Purchaser: Harbinger Capital Partners Master Fund I, Ltd. Harbinger Capital Partners Special Situations Fund, L.P. c/o Harbinger Capital Partners Funds 555 Madison Avenue, 16th Floor New York, New York 10022 Attn: Jeffrey T. Kirshner, Esq. Facsimile: 212-508-3721 with copies to (such copies not constituting notice hereunder): Harbert Management Corporation One Riverchase Parkway South Birmingham, Alabama 35244 Attn: General Counsel Facsimile: 205-987-5568 and Bingham McCutchen LLP 150 Federal Street Boston, Massachusetts 02110 Attention: Joseph J. Basile, Jr. Facsimile: (212) 752-5378 (b) If to the Company: TerreStar Networks Inc. 12010 Sunset Hills Road, 6th Floor Reston, VA 20190 Attention: Jeffrey Epstein Tel: (___) ___-____ Fax: (___) ___-____ with a copy (which shall not constitute notice) to: Hogan & Hartson LLP 555 13th Street, NW Washington, DC 20004-1109 Attention: ______________ Tel: (___) ___-____ Fax: (___) ___-____ or to such other address as the Company or the Purchaser may designate in writing. All notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified mail, return receipt requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery. Section 7.10 Entire Agreement. This Agreement and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those set forth or referred to herein or therein with respect to the rights granted by the Company or any of its Affiliates or the Purchaser or any of its Affiliates set forth herein or therein. This Agreement and the other agreements and documents referred to herein supersede all prior agreements and understandings between the parties with respect to such subject matter. Section 7.11 Governing Law. This Agreement will be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of laws. Section 7.12 Fees and Expenses. The Company shall bear (i) its own expenses and legal fees incurred on its behalf with respect to this Agreement and the transactions contemplated hereby and (ii) the expenses and legal fees incurred by the Purchaser with respect to this Agreement and the transactions contemplated hereby. Section 7.13 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. [SIGNATURE PAGES FOLLOW] IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date first set forth. TERRESTAR CORPORATION By: ____________________________________ Name: __________________________________ Title: _________________________________ HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. By: Harbinger Capital Partners Offshore Manager, L.L.C., as investment manager By: ____________________________________ Name: __________________________________ Title: _________________________________ HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. By: Harbinger Capital Partners Special Situations GP, LLC, as general partner By: ____________________________________ Name: __________________________________ Title: _________________________________ SK 03773 0003 853033 EX-99.G 6 d853038_ex99-g.txt Execution Version Registration Rights Agreement ----------------------------- February 5, 2008 This Registration Rights Agreement (the "Agreement") is made and entered into as of February 5, 2008, by and among TerreStar Corporation, a Delaware corporation (the "Company"), EchoStar Corporation, a Nevada corporation ("EchoStar"), Harbinger Capital Partners Master Fund I, Ltd., and Harbinger Capital Partners Special Situations Fund, L.P. (collectively, the "Harbinger Funds" and together with EchoStar and the other purchasers of the Notes who become a party to this Agreement by signing a counterpart signature page to this Agreement on or prior to February 8, 2008, the "Investors") pursuant to the Master Investment Agreement, dated of even date herewith, by and among the Company, TerreStar Networks Inc., a Delaware corporation ("TerreStar") and EchoStar (the "EchoStar Master Investment Agreement"), and the Master Investment Agreement, dated of even date herewith, by and among the Company, TerreStar and the Harbinger Funds (the "Harbinger Master Investment Agreement" and together with the EchoStar Master Investment Agreement, the "Master Investment Agreements"), the Spectrum Contribution Agreement, dated of even date herewith, by and among the Company, Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. (the "Harbinger Spectrum Contribution Agreement") and the Spectrum Agreement, dated of even date herewith, by and among the Company and EchoStar (the "EchoStar Spectrum Agreement"). As an inducement to the Investors to enter into the Master Investment Agreements, the Harbinger Spectrum Contribution Agreement and the EchoStar Spectrum Agreement and in satisfaction of a condition to the obligations of the Investors thereunder, the Company agrees with the Investors, for the benefit of the holders from time to time (including the Investors) of the Notes, the Junior Preferred Shares and the Registrable Securities (as defined below) (collectively, the "Holders"), as follows: 1. Certain Definitions. For purposes of this Registration Rights Agreement, the following terms shall have the following meanings: (a) "Additional Interest" has the meaning assigned thereto in Section 2(e). (b) "Additional Interest Payment Date" has the meaning assigned thereto in Section 2(e). (c) "Additional Registrable Securities" means: (i) the Common Shares, if any, issued or issuable upon conversion of the Junior Preferred Shares issued to Harbinger pursuant to the Harbinger Spectrum Contribution Agreement, until the earliest of (i) their effective registration under the Securities Act and the resale of all such Common Shares in accordance with the Shelf Registration Statement, (ii) the date on which all such Common Shares are freely transferable by persons who are not Affiliates of the Company in a single transaction at one time without registration under the Securities Act, or (iii) the date on which all such Common Shares cease to be outstanding; and (ii) the Common Shares issued to EchoStar pursuant to the EchoStar Spectrum Agreement, if any, until the earliest of (i) their effective registration under the Securities Act and the resale of all such Common Shares in accordance with the Shelf Registration Statement, (ii) the date on which all such Common Shares are freely transferable by persons who are not Affiliates of the Company in a single transaction at one time without registration under the Securities Act, or (iii) the date on which all such Common Shares cease to be outstanding. (d) "Additional Registration Effective Period" has the meaning assigned thereto in Section 2(a). (e) "Additional Shelf Registration Statement" means the shelf registration statement referred to in Section 2(b), as amended or supplemented by any amendment or supplement, including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Shelf Registration Statement. (f) "Agreement" means this Registration Rights Agreement, as the same may be amended from time to time pursuant to the terms hereof. (g) "Closing Date" means: (i) with respect to the Initial Registrable Securities and the Initial Shelf Registration Statement, the Notes Closing Date; and (ii) with respect to the Additional Registrable Securities and the Additional Shelf Registration Statement, the Spectrum Closing Date. (h) "Commission" means the Securities and Exchange Commission, or any other federal agency at the time administering the Exchange Act or the Securities Act, whichever is the relevant statute for the particular purpose. (i) "Common Shares" means the shares of common stock of the Company, par value $0.01 per share, (i) for which the Notes (other than the Notes that are exchangeable for Junior Preferred Shares) are exchangeable or that have been issued upon any exchange of such Notes, (ii) into which the Junior Preferred Shares are convertible or that have been issued upon any conversion of any Junior Preferred Shares and (iii) to be issued to EchoStar pursuant to the EchoStar Spectrum Agreement. (j) "Company" has the meaning specified in the preamble to this Agreement. (k) "Deferral Notice" has the meaning assigned thereto in Section 3(b). (l) "Deferral Period" has the meaning assigned thereto in Section 3(b). (m) "EchoStar" has the meaning specified in the preamble to this Agreement. (n) "EchoStar Master Investment Agreement" has the meaning specified in the preamble to this Agreement. (o) "EchoStar Spectrum Agreement" has the meaning assigned thereto in the preamble to this Agreement. (p) "Effective Period" means: (i) with respect to the Initial Shelf Registration Statement, the Initial Registration Effective Period; and (ii) with respect to the Additional Shelf Registration Statement, the Additional Registration Effective Period. (q) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. (r) "Eligibility Date" shall have the meaning set forth in Section 2(e). (s) "FINRA" means the Financial Industry Regulatory Authority. (t) "Harbinger" means the Harbinger Funds, collectively. (u) "Harbinger Spectrum Contribution Agreement" has the meaning assigned thereto in the preamble to this Agreement. (v) "Harbinger Master Investment Agreement" has the meaning specified in the preamble to this Agreement. (w) "Harbinger Funds" has the meaning assigned thereto in the preamble to this Agreement. (x) "Holders" has the meaning specified in the preamble to this Agreement. (y) "Indenture" means the Indenture dated as of the date hereof among the Company, TerreStar, the guarantors party thereto and U.S. Bank, National Association, as Trustee, pursuant to which the Notes are being issued. (z) "Initial Registrable Securities" means: (i) the Common Shares, if any, issued upon exchange of the Notes or upon exchange of the Junior Preferred Stock, if any, issued upon exchange of the Notes, until the earliest of (i) their effective registration under the Securities Act and the resale of all such Common Shares in accordance with the Shelf Registration Statement, (ii) the date on which all such Common Shares are freely transferable by persons who are not Affiliates of the Company in a single transaction at one time without registration under the Securities Act, or (iii) the date on which all such Common Shares cease to be outstanding. (aa) "Initial Registration Effective Period" has the meaning assigned thereto in Section 2(a). (bb) "Initial Shelf Registration Statement" means the shelf registration statement referred to in Section 2(a), as amended or supplemented by any amendment or supplement, including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Shelf Registration Statement. (cc) "Investors" has the meaning specified in the preamble to this Agreement. (dd) "Junior Preferred Shares" means the shares of Series E Junior Participating Preferred Stock of the Company, par value $0.01 per share, (i) for which the Notes (other than the Notes that are exchangeable for Common Shares) are exchangeable or that have been issued upon any exchange of such Notes and (ii) to be issued to Harbinger pursuant to the terms of the Harbinger Spectrum Contribution Agreement. (ee) "Material Event" has the meaning assigned thereto in Section 3(a)(iv). (ff) "Majority Holders" shall mean, on any date, holders of the majority of the Registrable Securities; for the purposes of this definition, Holders of Underlying Securities shall be deemed to be the Holders of the number of Common Shares into which such Underlying Securities are or would be exchangeable or convertible as of such date. (gg) "Master Investment Agreements" has the meaning specified in the preamble to this Agreement. (hh) "Notes" shall mean the 6.5% Senior Exchangeable PIK Notes Due 2014, to be issued under the Indenture and sold by TerreStar to the Investors. (ii) "Note Stockholder Approval": the approval of the Stockholders of the Parent (i) to the issuance of Common Shares issuable (A) upon exchange of the Notes and (B) upon conversion of the Junior Preferred Stock issuable upon exchange of the Notes and (ii) to the extent required for such issuances, to increase the number of shares of capital stock authorized under the Company's Certificate of Incorporation. (jj) "Notes Closing Date" means the effective date of the Note Stockholder Approval. (kk) "Notice and Questionnaire" means a written notice delivered to the Company containing substantially the information called for by the Form of Selling Securityholder Notice and Questionnaire attached hereto as Annex A. (ll) "Notice Holder" means, on any date, any Holder that has delivered a Notice and Questionnaire to the Company on or prior to such date. (mm) "Penalty Principal Amount" means, at any given time: (i) For each Note issued and outstanding at such time, the principal amount of such Note; and (ii) For each Common Share or Junior Preferred Share issued and outstanding at such time, an amount equal to the Conversion Price, as such term is defined in the Indenture. (nn) "Person" means a corporation, association, partnership, organization, business, individual, government or political subdivision thereof or governmental agency. (oo) "Prospectus" means the prospectus included in any Shelf Registration Statement, as amended or supplemented by any amendment or prospectus supplement, including post-effective amendments, and all materials incorporated by reference or explicitly deemed to be incorporated by reference in such Prospectus. (pp) "Registrable Securities" means the Initial Registrable Securities and the Additional Registrable Securities. (qq) "Registration Default" has the meaning assigned thereto in Section 2(e). (rr) "Registration Expenses" has the meaning assigned thereto in Section 6. (ss) "Rule 144," "Rule 405" and "Rule 415" mean, in each case, such rule as promulgated under the Securities Act. (tt) "Securities" means, collectively, the Notes, the Common Shares and the Junior Preferred Shares. (uu) "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. (vv) "Shelf Registration Statements" means the Initial Shelf Registration Statement and the Additional Shelf Registration Statement. (ww) "Spectrum Closing Date" means the effective date of the Spectrum Stockholder Approval. (xx) "Special Counsel" has the meaning assigned thereto in Section 6. (yy) "Spectrum Contribution": the transactions contemplated by (i) the Spectrum Contribution Agreement dated as of February 5, 2008 among the Company, Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P. and (ii) the Spectrum Agreement dated as of February 5, 2008 among Parent, the Company and EchoStar. (zz) "Spectrum Stockholder Approval": the approval of the stockholders of the Company (i) to the issuance of Common Shares and Junior Preferred Shares issuable in connection with the Spectrum Contribution, and (ii) to the extent required for such issuances, to increase the number of shares of capital stock authorized under the Company's Certificate of Incorporation. (aaa) "TerreStar" has the meaning assigned thereto in the preamble to this Agreement. (bbb) "Trustee" shall have the meaning assigned thereto in the Indenture. (ccc) "Underlying Securities" means, at any given time: (i) the Notes issued and outstanding at such time which have not been repurchased or exchanged pursuant to the terms of the Indenture; and (ii) the Junior Preferred Shares issued and outstanding at such time which have not been converted into Common Shares. Unless the context otherwise requires, any reference herein to a "Section" or "clause" refers to a Section or clause, as the case may be, of this Agreement, and the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Section or other subdivision. Unless the context otherwise requires, any reference to a statute, rule or regulation refers to the same (including any successor statute, rule or regulation thereto) as it may be amended from time to time. 2. Registration Under the Securities Act. (a) The Company agrees to file under the Securities Act as promptly as practicable but in any event no later than the 30th day after the Notes Closing Date with respect to the Initial Registrable Securities a shelf registration statement providing for the registration of, and the sale on a continuous or delayed basis by the Holders of, all of the Initial Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission. The Company agrees to use its reasonable efforts to cause the Initial Shelf Registration Statement to become or be declared effective under the Securities Act as promptly as practicable but in no event later than 90 days after such Notes Closing Date and to keep such Initial Shelf Registration Statement continuously effective until each of the Initial Registrable Securities covered by the Initial Shelf Registration Statement ceases to be an Initial Registrable Security (the "Initial Registration Effective Period"). Reasonable efforts shall be deemed to have been used notwithstanding an inability to have the Initial Shelf Registration Statement declared or kept effective due to an inability to obtain the consent of the Company's accountants after the use of reasonable efforts to obtain such consent by the Company. Except pursuant to registration rights obligations of the Company in existence prior to such Notes Closing Date, the Company's securityholders (other than the Holders) shall not have the right to include any of the Company's securities in the Initial Shelf Registration Statement. (b) The Company agrees to file under the Securities Act as promptly as practicable but in any event no later than the 30th day after the Spectrum Closing Date with respect to the Additional Registrable Securities a shelf registration statement providing for the registration of, and the sale on a continuous or delayed basis by the Holders of, all of the Additional Registrable Securities, pursuant to Rule 415 or any similar rule that may be adopted by the Commission. The Company agrees to use its reasonable efforts to cause the Additional Shelf Registration Statement to become or be declared effective under the Securities Act as promptly as practicable but in no event later than 90 days after such Spectrum Closing Date and to keep such Additional Shelf Registration Statement continuously effective until each of the Additional Registrable Securities covered by the Additional Shelf Registration Statement ceases to be an Additional Registrable Security (the "Additional Registration Effective Period"). Reasonable efforts shall be deemed to have been used notwithstanding an inability to have the Additional Shelf Registration Statement declared or kept effective due to an inability to obtain the consent of the Company's accountants after the use of reasonable efforts to obtain such consent by the Company. Except pursuant to registration rights obligations of the Company in existence prior to such Spectrum Closing Date, the Company's securityholders (other than the Holders) shall not have the right to include any of the Company's securities in the Additional Shelf Registration Statement. (c) The Company further agrees that it shall cause each Shelf Registration Statement and the related Prospectus and any amendment or supplement thereto, as of the effective date of such Shelf Registration Statement or such amendment or supplement, (i) to comply in all material respects with the applicable requirements of the Securities Act; and (ii) not to contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein (in the case of the Prospectus, in the light of the circumstances under which they were made) not misleading, and the Company agrees to furnish to the Holders copies of any supplement or amendment upon the request of such Holder prior to its being used or promptly following its filing with the Commission; provided, however, that the Company shall have no obligation to deliver to the Holders copies of any amendment consisting exclusively of an Exchange Act report or other Exchange Act filing otherwise publicly available on the Company's website. If a Shelf Registration Statement, as amended or supplemented from time to time, ceases to be effective for any reason at any time during its respective Effective Period (other than because all Registrable Securities registered thereunder shall have been sold pursuant thereto or shall have otherwise ceased to be Registrable Securities), the Company shall use its reasonable efforts, subject to Section 3(b), to obtain the prompt withdrawal of any order suspending the effectiveness thereof. (d) Each Holder agrees that if such Holder wishes to sell Registrable Securities pursuant to a Shelf Registration Statement and related Prospectus, it will do so only in accordance with this Section 2(d) and Section 3(b). From and after the date a Shelf Registration Statement is declared effective, the Company shall, as promptly as is practicable after the date a Notice and Questionnaire is delivered to itself and counsel to the Company, and in any event within fifteen (15) days after the date of receipt of such Notice and Questionnaire, or if the use of the Prospectus has been suspended by the Company under Section 3(b) hereof at the time of receipt of the Notice and Questionnaire, ten (10) days after the expiration of the period during which the use of the Prospectus is suspended: (i) if required by applicable law, file with the Commission a post-effective amendment to such Shelf Registration Statement or prepare and if required by applicable law, file a supplement to the related Prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that the Holder delivering such Notice and Questionnaire is named as a selling security holder in such Shelf Registration Statement and the related Prospectus in such a manner as to permit such Holder to deliver such Prospectus to purchasers of the Registrable Securities in accordance with applicable law and, if the Company shall file a post-effective amendment to such Shelf Registration Statement, use its reasonable efforts to cause such post-effective amendment to be declared effective under the Securities Act as promptly as is practicable. Notwithstanding the foregoing, the Company shall not be required to file more than one post-effective amendment to each Shelf Registration Statement or supplement to the related Prospectus during any thirty (30) day period; (ii) provide such Holder copies of any documents filed pursuant to Section 2(d)(i); and (iii) notify such Holder as promptly as practicable after the effectiveness under the Securities Act of any post-effective amendment filed pursuant to Section 2(d)(i). Notwithstanding anything contained herein to the contrary, the Company shall be under no obligation to name any Holder that is not a Notice Holder as a selling securityholder in any Shelf Registration Statement or related Prospectus; provided, however, that any Holder that becomes a Notice Holder pursuant to the provisions of this Section 2(d) (whether or not such Holder was a Notice Holder at the time such Shelf Registration Statement was declared effective) shall be named as a selling securityholder in such Shelf Registration Statement or related Prospectus in accordance with the requirements of this Section 2(d). (e) If any of the following events (any such event a "Registration Default") shall occur (notwithstanding the Company's compliance with the provisions of this Agreement, including this Section 2), then additional interest (the "Additional Interest") shall become payable by the Company to Holders in respect of the Registrable Securities and Underlying Securities as follows: (i) if (notwithstanding the Company's compliance with the provisions of this Agreement, including this Section 2) a Shelf Registration Statement is not filed with the Commission within 30 days following the relevant Closing Date, then commencing on the 31st day after such Closing Date, Additional Interest shall accrue on the Penalty Principal Amount of such securities at a rate of 0.25% per annum for the first 60 days following such 31st day and at a rate of 0.5% per annum thereafter; (ii) if (notwithstanding the Company's compliance with the provisions of this Agreement, including this Section 2) a Shelf Registration Statement is not declared effective by the Commission within 90 days following the relevant Closing Date, then commencing on the 91st day after such Closing Date, Additional Interest shall accrue on the Penalty Principal Amount of such securities at a rate of 0.25% per annum for the first 90 days following such 91st day and at a rate of 0.5% per annum thereafter; (iii) if the Company has failed to perform its obligations set forth in Section 2(d) hereof with respect to a Holder within the time periods required therein, then commencing on the first day after the date by which the Company was required to perform such obligations, Additional Interest shall accrue on the Penalty Principal Amount of such securities of such Holder at a rate of 0.25% per annum for the first 60 days and at a rate of 0.5% per annum thereafter; (iv) if the Shelf Registration Statement has been declared effective but such Shelf Registration Statement ceases to be effective at any time during the relevant Effective Period (other than pursuant to Section 3(b) hereof), then commencing on the day such Shelf Registration Statement ceases to be effective, Additional Interest shall accrue on the Penalty Principal Amount of such securities at a rate of 0.25% per annum for the first 60 days following such date on which the Shelf Registration Statement ceases to be effective and at a rate of 0.5% per annum thereafter; (v) if the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period pursuant to Section 3(b) hereof, then commencing on the day the aggregate duration of Deferral Periods in any period exceeds the number of days permitted in respect of such period (and again on the first day of any subsequent Deferral Period during such period), Additional Interest shall accrue on the Penalty Principal Amount of such securities at a rate of 0.25% per annum for the first 60 days and at a rate of 0.5% per annum thereafter; (vi) if pursuant to Section 2(f), the Company has not filed a registration statement upon the request of holders of excluded Registrable Securities, within 30 days following the receipt of such request, then commencing on the 31st day after such request, Additional Interest shall accrue on the Penalty Principal Amount of all then excluded Registrable Securities under Section 2(f) at a rate of 0.25% per annum for the first 60 days following such 31st day and at a rate of 0.5% per annum thereafter; or (vii) if pursuant to Section 2(f), the registration statement requested by the holders of excluded Registrable Securities is not declared effective by the Commission within 90 days following the date that a registration statement was requested by holders of excluded Registrable Securities pursuant to Section 2(f), then commencing on the 91st day after such request, Additional Interest shall accrue on the Penalty Principal Amount of all then excluded Registrable Securities under Section 2(f) at a rate of 0.25% per annum for the first 90 days following such 91st day and at a rate of 0.5% per annum thereafter; (f) The Company shall be entitled to exclude from the relevant Shelf Registration Statement such Registrable Securities as the Company and its securities counsel reasonably determine (in consultation with the Investors and their securities counsel) is required for the offering to qualify as a secondary (rather than a primary) offering pursuant to Rule 415 under the Securities Act in response to comments from the staff of the SEC after the Company and its securities counsel have used their reasonable best efforts to address the staff's comments. To the extent any Registrable Securities are so excluded, no Additional Interest (other than as set forth in Section 2(e)(vi) and (vii)) or other penalty will apply to such excluded Registrable Securities, and the Company agrees to use its reasonable best efforts to register such excluded Registrable Securities in accordance with this Section 2 promptly when eligible to do so under applicable federal securities laws, rules, regulations and policies, as the Company and its securities counsel reasonably determine (in consultation with the Investors and their securities counsel). Notwithstanding the foregoing, if the Company shall at any time receive a written request from the Holders of excluded Registrable Securities with an anticipated aggregate offering price of at least $5,000,000 that have not been registered, the Company shall within 30 days of such request file a registration statement under the Securities Act covering the registration of such excluded Registrable Securities. The Company shall also within 10 days of the receipt of such request give written notice of such request to all Holders of excluded Registrable Securities and shall use its reasonable best efforts to effect as soon as practicable, and in any event within 90 days of the receipt of such request, the registration under the Securities Act of all excluded Registrable Securities which the Holders request to be registered within 20 days of the mailing of such notice by the Company; provided, however, that the Additional Interest rate on such securities shall not exceed in the aggregate 0.5% per annum and shall not be payable under more than one clause above for any given period of time, except that if Additional Interest would be payable under more than one clause above, but at a rate of 0.25% per annum under one clause and at a rate of 0.5% per annum under the other, then the Additional Interest rate shall be the higher rate of 0.5% per annum. Following the cure of all Registration Defaults requiring the payment of Additional Interest to the Holders pursuant to this Section or upon the termination of certain transfer restrictions on the Securities with respect to a particular Holder because such Holder is able to sell all of its Securities in a single transaction at one time pursuant to Rule 144 or any successor provision, the accrual of Additional Interest will cease with respect to that Holder (without in any way limiting the effect of any subsequent Registration Default requiring the payment of Additional Interest). Additional Interest on such securities, if any, will be payable in cash on March 15 and September 15 of each year (the "Additional Interest Payment Date") to holders of record of such securities at the close of business on March 1 or September 1, as the case may be, immediately preceding the relevant interest payment date; provided that in the case of an event of the type described in clause (iii) above, such Additional Interest shall be paid only to the Holders that have delivered Notice and Questionnaires that caused the Company to incur the obligations set forth in Section 2(d) the non-performance of which is the basis of such Registration Default; provided further that any Additional Interest accrued with respect to such securities or portion thereof put for repurchase on a repurchase date or exchanged for Common Shares or Junior Preferred Shares on an exchange date prior to the Registration Default shall, in any such event, be paid instead to the Holder who submitted such Notes or portion thereof for repurchase or exchange on the applicable repurchase date or exchange date, as the case may be, on such date (or promptly following the exchange date, in the case of exchange). The Company shall notify the Trustee immediately upon the happening of each and every Registration Default. The Trustee shall be entitled, on behalf of the Holders, to seek any available remedy for the enforcement of this Agreement, including for the payment of any Additional Interest. Notwithstanding the foregoing, the parties agree that the sole monetary damages payable for a violation of the terms of this Agreement with respect to which additional monetary amounts are expressly provided shall be as set forth in this Section 2. Nothing shall preclude a Holder or Notice Holder from pursuing or obtaining specific performance or other equitable relief with respect to this Agreement. 3. Registration Procedures. The following provisions shall apply to a Shelf Registration Statement filed pursuant to Section 2: (a) The Company shall: (i) prepare and file with the Commission a registration statement with respect to the shelf registration on any form which may be utilized by the Company and which shall permit the disposition of the Registrable Securities covered by such Shelf Registration Statement in accordance with the intended method or methods thereof, as specified in writing by the Holders, and use its reasonable efforts to cause such registration statement to become effective in accordance with Section 2(a) or Section 2(b) above; (ii) before filing any Shelf Registration Statement or Prospectus or any amendments or supplements thereto with the Commission, furnish to the Investors copies of all such documents proposed to be filed and use reasonable efforts to reflect in each such document when so filed with the Commission such comments as the Investors reasonably shall propose within three (3) Business Days of the delivery of such copies to the Investors; (iii) subject to Section 3(b), use its reasonable efforts to prepare and file with the Commission such amendments and post-effective amendments to the Shelf Registration Statement and file with the Commission any other required document as may be necessary to keep such Shelf Registration Statement continuously effective until the expiration of the relevant Effective Period; cause the related Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provisions then in force) under the Securities Act; and comply with the provisions of the Securities Act applicable to it with respect to the disposition of all Registrable Securities covered by such Shelf Registration Statement during the relevant Effective Period in accordance with the intended methods of disposition by the sellers thereof set forth in such Shelf Registration Statement as so amended or such Prospectus as so supplemented; (iv) promptly notify the Notice Holders that have requested or received copies of the Prospectus included in such Shelf Registration Statement (A) when such Shelf Registration Statement or the Prospectus included therein or any amendment or supplement to the Prospectus or post-effective amendment has been filed with the Commission, and, with respect to such Shelf Registration Statement or any post-effective amendment, when the same has become effective, (B) of any request, following the effectiveness of the Shelf Registration Statement, by the Commission or any other Federal or state governmental authority for amendments or supplements to the Shelf Registration Statement or related Prospectus, (C) of the issuance by the Commission of any stop order suspending the effectiveness of such Shelf Registration Statement or the initiation or written threat of any proceedings for that purpose, (D) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or written threat of any proceeding for such purpose, (E) of the occurrence of (but not the nature of or details concerning) any event or the existence of any fact (a "Material Event") as a result of which any Shelf Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (provided, however, that no notice by the Company shall be required pursuant to this clause (E) in the event that the Company either promptly files a prospectus supplement to update the Prospectus or a Form 8-K or other appropriate Exchange Act report that is incorporated by reference into the Shelf Registration Statement, which, in either case, contains the requisite information with respect to such Material Event that results in such Shelf Registration Statement no longer containing any untrue statement of material fact or omitting to state a material fact necessary to make the statements contained therein not misleading), (F) of the determination by the Company that a post-effective amendment to the Shelf Registration Statement (other than for the purpose of naming a Notice Holder as a selling securityholder therein) will be filed with the Commission, which notice may, at the discretion of the Company (or as required pursuant to Section 3(b)), state that it constitutes a Deferral Notice, in which event the provisions of Section 3(b) shall apply or (G) at any time when a Prospectus is required to be delivered under the Securities Act, that the Shelf Registration Statement, Prospectus, Prospectus amendment or supplement or post-effective amendment does not conform in all material respects to the applicable requirements of the Securities Act and the rules and regulations of the Commission thereunder; (v) prior to any public offering of the Registrable Securities pursuant to the Shelf Registration Statement, use its reasonable efforts to register or qualify, or cooperate with the Notice Holders of Securities included therein and their respective counsel in connection with the registration or qualification of, such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Notice Holders reasonably request in writing and do any and all other acts or things reasonably necessary or advisable to enable the offer and sale in such jurisdictions of the Registrable Securities covered by the Shelf Registration Statement; prior to any public offering of the Registrable Securities pursuant to the Shelf Registration Statement, subject to Section 3(b), use its reasonable efforts to keep each such registration or qualification (or exemption therefrom) effective during the relevant Effective Period in connection with such Notice Holder's offer and sale of Registrable Securities pursuant to such registration or qualification (or exemption therefrom) and do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of such Registrable Securities in the manner set forth in the Shelf Registration Statement and the related Prospectus; provided that the Company will not be required to qualify generally to do business in any jurisdiction where it is not then so qualified or to take any action which would subject it to general service of process or to taxation in any such jurisdiction where it is not then so subject; (vi) use its reasonable efforts to prevent the issuance of, and if issued, to obtain the withdrawal of any order suspending the effectiveness of the Shelf Registration Statement or any post-effective amendment thereto, and to lift any suspension of the qualification of any of the Registrable Securities for sale in any jurisdiction in which they have been qualified for sale, in each case at the earliest practicable date; (vii) upon reasonable notice, for a reasonable period prior to the filing of the Shelf Registration Statement, and throughout the relevant Effective Period, (i) make reasonably available for inspection by a representative of, and Special Counsel acting for, Majority Holders of the Registrable Securities being sold and any underwriter (and its counsel) participating in any disposition of Registrable Securities pursuant to such Shelf Registration Statement, all relevant financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries, (ii) use reasonable efforts to have its officers, directors, employees, accountants and counsel supply all relevant information reasonably requested by such representative, Special Counsel or any such underwriter in connection with such Shelf Registration Statement, (iii) use reasonable efforts to have its officers, directors, employees, accountants and counsel participate in meetings, presentations, road shows, due diligence sessions, drafting sessions and sessions with rating agencies and (iv) use reasonable efforts to have its officers, directors, employees, accountants and counsel assist with the preparation of financial information and other materials for road show presentations, offering documents, prospectuses, business projections and similar documents required in connection with the offering of any Registrable Securities under the Shelf Registration Statement and provide all representation letters and other materials reasonably requested by its independent accountants for the inclusion therein of financial information; (viii) if requested by Majority Holders of the Registrable Securities being sold, its Special Counsel or the managing underwriters (if any) in connection with an underwritten offering under such Shelf Registration Statement, use its reasonable efforts to cause (i) its counsel to deliver an opinion relating to the Shelf Registration Statement and the Registrable Securities in customary form, (ii) its officers to execute and deliver all customary documents and certificates requested by the Majority Holders of the Registrable Securities being sold, their Special Counsel or the managing underwriters (if any), (iii) its independent public accountants to provide a comfort letter or letters in customary form, subject to receipt of appropriate documentation as contemplated, and only if permitted, by Statement of Auditing Standards No. 72 and (iv) its independent public accountants to provide consent to use audit reports; (ix) if reasonably requested by the Investors or any Notice Holder, promptly incorporate in a prospectus supplement or post-effective amendment to the Shelf Registration Statement such information as the Investors or such Notice Holder shall, on the basis of a written opinion of nationally-recognized counsel experienced in such matters, determine to be required to be included therein by applicable law and make any required filings of such prospectus supplement or such post-effective amendment; provided, that the Company shall not be required to take any actions under this Section 3(a)(ix) that are not, in the reasonable opinion of counsel for the Company, in compliance with applicable law; (x) promptly furnish to each Notice Holder and the Investors, upon their request and without charge, at least one (1) conformed copy of the Shelf Registration Statement and any amendments thereto, including financial statements but excluding schedules, all documents incorporated or deemed to be incorporated therein by reference and all exhibits; provided, however, that the Company shall have no obligation to deliver to Notice Holders or the Investors a copy of any amendment consisting exclusively of an Exchange Act report or other Exchange Act filing otherwise publicly available on the Company's website; (xi) during the Effective Period, deliver to each Notice Holder in connection with any sale of Registrable Securities pursuant to the Shelf Registration Statement, upon their request and without charge, as many copies of the Prospectus relating to such Registrable Securities (including each preliminary prospectus) and any amendment or supplement thereto as such Notice Holder may reasonably request; and the Company hereby consents (except during such periods that a Deferral Notice is outstanding and has not been revoked) to the use of such Prospectus or each amendment or supplement thereto by each Notice Holder in connection with any offering and sale of the Registrable Securities covered by such Prospectus or any amendment or supplement thereto in the manner set forth therein; and (xii) cooperate with the Notice Holders of Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold pursuant to the Shelf Registration Statement free of any restrictive legends and in such denominations and registered in such names as the Holders thereof may request in writing at least two business days prior to sales of Registrable Securities pursuant to such Shelf Registration Statement. (b) Upon (A) the issuance by the Commission of a stop order suspending the effectiveness of the Shelf Registration Statement or the initiation of proceedings with respect to the Shelf Registration Statement under Section 8(d) or 8(e) of the Securities Act, (B) the occurrence of any event or the existence of any Material Event as a result of which the Shelf Registration Statement shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, or any Prospectus shall contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or (C) the occurrence or existence of any corporate development that, in the discretion of the Company, makes it appropriate to suspend the availability of the Shelf Registration Statement and the related Prospectus, the Company will (i) in the case of clause (B) above, subject to the third sentence of this provision, as promptly as practicable prepare and file a post-effective amendment to such Shelf Registration Statement or a supplement to the related Prospectus or any document incorporated therein by reference or file any other required document that would be incorporated by reference into such Shelf Registration Statement and Prospectus so that such Shelf Registration Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and such Prospectus does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, as thereafter delivered to the purchasers of the Registrable Securities being sold thereunder, and, in the case of a post-effective amendment to the Shelf Registration Statement, subject to the third sentence of this provision, use reasonable efforts to cause it to be declared effective as promptly as is practicable, and (ii) give notice to the Notice Holders that the availability of the Shelf Registration Statement is suspended (a "Deferral Notice"). Upon receipt of any Deferral Notice, each Notice Holder agrees not to sell any Registrable Securities pursuant to the Shelf Registration Statement until such Notice Holder's receipt of copies of the supplemented or amended Prospectus provided for in clause (i) above, or until it is advised in writing by the Company that the Prospectus may be used, and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. The Company will use its reasonable efforts to ensure that the use of the Prospectus may be resumed (x) in the case of clause (A) above, as promptly as practicable, (y) in the case of clause (B) above, as soon as, in the sole judgment of the Company, public disclosure of such Material Event would not be prejudicial to or contrary to the interests of the Company or, if necessary to avoid unreasonable burden or expense, as soon as practicable thereafter and (z) in the case of clause (C) above, as soon as, in the discretion of the Company, such suspension is no longer appropriate; provided that the period during which the availability of the Shelf Registration Statement and any Prospectus is suspended (the "Deferral Period"), without the Company incurring any obligation to pay Additional Interest pursuant to Section 2(e), shall not exceed sixty (60) days in any fiscal quarter or one hundred and five (105) days in the aggregate in any twelve (12) month period. (c) Each Holder of Registrable Securities agrees that upon receipt of any Deferral Notice from the Company, such Holder shall forthwith discontinue (and cause any placement or sales agent or underwriters acting on their behalf to discontinue) the disposition of Registrable Securities pursuant to the registration statement applicable to such Registrable Securities until such Holder (i) shall have received copies of such amended or supplemented Prospectus and, if so directed by the Company, such Holder shall deliver to the Company (at the Company's expense) all copies, other than permanent file copies, then in such Holder's possession of the Prospectus covering such Registrable Securities at the time of receipt of such notice or (ii) shall have received notice from the Company that the disposition of Registrable Securities pursuant to the Shelf Registration may continue. (d) The Company may require each Holder seeking to sell Registrable Securities pursuant to a Shelf Registration Statement to furnish to the Company such information regarding such Holder and such Holder's intended method of distribution of such Registrable Securities as the Company may from time to time reasonably request in writing, but only to the extent that such information is required in order to comply with the Securities Act or other applicable law. Each such Holder agrees to notify the Company as promptly as practicable of any inaccuracy or change in information previously furnished by such Holder to the Company or of the occurrence of any event in either case as a result of which any Prospectus relating to such registration contains or would contain an untrue statement of a material fact regarding such Holder or such Holder's intended method of disposition of such Registrable Securities or omits to state any material fact regarding such Holder or such Holder's intended method of disposition of such Registrable Securities required to be stated therein or necessary to make the statements therein not misleading, and promptly to furnish to the Company any additional information required to correct and update any previously furnished information or required so that such Prospectus shall not contain, with respect to such Holder or the disposition of such Registrable Securities, an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. (e) The Company shall comply with all applicable rules and regulations of the Commission and make generally available to its securityholders earning statements (which need not be audited) satisfying the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any similar rule promulgated under the Securities Act) no later than (i) 40 days after the end of any 12-month period (or 60 days after the end of any 12-month period if such period is a fiscal year) if the Company is at such time an "accelerated filer" and (ii) 45 days after the end of any 12-month period (or 90 days after the end of any 12-month period if such period is a fiscal year) if the Company is not an "accelerated filer" commencing on the first day of the first fiscal quarter of the Company commencing after the effective date of the Shelf Registration Statement, which statements shall cover said 12-month periods. (f) The Company shall provide a CUSIP number for all Registrable Securities covered by the Shelf Registration Statement not later than the effective date of such Shelf Registration Statement and provide the transfer agent for the Common Shares with printed certificates for the Registrable Securities that are in a form eligible for deposit with The Depository Trust Company. (g) The Company shall use its reasonable efforts to provide such information as is required for any filings required to be made with FINRA. (h) Until the expiration of the relevant Effectiveness Period, the Company will not, and will use commercially reasonable efforts to not permit any of its "affiliates" (as defined in Rule 144) to, resell any of the Securities that have been reacquired by any of them except pursuant to an effective registration statement under the Securities Act. (i) The Company shall enter into such customary agreements and take all such other necessary and lawful actions in connection therewith (including those requested by the Majority Holders of the Registrable Securities being sold) in order to expedite or facilitate disposition of such Registrable Securities. 4. Piggyback Registrations. (a) The Company shall notify all Holders of Registrable Securities and Underlying Securites in writing at least twenty (20) days prior to filing any registration statement under the Securities Act for purposes of effecting an underwritten primary public offering by the Company of Common Shares (excluding registration statements relating to any employee benefit plan or a corporate reorganization or other transaction covered by Rule 145 promulgated under the Securities Act, or a registration on any registration form which does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities) and will afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities (including Registrable Securities issuable upon exchange or conversion of Underlying Securities) then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of such Registrable Securities held by such Holder shall, within ten (10) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities (including Registrable Securities issuable upon exchange or conversion of Underlying Securities) in any such registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to such offerings of its securities, all upon the terms and conditions set forth herein. (b) In the event the Company gives notice under this Section 4, the right of any Holder's Registrable Securities to be included in a registration statement pursuant to this Section 4 shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, second, to Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the number of Registrable Securities each such Holder has requested to be included in the registration; provided however, that the right of the underwriters to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that the number of Registrable Securities included in any such registration is not reduced below the lesser of (i) twenty-five (25%) of the total number of Registrable Securities requested to be included in the registration and (ii) 50% of the total number of shares to be included in the registration. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice, given in accordance with Section 10(b) hereof, to the Company and the underwriter, delivered at least twenty (20) days prior to the effective date of the registration statement; provided, however, the foregoing 20 day deadline shall not apply if at the time of such withdrawal, the withdrawing Holder has learned of a material adverse change in the condition, business or prospects of the Company not known to the Holder at the time of its request for such registration and has withdrawn its request for registration with reasonable promptness after learning of such material adverse change. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any such holder that is a partnership, limited liability company or corporation, the partners, retired partners, members, retired members and stockholders of such holder, or the estates and family members of any such partners and retired partners, members and retired members and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "holder," and any pro rata reduction with respect to such "holder" shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such "holder," as defined in this sentence. 5. Holder's Obligations. Each Holder agrees, by acquisition of the Securities, that no Holder shall be entitled to sell any Registrable Securities pursuant to a Shelf Registration Statement or to receive a Prospectus relating thereto, unless such Holder has furnished the Company with a Notice and Questionnaire as required pursuant to Section 2(d) hereof (including the information required to be included in such Notice and Questionnaire) and the information set forth in the next sentence. Each Notice Holder agrees promptly to furnish to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Notice Holder not misleading and any other information regarding such Notice Holder and the distribution of such Registrable Securities as may be required to be disclosed in a Shelf Registration Statement under applicable law or pursuant to Commission comments. Each Holder further agrees not to sell any Registrable Securities pursuant to a Shelf Registration Statement without delivering, or causing to be delivered, a Prospectus to the purchaser thereof and, following termination of the relevant Effective Period, to notify the Company, within 10 Business Days of a request by the Company, of the amount of Registrable Securities sold pursuant to such Shelf Registration Statement and, in the absence of a response, the Company may assume that all of the Holder's Registrable Securities were so sold. 6. Registration Expenses. The Company agrees to bear and to pay or cause to be paid promptly upon request being made therefor all expenses incident to the Company's performance of or compliance with this Agreement, including, but not limited to, (a) all Commission and any FINRA registration and filing fees and expenses, (b) all fees and expenses in connection with the qualification of the Securities for offering and sale under the State securities and Blue Sky laws referred to in Section 3(a)(v) hereof, including reasonable fees and disbursements of one counsel for the placement agent or underwriters, if any, in connection with such qualifications, (c) all expenses relating to the preparation, printing, distribution and reproduction of the Shelf Registration Statements, the related Prospectuses, each amendment or supplement to each of the foregoing, the certificates representing the Registrable Securities and all other documents relating hereto, (d) fees and expenses of the transfer agent for the Common Shares, (e) fees, disbursements and expenses of counsel and independent certified public accountants of the Company (including the expenses of any reports required by the Securities Act or the rules and regulations thereunder to be included or incorporated by reference in the Shelf Registration Statements or "cold comfort" letters required by or incident to such performance and compliance) and (f) reasonable fees, disbursements and expenses of one counsel for the Holders retained in connection with each Shelf Registration Statement, as selected by the Company (unless reasonably objected to by the Majority Holders of the Registrable Securities being registered, in which case the Majority Holders shall select one such counsel for the Holders) ("Special Counsel"), and fees, expenses and disbursements of any other Persons, including special experts, retained by the Company in connection with such registration (collectively, the "Registration Expenses"). To the extent that any Registration Expenses are incurred, assumed or paid by any Holder or any underwriter or placement agent therefor, the Company shall reimburse such Person for the full amount of the Registration Expenses so incurred, assumed or paid promptly after receipt of a documented request therefor. Notwithstanding the foregoing, the Holders of the Registrable Securities being registered shall pay all underwriting discounts and commissions and placement agent fees and commissions attributable to the sale of such Registrable Securities and the fees and disbursements of any counsel or other advisors or experts retained by such Holders (severally or jointly), other than the counsel and experts specifically referred to above. 7. Indemnification. (a) The Company agrees to indemnify and hold harmless each Holder (including, without limitation, the Investors), the directors, officers, employees and Affiliates of the Investors and each person who controls such Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission from any such document, in reliance upon and in conformity with written information provided by a Holder in its most recent Notice and Questionnaire; provided further, that with respect to any untrue statement or omission of material fact from any related preliminary prospectus, the indemnity agreement contained in this Section 7(a) shall not inure to the benefit of any Holder from whom the Person asserting any such loss, claim, damage or liability purchased the securities concerned, to the extent that any such loss, claim, damage or liability of such Holder occurs under the circumstance that (y) the untrue statement or omission of a material fact from the related preliminary prospectus was corrected in the final prospectus unless, in either case, such failure to deliver the final Prospectus was a result of non-compliance by the Company with Section 3 and (z) there was not sent or given to such Person, at or prior to the written confirmation of the sale of such securities to such Person, a copy of the final prospectus. This indemnity agreement will be in addition to any liability that the Company may otherwise have. (b) Each Holder agrees to indemnify and hold harmless the Company, each of its directors, each of its officers, and each person, if any, who controls the Company within the meaning of either the Act or the Exchange Act, against any and all losses, claims, damages or liabilities, joint or several, to which the Company may become subject under the Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in any such Registration Statement or any prospectus forming part thereof or in any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, but in each case only to the extent that the untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with any information furnished to the Company by such Holder in its most recent Notice and Questionnaire, and agrees to reimburse the Company, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action provided, however, that no such Holder shall be liable for any indemnity claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Shelf Registration Statement. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it has been materially prejudiced through the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b). If any action shall be brought against an indemnified party and it shall have notified the indemnifying party thereof, the indemnifying party shall be entitled to appoint counsel (including local counsel) of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel, other than local counsel if not appointed by the indemnifying party, retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel (including local counsel) to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest; (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties that are different from or additional to those available to the indemnifying party; (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action; or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding and does not include an admission of fault, culpability or a failure to act, by or on behalf of such indemnified party. (d) The provisions of this Section 7 and Section 8 shall remain in full force and effect, regardless of any investigation made by or on behalf of any Holder, the Company, or any of the indemnified Persons referred to in this Section 7 and Section 8, and shall survive the sale by a Holder of Registrable Securities covered by the Shelf Registration Statements. 8. Contribution. If the indemnification provided for in Section 7 is unavailable or insufficient to hold harmless an indemnified party under Section 7(a) or 7(b), then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in such proportion as shall be appropriate to reflect the relative benefits received by the Company from the offering and sale of the Securities, on the one hand, and a Holder with respect to the sale by such Holder of Registrable Securities, on the other, or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company and such Holder on the other with respect to the statements or omissions that resulted in such loss, claim, damage or liability, or action in respect thereof, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and a Holder on the other with respect to such offering and such sale shall be deemed to be in the same proportion as the total net proceeds from the offering of the Registrable Securities (excluding discounts and commissions, but before deducting expenses) received by or on behalf of the Company, on the one hand, and the total net proceeds (excluding discounts and commissions, but before deducting expenses) received by such Holder upon a resale of the Registrable Securities, on the other, bear to the total gross proceeds from the sale all Registrable Securities pursuant to the Shelf Registration Statement in the offering of the Registrable Securities from which the contribution claim arises. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to the Company or information supplied by the Company on the one hand or to any information contained in the relevant Notice and Questionnaire supplied by such Holder on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this Section 8 were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, damage or liability, or action in respect thereof, referred to above in this Section 8 shall be deemed to include, for purposes of this Section 8, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending or preparing to defend any such action or claim. Notwithstanding the provisions of this Section 8, an indemnifying party that is a Holder shall not be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities sold by such indemnifying party to any purchaser exceeds the amount of any damages which such indemnifying party has otherwise paid or become liable to pay by reason of any untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. 9. Rule 144A and Rule 144. So long as any Underlying Securities or Registrable Securities remain outstanding, the Company shall use its reasonable efforts to file the reports required to be filed by it under Rule 144A(d)(4) under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the written request of any Holder, make publicly available other information so long as necessary to permit sales of such Holder's Securities pursuant to Rules 144 and 144A. The Company covenants that it will take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon the written request of any Holder, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 9 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act. 10. Miscellaneous. (a) Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of the Majority Holders. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose Registrable Securities are being sold pursuant to a Shelf Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by Holders of a majority in aggregate amount of the Registrable Securities being sold by such Holders pursuant to such Shelf Registration Statement. (b) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telecopier or air courier guaranteeing next-day delivery: (1) If to the Company, initially at the address set forth in the Master Investment Agreements; (2) If to the Investors, initially at the respective addresses set forth in the Master Investment Agreements; and (3) If to a Holder, to the address of such Holder set forth in the security register, the Notice and Questionnaire or other records of the Company. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; one business day after being delivered to a next-day air courier; five business days after being deposited in the mail; and when receipt is acknowledged by the recipient's telecopier machine, if sent by telecopier. (c) Successors and Assigns. This Agreement shall be binding upon the Company and each of its successors and assigns. (d) Counterparts. This Agreement may be executed in any number of counterparts (which may be delivered in original form or by telecopier) and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (e) Definition of Terms. For purposes of this Agreement, (a) the term "business day" means any day on which the New York Stock Exchange, Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405 under the Securities Act and (c) except where otherwise expressly provided, the term "affiliate" has the meaning set forth in Rule 405 under the Securities Act. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York. (h) Remedies. In the event of a breach by the Company or by any Holder of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law, including recovery of damages (other than the recovery of damages for a breach by the Company of its obligations under Section 3 hereof for which Additional Interest have been paid pursuant to Section 2 hereof), will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agree that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (i) No Inconsistent Agreements. Except pursuant to the agreements listed on Schedule 1, the Company represents, warrants and agrees that (i) it has not entered into, shall not, on or after the date of this Agreement, enter into any agreement that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof, (ii) there are no contracts, commitments, agreements, arrangements, understandings or undertakings of any kind to which the Company is a party, or by which it is bound, requiring the Company to include any securities of the Company with the Securities registered pursuant to any registration statement and (iii) without limiting the generality of the foregoing, without the written consent of the Majority Holders, it shall not grant to any Person the right to request the Company to register any securities of the Company under the Securities Act unless the rights so granted are not in conflict or inconsistent with the provisions of this Agreement. (j) No Piggyback on Registrations. Neither the Company nor any of its security holders (other than the Holders of Registrable Securities in such capacity) shall have the right to include any securities of the Company in any Shelf Registration Statement other than Registrable Securities. (k) Severability. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (l) Survival. The respective indemnities, agreements, representations, warranties and each other provision set forth in this Agreement or made pursuant hereto shall remain in full force and effect regardless of any investigation (or statement as to the results thereof) made by or on behalf of any Holder, any director, officer or partner of such Holder, any agent or underwriter or any director, officer or partner thereof, or any controlling person of any of the foregoing, and shall survive delivery of and payment for the Underlying Securities and the Registrable Securities pursuant to the Master Investment Agreements, EchoStar Spectrum Agreement and Harbinger Spectrum Contribution Agreement and the transfer and registration of Underlying or Registrable Securities by such Holder. (m) Securities Held by the Company, Etc. Whenever the consent or approval of Holders of a specified percentage of Securities is required hereunder, Securities held by the Company or its affiliates (other than subsequent Holders of Securities if such subsequent Holders are deemed to be affiliates solely by reason of their holdings of such Securities) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. SIGNATURE PAGE FOLLOWS IN WITNESS WHEREOF, the parties have executed this agreement as of the date first written above. Very truly yours, TerreStar Corporation By: ___________________________________ Name: Title: EchoStar Corporation By: ___________________________________ Name: Title: Harbinger Capital Partners Master Fund I, Ltd. By: Harbinger Capital Partners Offshore Manager, L.L.C., as investment manager By: ___________________________________ Name: Title: Harbinger Capital Partners Special Situations Fund, L.P. By: Harbinger Capital Partners Special Situations GP, LLC, as general partner By: ___________________________________ Name: Title: [Signature page to the Registration Rights Agreement] Annex A Form of Selling Securityholder Notice and Questionnaire NOTICE The undersigned beneficial owner (the "Selling Securityholder") of Registrable Securities hereby gives notice to the Company of its intention to sell or otherwise dispose of Registrable Securities beneficially owned by it and listed below in Item 3 (unless otherwise specified under such Item 3). The undersigned, by signing and returning this Notice and Questionnaire, understands that it will be bound by the terms and conditions of this Notice and Questionnaire and the Registration Rights Agreement. If the Selling Securityholder transfers all or any portion of the Registrable Securities listed in Item 3 below after the date on which such information is provided to the Company, the Selling Securityholder agrees to notify the transferee(s) at the time of the transfer of its rights and obligations under the Registration Rights Agreement. QUESTIONNAIRE Please respond to every item, even if your response is "none." If you need more space for any response, please attach additional sheets of paper. Please be sure to indicate your name and the number of the item being responded to on each such additional sheet of paper, and to sign each such additional sheet of paper before attaching it to this Questionnaire. The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate and complete: 1. Your Identity and Background as the Beneficial Owner of the Registrable Securities. (a) Your full legal name: ________________________________________________________________________________ (b) Your business address (including street address) (or residence if no business address), telephone number and facsimile number: Address: _______________________________________________________________________ ________________________________________________________________________________ Telephone No.: _________________________________________________________________ Fax No.: _______________________________________________________________________ (c) Are you a broker-dealer registered pursuant to Section 15 of the Exchange Act? |_| Yes. |_| No. (d) If your response to Item 1(c) above is no, are you an "affiliate" of a broker-dealer registered pursuant to Section 15 of the Exchange Act? |_| Yes. |_| No. For the purposes of this Item 1(d), an "affiliate" of a registered broker-dealer includes any person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such broker-dealer, and does not include any individuals employed by such broker-dealer or its affiliates. (e) Full legal name of person through which you hold the Registrable Securities, if applicable -- (i.e., name of your broker, if applicable, or the DTC participant, if applicable, through which your Registrable Securities are held): Name of Broker: ________________________________________________________________ DTC No.: _______________________________________________________________________ Contact person: ________________________________________________________________ Telephone No.: _________________________________________________________________ 2. Your Relationship with the Company. (a) Have you or any of your affiliates, officers, directors or principal equity holders (owners of 5% or more of the equity securities of the undersigned) held any position or office or have you had any other material relationship with the Company (or its predecessors or affiliates) within the past three years? |_| Yes. |_| No. (b) If your response to Item 2(a) above is yes, please state the nature and duration of your relationship with the Company: 3. Your Interest in the Registrable Securities. (a) State the type and amount of Registrable Securities beneficially owned by you: ________________________________________________________________________________ (b) Other than as set forth in your response to Item 3(a) above, do you beneficially own any other securities of the Company? |_| Yes. |_| No. (c) If your answer to Item 3(b) above is yes, state the type and the aggregate amount of such other securities of the Company beneficially owned by you: Type: __________________________________________________________________________ Aggregate amount: ______________________________________________________________ 4. Nature of your Beneficial Ownership. (a) Check if the beneficial owner set forth in your response to Item 1(a) is any of the below: (i) A reporting company under the Exchange Act. ? (ii) A majority owned subsidiary of a reporting company under the Exchange Act. ? (iii) A registered investment fund under the 1940 Act. ? (b) If the beneficial owner of the Registrable Securities set forth in your response to Item 1(a) above is a limited partnership, state the names of the general partners of such limited partnership: ________________________________________________________________________________ ________________________________________________________________________________ (i) With respect to each general partner listed in Item 4(b) above who is not a natural person and is not publicly-held, name each shareholder (or holder of partnership interests, if applicable) of such general partner. If any of these named shareholders are not natural persons or publicly-held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly-held entity. ________________________________________________________________________________ ________________________________________________________________________________ (c) Name your controlling shareholder(s) (the "Controlling Entity"). If the Controlling Entity is not a natural person and is not a publicly-held entity, name each shareholder of such Controlling Entity. If any of these named shareholders are not natural persons or publicly-held entities, please provide the same information. This process should be repeated until you reach natural persons or a publicly-held entity. (i) (A) Full legal name of Controlling Entity(ies) or natural person(s) who have sole or shared voting or dispositive power over the Registrable Securities: ________________________________________________________________________________ ________________________________________________________________________________ (B) Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s): Address: _______________________________________________________________________ Telephone No.: _________________________________________________________________ Fax No.: _______________________________________________________________________ (C) Name of shareholders: ______________________________________________________ (ii) (A) Full legal name of Controlling Entity(ies): ________________________________________________________________________________ (B) Business address (including street address) (or residence if no business address), telephone number and facsimile number of such person(s): Address: _______________________________________________________________________ ________________________________________________________________________________ Telephone No.: _________________________________________________________________ ________________________________________________________________________________ Fax No.: _______________________________________________________________________ ________________________________________________________________________________ (iii) Name of shareholders: ________________________________________________________________________________ ________________________________________________________________________________ By signing below, the undersigned acknowledges that it is the beneficial owner of the Registrable Securities set forth herein, consents to the disclosure of the information contained in this Notice and Questionnaire and the inclusion of such information in the Shelf Registration Statement and the related prospectus. The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Shelf Registration Statement and the related prospectus. This Notice and Questionnaire shall be governed in all respects by the laws of the State of New York, without giving effect to rules governing the conflict of laws. IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent. NAME OF BENEFICIAL OWNER: _____________________(Please Print) Signature: _____________________________ Date: __________________________________ PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE TO TERRESTAR CORPORATION AS FOLLOWS: TerreStar Corporation 12010 Sunset Hills Road, 6th Floor Reston, VA 20190 Attention: Jeffrey Epstein Tel: (703) 483-7806 Fax: (703) 483-7973 EX-99.H 7 d853046_ex99-h.txt Execution Version RIGHT OF FIRST OFFER AGREEMENT February 5, 2008 This Right of First Offer Agreement is made and entered into by and between TerreStar Corporation, a Delaware corporation (the "Parent"), TerreStar Networks Inc., a Delaware corporation (the "Company"), Harbinger Capital Partners Master Fund I, Ltd. ("Harbinger Master Fund"), and Harbinger Capital Partners Special Situations Fund ("Harbinger Special Situations Fund" and together with Harbinger Master Fund, "Harbinger"), pursuant to the Master Investment Agreement, dated as of February 5, 2008, by and among Parent, the Company and Harbinger (the "Master Investment Agreement"). As an inducement to Harbinger to enter into the Master Investment Agreement and in satisfaction of a condition to the obligations of Harbinger thereunder, each of Parent and the Company agrees with Harbinger as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. For the purposes of this Agreement, the following terms shall have the following meanings: "Agreement" means this Right of First Offer Agreement. The "Company" has the meaning assigned to such term in the preamble to this Agreement. "Company Excluded Securities" means (i) equity securities issued as dividends payable in kind, (ii) securities issued as interest payable-in-kind, (ii) equity securities issued in connection with a stock split or reclassification, (iii) securities issued as direct consideration in connection with a bona fide acquisition of another corporation or entity by the Company (or a wholly-owned subsidiary thereof) by consolidation, merger, purchase of all or substantially all of the assets of such other corporation or entity or 50% or more of the equity ownership of such other entity, or other similar transaction, not resulting in the holders of voting common stock of the Company owning less than 50% of the voting securities of the Company or the entity resulting from such transaction; provided that such transaction or series of transactions has been approved by the Board of Directors of the Company and such transaction is not being done in breach of any approval rights of Harbinger, (iv) shares of Company Common Stock issuable upon conversion or exercise of any options, warrants or other rights to purchase Company Common Stock outstanding as of the date hereof or approved by the Board of Directors of the Company after the date hereof, and (v) Company Common Stock (or options, warrants or rights therefor) issuable to employees, officers, directors, contractors, consultants or advisors of the Company (or any subsidiary) pursuant to incentive agreements, stock purchase or stock option plans, stock bonuses or awards, warrants, contracts or other similar arrangements in each case for other than primarily equity financing purposes, as approved by the Board of Directors of the Company. "EchoStar" means EchoStar Corporation. "Harbinger" has the meaning assigned to such term in the preamble to this Agreement. The "Harbinger Proportionate Number" is, at any given time and with respect to a particular Offering, the product of (i) a number equal to (A) the aggregate principal amount of Exchangeable Notes held by Harbinger and its affiliates at such time, divided by (B) the aggregate principal amount of all Exchangeable Notes held by EchoStar, Harbinger and their respective affiliates and (ii) the total amount of securities proposed to be sold, issued or otherwise transferred in such Offering; provided, however, that the number referred to in clause (i)(B) above shall include those Exchangeable Notes held by EchoStar only if EchoStar and its affiliates, at the time of the relevant Right of First Offer Notice, hold at least 50% of the aggregate principal amount of the Exchangeable Notes initially purchased by EchoStar pursuant to the terms of the Master Investment Agreement between Parent, the Company and EchoStar. "Master Investment Agreement" has the meaning assigned to such term in the preamble to this Agreement. "Offering" has the meaning assigned to such term in Section 2.01 of this Agreement. "Parent" has the meaning assigned to such term in the preamble to this Agreement. "Parent Excluded Securities" means (i) equity securities issued as dividends payable in kind, (ii) securities issued as interest payable-in-kind, (iii) equity securities issued in connection with a stock split or reclassification, (iii) securities issued as direct consideration in connection with a bona fide acquisition of another corporation or entity by Parent (or a wholly-owned subsidiary thereof) by consolidation, merger, purchase of all or substantially all of the assets of such other corporation or entity or 50% or more of the equity ownership of such other entity, or other similar transaction, not resulting in the holders of voting common stock of Parent owning less than 50% of the voting securities of Parent or the entity resulting from such transaction; provided that such transaction or series of transactions has been approved by the Board of Directors of Parent and such transaction is not being done in breach of any approval rights of Harbinger, (iv) shares of Parent Common Stock issuable upon conversion or exercise of any options, warrants or other rights to purchase Parent Common Stock outstanding as of the date hereof or approved by the Board of Directors of Parent after the date hereof, and (vi) Parent Common Stock (or options, warrants or rights therefor) to employees, officers, directors, contractors, consultants or advisors of the Company (or any subsidiary) pursuant to incentive agreements, stock purchase or stock option plans, stock bonuses or awards, warrants, contracts or other similar arrangements in each case for other than primarily equity financing purposes, as approved by the Board of Directors of Parent. "Right of First Offer Notice" has the meaning assigned to such term in Section 2.01 of this Agreement. Section 1.02 Other Terms. Capitalized terms used herein but not defined shall have the meanings assigned to such terms in the Master Investment Agreement. ARTICLE II LIMITED PREEMPTIVE RIGHTS Section 2.01 Right of First Offer. In the event that either the Company or Parent proposes to sell, issue or otherwise transfer any equity or debt securities (other than Company Excluded Securities and Parent Excluded Securities) of the Company or Parent (each such transaction, an "Offering"), it shall provide Harbinger written notice (the "Right of First Offer Notice") of such Offering, specifying the proposed price (it being understood that the form of consideration shall be cash or tangible assets only) and the material terms upon which the Company or Parent proposes to sell, issue or otherwise transfer the same. Any such Right of First Offer Notice shall contain, as applicable, the term, maturity, amortization, interest rate and payment terms (including cash and Paid-in-Kind components, as applicable), fees, discount, equity component, security, terms of credit support (including, but not limited to, collateral and guarantees), subordination (including contractual and structural) and governance rights of such securities. Harbinger shall have ten (10) Business Days from the delivery date of any Right of First Offer Notice to agree to purchase (if the form of consideration is tangible assets, at Harbinger's option, for cash and/or the same type of tangible assets of equal value), an amount of equity or debt securities of Parent or the Company up to the Harbinger Proportionate Number (in each case calculated prior to the issuance) for the price and upon the terms specified in the Right of First Offer Notice by giving written notice to the Company or Parent, as applicable, and stating therein the amount of such equity or debt securities to be purchased. If a definitive agreement for the purchase of such equity or debt securities is not provided along with the Right of First Offer Notice, Harbinger's election to purchase such equity or debt securities pursuant to such Right of First Offer Notice shall not be binding until a definitive agreement is executed (but, subject to Section 2.03, an election not to purchase shall be binding). Section 2.02 Extension Right. To the extent that Harbinger has agreed to purchase all of the Harbinger Proportionate Number of securities with respect to an Offering and any other person with a similar right (i) does not elect to purchase all of the securities with respect to such Offering which such other person has a right to acquire or (ii) is otherwise unable to reach agreement with the Company or Parent, as applicable, with regard to the terms of the definitive agreements related thereto, Harbinger shall have the option to purchase any or all of such securities not so purchased in addition to the Harbinger Proportionate Number of securities with respect to such Offering. Section 2.03 Right to Sell. In the event that Harbinger does not elect to purchase all of the equity or debt securities to be offered in an Offering, or to the extent that Harbinger is not able to reach agreement with the Company or Parent, as applicable, with regard to the terms of the definitive agreements related thereto, the Company or Parent, as applicable, shall have 120 days after the date of the Right of First Offer Notice to consummate the sale, issuance or transfer of any or all of the amount of equity or debt securities with respect to which Harbinger's preemptive rights hereunder were not exercised, at or above the price and upon terms not less favorable to the Company or Parent in any material respect (it being understood and agreed that any increase in the number of equity or debt securities or any decrease in the price thereof shall be deemed material for this purpose) than the terms specified in the initial Right of First Offer Notice given in connection with such sale, issuance or other transfer. ARTICLE III MISCELLANEOUS Section 3.01 Term. This Agreement shall terminate at such time when Harbinger and its affiliates collectively own less than 50% of the aggregate principal amount of the Exchangeable Notes initially purchased by Harbinger pursuant to the terms of the Master Investment Agreement. Section 3.02 Most Favored Nation. Each of the Company and Parent agree not to grant to any third party any preemptive rights or rights similar to the rights granted to Harbinger hereunder (i) on any terms more favorable to such third party or (ii) to the extent that such third party's rights would interfere with or impair Harbinger's rights hereunder. Section 3.03 Termination by Mutual Consent. This Agreement may be terminated and the sale and purchase of the Purchased Securities hereunder may be abandoned at any time prior to the Closing, by mutual written consent of (a) the Company, (b) Parent and (c) Harbinger. Section 3.04 Interpretation; Severability. Article, Section, Schedule, and Exhibit references are to this Agreement, unless otherwise specified. All references to instruments, documents, contracts, and agreements are references to such instruments, documents, contracts, and agreements as the same may be amended, supplemented, and otherwise modified from time to time, unless otherwise specified. The word "including" shall mean "including but not limited to." Whenever any party has an obligation under this Agreement, the expense of complying with that obligation shall be an expense of such party unless otherwise specified. If any provision of this Agreement is held to be illegal, invalid, not binding, or unenforceable, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid, not binding, or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions shall remain in full force and effect. Section 3.05 Waivers; Remedies; Amendments. (a) No Waiver; Remedies Cumulative. No failure or delay on the part of any party in exercising any right, power, or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power, or remedy preclude any other or further exercise thereof or the exercise of any right, power, or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to a party at law or in equity or otherwise. (b) Amendments and Modifications. Except as otherwise provided herein, no amendment, waiver, consent or modification of any provision of this Agreement shall be effective unless signed by each of the parties hereto affected by such amendment, waiver, consent or modification. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by any party hereto from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on any party hereto in any case shall entitle any party hereto to any other or further notice or demand in similar or other circumstances. Section 3.06 Binding Effect; Assignment. This Agreement shall be binding upon the Company, Parent, Harbinger, and their respective successors and permitted assigns. Except as expressly provided in this Agreement, this Agreement shall not be construed so as to confer any right or benefit upon any Person other than the parties to this Agreement and their respective successors and permitted assigns. Section 3.07 Non-Disclosure. Notwithstanding anything herein to the contrary, the Confidentiality Agreement shall remain in full force and effect according to its terms regardless of any termination of this Agreement. Section 3.08 Communications. All notices and demands to be delivered to any party hereto shall be in writing and shall be given by registered or certified mail, return receipt requested, telecopy, air courier guaranteeing overnight delivery or personal delivery to the address of such party specified in the Master Investment Agreement or to such other address as such party may designate in writing. All notices and communications shall be deemed to have been duly given at the time delivered by hand, if personally delivered; upon actual receipt if sent by certified mail, return receipt requested, or regular mail, if mailed; when receipt acknowledged, if sent via facsimile; and upon actual receipt when delivered to an air courier guaranteeing overnight delivery. Section 3.09 Entire Agreement. This Agreement and the other agreements and documents referred to herein are intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein and therein. There are no restrictions, promises, representations, warranties, covenants or undertakings, other than those set forth or referred to herein or therein with respect to the rights granted by the Company, Parent or any of their Affiliates or each of the Purchasers or any of their Affiliates set forth herein or therein. This Agreement and the other agreements and documents referred to herein supersede all prior agreements and understandings between the parties with respect to such subject matter. Section 3.10 Governing Law. This Agreement will be construed in accordance with and governed by the laws of the State of New York without regard to principles of conflicts of laws. Section 3.11 Execution in Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same Agreement. IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of the date first written above. TERRESTAR NETWORKS INC. --------------------------------------- By: Title: TERRESTAR CORPORATION --------------------------------------- By: Title: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. By: Harbinger Capital Partners Offshore Manager, L.L.C., as investment manager --------------------------------------- By: Title: HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. By: Harbinger Capital Partners Special Situations GP, LLC, as general partner --------------------------------------- By: Title: [Signature Page to Harbinger Right of First Offer Agreement] EX-99.I 8 d853053_ex99-i.txt Execution copy ================================================================================ $100,000,000 PURCHASE MONEY CREDIT AGREEMENT Dated as of February 5, 2008, among TERRESTAR NETWORKS INC., as Borrower, THE GUARANTORS PARTY HERETO, U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent, HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., as a Lender, HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P., as a Lender, ECHOSTAR CORPORATION, as a Lender, and THE OTHER LENDERS PARTY HERETO, ================================================================================ TABLE OF CONTENTS ----------------- Page ---- ARTICLE I DEFINITIONS.......................................................1 SECTION 1.01. DEFINED TERMS.............................................1 SECTION 1.02. TERMS GENERALLY..........................................25 SECTION 1.03. ACCOUNTING TERMS; GAAP...................................25 ARTICLE II LOAN PROVISIONS..................................................26 SECTION 2.01. THE COMMITMENT...........................................26 SECTION 2.02. SECURITY.................................................26 SECTION 2.03. REQUEST FOR A LOAN.......................................27 SECTION 2.04. RECORDS; PROMISSORY NOTES................................27 SECTION 2.05. REPAYMENT OF THE LOANS...................................27 SECTION 2.06. PREPAYMENT OF THE LOANS AND COMMITMENT REDUCTIONS........27 SECTION 2.07. INTEREST.................................................29 SECTION 2.08. TAXES....................................................30 SECTION 2.09. PAYMENTS GENERALLY.......................................32 ARTICLE III REPRESENTATIONS AND WARRANTIES...................................33 SECTION 3.01. ORGANIZATION; POWERS.....................................33 SECTION 3.02. AUTHORIZATION; ENFORCEABILITY............................33 SECTION 3.03. COMPLIANCE WITH LAWS AND AGREEMENTS......................34 SECTION 3.04. ERISA....................................................34 SECTION 3.05. LITIGATION, ENVIRONMENTAL AND OTHER MATTERS..............34 SECTION 3.06. COLLATERAL...............................................35 SECTION 3.07. SECURITY DOCUMENTS.......................................35 SECTION 3.08. TAXES....................................................35 SECTION 3.09. USE OF PROCEEDS..........................................35 SECTION 3.10. MATERIAL CONTRACTS.......................................35 SECTION 3.11. GOVERNMENTAL APPROVALS; NO CONFLICTS.....................36 SECTION 3.12. NO DEFAULT...............................................36 SECTION 3.13. LICENSES.................................................36 ARTICLE IV CONDITIONS.......................................................36 SECTION 4.01. EFFECTIVE DATE...........................................36 SECTION 4.02. ADDITIONAL CONDITIONS TO EFFECTIVE DATE AND EACH LOAN....39 SECTION 4.03. ADDITIONAL CONDITION TO INITIAL LOAN.....................40 ARTICLE V AFFIRMATIVE COVENANTS............................................40 SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION...............40 SECTION 5.02. NOTICES OF MATERIAL EVENTS...............................41 SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS...........................42 SECTION 5.04. BOOKS AND RECORDS; INSPECTION RIGHTS.....................42 SECTION 5.05. MAINTENANCE OF PROPERTIES................................42 SECTION 5.06. COMPLIANCE WITH LAWS.....................................42 SECTION 5.07. PAYMENT OF OBLIGATIONS...................................42 SECTION 5.08. RECOVERY EVENTS..........................................43 SECTION 5.09. FURTHER ASSURANCES.......................................43 SECTION 5.10. USE OF PROCEEDS..........................................43 SECTION 5.11. MAINTENANCE OF APPROVALS.................................43 SECTION 5.12. LICENSES.................................................44 SECTION 5.13. DESIGNATION OF UNRESTRICTED SUBSIDIARIES.................44 SECTION 5.14. MAINTENANCE OF INSURANCE.................................45 SECTION 5.15. COMPLIANCE CERTIFICATES..................................45 SECTION 5.16. ADDITIONAL GUARANTEES....................................46 ARTICLE VI NEGATIVE COVENANTS...............................................47 SECTION 6.01. INDEBTEDNESS.............................................47 SECTION 6.02. LIMITATION ON LIENS......................................50 SECTION 6.03. MERGER, CONSOLIDATION AND SALE OF ALL OR SUBSTANTIALLY ALL ASSETS...............................................50 SECTION 6.04. RESTRICTED PAYMENTS......................................50 SECTION 6.05. TRANSACTIONS WITH AFFILIATES.............................53 SECTION 6.06. LIMITATION ON LINES OF BUSINESS..........................55 SECTION 6.07. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES..................................55 SECTION 6.08. LIMITATION ON ASSET SALES OF THE COLLATERAL..............57 SECTION 6.09. LIMITATION ON TRANSFER OF THE COLLATERAL.................57 SECTION 6.10. LIMITATION ON AMENDMENTS TO PAYMENTS UNDER THE TERRESTAR-2 CONSTRUCTION AGREEMENT.......................57 ARTICLE VII EVENTS OF DEFAULT................................................57 SECTION 7.01. EVENTS OF DEFAULT........................................57 SECTION 7.02. ACCELERATION.............................................60 SECTION 7.03. WAIVER OF DEFAULTS.......................................61 SECTION 7.04. RIGHTS AND REMEDIES CUMULATIVE...........................61 SECTION 7.05. DELAY OR OMISSION NOT WAIVER.............................61 ARTICLE VIII GUARANTEES.......................................................61 SECTION 8.01. GUARANTEES...............................................61 SECTION 8.02. LIMITATION ON LIABILITY..................................63 SECTION 8.03. SUCCESSORS AND ASSIGNS...................................63 SECTION 8.04. EXECUTION AND DELIVERY OF THE GUARANTEE..................63 ARTICLE IX THE COLLATERAL AGENT.............................................64 SECTION 9.01. APPOINTMENT..............................................64 SECTION 9.02. DELEGATION OF DUTIES.....................................64 SECTION 9.03. EXCULPATORY PROVISIONS...................................64 SECTION 9.04. RELIANCE BY THE COLLATERAL AGENT.........................64 SECTION 9.05. NOTICE OF DEFAULT........................................65 SECTION 9.06. NON-RELIANCE ON THE COLLATERAL AGENTS AND OTHER LENDERS..65 SECTION 9.07. INDEMNIFICATION..........................................66 SECTION 9.08. SUCCESSOR COLLATERAL AGENTS..............................66 SECTION 9.09. THE COLLATERAL AGENT GENERALLY...........................67 SECTION 9.10. AGENCY FOR PERFECTION....................................67 ARTICLE X MISCELLANEOUS....................................................67 SECTION 10.01. NOTICES..................................................67 SECTION 10.02. WAIVERS; AMENDMENTS......................................69 SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER; COMMITMENT FEE.......70 SECTION 10.04. SUCCESSORS AND ASSIGNS...................................71 SECTION 10.05. THE BUY OUT..............................................73 SECTION 10.06. SURVIVAL.................................................73 SECTION 10.07. COUNTERPARTS; INTEGRATION; EFFECTIVENESS.................73 SECTION 10.08. SEVERABILITY.............................................74 SECTION 10.09. GOVERNING LAW; JURISDICTION; ETC.........................74 SECTION 10.10. WAIVER OF JURY TRIAL.....................................75 SECTION 10.11. HEADINGS.................................................75 SECTION 10.12. CONFIDENTIALITY..........................................75 SECTION 10.13. USA PATRIOT ACT..........................................76 APPENDIX A-1 Commitments SCHEDULE I Material Contracts SCHEDULE II Milestone Payments and Payment Dates SCHEDULE 2.09(a) Lender Payment Accounts SCHEDULE 3.05(c) Material Adverse Effect Exceptions EXHIBIT A Form of Notice of Borrowing EXHIBIT B Opinions of New York, Delaware and FCC regulatory counsel to the Borrower EXHIBIT C Form of Security Agreement EXHIBIT D Form of Note EXHIBIT E Form of Joinder to Guarantee This PURCHASE MONEY CREDIT AGREEMENT dated as of February 5, 2008 (this "AGREEMENT") is entered into among TERRESTAR NETWORKS INC., a Delaware corporation (the "BORROWER"), the guarantors party hereto from time to time, U.S. BANK NATIONAL ASSOCIATION, as collateral agent for the lenders referred to below (in such capacity, the "COLLATERAL AGENT"), HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD. ("HARBINGER"), HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P. ("HARBINGER SITUATIONS"), ECHOSTAR CORPORATION, ("ECHOSTAR"), and the other lenders party hereto from time to time (together with Harbinger, Harbinger Situations, EchoStar and their respective successors and assigns, collectively, the "LENDERS"). WHEREAS, the Borrower is party to the satellite construction contract, dated as of December 12, 2007 ("TERRESTAR-2 CONSTRUCTION AGREEMENT") with Space Systems/Loral, Inc., a Delaware corporation (the "SATELLITE MANUFACTURER") which provides for the construction and delivery of the TerreStar-2 Satellite; WHEREAS, under the terms of the TerreStar-2 Construction Agreement, the Borrower is obligated to make at least $100,000,000 in remaining purchase price payments to the Satellite Manufacturer; WHEREAS, the Borrower has requested that the Lenders make credit extensions to it in order to enable the Borrower to make the remaining purchase price payments to the Satellite Manufacturer pursuant to the TerreStar-2 Construction Agreement to enable the Borrower to complete the acquisition of, and rights to use, the TerreStar-2 Satellite and the other Collateral; and WHEREAS, the Lenders are prepared to make loans to the Borrower for the purposes described herein and upon the terms and conditions hereof; NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained herein, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following terms have the meanings specified below: "1.4 GHZ SPECTRUM" means any spectrum between 1390 to 1395 MHz and 1432 to 1435 MHz bands. "15% NOTES" means the Borrower's outstanding 15% Senior Secured PIK Notes due 2014. "15% NOTES INDENTURE" means the Indenture for the 15% Notes, dated as of the 15% Notes Issue Date, between the Borrower and U.S. Bank National Association, as trustee, as supplemented on or before the Effective Date (including, as applicable, the supplemental indenture relating to the issuance of an additional $50,000,000 principal amount of 15% Notes on or about the Effective Date). "15% NOTES ISSUE DATE" means February 14, 2007. "ACQUIRED DEBT" means, with respect to any specified Person, (a) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Subsidiary of, such specified Person; and (b) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person. "AFFILIATE" means with respect to any specified Person, any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, "control," 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 or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise; provided, that beneficial ownership of 10% or more of the Voting Stock of a Person will be deemed to be control. For purposes of this definition, the terms "controlling," "controlled by" and "under common control with" have correlative meanings. "AGREEMENT" has the meaning assigned to such term in the Preamble. "ASSET SALE" means: (i) the sale, lease, conveyance or other disposition of any assets or rights; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Borrower and its Restricted Subsidiaries taken as a whole will be governed by Sections 6.03 and not by Section 6.08; and (ii) the issuance of Equity Interests in any of the Borrower's Restricted Subsidiaries or the sale of Equity Interests in any of its Restricted Subsidiaries. Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale: (a) except in the case of the Collateral, any single transaction or series of related transactions that involves assets having a fair market value of less than $10,000,000; (b) a disposition of assets between or among the Borrower and any Guarantors; provided, that in the case of a sale of Collateral, the transferee will cause such amendments, supplements or other instruments to be executed, filed, and recorded in such jurisdictions as may be required by applicable law to preserve and protect the Lien on the Collateral owned by or transferred to the transferee, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral which may be perfected by the filing of a financing statement or a similar document under the Uniform Commercial Code or other similar statute or regulation of the relevant states or jurisdictions; (c) a transfer of assets between or among Restricted Subsidiaries that are not Guarantors or from a Restricted Subsidiary that is not a Guarantor to the Borrower or a Guarantor; (d) an issuance of Equity Interests by a Restricted Subsidiary of the Borrower to the Borrower or to another Restricted Subsidiary of the Borrower; (e) the sale, lease or other disposition of equipment, inventory or products in the ordinary course of business and any sale or other disposition of damaged, worn-out, uneconomic or obsolete assets in the ordinary course of business; (f) with respect to assets that are Collateral, the creation of a Collateral Permitted Lien and dispositions in connection with Collateral Permitted Liens, and with respect to assets that are not Collateral, the creation of any "Permitted Lien" as such term is defined in the 15% Notes and dispositions in connection with such Permitted Liens; (g) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property; (h) except in the case of Collateral, foreclosure on assets, except to the extent that the value of the assets exceeds the amount of the obligation secured; (i) the sale or other disposition of cash or Cash Equivalents; provided that, if such cash or Cash Equivalents arise as the result of an Asset Sale or Recovery Event, such sale or disposition is in accordance with the provisions of this Agreement; (j) the sale or other disposition of Equity Interests in Unrestricted Subsidiaries; and (k) a Restricted Payment that is permitted by Section 6.04 or a Permitted Investment. "ATC" means Ancillary Terrestrial Component as defined by the FCC. "ATC OPERATIONAL DATE" means the date that is three months after Borrower's certification to the FCC that the TerreStar-1 Satellite system is operational and that Borrower has satisfied the final FCC milestone conditioning the FCC MSS S-Band Spectrum reservation held by Borrower. "ATTRIBUTABLE DEBT" means in respect of a Sale/Leaseback Transaction, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value will be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided that if such Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of "CAPITAL LEASE OBLIGATION." "BANKRUPTCY CODE" means Title 11 of the United States Code entitled "Bankruptcy," as now and hereafter in effect, or any successor statute. "BENEFICIAL OWNER" has the meaning in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular "person" (as that term is used in Section 13(d)(3) of the Exchange Act), such "person" will be deemed to have beneficial ownership of all securities that such "person" has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable, or is exercisable only upon the occurrence of a subsequent condition. The term "Beneficially Own" has a corresponding meaning. "BOARD OF GOVERNORS" means the Board of Governors of the Federal Reserve System of the United States of America. "BOARD OF DIRECTORS" means: (a) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such Person; (b) with respect to a partnership, the board of directors of the general partner of the partnership; (c) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and (d) with respect to any other Person, the board of directors or committee of such Person serving a similar function. "BORROWER" has the meaning assigned to such term in the Preamble. "BUSINESS DAY" means each day that is not a Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by law to close. "BUYING LENDERS" has the meaning assigned to such term in Section 10.05(a). "CANADIAN ENTITIES" means TerreStar Canada Holdings and TerreStar Canada. "CAPITAL LEASE OBLIGATION" means at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty. "CAPITAL STOCK" means: (a) in the case of a corporation, corporate stock; (b) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock; (c) in the case of a partnership or limited liability company, partnership or membership interests (whether general or limited); and (d) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock. "CASH EQUIVALENTS" means any of the following: (a) United States dollars and in the case of any Foreign Subsidiary that is a Restricted Subsidiary, such local currencies held by them from time to time in the ordinary course of business; (b) securities issued or directly and fully guaranteed or insured by the United States or the Canadian government or any agency or instrumentality of the United States or the Canadian government (provided that the full faith and credit of the United States or Canada, as applicable, is pledged in support of those securities) having maturities of not more than twelve months from the date of acquisition; (c) marketable general obligations issued by any state of the United States or province of Canada, or any political subdivision of any such state or province or any public instrumentality thereof maturing within one year from the date of acquisition (provided that the full faith and credit of the United States or Canada, as applicable, is pledged in support thereof) and, at the time of acquisition, having a credit rating of "A" or better from either S&P or Moody's; (d) certificates of deposit and eurodollar time deposits with maturities of twelve months or less from the date of acquisition, bankers' acceptances with maturities not exceeding twelve months and overnight bank deposits with any U.S. domestic or Canadian commercial bank having capital and surplus in excess of $500,000,000 and a Thomson Bank Watch Rating of "B" or better; (e) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (b), (c) and (d) above entered into with any financial institution meeting the qualifications specified in clause (d) above; (f) commercial paper having a rating of at least A-3 from Moody's or P-3 from S&P and in each case maturing within nine months after the date of acquisition; and (g) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (a) through (f) of this definition. "CCTV" means CCTV Wireless, Inc., a Delaware corporation. "CHANGE OF CONTROL" means the occurrence of any of the following: (a) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of TerreStar Parent, Borrower or any of its Restricted Subsidiaries taken as a whole to any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) other than a Permitted Holder; (b) the adoption of a plan relating to the liquidation or dissolution of the TerreStar Parent or Borrower; (c) any "person" (as that term is used in Section 13(d)(3) of the Exchange Act) becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of TerreStar Parent or Borrower, other than a Permitted Holder, measured by voting power rather than number of shares; or (d) the first day on which a majority of the members of the Board of Directors of TerreStar Parent or Borrower are not Continuing Directors. "CODE" means the Internal Revenue Code of 1986. "COLLATERAL" has the meaning in the U.S. Security Agreement. "COLLATERAL AGENT" has the meaning assigned to such term in the Preamble. "COLLATERAL PERMITTED LIENS" means all of the following: (a) Liens to secure the performance of statutory obligations or other obligations of a like nature incurred in the ordinary course of business; (b) Statutory Liens or mechanics', suppliers', materialmen's, repairmen's or other like Liens arising in the ordinary course of business; (c) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently conducted and if a reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor; (d) Liens incurred or deposits made in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, in connection with the TerreStar-2 Construction Agreement and the related escrow agreements; (e) Liens created for the benefit of Collateral Agent or the Lenders to secure the Obligations under this Agreement or the other Loan Documents; (f) rights of banks to set off deposits against debts owed to said bank; (g) all right, title and interest of the Satellite Manufacturer in the Collateral pursuant to the TerreStar-2 Construction Agreement; and (h) the Lien evidenced by the Uniform Commercial Code financing statement filed in connection with the 15% Notes Indenture naming the Borrower, as debtor, and U.S. Bank National Association, as secured party, on the Collateral, until such Lien is terminated on or prior to the borrowing date of the initial Loan hereunder in accordance with Section 4.03. "COMMISSION" means the Securities and Exchange Commission or any successor agency. "COMMITMENT" means the commitment of a Lender to make or otherwise fund a Loan hereunder, expressed as an amount representing the maximum aggregate amount of the Loans to be made by the Lenders hereunder, and "COMMITMENTS" means such commitments of all Lenders in the aggregate to make or otherwise fund a Loan hereunder. The amount of each Lender's Commitment, if any, is set forth on Appendix A-1, subject to any adjustment or reduction pursuant to the terms and conditions hereof. The total amount of the Commitment is $100,000,000, as such amount may be reduced as provided in the definition of the term "UNUSED COMMITMENT". "CONTINUING DIRECTORS" means, as of any date of determination, any member of the Board of Directors of TerreStar Parent or the Borrower who: (a) was a member of such Board of Directors on the Effective Date; or (b) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election or by the Permitted Holders. "DEFAULT" means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default. "DEPOSIT ACCOUNT" means the account of the Borrower or the Satellite Manufacturer (as the case may be) designated by the Borrower to the Lenders in the most recent Notice of Borrowing delivered by the Borrower to each of the Lenders pursuant to Section 4.02(e), subject to approval by the Required Lenders (which approval shall not be unreasonably withheld or delayed). "DISQUALIFIED STOCK" means, any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, prior to the date that is 91 days after Maturity Date. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Borrower to repurchase such Capital Stock upon the occurrence of a Change of Control or an Asset Sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Borrower may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 6.04. "DOLLARS" or "$" refers to lawful money of the United States of America. "DOMESTIC SUBSIDIARY" means any Subsidiary that is not a Foreign Subsidiary. "ECHOSTAR" has the meaning assigned to such term in the Preamble. "EFFECTIVE DATE" means the date on which the conditions specified in Section 4.01 and Section 4.02 are satisfied (or waived in accordance with Section 10.02). "ELECTING LENDERS" means, at any time, any Lender holding at least 30% of the aggregate unpaid principal amount of the Loans and the Unused Commitment; provided, that on and after the date that no Lender holds at least 30% of the aggregate unpaid principal amount of the Loans and the Unused Commitment, "ELECTING LENDERS" means, at any time, Lenders holding more than 30% of the then aggregate unpaid principal amount of the Loans and the Unused Commitment. A defaulting Lender shall be excluded for the purpose of this determination. "ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes, ordinances, orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or entered into by any Governmental Authority, relating in any way to the environment, preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters. "ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise, of the Borrower or any Subsidiary directly or indirectly resulting from or based upon (a) violation of any Environmental Law, (b) the generation, use, handling, transportation, storage, treatment or disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement or other consensual arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing. "EQUITY INTERESTS" means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock). "ERISA" means the Employee Retirement Income Security Act of 1974. "ERISA AFFILIATE" means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or, solely for purposes of the Pension Funding Rules and Withdrawal, is treated as a single employer under Section 414 of the Code. "ERISA EVENT" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived), (b) prior to the effectiveness of the applicable provisions of the Pension Act with respect to a Plan, the existence with respect to the Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA) or, on and after the effectiveness of the applicable provisions of the Pension Act with respect to such Plan, any failure by the Plan to satisfy the minimum funding standard (within the meaning of Section 412 of the Code or Section 302 of ERISA) applicable to such Plan, in each case whether or not waived, (c) the filing pursuant to, prior to the effectiveness of the applicable provisions of the Pension Act with respect to a Plan, Section 412(d) of the Code or Section 303(d) of ERISA or, on and after the effectiveness of the applicable provisions of the Pension Act with respect to the Plan, Section 412(c) of the Code or Section 302(c) of ERISA, of an application for a waiver of the minimum funding standard with respect to any Plan, (d) on and after the effectiveness of the applicable provisions of the Pension Act, a determination that any Plan is, or is expected to be, in "at-risk" status (as defined in Section 303(i)(4) of ERISA or Section 430(i)(4) of the Code), (e) the incurrence by the Borrower or any ERISA Affiliate of any liability under Title IV of ERISA with respect to the termination of any Plan, (f) the receipt by the Borrower or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or to appoint a trustee to administer any Plan, (g) the incurrence by the Borrower or any ERISA Affiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan pursuant to its terms or pursuant to Title IV of ERISA, or (h) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA or, on and after the effectiveness of the applicable provisions of the Pension Act, in endangered or critical status, within the meaning of Section 305 of ERISA or Section 432 of the Code. "EVENT OF DEFAULT" means any of the events specified Article VII; provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "EXCHANGE ACT" means the Securities Exchange Act of 1934. "EXCHANGEABLE NOTES" means Borrower's 6 1/2% Senior Exchangeable PIK Notes due 2014, exchangeable for certain Capital Stock of TerreStar Parent. "EXCHANGEABLE NOTES INDENTURE" means the Indenture for the Exchangeable Notes, dated as of the date hereof, between the Borrower, certain affiliates of the Borrower, as guarantors, and U.S. Bank National Association, as trustee. "EXCLUDED TAXES" means, with respect to Collateral Agent, any Lender or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States of America (including any subdivision thereof), or by the jurisdiction (including any subdivision thereof) under the laws of which such recipient (or, if the recipient is treated as a disregarded entity for U.S. federal income tax purposes, the beneficial owners thereof) is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, (b) any branch profits taxes imposed by the United States of America or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c) any Taxes that would not have been imposed but for the activities of the recipient (or, if the recipient is treated as a disregarded entity for U.S. federal income tax purposes, the beneficial owners thereof) in the jurisdiction imposing such Tax which are not related to this Agreement or any of the other Loan Documents or the transactions contemplated by the Loan Documents, including the execution and delivery of the Loan Documents and the administration of the provisions or exercise of rights and remedies under the Loan Documents; (d) United States withholding taxes imposed on amounts payable to a Lender, including a Buying Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender's assignor (if any) was entitled, at the time of assignment, to receive additional amounts from the Borrower with respect to Indemnified Taxes; and (e) any Taxes that are attributable to Collateral Agent or such Lender's, including any Buying Lender's, failure to comply with the requirements of Section 2.08(e) of this Agreement. "EXISTING INDEBTEDNESS" means Indebtedness of Borrower and the Restricted Subsidiaries in existence on the Effective Date, until such amounts are repaid. "FCC" means the U.S. Federal Communications Commission, or any successor thereto. "FCC ATC AUTHORIZATION" means the FCC authorization (FCC Application File No. SES-AMD-20070907-01253 still pending) permitting Borrower to provide ATC in the United States as additional authority pursuant to call sign E060430. "FCC LICENSES" means any license, authorization, approval, or permit granted by the FCC pursuant to the Communications Act of 1934 to the Borrower or its Subsidiaries. "FCC LICENSE SUBSIDIARY" means TerreStar License Inc., a Delaware corporation. "FCC MOBILE EARTH STATION LICENSE" means the FCC license (FCC Application File No. SES-LIC-20061206-02100, as amended, still pending) authorizing Borrower to provide service to mobile earth terminals in the United States pursuant to call sign E060430. "FCC SPECTRUM RESERVATION" means the FCC authorization permitting the Borrower to operate a MSS S-Band system in the United States pursuant to call sign S2633. "FOREIGN SUBSIDIARY" means any (i) Subsidiary that is treated as a corporation for United States federal income tax purposes that is formed or incorporated outside of the United States, (ii) Subsidiary substantially all of the assets of which consist, directly or indirectly, of Subsidiaries described in clause (i) of this definition, (iii) entity treated as disregarded for United States federal income tax purposes that owns more than 65% of the voting stock of a Subsidiary described in clause (i) or (ii) of this definition or (iv) Subsidiary that was not formed under the laws of the United States or the District of Columbia. "FULL IN-ORBIT INSURANCE" means insurance coverage of satellites following the period of time that is customarily covered by launch insurance that provides coverage against partial losses, constructive total losses and complete losses. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board of the Public Company Accounting Oversight Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession in the United States, which are in effect from time to time. "GOVERNMENTAL AUTHORITY" means any international body or any nation or government, any state or political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled, through stock or capital or otherwise, by any of the foregoing. "GUARANTEE" means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise). Unless the context otherwise indicates, "Guarantee" shall mean a guarantee by a Guarantor of the Borrower's payment Obligations pursuant to the terms of this Agreement. "GUARANTEED OBLIGATIONS" has the meaning assigned to such term in Section 8.01. "GUARANTOR" means any Person that guarantees the Obligations of the Borrower hereunder and under the other Loan Documents; provided that upon the release or discharge of such Person from its Guarantee in accordance with the provisions of the Loan Documents, such Person shall cease to be a Guarantor. "HARBINGER" has the meaning assigned to such term in the Preamble. "HARBINGER SITUATIONS" has the meaning assigned to such term in the Preamble. "HAZARDOUS MATERIALS" means all explosive or radioactive substances or wastes and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas, infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to any Environmental Law. "HEDGING OBLIGATIONS" means with respect to any specified Person, the obligations of such Person incurred in the ordinary course of business and not for speculative purposes under: (a) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements; (b) foreign exchange contracts and currency protection agreements entered into with one of more financial institutions and designed to protect the person or entity entering into the agreement against fluctuations in currency exchanges rates with respect to Indebtedness incurred; and (c) other agreements or arrangements designed to protect such Person against fluctuations in interest rates or currency exchange rates. "INDEBTEDNESS" means (without duplication) with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent: (a) in respect of borrowed money; (b) evidenced by bonds, notes, debentures or similar instruments; (c) in respect of letters of credit, banker's acceptances or other similar instruments; (d) representing Capital Lease Obligations and Attributable Debt; (e) representing the balance deferred and unpaid of the purchase price of any property or services due more than 12 months after such property is acquired or such services are completed; (f) all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary that is not a Guarantor, any preferred stock (but excluding, in each case, any accrued dividends); or (g) representing any Hedging Obligations; provided, that Indebtedness shall be deemed not to include (1) Guarantees incurred in the ordinary course of business and not in respect of borrowed money; (2) obligations to make payments to one or more insurers under satellite insurance policies in respect of premiums or the requirement to remit to such insurer(s) a portion of the future revenues generated by a satellite which has been declared a constructive total loss, in each case in accordance with the terms of the insurance policies relating thereto; (3) any obligations to make progress or incentive payments under any satellite manufacturing contract or to make payments under satellite launch contracts in respect of launch services provided thereunder, in each case, to the extent not overdue by more than 90 days; (4) obligations of such Person arising from agreements of such Person providing for indemnities, guarantees of performance, adjustments of purchase price, contingency payment obligations based on the performance of acquired or disposed assets or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Subsidiary for the purpose of financing such acquisition; or (5) purchase price holdbacks in connection with purchasing in the ordinary course of business of such Person; provided, further, that: (A) in the case of clauses (1) and (4), such obligations are not reflected on the balance sheet of such Person (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this definition); (B) in the case of clauses (2) and (3), such amounts are not required by GAAP to be treated as indebtedness on the balance sheet of such Person; and (C) in the case of clause (4), the maximum assumable liability in respect of all such obligations shall at no time exceed the gross proceeds including non-cash proceeds (the fair market value of such non-cash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by such Person in connection with such disposition. In addition, the term "INDEBTEDNESS" of a Person shall be deemed to include all Indebtedness secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. The amount of any Indebtedness outstanding as of any date will be: (a) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount; (b) in the case of any Disqualified Stock of the specified Person or any Guarantor or preferred stock of a Restricted Subsidiary that is not a Guarantor, the repurchase price calculated in accordance with the terms of such Disqualified Stock or preferred stock as if such Disqualified Stock or preferred stock were repurchased on the date on which Indebtedness is required to be determined pursuant to this Agreement; provided that if such Disqualified Stock or preferred stock is not then permitted to be repurchased, the greater of the liquidation preference and the book value of such Disqualified Stock or preferred stock; (c) in the case of Indebtedness of others secured by a Lien on any asset of the specified Person, the lesser of (i) the fair market value of such asset on the date on which Indebtedness is required to be determined pursuant to this Agreement and (ii) the amount of the Indebtedness so secured; (d) in the case of the Guarantee by the specified Person of any Indebtedness of any other Person, the maximum liability to which the specified Person may be subject upon the occurrence of the contingency giving rise to the obligation (whether or not such contingency has occurred or is likely to occur); (e) in the case of any Hedging Obligations, the net amount payable if such Hedging Obligations were terminated at that time due to default by such Person (after giving effect to any contractually permitted set-off); and (f) the principal amount of the Indebtedness, together with any interest on the Indebtedness that is more than 30 days past due, in the case of any other Indebtedness. "INDEMNIFIED TAXES" means Taxes other than Excluded Taxes. "INDEMNITEE" has the meaning assigned to such term in Section 10.03(b). "INDUSTRY CANADA" means the Canadian Federal Department of Industry or any successor thereto. "INDUSTRY CANADA LICENSE" means the Approval in Principle issued by Industry Canada to TMI Communications and Company, Limited Partnership, dated May 6, 2002, as amended from time to time, which was transferred to TerreStar Canada and which authorizes TerreStar Canada to operate a 2 GHz MSS satellite in a Canadian orbital position, and in addition, to use associated service, feeder link and telemetry, telecommand and control radio spectrum for the purposes of providing MSS services in Canada. "INFORMATION" has the meaning assigned to such term in Section 10.12. "INFORMATION STATEMENT" shall mean the Information Statement required to be filed with the Commission with respect to the Spectrum Contribution. "INTEREST PAYMENT DATE" has the meaning assigned to such term in Section 2.07(d). "INTEREST RATE" means a percentage per annum equal to fourteen (14) percentage points, as such percentage may be modified from time to time by the terms of this Agreement, including, without limitation, Sections 2.07(b) and (c). "INVESTED CAPITAL" means, at any time of determination, the sum of, without duplication, (a) total consolidated Indebtedness of the Borrower, its Restricted Subsidiaries and, to the extent they are required to be consolidated with the Borrower under GAAP, the Canadian Entities, in each case determined in accordance with GAAP; (b) cash capital contributions in the aggregate amount of $307,000,000 made by TerreStar Parent and its Subsidiaries other than the Borrower or any Subsidiaries of the Borrower to the Borrower prior to the Effective Date; (c) Net Proceeds received by the Borrower since the Effective Date from the sale of Equity Interests of the Borrower (other than proceeds of Disqualified Stock) or capital contributions by TerreStar Parent or any Subsidiary of TerreStar Parent other than the Borrower or any Subsidiary of the Borrower or any other Person other than the Borrower or any Subsidiary of the Borrower; and (d) in respect of the TerreStar Parent Funding Agreement, the greater of $95,000,000 and (x) the sum of the amount of cash contributed plus (y) the net value (determined as of the date of contribution after deducting estimated expenses of sale) of shares of SkyTerra common stock contributed to the Borrower pursuant thereto. "INVESTMENT AGREEMENTS" means (a) the Master Investment Agreement, dated on or about the date hereof, by and among TerreStar Parent, the Borrower and EchoStar and (b) the Master Investment Agreement, dated on or about the date hereof, by and among TerreStar Parent, the Borrower, Harbinger and Harbinger Situations. "INVESTMENTS" means with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (excluding Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Borrower or any Restricted Subsidiary sells or otherwise disposes of any Equity Interests of any direct or indirect Subsidiary of the Borrower such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary, the Borrower will be deemed to have made an Investment on the date of any such sale or disposition in an amount equal to the fair market value of the Equity Interests of such Subsidiary not sold or disposed of in an amount determined as provided in Section 6.04(c). The acquisition by the Borrower or any Restricted Subsidiary of a Person that holds an Investment in a third Person will be deemed to be an Investment made by the Borrower or such Restricted Subsidiary in such third Person in an amount equal to the fair market value of the Investment held by the acquired Person in such third Person on the date of any such acquisition in an amount determined as provided in Section 6.04(c). Except as otherwise provided in this Agreement, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value. "IRU AGREEMENT" means the Indefeasible Right of Use Agreement between the Borrower and TerreStar Canada, as such agreement may be modified from time to time in accordance with its terms. "LENDER" has the meaning assigned to such term in the Preamble. "LIEN" means, with respect to any asset, any mortgage, lien, hypothecation, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement or any lease in the nature thereof. "LOAN" has the meaning assigned to such term in Section 2.01. "LOAN DOCUMENTS" means, collectively, this Agreement, the Notes, the Security Documents and any other agreement entered into, now or hereafter executed by or on behalf of the Borrower or any Guarantor, and delivered to the Collateral Agent or any Lender in connection with this Agreement or the transactions contemplated hereby. "MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the business, assets, financial condition or results of operations of TerreStar Parent, the Borrower and its Restricted Subsidiaries taken as a whole, (b) the rights of TerreStar Parent, the Borrower or any of the respective Restricted Subsidiaries in respect of any Material License, (c) the ability of the Borrower or of the Guarantors to perform any of their respective payment obligations under any Material Contract, this Agreement or any of the other Loan Documents to which they are party, (d) the validity, enforceability or priority of the Liens contemplated under the Security Documents, or (e) the ability of Collateral Agent or any Lender to exercise any of its rights and/or remedies available under this Agreement or any of the other Loan Documents, except for any change, event, occurrence, fact, condition, development or effect resulting from or arising in connection with (i) the taking of any action required by the terms of the Investment Agreements, or (ii) any actions required to be taken (or required to not be taken) at the request of any Lender or any Purchaser. "MATERIAL CONTRACTS" shall mean the agreements set forth in Schedule I, in each case, including all amendments, modifications and supplements thereto. "MATERIAL LICENSE" means the FCC ATC Authorization, the Industry Canada License, the FCC Spectrum Reservation, or the FCC Mobile Earth Station License. "MATURITY DATE" means the earliest to occur of (a) February 5, 2013 and (b) July 23, 2008, if the Spectrum Contribution Approval shall not have occurred on or prior to such date. "MAXIMUM AMOUNT" means, as of any date of calculation, the lesser of (a) the Unused Commitment as of such date and (b) the Milestone Payment required to be made by the Borrower and remaining unpaid as of such date. "MILESTONE PAYMENT" means each payment in respect of the TerreStar-2 Satellite set forth in Schedule II required to be made by the Borrower to the Satellite Manufacturer under the TerreStar-2 Construction Agreement. "MILESTONE PAYMENT DATE" means each date set forth in Schedule II on which a Milestone Payment is due under the TerreStar-2 Construction Agreement. "MOODY'S" means Moody's Investors Service, Inc. or any successor to the rating agency business thereof. "MSS" means mobile satellite service. "MSS S-BAND SPECTRUM" means the spectrum bands 2000-2020 MHz and 2180-2200 MHz. "MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "NET AWARD" means any awards or proceeds in respect of any condemnation or other eminent domain proceeding. "NET INSURANCE PROCEEDS" means any awards or proceeds in respect of any casualty insurance or title insurance claim. "NET PROCEEDS" means (i) with respect to any Asset Sale or Recovery Event, the aggregate cash proceeds received by the Borrower or any of the Restricted Subsidiaries in respect of such Asset Sale (including any cash received upon the sale or other disposition of any non-cash consideration received in any such Asset Sale) or any such Recovery Event (including any Net Insurance Proceeds in respect thereof), net of the direct costs relating to such Asset Sale or Recovery Event, including legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the Asset Sale or Recovery Event, taxes paid or payable as a result of the Asset Sale or Recovery Event, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, amounts required to be applied to the repayment of Indebtedness, and any reserve for adjustment in respect of the sale price of such asset or assets established in accordance with GAAP, and any deduction of appropriate amounts to be provided by the Borrower or any Restricted Subsidiary as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such Asset Sale and retained by the Borrower and/or any Restricted Subsidiary and (ii) with respect to any issuance or sale of Capital Stock or Indebtedness, or any capital contribution, the proceeds of such issuance, sale or capital contribution, net of attorneys' fees, accountants' fees, underwriters' or placement agents' fees, discounts or commissions and brokerage, consultant or other fees actually incurred in connection with such issuance, sale or capital contribution, and net of taxes paid or payable as a result thereof. "NON-RECOURSE DEBT" means Indebtedness, (a) as to which neither the Borrower nor any of its Restricted Subsidiaries (i) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (ii) is directly or indirectly liable as a guarantor or otherwise, or (iii) is the lender; (b) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness of the Borrower or any Restricted Subsidiary to declare a default on such other Indebtedness or to cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity; and (c) as to which the lenders have been notified in writing that they will not have any recourse to the stock or assets of the Borrower or any of its Restricted Subsidiaries. "NOTES" means one or more promissory notes issued by the Borrower pursuant to Section 2.04(c). "NOTICE OF BORROWING" means a notice substantially in the form of EXHIBIT A. "OBLIGATIONS" means, any principal, premium, if any, interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization, whether or not a claim for post-filing interest is allowed in such proceeding), penalties, fees, charges, expenses, indemnifications, reimbursement obligations, damages, guarantees, and other liabilities or amounts payable under the documentation governing any Indebtedness or in respect thereto. "OECD" means the Organization for Economic Co-operation and Development. "OFFICER" means, as to TerreStar Parent, Borrower or any Subsidiary Guarantor, as the case may be, the Chairman, President, Chief Executive Officer, Treasurer, Chief Financial Officer, Executive Vice President, Senior Vice President, Vice President, Assistant Vice President, Secretary or Assistant Secretary. "OFFICERS' CERTIFICATE" means a certificate signed by two Officers or by one Officer and any Assistant Treasurer or Assistant Secretary of TerreStar Parent, Borrower or any Guarantor, as the case may be, and which complies with the provisions of this Agreement. "OTHER TAXES" means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document. "PARTICIPANT" has the meaning assigned to such term in Section 10.04(e). "PATRIOT ACT" has the meaning set forth in Section 10.13. "PBGC" means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entity performing similar functions. "PENSION ACT" means the Pension Protection Act of 2006. "PENSION FUNDING RULES AND WITHDRAWAL" means the rules of the Code and ERISA regarding minimum required contributions (including any installment payment thereof) to Plans subject to Title IV of ERISA and set forth in, with respect to plan years ending prior to the effective date as to such plan of the Pension Act, Section 412 of the Code and Section 302 of ERISA each as in effect prior to the Pension Act and, thereafter, Sections 412 and 430 of the Code and Sections 302 and 303 of ERISA. "PERMITTED BUSINESS" means the lines of business conducted by the Borrower and the Restricted Subsidiaries on the Effective Date and any business incidental or reasonably related thereto or which is a reasonable extension thereof as determined in good faith by the Borrower's Board of Directors and set forth in an Officers' Certificate delivered to the Lenders. "PERMITTED HOLDER" means, (a) with respect to the Borrower, each of TerreStar Parent, Motient Ventures Holding Inc., MVH Holdings Inc., Harbinger (or any Affiliate thereof) and Echostar (or any Affiliate thereof) and (b) with respect to TerreStar Parent, each of Motient Ventures Holding Inc., MVH Holdings Inc., Harbinger (or any Affiliate thereof) and Echostar (or any Affiliate thereof). "PERMITTED INVESTMENT" means: (a) any Investment in the Borrower or any Restricted Subsidiary of the Borrower; (b) any Investment in cash and Cash Equivalents; (c) any Investment by the Borrower or any Restricted Subsidiary in a Person, if as a result of such Investment: (i) such Person becomes a Restricted Subsidiary of the Borrower; or (ii) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Borrower or a Restricted Subsidiary of the Borrower; (d) any Investment made as a result of the receipt of any non-cash consideration received in connection with a disposition of assets excluded from the definitions of "Asset Sale" and "Recovery Event"; (e) workers' compensation, utility, lease and similar deposits and prepaid expenses in the ordinary course of business and endorsements of negotiable instruments and documents in the ordinary course of business; (f) loans or advances to employees (other than executive officers) made in the ordinary course of business of the Borrower or such Restricted Subsidiary in an aggregate amount not to exceed $2,500,000 at any one time outstanding; (g) any Investments received in compromise or resolution of (i) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Borrower or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer, or (ii) litigation, arbitration or other disputes with Persons who are not Affiliates; (h) Hedging Obligations; (i) advances or extensions of credit on terms customary in the industry in the form of accounts or other receivables incurred, and loans and advances made in settlement of such accounts receivable, all in the ordinary course of business; (j) Investments existing on the Effective Date; (k) advances, loans or extensions of credit to suppliers and vendors in the ordinary course of business; (l) Investments in the Canadian Entities that have been made, or are required to be made, by the Borrower under the (i) Transfer Agreements and (ii) the TerreStar Canada Credit Facility; and (m) other Investments in any Person having an aggregate fair market value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (m) during the relevant period that are at the time outstanding, not to exceed $10,000,000 in any calendar year and $60,000,000 in the aggregate since the Effective Date. "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the Borrower or any Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to extend, refinance, renew, replace, defease, refund or discharge other Indebtedness of the Borrower or any of its Subsidiaries (other than intercompany Indebtedness); provided that: (a) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness extended, refinanced, renewed, replaced, defeased, refunded or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses and premiums incurred in connection therewith); (b) if the Stated Maturity of the Indebtedness being refinanced is the same as or earlier than the Stated Maturity of the Loans, such Permitted Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Notes, such Permitted Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Loans; (c) such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity equal to or greater than the Weighted Average Life to Maturity of, the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged; (d) if the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged is subordinated in right of payment to the Loans or any Subsidiary Guarantee, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Loans or the Subsidiary Guarantees, as the case may be, on terms at least as favorable to the Lenders as those contained in the documentation governing the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged; and (e) such Indebtedness is incurred either by the Borrower or a Guarantor that is the obligor on the Indebtedness being extended, refinanced, renewed, replaced, defeased, refunded or discharged. "PERSON" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity. "PIK INTEREST" has the meaning assigned to such term in Section 2.07(d). "PLAN" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "PURCHASE MONEY INDEBTEDNESS" means Indebtedness: (a) consisting of the deferred purchase price of an asset, conditional sale obligations, obligations under any title retention agreement and other purchase money obligations, in each case where the maturity of such Indebtedness does not exceed the anticipated useful life of the asset being financed, and (b) incurred to finance the acquisition or construction by the Borrower or a Restricted Subsidiary of such asset, including additions and improvements; provided, that such Indebtedness is incurred within 180 days after the acquisition, or the completion of construction or improvement by the Borrower or such Restricted Subsidiary of such asset. "RECOVERY EVENT" means any event, occurrence, claim or proceeding that results in any Net Award or Net Insurance Proceeds of $10,000,000 or more. "REGISTERED LENDER" means, as of any date of determination, each Person that, to the Borrower's knowledge, is a Lender. "RELATED PARTIES" means, with respect to any specified Person, such Person's Affiliates and the respective directors, officers and employees of such Person and such Person's Affiliates. "REQUIRED LENDERS" means, at any time, Lenders having more than 70% of the aggregate amount of the sum of (a) the Unused Commitment and (b) the then aggregate unpaid principal amount of the Loans. A defaulting lender shall be excluded for the purpose of this determination. "RESTRICTED INVESTMENT" means an Investment other than a Permitted Investment. "RESTRICTED PAYMENT" has the meaning assigned to such term in Section 6.04. "RESTRICTED SUBSIDIARY" means with respect to a Person, any Subsidiary of the specified Person that is not an Unrestricted Subsidiary. Unless otherwise specified, "Restricted Subsidiary" refers to a Restricted Subsidiary of the Borrower. "S&P" means Standard and Poor's Ratings Group, Inc., or any successor to the rating agency business thereof. "SALE/LEASEBACK TRANSACTION" means arrangement relating to property or assets owned by the Borrower or a Restricted Subsidiary on the Effective Date or thereafter acquired by the Borrower or a Restricted Subsidiary whereby the Borrower or a Restricted Subsidiary transfers such property or assets to a Person (other than the Borrower or a Restricted Subsidiary of the Borrower) and the Borrower or a Restricted Subsidiary leases such property or assets from such Person. "SATELLITE MANUFACTURER" has the meaning assigned to such term in the Preamble. "SECURITY AGREEMENT" means the Security Agreement between the Borrower and the Collateral Agent for the benefit of the Lenders dated as of even date herewith, in the form attached hereto as EXHIBIT C. "SECURITY DOCUMENTS" means, collectively, the Security Agreement and all Uniform Commercial Code financing statements or comparable instruments as may be required or desirable pursuant to the terms of applicable law, required by the Security Agreement to be filed with respect to the security interests created pursuant to the Security Agreement and such other agreements and documents as shall be necessary to provide the Collateral Agent with valid, enforceable and perfected first priority security interests (subject only to Collateral Permitted Liens) in the Collateral and in each case all amendments, modifications and supplements thereto. "SELLING LENDERS" has the meaning assigned to such term in Section 10.05(a). "SKYTERRA" means SkyTerra Communications, Inc. "SPECTRUM CONTRIBUTION" means the transactions contemplated by the Spectrum Contribution Agreement. "SPECTRUM CONTRIBUTION AGREEMENT" means each of the Spectrum Contribution Agreements dated on or about the date hereof among (i) TerreStar Parent, Harbinger and Harbinger Situations and (ii) TerreStar Parent and EchoStar. "SPECTRUM CONTRIBUTION APPROVAL" means the approval of each of the Spectrum Contribution Transactions by all necessary action of the shareholders of TerreStar Parent, which shall be evidenced in form and substance reasonably satisfactory to the Lenders. "SPECTRUM CONTRIBUTION TRANSACTIONS" means, collectively, (a) the Spectrum Contribution, (b) the provision to EchoStar of TerreStar Parent's satellite/terrestrial network capacity for a set-top box return path, and (c) the non-exclusive, royalty-free license to TerreStar Parent for the use of CCTV's intellectual property with respect to use of 1.4 GHz Spectrum in North America. "STATED MATURITY" means with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the Effective Date, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof. "SUBSIDIARY" means, with respect to any specified Person: (a) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders' agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and (b) any partnership (i) the sole general partner or the managing general partner of which is such Person or a Subsidiary of such Person or (ii) the only general partners of which are that Person or one or more Subsidiaries of that Person (or any combination thereof). Unless otherwise specified, "Subsidiary" refers to a Subsidiary of Borrower. "SUBSIDIARY GUARANTEE" means any Guarantee by a Subsidiary of the Obligations under this Agreement and the other Loan Documents. "SUBSIDIARY GUARANTOR" means any Restricted Subsidiary of the Borrower that is a Guarantor. "TAXES" means any and all present or future taxes, fees, levies, imposts, duties, deductions, charges or withholdings imposed by any Governmental Authority, including any interest, penalties, or additions thereto. "TERRESTAR-1 SATELLITE" means "TERRESTAR-1", as such term is defined in the 15% Notes Indenture. "TERRESTAR-2 CONSTRUCTION AGREEMENT" has the meaning assigned to such term in the Preamble. "TERRESTAR-2 SATELLITE" means "TERRESTAR-2", as such term is defined in the TerreStar-2 Construction Agreement. "TERRESTAR CANADA" means TerreStar Networks (Canada) Inc., a corporation incorporated under the laws of the province of Ontario. "TERRESTAR CANADA CREDIT FACILITY" means (i) the Amended and Restated Credit Facility Agreement dated December 20, 2007 between the Borrower and TerreStar Canada; and (ii) the Amended and Restated Promissory Note dated December 20, 2007 between the Borrower and TerreStar Canada. "TERRESTAR CANADA HOLDINGS" means TerreStar Networks Holdings (Canada) Inc., a corporation incorporated under the laws of the province of Ontario. "TERRESTAR PARENT" means TerreStar Corporation, a Delaware corporation (f/k/a Motient Corporation). "TERRESTAR PARENT FUNDING AGREEMENT" means the agreement entered into in connection with the offering of the 15% Notes among TerreStar Parent and Motient Ventures Holding Inc. in favor of the Borrower relating to certain funding commitments to the Borrower. "TERRESTAR SHAREHOLDERS AGREEMENT" means the Amended and Restated Shareholders Agreement dated as of May 6, 2006 between 437158 Canada Inc. (the transferee of TMI's shares in the capital of TerreStar Canada Holdings), the Borrower, TerreStar Canada Holdings and TerreStar Canada, as amended from time to time in a manner not materially disadvantageous to the Lenders. "TMI" means TMI Communications and Company, Limited Partnership, a limited partnership formed under, and governed by, the laws of the Province of Quebec, or any successor thereto. "TRANSACTIONS" means the execution, delivery and performance by the Borrower of this Agreement and by the Borrower and the Guarantors of the other Loan Documents to which they are a party, the borrowing of the Loan, the use of the proceeds thereof and the granting of the Liens on the Collateral by the Borrower to the Collateral Agent. "TRANSFER AGREEMENTS" means the Master Agreement dated as of October 24, 2006 by and among Telesat Canada, BCE Inc., the Borrower, TerreStar Canada Holdings, TerreStar Canada, TMI and TerreStar Parent, along with the series of agreements attached thereto that the parties thereto have subsequently entered into or will hereafter enter into, including a Shareholders Agreement of TerreStar Canada Holdings, a Rights and Services Agreement, a Tax Indemnity Agreement, a TerreStar Canada Guarantee in favor of Loral, a TerreStar Canada Guarantee in favor of the Borrower, a security agreement, a Release and Indemnity Agreement, a Guarantee and Share Pledge Agreement in favor of the Borrower, a Satellite Delivery Agreement, an Indefeasible Right of Use Agreement and an Intellectual Property License Agreement, in each case, as such agreements may have been or may hereafter be modified from time to time in a manner not materially disadvantageous to the Lenders. "UNIFORM COMMERCIAL CODE" means the New York Uniform Commercial Code and the Uniform Commercial Code of each other state as may be applicable, in the reasonable judgment of the Lenders, for the purpose of creating, maintaining and perfecting the Collateral Agent's first priority security interest (subject only to Collateral Permitted Liens) in the Collateral. "UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower that is designated by the Board of Directors of the Borrower as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors, but only to the extent that such Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) except as permitted by Section 6.05, is not party to any agreement, contract, arrangement or understanding with the Borrower or any Restricted Subsidiary of the Borrower unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Borrower or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Borrower; (c) is a Person with respect to which neither the Borrower nor any of its Restricted Subsidiaries has any direct or indirect obligation (i) to subscribe for additional Equity Interests or (ii) to maintain or preserve such Person's financial condition or to cause such Person to achieve any specified levels of operating results; and (d) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Borrower or any of its Restricted Subsidiaries. "UNUSED COMMITMENT" means, as of any date of calculation, the amount by which the Commitment in effect at the time exceeds the aggregate outstanding principal amount of all Loans; provided, that the Commitment shall be permanently reduced (a) at the time of and by the amount of each Milestone Payment required to be made, regardless of whether a Loan has been made with respect thereto and (b) as otherwise provided in Section 2.06. "VOTING STOCK" of any specified Person as of any date, means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person. "WEIGHTED AVERAGE LIFE TO MATURITY" means when applied to any Indebtedness at any date, the number of years obtained by dividing: (a) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (ii) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by (b) the then outstanding principal amount of such Indebtedness. "WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to compliance with any restrictions on or conditions to such amendments, supplements or modifications set forth herein), and (ii) references to any statute or regulation shall be construed as including all statutory and regulatory provisions consolidating, amending, replacing, supplementing or interpreting the statute or regulation, (b) any reference herein to any Person shall be construed to include such Person's permitted successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights and (f) unless otherwise expressly provided herein, any reference to any action of Collateral Agent or any Lender by way of consent, approval or waiver shall be deemed modified by the phrase "in its/their sole discretion". SECTION 1.03. ACCOUNTING TERMS; GAAP. Except as otherwise expressly provided herein, all terms of an accounting or financial nature shall be construed in accordance with GAAP; provided that, if the Borrower notifies the Lenders that the Borrower requests an amendment to any provision hereof to eliminate the effect of any change occurring after the date hereof in GAAP or in the application thereof on the operation of such provision (or if the Lenders notify the Borrower that the Lenders request an amendment to any provision hereof for such purpose), regardless of whether any such notice is given before or after such change in GAAP or in the application thereof, then the Collateral Agent, the Lenders and the Borrower shall negotiate in good faith to effect such amendment and such provision shall be interpreted on the basis of GAAP as in effect and applied immediately before such change shall have become effective until such notice shall have been withdrawn or such provision amended in accordance herewith. ARTICLE II LOAN PROVISIONS SECTION 2.01. THE COMMITMENT. (a) THE LOANS. The Lenders agree, subject to the terms hereof and satisfaction of the conditions precedent contained herein, from the Effective Date through the Maturity Date to make extensions of credit to the Borrower (each such extension of credit, a "LOAN" and, collectively, the "LOANS") upon the request of the Borrower in accordance with Section 2.03, on any Milestone Payment Date for the TerreStar-2 Satellite in order for the Borrower to make the related Milestone Payment to the Satellite Manufacturer as provided below; provided that no Loan shall exceed the Maximum Amount, and provided, further, that each Loan shall be in an amount at least equal to the full Milestone Payment (or, if less than the full Milestone Payment, $500,000 and whole number multiples of $100,000 in excess thereof). The Lenders are authorized to make Loans under this Agreement based on written instructions received from an Officer of the Borrower, and the Borrower shall indemnify and hold Collateral Agent and the Lenders harmless for any damages or losses suffered by Collateral Agent or such Lender as a result of reliance on such instructions. To the extent permitted by applicable law, the Lenders shall disburse funds to the Borrower by wiring the amount of each Loan made by such Lender under this Section 2.01 to the Deposit Account or in such other manner and otherwise in accordance with the Borrower's instructions. Each Loan under this Agreement shall be granted by the Lenders pro rata on the basis of their then-applicable Commitments. It is understood that no Lender shall be responsible for any default by any other Lender in its obligation to make Loans hereunder and that each Lender shall be obligated to make the Loans provided to be made by it hereunder, regardless of the failure of any other Lender to fulfill its commitments hereunder. Under no circumstances shall any Lender be obligated to make any Loan if, after making such Loan, the aggregate principal amount of the Loans made by such Lender would exceed the Commitment of such Lender then in effect. Amounts prepaid or repaid in respect of the Loans may not be reborrowed. (b) PURPOSE. The Borrower shall, subject to the terms and conditions hereof, use each Loan solely to pay the applicable Milestone Payment owed to the Satellite Manufacturer pursuant to the TerreStar-2 Construction Agreement. SECTION 2.02. SECURITY. All obligations of the Borrower under this Agreement and the other Loan Documents shall be secured by the Collateral as set forth in the Security Documents, subject to the condition that if the Loans (together with accrued and unpaid interest thereon, fees and all other amounts due and payable under the Loan Documents) to be so secured shall be repaid in full, and the Commitment shall have terminated or expired, Collateral Agent shall release the Collateral from the security interest created therein. The Borrower shall enter into on or before the Effective Date the Security Documents, including the Security Agreement, granting to Collateral Agent a valid Lien in or on all Collateral, which Lien shall be subject to no prior Liens (provided that the Collateral may be subject to Collateral Permitted Liens), shall be perfected at all times on and after the Effective Date and shall be otherwise in accordance with the terms hereof, and, as a condition to the Effective Date, the Lenders shall be satisfied by receipt of legal opinions that such grant is not void or subject to avoidance if the Borrower becomes the subject of an insolvency proceeding. SECTION 2.03. REQUEST FOR A LOAN. To request a Loan, the Borrower shall notify the Lenders of such request by delivery of a Notice of Borrowing, in substantially the form of Exhibit A or otherwise in a form approved by the Required Lenders and signed by the Borrower, not later than 10 Business Days before the date of the proposed Loan. SECTION 2.04. RECORDS; PROMISSORY NOTES. (a) MAINTENANCE OF RECORDS BY THE LENDERS. Each Lender shall maintain records evidencing the indebtedness of the Borrower to such Lender resulting from the Loans in which it shall record (i) the amount of any principal or interest due and payable or to become due and payable from the Borrower hereunder and (ii) the amount of any sum received by such Lender hereunder. (b) EFFECT OF ENTRIES. The entries made in the respective records maintained pursuant to paragraph (a) of this Section shall be prima facie evidence of the existence and amounts of the obligations recorded therein; provided that the failure of any Lender to maintain such records or any error therein shall not in any manner affect the obligation of the Borrower to repay the Loans in accordance with the terms of this Agreement. (c) PROMISSORY NOTES. Any Lender may request that a Loan be evidenced by a Note substantially in the form of EXHIBIT D. In such event, the Borrower shall prepare, execute and deliver to the requesting Lender a Note payable to such Lender. Thereafter, the Loan evidenced by such Note and interest thereon shall at all times (including after assignment pursuant to Section 10.04) be represented by a Note in such form payable to the payee named therein (or, if such Note is a registered note, to such payee and its registered assigns). SECTION 2.05. REPAYMENT OF THE LOANS. The Borrower hereby unconditionally promises to pay to the Lenders the unpaid principal amount of the Loans, together with accrued and unpaid interest thereon, on the Maturity Date. SECTION 2.06. PREPAYMENT OF THE LOANS AND COMMITMENT REDUCTIONS. (a) OPTIONAL PREPAYMENTS. The Borrower may, upon three Business Days prior written notice to the Lenders, prepay Loans, in whole or in part, in amounts of at least $5,000,000 or any whole number multiple of $1,000,000 in excess thereof and at the following prepayment prices (expressed as a percentage of the principal amount of the Loans being prepaid), if prepaid during the twelve-month period ending on the anniversary of the Effective Date set forth below: Anniversary Prepayment Price ----------- ---------------- First 104% Second 103% Third 102% Fourth 101% Thereafter 100% ; provided, that such prepayment shall be accompanied by (i) interest on the amount of such prepayment, accrued and unpaid to the date of prepayment and (ii) all accrued and unpaid fees, if any, and all other amounts due and payable under this Agreement and the other Loan Documents in respect of such Loans. Loans (or portions thereof) prepaid in accordance with this Section 2.06(a) may not be reborrowed. (b) MANDATORY PREPAYMENTS. The Commitment shall terminate immediately and the Borrower shall prepay all Loans in full, together with (i) interest thereon accrued to the date of prepayment and (ii) all accrued and unpaid fees and other amounts due and payable under this Agreement and the other Loan Documents, within 10 Business Days after the occurrence of any of the following events: (i) a revocation, cancellation or relinquishment of any Material License held by the Borrower, a Restricted Subsidiary or TerreStar Canada to operate satellite or ancillary terrestrial component facilities, unless the revocation, cancellation or relinquishment (1) remains subject to reconsideration, review, or appeal at the FCC or Industry Canada or any court, as applicable if, but only if, during the pendency of such reconsideration, review or appeal the Borrower, a Restricted Subsidiary or TerreStar Canada, as applicable, is permitted to exercise its rights under the applicable Material License and continues to conduct its business in the ordinary course, or (2) is accompanied by the issuance of a substitute or successor license, permit, or authorization of substantially equivalent utility, as reasonably determined by the Required Lenders or Borrower or a Restricted Subsidiary of Borrower already holds a license, permit, or authorization of substantially equivalent utility; (ii) termination of the TerreStar-2 Construction Agreement, including a partial termination by the Borrower that includes the cancellation of the manufacture of the TerreStar-2 Satellite; and (iii) a Change of Control. The Loans (or portions thereof) prepaid in accordance with this Section 2.06(b) may not be reborrowed. (c) TERMINATION/EXPIRATION OF THE COMMITMENT. The Commitment or a portion thereof shall terminate upon the earliest to occur of the following: (i) in whole upon satisfaction of the last scheduled payment with respect to the TerreStar-2 Satellite set forth in Schedule II, (ii) the occurrence of any of the events set forth in Section 2.06(a) or (b) to the extent of the applicable prepayment, (iii) the date on which the aggregate outstanding principal amount of the Loans shall equal the Commitment then in effect and (iv) in whole, upon termination in accordance with Section 7.02. (d) NOTICES, ETC. The Borrower shall notify the Lenders by telephone (confirmed by telecopy) of any prepayment hereunder not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date, the principal amount of the Loans or the portion thereof to be prepaid and a reasonably detailed calculation of the amount of such prepayment. Each partial prepayment of the Loans shall be in an amount that would be permitted as provided in Section 2.06(a), except as necessary to apply fully the required amount of a mandatory prepayment. Prepayments shall be accompanied by the applicable unpaid fees and all other amounts owing under this Agreement and the other Loan Documents and accrued and unpaid interest to the extent required by Section 2.07 and shall be made in the manner specified in Section 2.09. SECTION 2.07. INTEREST. (a) RATE. The unpaid principal amount of each Loan shall bear interest from the date such Loan is made under Section 2.01 until paid in full at a rate per annum that shall at all times be equal to the Interest Rate. (b) ADDITIONAL INTEREST. Notwithstanding Section 2.07(a): (i) if the Information Statement shall not have been submitted to the Commission on or prior to February 29, 2008, the Interest Rate then in effect shall be increased from March 1, 2008 to the date of the Spectrum Contribution Approval by one (1) percentage point per annum; (ii) if the Information Statement shall not have been submitted to the shareholders of TerreStar Parent on or prior to April 30, 2008, the Interest Rate then in effect shall be increased from May 1, 2008 to the date of the Spectrum Contribution Approval by one (1) percentage point per annum; (iii) if the Borrower fails to secure the FCC ATC Authorization on or prior to the ATC Operational Date, the Interest Rate then in effect shall be increased by one (1) percentage point per annum on each of (A) the ATC Operational Date and (B) until Borrower secures the FCC ATC Authorization, (x) the date that is one (1) month after the ATC Operational Date and (y) the date that is two (2) months after the ATC Operational Date; provided that all additional interest pursuant to this clause (iii) shall cease to apply as of the date that the Borrower has secured the FCC ATC Authorization; and (iv) the aggregate amount of all such additional interest shall be payable in cash on demand by the Lenders. (c) DEFAULT INTEREST. From and after the occurrence and during the continuance of any Event of Default, upon notice by the Required Lenders to the Borrower, the Borrower shall pay interest on the principal amount of all Loans and all other due and unpaid Obligations under this Agreement and the other Loan Documents, to the extent permitted by applicable law, at the Interest Rate then in effect plus two (2) percentage points per annum. All such interest shall be payable in cash on demand by the Lenders. (d) PAYMENT OF INTEREST. Interest on each Loan shall accrue from and including the date such Loan is made under Section 2.01 to but excluding the date of any repayment thereof and shall be payable quarterly in arrears on the last day of each March, June, September and December (each an "INTEREST PAYMENT DATE"), beginning with the fiscal quarter ending March 31, 2008, and on any prepayment (on the amount prepaid), at maturity (whether by acceleration or otherwise) and, after such maturity, on demand by the Lenders. On each Interest Payment Date the Borrower shall (i) pay in cash all interest which shall have accrued at the Interest Rate on the Loans through such Interest Payment Date or (ii) solely during the period from the Effective Date to, but not including, the fourth anniversary thereof, at the election of the Borrower, (A) defer payment in cash of all interest which shall have accrued at the Interest Rate on the Loans through such Interest Payment Date or (B) make a cash payment of an amount and defer payment of an amount so that the combined amount of the payment and the deferral is equal to all interest accrued at the Interest Rate on the Loans through such Interest Payment Date. Upon any such deferral of an interest payment in accordance with this Section 2.07(d)(ii), the amount of the deferred payment shall become and be deemed to be additional outstanding principal of the Loans, on which interest shall begin accruing hereunder on the date of any such deferral. Such additional outstanding principal amount of the Loans is sometimes referred to in this Agreement as "PIK INTEREST". To the extent requested from time to time by the Lenders, the Borrower shall issue additional or replacement Notes to evidence the increased principal amount of Loans resulting from the deferral of interest payments hereunder; provided that the absence of or failure to request or issue such additional or replacement Notes shall not affect the validity of such obligation, its character as principal or the Borrower's obligations with respect thereto. Interest accrued on Loans and other monetary Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents after the date such amount is due and payable (whether on the Maturity Date, upon acceleration or otherwise) shall be payable upon demand by the Lenders. (e) COMPUTATION. All interest hereunder shall be computed on the basis of a year of 360 days, and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). SECTION 2.08. TAXES. (a) PAYMENTS TO BE FREE OF TAXES. Any and all payments by or on account of any obligation of the Borrower hereunder or under any other Loan Document shall be made free and clear of and without deduction for any Indemnified Taxes or Other Taxes. In furtherance of the foregoing, if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section) the Lenders receive an amount equal to the sum they would have received had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. (b) PAYMENT OF OTHER TAXES BY THE BORROWER. In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. (c) INDEMNIFICATION BY THE BORROWER. The Borrower shall indemnify Collateral Agent and the Lenders, within 10 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by Collateral Agent or such Lender and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to the Borrower by Collateral Agent or such Lender shall be conclusive absent manifest error. (d) EVIDENCE OF PAYMENTS. As soon as practicable after any payment of Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to the Lenders the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Lenders. (e) TAXATION OF LENDERS. Notwithstanding any provision of this Agreement to the contrary, each Lender shall be either (a) a United States person under Section 7701(a)(30) of the Code for United States federal income purposes and shall deliver to the Borrower a properly completed and executed Internal Revenue Service Form W-9 (or any subsequent versions thereof or successors thereto), or (b) entitled to an exemption from withholding tax under the laws of the United States of America, or any treaty with the United States of America, or any treaty to which the United States of America is a party, with respect to payments under any Loan Documents and shall deliver to the Borrower, at the time or times prescribed by applicable law or reasonably requested by the Borrower, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding. (f) REFUNDS. If any Lender determines, in its sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrower or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.08, it shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by the Borrower under this Section 2.08 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of such Lender and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, that the Borrower, upon the request of such Lender, agrees to repay the amount paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to such Lender in the event such Lender is required to repay such refund to such Governmental Authority. This paragraph shall not be construed to require any Lender to make available its tax returns (or any other information relating to its taxes which it deems confidential) to the Borrower or any other Person. SECTION 2.09. PAYMENTS GENERALLY. (a) PAYMENTS BY THE BORROWER. The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest or fees, or under Section 2.08, or otherwise) or under any other Loan Document (except to the extent otherwise provided therein) prior to 11:00 a.m., New York City time, on the date when due, in immediately available funds, without set-off, recoupment or counterclaim (it being understood and agreed that the Borrower shall not at any time offset amounts owed to it by the Satellite Manufacturer under the TerreStar-2 Construction Agreement or otherwise against amounts due and owing to Collateral Agent or any Lender hereunder or under the other Loan Documents). Any amounts received after such time on any date may, in the discretion of the Lender, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Lenders by wire transfer to the account specified for such purpose below such Lender's name in Schedule 2.09(a), or at such other account as such Lender may specify by prior written notice to the Borrower, except as otherwise expressly provided in the relevant Loan Document. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder or under any other Loan Document shall be made in Dollars. (b) APPLICATION OF PAYMENTS. Upon the occurrence, and during the continuance of an Event of Default, all payments or proceeds received by Lenders hereunder or under any Loan Document in respect of any of the Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents, including, but not limited to all proceeds received by any Lender in respect of any sale, any collection from, or other realization upon all or any part of the Collateral, shall be applied in full or in part as follows: first, to the payment of all costs and expenses of such sale, collection or other realization, including reasonable compensation to Collateral Agent and its agents and counsel, and all other expenses, liabilities and advances made or incurred by Collateral Agent in connection therewith, and all amounts for which Collateral Agent is entitled to indemnification hereunder or under any Loan Document (in its capacity as Collateral Agent) and to the payment of all costs and expenses paid or incurred by Collateral Agent in connection with the exercise of any right or remedy hereunder or under any Loan Document, all in accordance with the terms hereof or thereof; and second, to the extent of any excess of such proceeds, to the payment of all other Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents for the ratable benefit of the Lenders. (c) RATABLE SHARING. Lenders hereby agree among themselves that, except as otherwise provided in the other Loan Documents, if any of them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and applied in accordance with the terms hereof), through the exercise of any right of set off or banker's lien, by counterclaim or cross action or by the enforcement of any right under the Loan Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal, interest, amounts payable in respect of fees and other amounts then due and owing to such Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE AMOUNTS DUE" to such Lender) which is greater than the proportion received by any other Lender in respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such proportionately greater payment shall (i) notify each other Lender of the receipt of such payment and (ii) apply a portion of such payment to purchase participations (which it shall be deemed to have purchased from each seller of a participation simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, that if all or part of such proportionately greater payment received by such purchasing Lender is thereafter recovered from such Lender upon the bankruptcy or reorganization of Borrower or otherwise, those purchases to that extent shall be rescinded and the purchase prices paid for such participations shall be returned to such purchasing Lender ratably to the extent of such recovery, but without interest. Borrower expressly consents to the foregoing arrangement and agrees that any holder of a participation so purchased may exercise any and all rights of banker's lien, set off or counterclaim with respect to any and all monies owing by Borrower to that holder with respect thereto as fully as if that holder were owed the amount of the participation held by that holder. (d) APPLICATION OF INSUFFICIENT PAYMENTS. If at any time insufficient funds are received by and available to the Lenders to pay fully all amounts of principal, interest and fees then due hereunder and under the other Loan Documents, such funds shall be applied (i) first, to pay interest and fees then due and (ii) second, to pay principal then due. ARTICLE III REPRESENTATIONS AND WARRANTIES The Borrower and each Guarantor represents and warrants to the Collateral Agent and the Lenders that: SECTION 3.01. ORGANIZATION; POWERS. The Borrower and each Guarantor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except in any jurisdiction where the failure to be so qualified or in good standing has not had, and would not reasonably be expected to have, a Material Adverse Effect. SECTION 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions are within the Borrower's and each Guarantor's organizational powers and have been duly authorized by all necessary corporate action. This Agreement has been duly executed and delivered by the Borrower and constitutes, and each of the Security Documents when executed and delivered will constitute, a legal, valid and binding agreement of the Borrower and each Guarantor, and each Note when executed and delivered will constitute the legal, valid and binding obligation of the Borrower, in each case, enforceable in accordance with its terms, except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or similar laws of general applicability affecting the enforcement of creditors' rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). SECTION 3.03. COMPLIANCE WITH LAWS AND AGREEMENTS. (a) The Borrower and each Guarantor is in compliance in all respects with all laws, regulations and orders of any Governmental Authority applicable to it or its property and all indentures, agreements and other instruments binding upon it or its property, except any non-compliance that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. (b) The Satellite Manufacturer has received notice of the security interests in the Collateral granted to the Collateral Agent under the Security Agreement in accordance with the terms of the TerreStar-2 Construction Agreement. SECTION 3.04. ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events for which liability is reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect. The present value of all accumulated benefit obligations under each Plan (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $100,000 the fair market value of the assets of such Plan, and the present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $100,000 the fair market value of the assets of all such underfunded Plans. SECTION 3.05. LITIGATION, ENVIRONMENTAL AND OTHER MATTERS. (a) ACTIONS, SUITS AND PROCEEDINGS. There are no actions, suits or proceedings by or before any arbitrator or Governmental Authority now pending against or, to the knowledge of the Borrower and each Guarantor, threatened against or affecting the Borrower or its Subsidiaries or any of their respective properties (i) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect or (ii) that involve this Agreement, any other Loan Document or the Transactions. No injunction, writ, temporary restraining order or any order of any nature has been issued by any court or other Governmental Authority purporting to enjoin or restrain the execution, delivery or performance of this Agreement or any other Loan Document, or directing that the Transactions not be consummated as herein or therein provided. (b) ENVIRONMENTAL MATTERS. Except with respect to any matters that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect, the Borrower and each Guarantor (i) has not failed to comply with any Environmental Law or to obtain, maintain or comply with any permit, license or other approval required under any Environmental Law, (ii) has not become subject to any Environmental Liability, (iii) has not received notice of any claim with respect to any Environmental Liability or (iv) does not know of any basis for any Environmental Liability. (c) DISCLOSED MATTERS. Other than as set forth on Schedule 3.05(c), since September 30, 2007, there has been no event or condition which has had or is reasonably likely to have a Material Adverse Effect. SECTION 3.06. COLLATERAL. All representations of the Borrower and each Guarantor contained in the Security Documents are true and correct. SECTION 3.07. SECURITY DOCUMENTS. From and after the Effective Date, the Security Documents shall create in favor of Collateral Agent, for the benefit of the Lenders, a legal, valid and enforceable Liens on or in all of the Collateral and shall constitute at all times a perfected Lien on or in all right, title, estate and interest of the Borrower and each Guarantor in the Collateral covered thereby having the perfection and priority required by Section 2.02, and all necessary and appropriate consents to such creation and perfection of such Liens of each of the parties to the Security Documents have been obtained on or before the date of execution of the Security Documents. SECTION 3.08. TAXES. The Borrower and each Guarantor has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which such Person has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. SECTION 3.09. USE OF PROCEEDS. The proceeds of the Loan are being used solely for the purposes set forth in Section 5.10. SECTION 3.10. MATERIAL CONTRACTS. (a) Other than as listed on Schedule I, except to the extent that (i) such contract has expired in accordance with its terms (other than by reason of default of any party thereto) or (ii) such Material Contract has been replaced with a substitute Contract reasonably acceptable to the Required Lenders, each Material Contract is in full force and effect, and neither the Borrower nor any of its Affiliates is in default in the performance of any of their respective covenants or obligations set out therein. (b) No Indebtedness or other obligations of TerreStar Parent, Borrower, any Guarantor or any of their respective Affiliates has been incurred for the purpose of financing all or part of the purchase price of the TerreStar-2 Satellite (other than the Loan Documents), and no value has been given by any Person other than Borrower to enable TerreStar Parent, Borrower, any Guarantor or any Affiliate thereof to acquire rights in or the use of the TerreStar-2 Satellite. (c) Schedule II describes each payment and payment date in respect of the TerreStar-2 Satellite required to be made by the Borrower to the Satellite Manufacturer under Exhibit E and Exhibit F of the TerreStar-2 Construction Agreement (other than changes made to such schedules with the consent of the Lenders pursuant to Section 6.10). SECTION 3.11. GOVERNMENTAL APPROVALS; NO CONFLICTS. The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except for (i) such as have been obtained or made and are in full force and effect or will be obtained in the ordinary course of business before the time required under applicable laws and regulations and (ii) filings and recordings in respect of the Liens created pursuant to the Security Documents, (b) will not violate any applicable law or regulation or the organizational documents of the Borrower or any Guarantor or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or any other instrument binding upon the Borrower or any Guarantor or their respective assets, or give rise to a right thereunder to require any payment to be made by any such Person, and (d) except for the Liens created pursuant to the Security Documents, will not result in the creation or imposition of any Lien on any asset of the Borrower or any Guarantor, except, in the case of clauses (a), (b) and (c) above, such violations, conflicts and/or absence of approvals and consents that, individually or in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. SECTION 3.12. NO DEFAULT. No Default or Event of Default exists or would result from the incurring of any obligations by the Borrower or any Guarantor under any Loan Document or from the grant or perfection of the Liens of the Lenders or Collateral Agent, as the case may be, on the Collateral. SECTION 3.13. LICENSES. Each Material License either (a) has been issued to the Borrower, a Restricted Subsidiary or TerreStar Canada, (b) has been applied for by Restricted Subsidiary or TerreStar Canada, or (c) will be applied for by Restricted Subsidiary or TerreStar Canada. All of the Material Licenses that have been issued are in full force and effect. Such Material Licenses are all the authorization necessary from all applicable Governmental Authorities for the Borrower and its Restricted Subsidiaries to operate the TerreStar-1 Satellite as part of their MSS and ATC system in the United States. The administration of Canada has advance published and requested coordination at the International Telecommunications Union with respect to the service link and feeder link frequencies on TerreStar-1. There are no proceedings before any Governmental Authority now pending against or, to the knowledge of the Borrower or its Restricted Subsidiaries, threatened against or affecting any Material License or its use by the Borrower or any Restricted Subsidiary, as applicable for the purposes contemplated hereby. ARTICLE IV CONDITIONS SECTION 4.01. EFFECTIVE DATE. The obligation of the Lenders to make the Loans hereunder shall not become effective until the date on which the Lenders shall have received each of the following documents, each of which shall be satisfactory to the Lenders in form and substance (or such condition shall have been waived in accordance with Section 10.02) and each of the other conditions in Sections 4.01 and 4.02 have been satisfied (or waived in accordance with Section 10.02): (a) PURCHASE MONEY CREDIT AGREEMENT, ETC. From the Borrower, a duly executed counterpart of this Agreement and any Notes signed on behalf of the Borrower, together with all schedules and exhibits hereto. (b) SECURITY DOCUMENTS. From the Borrower, a duly executed counterpart of the Security Agreement and duly executed copies of any filings required to be made in accordance with the terms thereof or such other evidence satisfactory to Collateral Agent and the Lenders that such filings shall have been duly made in the appropriate filing offices to perfect the security interests contemplated thereby in accordance with the priority contemplated in Section 2.02 (subject to Collateral Permitted Liens). (c) SEARCH RESULTS. (i) The results of a search of the Uniform Commercial Code filings (or equivalent filings), in addition to tax Lien, judgment Lien, bankruptcy and litigation searches made with respect to the Borrower and each Guarantor, together with copies of the financing statements and other filings (or similar documents) disclosed by such searches, and accompanied by evidence satisfactory to the Collateral Agent and the Lenders that the Liens indicated in any such financing statement and other filings (or similar document) are Collateral Permitted Liens. (ii) Evidence that appropriate Uniform Commercial Code (or equivalent) financing statements have been duly filed in such office or offices as may be necessary or, in the opinion of the Lenders, desirable, to perfect the Collateral Agent's Liens in and to the Collateral and certified searches reflecting the filing of all such financing statements. (d) INSURANCE. Evidence that all insurance, if any, required to be maintained pursuant to the Loan Documents has been obtained and is in effect, together with the certificates of insurance, naming the Collateral Agent, on behalf of the Lenders, as an additional insured or loss payee, as the case may be, under all insurance policies maintained with respect to the assets and properties of the Loan Parties that constitutes Collateral. (e) OPINION OF COUNSEL. One or more opinions, each dated the Effective Date and addressed to the Lenders, of counsel (including New York, Delaware, FCC and Industry Canada regulatory counsel) to the Borrower and the Guarantors acceptable to the Lenders covering the matters set forth in EXHIBIT B and such other matters as the Lenders may reasonably request. (f) ORGANIZATIONAL DOCUMENTS. Certified copies of (i) the certificate of incorporation or other organizational documents and by-laws (or equivalent) of the Borrower and each Guarantor, and (ii) good standing certificates. (g) SECRETARY'S CERTIFICATE. An original certificate, dated the Effective Date, for the Borrower and each Guarantor, dated the Effective Date, duly executed and delivered by the secretary or assistant secretary, managing member or general partner thereof, as applicable, as to: (i) resolutions of each such Person's board of managers/directors (or other managing body, in the case of a Person that is not a corporation) then in full force and effect expressly and specifically authorizing, to the extent relevant, all aspects of the Loan Documents applicable to such Person, and the execution, delivery and performance of each Loan Document, in each case, to be executed by such Person; (ii) the incumbency and signatures of its Officers and any other of its officers, managing member or general partner, as applicable, authorized to act with respect to each Loan Document to be executed by such Person; and (iii) each such Person's certificate of incorporation or other organizational documents and by-laws (or equivalent), as amended, modified or supplemented as of the Effective Date, certified by the appropriate officer or official body of the jurisdiction of organization of such Person, which certificates shall provide that Collateral Agent and the Lenders may conclusively rely thereon until it shall have received a further certificate of the secretary, assistant secretary, managing member or general partner, as applicable, of any such Person canceling or amending the prior certificate of such Person as provided in this Agreement. (h) OFFICER'S CERTIFICATE. Certificates, dated the Effective Date and except as otherwise provided below signed by an Officer of the Borrower and each Guarantor, confirming the following: (i) the receipt of all required approvals and consents of all Governmental Authorities and other third parties with respect to the consummation of the transactions contemplated by the Loan Documents (other than (A) the Spectrum Contribution Approval and (B) FCC approval with respect to the Spectrum Contribution), each of which shall be attached thereto and certified as being true, complete and correct copies thereof; (ii) that each of the representations and warranties set out in the Loan Documents is true and correct and each of the conditions specified in Article IV have been fulfilled; (iii) from the chief financial officer of the Borrower, certifying as to the solvency of the Borrower and the Restricted Subsidiaries on a consolidated basis after giving effect to the Transactions; (iv) the receipt of a fairness opinion, dated as of the Effective Date and addressed to the Board of Directors of TerreStar Parent from Jeffries & Company, Inc. covering the Transactions and the Spectrum Contribution Transactions, which shall be attached thereto and certified as being a true, complete and correct copy thereof; and (v) that the Satellite Manufacturer has received notice of the security interests in the Collateral granted to the Collateral Agent under the Security Agreement in accordance with the terms of the TerreStar-2 Construction Agreement. (i) MATERIAL CONTRACTS. Copies of each Material Contract (other than Material Contracts that are subject to confidentiality restrictions), together with a certificate of an Officer of the Borrower certifying each such document as being a true, correct, and complete copy thereof. (j) FEES AND EXPENSES. (i) All fees required to be paid to Collateral Agent and the Lenders, respectively, on or before the Effective Date shall have been paid. (ii) All reasonable fees, charges and disbursements of respective counsel and agents, including accountants and other advisors, to Collateral Agent and the Lenders shall have been paid (directly to such Persons if requested) to the extent invoiced prior to or on the Effective Date, plus such additional amounts of such fees, charges and disbursements as shall constitute its reasonable estimate of such fees, charges and disbursements incurred or to be incurred by such Persons through the closing proceedings (provided that such estimate shall not thereafter preclude a final settling of accounts between the Borrower and the Lenders). SECTION 4.02. ADDITIONAL CONDITIONS TO EFFECTIVE DATE AND EACH LOAN. The obligation of the Lenders to make each Loan hereunder is subject to satisfaction (or waiver in accordance with Section 10.02) of the following additional conditions on such borrowing date: (a) NO DEFAULT OR EVENT OF DEFAULT; NO FUTURE ADVANCE NOTICE. No Default or Event of Default shall have occurred and be continuing. Collateral Agent and the Lenders shall not have received from the Borrower any notice that any Security Document will no longer secure on a first priority basis (subject only to Collateral Permitted Liens) future Loans to be made under this Agreement. (b) REPRESENTATIONS AND WARRANTIES. Each of the representations and warranties of the Borrower and each Guarantor set out in the Loan Documents shall be true and correct. (c) MATERIAL ADVERSE EFFECT. Other than as set forth on Schedule 3.05(c), there has been no event, change, occurrence or development since September 30, 2007 that, either individually or in the aggregate, has had or could reasonably be expected to have a Material Adverse Effect. (d) NO ADVERSE ACTIONS. The Lenders shall be satisfied that there is no (a) litigation, investigation or proceeding (judicial or administrative) pending or threatened in writing against the Borrower or any Guarantor, or any of their respective Subsidiaries by any Governmental Authority or other Person except to the extent as would not give rise to a Material Adverse Effect or (b) injunction, writ or restraining order restraining or prohibiting the Transactions. (e) NOTICE OF BORROWING. The Notice of Borrowing shall have been timely delivered by the Borrower to each of the Lenders. SECTION 4.03. ADDITIONAL CONDITION TO INITIAL LOAN. The obligation of the Lenders to make the initial Loan hereunder is subject to receipt by the Lenders on or prior to the borrowing date of such Loan of evidence of filed Uniform Commercial Code termination statements relating to each of the Uniform Commercial Code financing statements filed in connection with the 15% Notes Indenture naming the Borrower, as debtor, and U.S. Bank National Association, as secured party, releasing all Liens of such secured party on the Collateral, in form and substance reasonably satisfactory to the Lenders (or the waiver of such condition in accordance with Section 10.02). ARTICLE V AFFIRMATIVE COVENANTS Until the Commitment has expired or terminated and the principal of and interest on the Loans and all fees payable hereunder and all other amounts payable under the Loan Documents shall have been paid in full, Borrower and each Guarantor covenant and agree that: SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower will furnish a copy of all of the information and reports referred to in clauses (a) through (c) below: (a) to each of the Registered Lenders within 120 days after the end of each fiscal year, annual audited financial statements of assets, liabilities and stockholders' equity and cash flows of the Borrower and its consolidated Subsidiaries for such fiscal year (along with customary comparative results) and (b) within 60 days of the end of each of the first three fiscal quarters of every fiscal year, unaudited financial statements of assets, liabilities and stockholders' equity and cash flows of the Borrower and its consolidated Subsidiaries for the interim period as of, and for the period ending on, the end of such fiscal quarter (along with comparative results for the corresponding interim period in the prior year), in each case, including a "Management's Discussion and Analysis of Financial Condition and Results of Operations" with respect to the periods presented and, with respect to the annual information only, a report on the annual financial statements by the Borrower's certified independent accountants (all of the foregoing financial information to be prepared on a basis substantially consistent with the corresponding financial information included in the then applicable Commission requirements); and (b) to each of the Registered Lenders within 5 Business Days of the occurrence of an event required to be therein reported, such other reports containing substantially the same information required to be contained in a Current Report on Form 8-K under the Exchange Act (other than Items 3.01 (Notice of delisting or failure to satisfy a continued listing rule or standard; transfer of listing), 3.02 (Unregistered sales of equity securities), 3.03 (Modification of rights of security holders), and 5.04 (Temporary suspension of trading under registrant's employee benefit plans) thereof); provided that if the Borrower becomes subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act, the Borrower may satisfy the foregoing requirements, by timely filing all reports within the periods specified in the Commission's rules and regulations and otherwise complying with the Commission's rules and regulations regarding public availability of such reports. If the Borrower has designated any of its Subsidiaries as Unrestricted Subsidiaries, then the quarterly and annual financial information required by this Section 5.01 shall include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in "Management's Discussion and Analysis of Financial Condition and Results of Operations," of the financial condition and results of operations of the Borrower and its Restricted Subsidiaries separate from the financial condition and results of operations of its Unrestricted Subsidiaries to the extent such information would be required if the Borrower was subject to the periodic reporting requirements of the Exchange Act. SECTION 5.02. NOTICES OF MATERIAL EVENTS. The Borrower will furnish to the Lenders prompt written notice of the following: (a) the filing or commencement of any action, suit or proceeding by or before any arbitrator or Governmental Authority against or affecting the Borrower or any of its Affiliates that, if adversely determined, could reasonably be expected to result in a Material Adverse Effect; (b) a Change of Control or potential Change of Control; (c) a revocation, cancellation or relinquishment of any Material License held by the Borrower or any Restricted Subsidiary to operate satellite component facilities, (d) the occurrence of any Default or Event of Default; (e) the occurrence of any default under (i) any Material Contract, (ii) the 15% Notes Indenture, or (iii) the Exchangeable Notes Indenture, in each case, whether or not the applicable non-defaulting party, has exercised, or is permitted to exercise, any of its rights and remedies on account thereof; (f) any material notices and other material communications from any shareholder of TerreStar Parent with respect to any of (i) the Transactions, (ii) the Spectrum Contribution Transactions, (iii) the Exchangeable Notes issued on or about the Effective Date, and (iv) the additional 15% Notes issued on or about the Effective Date; (g) any material change in accounting policies or financial reporting practices by the Borrower or any Restricted Subsidiary thereof; and (h) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect; provided, that each notice delivered under this Section shall be accompanied by a statement of an Officer of the Borrower (x) alerting the Lenders whether the details of the event or development requiring such notice include any material, non-public information relating to the Borrower or its business, (y) describing such details, and (z) setting forth any action taken or proposed to be taken with respect thereto. Upon receipt of such statement, any Lender may, in its sole discretion, disregard the details provided with such Officer's statement and waive its rights to notice under this Section of such event or development. SECTION 5.03. EXISTENCE; CONDUCT OF BUSINESS. Except as otherwise permitted in this Agreement, the Borrower and the Guarantors shall do or cause to be done all things necessary to preserve and keep in full force and effect their corporate existences and the corporate, partnership, limited liability company or other existence of any Restricted Subsidiary in accordance with their respective organizational documents (as the same may be amended from time to time). SECTION 5.04. BOOKS AND RECORDS; INSPECTION RIGHTS. The Borrower will, and will cause each Restricted Subsidiary to, keep proper books of record and account in which all entries are made of all dealings and transactions in relation to its business and activities to the extent required by GAAP. The Borrower will, and will cause each Restricted Subsidiary to, permit any representatives designated by the Collateral Agent or any Lender, upon reasonable prior notice, to visit and inspect its properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested. Without limiting the generality of the foregoing sentence, the Borrower will, and will cause each Restricted Subsidiary, upon reasonable prior notice, to, provide access to representatives designated by the Collateral Agent or any Lender for the purposes of reviewing licenses, approvals and authorizations where such access is applicable and available under applicable laws and regulations. SECTION 5.05. MAINTENANCE OF PROPERTIES. The Borrower will, and will cause each Restricted Subsidiary to, keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted. SECTION 5.06. COMPLIANCE WITH LAWS. The Borrower will, and will cause each Restricted Subsidiary to, comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its property, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. SECTION 5.07. PAYMENT OF OBLIGATIONS. The Borrower will, and will cause each of its Restricted Subsidiaries to, pay or discharge or cause to be paid or discharged, before the same shall become delinquent, (i) all material taxes, assessments and governmental charges levied or imposed upon the Borrower or any Restricted Subsidiary or upon the income, profits or property of the Borrower or any Restricted Subsidiary and (ii) all lawful claims for labor, materials and supplies, which, if unpaid, might by law become a material liability or Lien upon the property of the Borrower or any Restricted Subsidiary; provided, that the Borrower shall not be required to pay or discharge or cause to be paid or discharged any such tax, assessment, charge or claim the amount, applicability or validity of which is being contested in good faith by appropriate proceedings and for which appropriate reserves, if necessary (in the good faith judgment of management of the Borrower), are being maintained in accordance with GAAP or where the failure to effect such payment will not be materially disadvantageous to the Lenders. SECTION 5.08. RECOVERY EVENTS. All of the Net Proceeds received by the Borrower or such Restricted Subsidiary, as the case may be, from any Recovery Event relating to Collateral shall be applied in accordance with the provisions of Section 2.09 to the payment in full of the Loans and all amounts required to be paid by the Borrower to Collateral Agent or any Lender under the Loan Documents. SECTION 5.09. FURTHER ASSURANCES. (a) At any time or from time to time, the Borrower will, and will cause each Subsidiary Guarantor to, execute, acknowledge and deliver such further documents as the Collateral Agent or any Lender may reasonably request to effect fully the purposes and objectives of this Agreement. (b) The Borrower shall ensure that all written information, exhibits and reports furnished to Collateral Agent and/or any Lender do not and will not contain any untrue statement by the Borrower or any Affiliate thereof of a material fact and do not and will not omit, on the part of the Borrower or any such Affiliate, to state any material fact or any fact necessary to make the statements contained therein not misleading in light of the circumstances in which made, and the Borrower will promptly disclose to the Lenders and correct any defect or error that may be discovered therein by the Borrower or any Affiliate or in any of the Loan Documents, including the Security Documents, or in the execution, acknowledgment or recordation thereof. (c) The Borrower shall as of and at all times after the date of execution of the Security Documents take or cause to be taken all action reasonably requested by Collateral Agent or any Lender to maintain and preserve the Liens of the Security Documents and the perfection and priority thereof required by the terms of this Agreement. (d) The Borrower will furnish to the Lenders prompt written notice in the event that any Collateral is generated, used, handled, transported, stored, or located at any time outside of the United States and will, and will cause each Subsidiary Guarantor to, execute, acknowledge and deliver such further documents as the Collateral Agent or any Lender may reasonably request to preserve and protect the Collateral Agent's Lien on such Collateral, together with such financing statements or comparable documents as may be required to perfect any security interests in such Collateral under the Uniform Commercial Code or other similar statute or regulation of the relevant jurisdiction. SECTION 5.10. USE OF PROCEEDS. Subject to the terms and conditions hereof, the proceeds of each Loan will be used solely to pay Milestone Payments owed by the Borrower pursuant to the TerreStar-2 Construction Agreement. No part of the proceeds of any Loan will be used, whether directly or indirectly, for any purpose that entails a violation of any of the Regulations of the Board of Governors, including Regulations U and X. SECTION 5.11. MAINTENANCE OF APPROVALS. The Borrower will maintain, and cause each Restricted Subsidiary to maintain, all licenses, satellite concessions and governmental and third-party consents and approvals necessary to its business as currently conducted or as proposed to be conducted in its business plan, except where the failure to so maintain such licenses, consents and approvals has not had, and would not be reasonably expected to have, a Material Adverse Effect. SECTION 5.12. LICENSES. (a) All FCC Licenses in existence on the Effective Date or acquired after the Effective Date shall be held by the FCC License Subsidiary, except as required by law or administrative action. All Industry Canada Licenses in existence on the Effective Date or acquired after the Effective Date shall be held by TerreStar Canada or another entity designated by the Borrower and reasonably acceptable to the Lenders, except as required by law or administrative action. The Borrower shall not transfer or dispose of any Capital Stock it directly or indirectly owns in each of the Canadian Entities; provided, that the Borrower may dispose of its Capital Stock of any of the Canadian Entities if such disposition does not adversely affect the rights of the Borrower under the IRU Agreement or result in the loss of the orbital slot granted by Industry Canada for the TerreStar-1 Satellite. (b) The Borrower shall maintain direct ownership of all of the Capital Stock of the FCC License Subsidiary. SECTION 5.13. DESIGNATION OF UNRESTRICTED SUBSIDIARIES. (a) The Board of Directors of the Borrower may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate fair market value of all outstanding Investments owned by the Borrower and its Restricted Subsidiaries in the Subsidiary properly designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under clause (viii) of Section 6.04(b) or one or more clauses of the definition of Permitted Investments, as determined by the Borrower). Such designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Borrower may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a Default or an Event of Default. All Subsidiaries of Unrestricted Subsidiaries shall be automatically deemed to be Unrestricted Subsidiaries. (b) Any designation of a Subsidiary of the Borrower as an Unrestricted Subsidiary shall evidenced to the Lenders by filing with the Lenders a certified copy of a resolution of the Board of Directors of the Borrower giving effect to such designation and an Officers' Certificate certifying that such designation complied with clause (a) of this Section 5.13 and was permitted under Section 6.04. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this Agreement and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Borrower as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 6.01, the Borrower will be in default of such covenant. The Board of Directors of the Borrower may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Borrower; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Borrower of any outstanding Indebtedness of such Unrestricted Subsidiary and such designation will only be permitted if (i) such Indebtedness is permitted under Section 6.01, calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable quarterly reference period; and (ii) no Default or Event of Default would be in existence following such designation. SECTION 5.14. MAINTENANCE OF INSURANCE. (a) The Borrower shall obtain, or cause to be obtained, prior to the launch of the TerreStar-1 Satellite and the TerreStar-2 Satellite (as applicable) and shall maintain, or cause to be maintained, launch insurance with respect to the launch of the TerreStar-1 Satellite and the TerreStar-2 Satellite (as applicable) covering the period from the launch to 180 days or more following the launch thereof on such terms (including coverage period, exclusions, limitations on coverage, co-insurance, deductibles and coverage amount) as is customary in the industry for similar persons at the time of such launch. (b) The Borrower shall procure and maintain, or cause to be procured and maintained, Full In-Orbit Insurance for the TerreStar-1 Satellite and the TerreStar-2 Satellite (as applicable); provided that such Full In-Orbit Insurance shall only be required if, and to the extent and on such terms (including coverage period, exclusions, limitations on coverage, co-insurance, deductibles and coverage amount) as is determined by the Board of Directors of the Borrower to be in the best interests of the Borrower as evidenced by a resolution of the Board of Directors. (c) Insurance policies required by the foregoing paragraphs obtained or renewed after the Effective Date shall: (i) contain no exclusions other than customary exclusions and such specific exclusions applicable to the performance of the satellite (or portion thereof, or the type of satellite or portion thereof, as applicable) being insured as are acceptable to the Board of Directors of the Borrower in order to obtain insurance for a price that is, and on other terms and conditions that are, commercially reasonable; and (ii) subject to the proviso in clause (b) of this Section 5.14, provide coverage for all risks of loss and damage to the TerreStar-1 Satellite and the TerreStar-2 Satellite. (a) In the event that the Borrower or any Guarantor receives Net Insurance Proceeds relating to the TerreStar-2 Satellite, the Borrower or such Guarantor shall apply such Net Insurance Proceeds in the manner provided under Section 5.08. SECTION 5.15. COMPLIANCE CERTIFICATES. (a) The Borrower shall deliver to the Lenders, together with the delivery of financial information under Section 5.01(a), an Officers' Certificate of the chief executive officer and the chief financial officer of the Borrower as to the signers' knowledge of the Borrower's compliance with all conditions and covenants on its part contained in this Agreement and stating whether or not the signer knows of any Default or Event of Default that is then continuing and demonstrating compliance with such covenants in reasonable detail. For the purposes of this Section 5.15, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Agreement. (b) The Borrower shall promptly deliver to the Lenders and in any event within five Business Days of any Officer of the Borrower becoming aware of the occurrence of any Default or Event of Default, an Officers' Certificate setting forth the details of such Default or Event of Default and the action which the Borrower is taking or proposes to take to remedy the same. (c) Concurrently with the delivery of the financial information referred to in Section 5.01(a), a certificate of Borrower's registered independent public accounting firm certifying such financial statements and (unless such accountants are prohibited by law or the Public Company Accounting Oversight Board or the Financial Accounting Standards Board (or any successor to either of such bodies) from providing such statement or such accountants are not then providing such statements to their clients as a matter of general policy) stating that in the course of the audit upon which their opinion on such financial statements was based (but without any special or additional audit procedures for the purpose), they obtained knowledge of no condition or event relating to financial matters which constitutes a Default or an Event of Default or, if such accountants shall have obtained in the course of such audit knowledge of any such Default or Event of Default, disclosing in such written statement the nature and period of existence thereof, it being understood that such accountants shall be under no liability, directly or indirectly, to the Lenders for failure to obtain knowledge of any such condition or event. SECTION 5.16. ADDITIONAL GUARANTEES. (a) If at any time the Borrower or any Restricted Subsidiary acquires or creates another Domestic Subsidiary (other than a Domestic Subsidiary that is a Subsidiary, directly or indirectly, of a Foreign Subsidiary) that owns any assets that constitute or may constitute Collateral, such newly acquired or created Domestic Subsidiary shall, on the date on which it is acquired or created, become a Guarantor by executing and delivering to the Lenders a joinder agreement substantially in form of Exhibit E attached hereto and there shall be no need to re-execute, amend or restate this Agreement in connection therewith, and pursuant to which such Domestic Subsidiary will guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest on the Loans on a senior secured basis. Upon delivery of any such joinder agreement to the Lenders, notice of which is hereby waived by the Guarantors, each such Domestic Subsidiary shall be a Guarantor and shall be as fully a party hereto as if such Domestic Subsidiary were an original signatory hereto as a Guarantor. Each Guarantor expressly agrees that its obligations arising hereunder shall not be affected or diminished by the addition or release of any other Guarantor hereunder nor by any election of the Collateral Agent not to cause any Person to become an Guarantor hereunder. This Guaranty shall be fully effective as to any Guarantor that is or becomes a party hereto regardless of whether any other Person becomes or fails to become or ceases to be a Guarantor hereunder. (b) The Borrower may elect to make any Foreign Subsidiary or any Affiliate a Guarantor, with the consent of any such party, by causing such Person to execute and deliver to the Lenders a joinder agreement substantially in form of Exhibit E attached hereto subject to the terms of this Agreement. (c) Each Guarantor shall become a party to the Loan Documents applicable to it. The Borrower (i) shall cause each Subsidiary Guarantor to become a party to the Loan Documents and (ii) shall, or shall cause each Subsidiary Guarantor to, file any financing statement necessary to grant to the Collateral Agent, for the benefit of itself and the Lenders, perfected first priority security interest (subject only to Collateral Permitted Liens) in any Collateral held by such Guarantor, to the extent a security interest therein can be perfected by the filing of a financing statement. ARTICLE VI NEGATIVE COVENANTS Until the Commitment has expired or terminated and the principal of and interest on the Loans and all fees payable hereunder and all other amounts payable under the Loan Documents have been paid in full, Borrower and each Guarantor covenant and agree that: SECTION 6.01. INDEBTEDNESS. (a) The Borrower shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, "incur") any Indebtedness (including Acquired Debt); (b) The provisions of clause (a) of this Section 6.01 will not apply to any of the following items of Indebtedness: (i) the incurrence by the Borrower and the Restricted Subsidiaries of (A) Existing Indebtedness (including Indebtedness represented by the $500,000,000 principal amount 15% Notes and any additional 15% Notes issued under the 15% Notes Indenture prior to the Effective Date in payment of interest (including interest on interest) thereon), (B) the $150,000,000 principal amount of Exchangeable Notes issued on or about the Effective Date, (C) the $50,000,000 principal amount of additional 15% Notes issued on or about the Effective Date, and (D) without limitation of Section 6.01(d)(i), Indebtedness represented by additional 15% Notes or Exchangeable Notes issued in payment of interest (including interest on interest) on the 15% Notes or Exchangeable Notes referred to in Section 6.01(b)(i)(A), (B) and (C) to be issued on or after the Effective Date; (ii) the incurrence by the Borrower and the Restricted Subsidiaries of Indebtedness represented by the Loans and Notes and interest (including interest on interest) on the Loans and Notes; (iii) the incurrence by the Borrower or any Restricted Subsidiary of Indebtedness represented by Capital Lease Obligations, mortgage financings or Purchase Money Indebtedness with respect to assets other than Capital Stock or other Investments, including the incurrence of Indebtedness representing the financing of installments of Full In-Orbit Insurance, launch insurance premiums or launch services, in each case, incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation or improvement of property, plant or equipment used in a Permitted Business, and Attributable Debt, in an aggregate principal amount not to exceed $50,000,000 at any time outstanding; (iv) the incurrence by the Borrower or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, discharge, defease or replace, Indebtedness permitted under any other clause of this Section 6.01(b) (excluding clause (v)), provided that for purposes of any limit contained in any such other clause the aggregate amount of Indebtedness incurred pursuant to this clause (iv) outstanding at any one time shall be treated as outstanding pursuant to such other clause; (v) the incurrence by the Borrower or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Borrower and any of its Restricted Subsidiaries; provided that: (A) if the Borrower or any Restricted Subsidiary is the obligor on such Indebtedness and the payee is not the Borrower or a Restricted Subsidiary, such Indebtedness shall be expressly subordinated to the prior payment in full in cash of all Obligations of the Borrower and the Restricted Subsidiaries hereunder and under the other Loan Documents; and (B) (1) any subsequent issuance or transfer of Equity Interests or any other event that results in any such Indebtedness being beneficially held by a Person other than the Borrower or a Restricted Subsidiary, (2) any sale or other transfer of any such Indebtedness to a Person that is neither the Borrower nor a Restricted Subsidiary or (3) the designation of a Restricted Subsidiary which holds Indebtedness as an Unrestricted Subsidiary will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Borrower or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (v); (vi) the incurrence by the Borrower or any of its Restricted Subsidiaries of Hedging Obligations; (vii) the Guarantee by the Borrower or any of the Restricted Subsidiaries of Indebtedness of any Restricted Subsidiary that was permitted to be incurred by another provision of this Section 6.01(b); provided that in the case of any such Guarantee by the Borrower, if the Indebtedness being guaranteed is (A) pari passu in right of payment to the Loans, then the Guarantee related to such Indebtedness shall rank equally in right of payment to the Loans, or (B) subordinated in right of payment to the Loans, then the Guarantee of such Indebtedness shall be subordinated in right of payment to the same extent to the Loans; (viii) the incurrence of Indebtedness by the Borrower or any of its Restricted Subsidiaries arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) in the ordinary course of business inadvertently drawn against insufficient funds, provided, that such Indebtedness is extinguished within five (5) Business Days of incurrence; (ix) the incurrence of Indebtedness by the Borrower or any of its Restricted Subsidiaries incurred in respect of workers' compensation claims, self-insurance obligations, bankers' acceptances, performance, surety and similar bonds and completion guarantees provided by the Borrower or any Restricted Subsidiary, in each case, in the ordinary course of business; and (x) the incurrence of Indebtedness by the Borrower or any Restricted Subsidiary to finance the purchase or construction of property (real or personal) or equipment that is used for the construction of the Borrower's terrestrial network so long as, at the time of incurrence thereof, the ratio of total consolidated Indebtedness of the Borrower and its Restricted Subsidiaries determined in accordance with GAAP (including Indebtedness under all financings under this clause (x)) to Invested Capital does not exceed 75%. (c) The Borrower shall not permit any of the Unrestricted Subsidiaries to incur any Indebtedness other than Non-Recourse Debt. If any Non-Recourse Debt of an Unrestricted Subsidiary shall at any time cease to constitute Non-Recourse Debt or such Unrestricted Subsidiary shall be redesignated a Restricted Subsidiary, such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary. (d) For purposes of determining compliance with this Section 6.01: (i) in the event that any Indebtedness meets the criteria of more than one of the categories described in clauses (i) through (iv) of Section 6.01(d), the Borrower in its sole discretion, will be permitted to classify such item of Indebtedness at the time of such incurrence in any manner that complies with this Section 6.01; (ii) the accrual of interest, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same, or less onerous, terms, the reclassification of preferred stock of the Borrower or any Restricted Subsidiary as Indebtedness due to a change in accounting principles, and the payment of dividends on Disqualified Stock or preferred stock in the form of additional shares of the same class of Disqualified Stock or preferred stock, the accrual of dividends on Disqualified Stock or preferred stock and the accretion of the liquidation preference of Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness for purposes of this Section 6.01; (iii) Indebtedness permitted by this Section 6.01 need not be permitted solely by reference to one provision permitting such Indebtedness, but may be permitted in part by one such provision and in part by one or more other provisions of this Section 6.01 permitting such Indebtedness; and (iv) for the purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness denominated in a foreign currency, the dollar-equivalent principal amount of such Indebtedness incurred pursuant thereto shall be calculated based on the relevant currency exchange rate in effect on the earlier of the date that such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-dominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-dominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. Notwithstanding any other provision of this Section 6.01, the maximum amount of Indebtedness that the Borrower or any Restricted Subsidiary may incur pursuant to this Section 6.01 shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such refinancing Indebtedness is denominated that is in effect on the date of such refinancing. SECTION 6.02. LIMITATION ON LIENS. The Borrower and the Restricted Subsidiaries shall not directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien of any kind on the Collateral (other than Collateral Permitted Liens). SECTION 6.03. MERGER, CONSOLIDATION AND SALE OF ALL OR SUBSTANTIALLY ALL ASSETS. The Borrower and the Restricted Subsidiaries shall not, directly or indirectly: (a) consolidate or merge with or into another Person (whether or not the Borrower or such Restricted Subsidiary is the surviving corporation); or (b) sell, assign, transfer, convey, lease or otherwise dispose of all or substantially all of the properties or assets of the Borrower and the Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person; provided that, any Restricted Subsidiary may consolidate with, merge into, sell, assign, convey, lease or otherwise transfer all or part of its properties and assets to the Borrower or another Restricted Subsidiary. SECTION 6.04. RESTRICTED PAYMENTS. (a) The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make any other payment or distribution on or in respect of the Borrower's or any of its Restricted Subsidiaries' Equity Interests or to the direct or indirect holders of the Borrower's or any of its Restricted Subsidiaries' Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Borrower and other than dividends or distributions payable to the Borrower or a Restricted Subsidiary of the Borrower); (ii) purchase, redeem or otherwise acquire or retire for value (including in connection with any merger or consolidation involving the Borrower) any Equity Interests of the Borrower or any direct or indirect parent of the Borrower; (iii) make any principal payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Borrower or any Guarantor (other than intercompany Indebtedness among the Borrower and the Guarantors) that is contractually subordinated to the Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents, except a payment of principal at the Stated Maturity thereof, or within one year prior to such Stated Maturity; or (iv) make any Restricted Investment (all such payments and other actions set forth in these clauses (i) through (iv) above being collectively referred to as "RESTRICTED PAYMENTS"). (b) So long as no Default has occurred and is continuing or would be caused thereby, the preceding provisions will not prohibit: (i) the making of any Restricted Payment in exchange for, or out of the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Borrower) of, Equity Interests of the Borrower (other than Disqualified Stock and other than Equity Interests issued or sold to an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or guaranteed by the Borrower or any Restricted Subsidiary unless such loans have been repaid with cash on or prior to the date of determination) or from the substantially concurrent contribution of common equity capital to the Borrower; provided that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (ii) the defeasance, redemption, repurchase or other acquisition or retirement for value of Indebtedness of the Borrower or any Guarantor that is contractually subordinated to the Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents in exchange for, or out of the net cash proceeds of the substantially concurrent incurrence of, Permitted Refinancing Indebtedness (other than to a Subsidiary of the Borrower); provided that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (iii) the payment of any dividend or distribution by a Restricted Subsidiary of the Borrower to the holders of its Equity Interests on a pro rata basis; provided that payments of amounts to the Borrower or any of its Restricted Subsidiaries pursuant to this clause (iii) shall be excluded from subsequent calculations of the amount of Restricted Payments; (iv) the repurchase, redemption or other acquisition or retirement for value of any Equity Interests of the Borrower or any Restricted Subsidiary of the Borrower or any direct or indirect parent of the Borrower held by any current or former officer, director or employee of the Borrower or any of its Restricted Subsidiaries or their estates or heirs pursuant to any equity subscription agreement, stock option agreement, shareholders' agreement or similar agreement; provided that the aggregate price paid for all such Equity Interests repurchased, redeemed, acquired or retired pursuant to this clause on and after the 15% Notes Issue Date may not exceed $2,500,000 in the aggregate; provided further that cancellation in connection with a repurchase of Equity Interests of the Borrower of Indebtedness owing to the Borrower from employees, directors, officers or consultants of the Borrower or any of its Subsidiaries incurred to finance the acquisition of such Equity Interests by such individuals shall not be deemed to constitute a Restricted Payment; provided further that payments of amounts pursuant to this clause (iv) shall be excluded from subsequent calculations of the amount of Restricted Payments; (v) repurchases of Equity Interests deemed to occur upon the exercise of stock options, warrants or other convertible securities to the extent such Equity Interests represent a portion of the exercise price thereof; provided that payments of amounts pursuant to this clause shall be excluded from subsequent calculations of the amount of Restricted Payments; (vi) the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Borrower or any Restricted Subsidiary of the Borrower issued on or after the 15% Notes Issue Date in accordance with the terms of the 15% Notes Indenture; provided that payments pursuant to this clause shall be excluded from subsequent calculations of Restricted Payments; (vii) the declaration and payment of dividends by the Borrower to, or the making of loans to, any direct or indirect parent in amounts required for any direct or indirect parent to pay: (A) franchise taxes and other fees, taxes and expenses required to maintain their corporate existence; provided that payments of amounts pursuant to this clause (A) shall be excluded from subsequent calculations of the amount of Restricted Payments; (B) federal, state and local income taxes, to the extent such income taxes are attributable to the income of the Borrower and its Subsidiaries; provided that payments of amounts pursuant to this clause (B) shall be excluded from subsequent calculations of the amount of Restricted Payments; (C) (1) reasonable salary, bonus and other benefits payable to directors, officers and employees of any direct or indirect parent company of the Borrower to the extent such salaries, bonuses and other benefits payable in cash and are substantially attributable to the ownership or operation of the Borrower and its Restricted Subsidiaries and (2) general corporate overhead expenses of any direct or indirect parent company of the Borrower to the extent such expenses payable in cash and are substantially attributable to the ownership or operation of the Borrower and its Restricted Subsidiaries; provided that payments of amounts pursuant to this clause (C) may not exceed $5,000,000 for any fiscal year of the Borrower; (D) costs, fees and expenses incident to a private placement or public offering of any securities of such parent, so long as all of the net proceeds of such offering (if it is completed) are contributed to the Borrower; provided that payments of amounts pursuant to this clause (D) shall be excluded from subsequent calculations of the amount of Restricted Payments; and (E) taxes payable by any direct or indirect parent in connection with a contribution of shares of SkyTerra common stock to the Borrower pursuant to the TerreStar Parent Funding Agreement; provided that such taxes relate to increases in the value of such shares after their issuance to Motient Ventures Holding Inc., and provided, further that payments of amounts pursuant to this clause (E) shall be excluded from subsequent calculations of the amount of Restricted Payments; and (viii) other Restricted Payments in an aggregate amount since the Effective Date not to exceed $2,000,000; and (ix) Restricted Payments made pursuant to the Transfer Agreements. (c) The amount of all Restricted Payments (other than cash) will be the fair market value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Borrower or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment. The fair market value of any non-cash Restricted Payment that is required to be valued by this covenant shall be determined by the Board of Directors of the Borrower acting in good faith, whose resolution with respect thereto will be delivered to the Lenders. The Board of Directors' determination must be based upon an opinion or appraisal issued by an accounting, appraisal or investment banking firm of national standing if the fair market value exceeds $10,000,000. SECTION 6.05. TRANSACTIONS WITH AFFILIATES. (a) The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, make any payment to, or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Borrower (each, an "AFFILIATE TRANSACTION"). (b) Notwithstanding the foregoing, none of the following shall be prohibited by Section 6.05(a) or be deemed to be Affiliate Transactions: (i) reasonable and customary (A) directors' fees and indemnification and similar arrangements, (B) consulting fees in an amount not to exceed $250,000 per fiscal year, (C) employee salaries, bonuses and employment agreements (including indemnification arrangements) and (D) compensation or employee benefit arrangements and incentive arrangements with any officer, director or employee entered into in the ordinary course of business (including customary benefits thereunder) and payments pursuant thereto; (ii) transactions between or among the Borrower and/or any of its Restricted Subsidiaries and Guarantees issued by and other transactions of the Borrower or any of its Restricted Subsidiaries for the benefit of the Borrower or any of its Restricted Subsidiaries, as the case may be; (iii) transactions with a Person (other than an Unrestricted Subsidiary of the Borrower) that is an Affiliate of the Borrower or any Restricted Subsidiary solely because the Borrower or any Restricted Subsidiary owns an Equity Interest in, or controls, such Person; (iv) the pledge of Equity Interests of Unrestricted Subsidiaries to support the Indebtedness thereof; (v) issuances and sales of Equity Interests (other than Disqualified Stock) of the Borrower to Affiliates of the Borrower and the granting of registration and other customary rights in connection therewith, or the receipt of capital contributions from Affiliates of the Borrower that are not Restricted Subsidiaries of the Borrower solely in exchange for Equity Interests (other than Disqualified Stock) of the Borrower; (vi) Restricted Payments that are permitted by Section 6.04 and Permitted Investments (other than pursuant to clauses (a) or (c) of the definition of "PERMITTED INVESTMENTS"); (vii) the performance of obligations of the Borrower or any of its Restricted Subsidiaries under the terms of any agreement to which the Borrower or any Restricted Subsidiaries is a party as of or on the Effective Date, substantially as described therein, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided that any future amendment, modification, supplement, extension or renewal entered into after the Effective Date will be permitted to the extent that its terms are not materially more disadvantageous to the Lenders than the terms of the agreements in effect on the Effective Date; (viii) the performance of obligations of the Borrower or any of its Subsidiaries under the terms of (i) the Investment Agreements (and any other agreement contemplated thereby), the Transfer Agreements, the TerreStar Parent Funding Agreement and the TerreStar Shareholders Agreement, as these agreements may be amended, modified, supplemented, extended or renewed from time to time; provided, that any future amendment, modification, supplement extension or renewal entered into after the Effective Date will be permitted to the extent that its terms are not more disadvantageous in any material respect to the Lenders than the terms of the agreements in effect on the Effective Date and (ii) the TerreStar Canada Credit Facility, as amended, modified, supplemented, extended or renewed from time to time; provided, that any future amendment, modification, supplement extension or renewal entered into after the Effective Date will be subject to prior written consent of the Required Lenders; (ix) any transaction in which the Borrower or any of its Restricted Subsidiaries delivers to the Lenders a letter issued by an investment banking, appraisal or accounting firm of national standing stating that such transaction is fair from a financial point of view; and (x) transactions with customers, clients, suppliers, or purchasers or sellers of goods or services, in each case in the ordinary course of business and otherwise in compliance with the terms of this Agreement which are fair to the Borrower and its Restricted Subsidiaries, in the reasonable determination of the Board of Directors or the senior management of the Borrower, or are on terms at least as favorable as might reasonably have been obtained at such time from an unaffiliated party. SECTION 6.06. LIMITATION ON LINES OF BUSINESS. The Borrower shall not, and shall not permit any Restricted Subsidiary to, engage in any business other than Permitted Businesses. SECTION 6.07. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES. (a) The Borrower shall not, and shall not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to: (i) pay dividends or make any other distributions on its Capital Stock to the Borrower or any of its Restricted Subsidiaries (it being understood that the priority of any preferred stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on common stock shall not be deemed a restriction on the ability to make distributions on Capital Stock) or pay any Indebtedness owed to the Borrower or any of its Restricted Subsidiaries; (ii) make loans or advances to the Borrower or any of its Restricted Subsidiaries (it being understood that the subordination of loans or advances made to the Borrower or any of its Restricted Subsidiaries to other Indebtedness incurred by the Borrower or any of its Restricted Subsidiaries shall not be deemed a restriction on the ability to make loans or advances); or (iii) sell, lease or transfer any of its properties or assets to the Borrower or any of its Restricted Subsidiaries. (b) The preceding restrictions will not apply to encumbrances or restrictions existing under or by reason of: (i) agreements governing Existing Indebtedness as in effect on the Effective Date (including the 15% Notes Indenture and the Exchangeable Notes Indenture) and any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive in any material respect, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the Effective Date; (ii) this Agreement and the other Loan Documents; (iii) the Transfer Agreements; (iv) applicable law or any applicable rule, regulation or order; (v) any instrument government Indebtedness or Capital Stock of a Person acquired by the Borrower or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, including any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of any such agreements or instruments; provided that the amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are no more restrictive in any material respect, taken as a whole, than those contained in the agreements governing such original agreement or instrument; provided, further, that, in the case of Indebtedness, such Indebtedness was permitted by Section 6.01; (vi) in the case of Section 6.07(a)(iii): (A) a lease, license or similar contract that restricts in a customary manner the subletting, assignment or transfer of any subject property or asset, or the assignment or transfer of any such lease, license or other contract; (B) mortgages, pledges or other security agreements otherwise permitted under this Agreement securing Indebtedness of the Borrower or any of its Restricted Subsidiaries to the extent such encumbrances or restrictions restrict the transfer of the property subject to such mortgages, pledges or other security agreements; or (C) reciprocal easement agreements of the Borrower or any of its Restricted Subsidiaries containing customary provisions restricting dispositions of the subject real property interests; (vii) leases and other agreements containing net worth provisions entered into by the Borrower or any Restricted Subsidiary in the ordinary course of business; (viii) Purchase Money Indebtedness for property acquired in the ordinary course of business and Capital Lease Obligations permitted under this Agreement that, in each case, impose restrictions on the property purchased or leased of the nature described in Section 6.07(a)(iii); (ix) any agreement for the sale or other disposition of assets or Capital Stock of a Restricted Subsidiary permitted under this Agreement that restricts the sale of assets, distributions or loans by that Restricted Subsidiary pending its sale or other disposition; (x) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are no more restrictive in any material respect, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced; (xi) Liens securing Indebtedness otherwise permitted to be incurred under the 15% Notes Indenture that limit the right of the debtor to dispose of the assets subject to such Liens; (xii) provisions with respect to the disposition or distribution of assets or property in joint venture agreements and other similar agreements entered into in the ordinary course of business; provided that such restrictions apply only to the assets or property subject to such agreements; (xiii) any agreement or instrument entered into after the Effective Date; provided that the encumbrances or restrictions in such agreement or instrument are not materially more restrictive, taken as a whole, than those contained in this Agreement or the other Loan Documents; and (xiv) restrictions on cash or other deposits or net worth under contracts or leases entered into in the ordinary course of business. SECTION 6.08. LIMITATION ON ASSET SALES OF THE COLLATERAL. The Borrower shall not, and shall not permit any of the Guarantor Subsidiaries to, consummate an Asset Sale of all or any part of the Collateral. SECTION 6.09. LIMITATION ON TRANSFER OF THE COLLATERAL. The Borrower shall not assign, transfer, or otherwise convey any of the Collateral to any Person other than a Guarantor in compliance with clause (b) of the definition of "Asset Sale". SECTION 6.10. LIMITATION ON AMENDMENTS TO PAYMENTS UNDER THE TERRESTAR-2 CONSTRUCTION AGREEMENT. The Borrower shall not amend any payment date or the amount of any payment in respect of the TerreStar-2 Satellite required to be made by the Borrower to the Satellite Manufacturer under Exhibit E of the TerreStar-2 Construction Agreement without the prior written consent of the Required Lenders. ARTICLE VII EVENTS OF DEFAULT SECTION 7.01. EVENTS OF DEFAULT. Each of the following is an "EVENT OF DEFAULT" under this Agreement: (a) default in the payment when due (at maturity, at a date fixed for prepayment thereof or otherwise) of the principal of or premium, if any, on, the Loans; (b) default in the payment when due of interest on the Loans, any fee or any other amount (other than an amount referred to in clause (a) of this Article) payable under this Agreement or under any other Loan Document for more than five (5) Business Days; (c) any representation or warranty made or deemed made by or on behalf of the Borrower in or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with this Agreement or any other Loan Document or any amendment or modification hereof or thereof, shall prove to have been materially inaccurate or false when made or deemed made; (d) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in Section 5.02(a), 5.03, or Article VI of this Agreement; (e) the Borrower shall fail to observe or perform any covenant, condition or agreement contained in this Agreement or any other Loan Document or any Guarantor shall fail to observe or perform any covenant, condition or agreement contained in a Guarantee (other than those specified in clause (a), (b), (c) or (d) of this Article, as applicable) and such failure shall continue unremedied for a period of thirty (30) or more days after the earlier of (i) an Officer of such Person obtaining actual knowledge thereof and (ii) such Person receiving notice thereof from any Lender; (f) (i) TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Restricted Subsidiary shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors seeking to have an order for relief entered with respect to it, or seeking to adjudicate it as bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Restricted Subsidiary shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Restricted Subsidiary any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against TerreStar Parent, the Borrower, the FCC License Subsidiary or any Restricted Subsidiary any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) TerreStar Parent, the Borrower, the FCC License Subsidiary or any Restricted Subsidiary shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; (g) either (i) the Lien created by the Security Documents shall at any time not constitute a valid and perfected first priority Lien (subject to other Liens permitted under Section 6.02) under the laws of the jurisdiction where the Collateral is located on the Collateral in favor of Collateral Agent, on behalf of the Lenders, free and clear of all other Liens (other than Liens permitted under Section 6.02); provided, that the foregoing event shall not constitute an Event of Default if such event occurs solely as a result of any action taken by the Collateral Agent, any Lender or their respective representatives or (ii) with respect to any Collateral, the Borrower or any Guarantor asserts, in any pleading in any court of competent jurisdiction, that such Lien is invalid or unenforceable; (h) except as permitted by this Agreement, any material provision of any Guarantee, shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect, or the Borrower, any Guarantor, or any Person acting on behalf of the Borrower or any such Guarantor, shall deny or disaffirm its obligations under its Guarantee; (i) either (i) any of the Loan Documents at any time for any reason is declared null and void, or (ii) there occurs any enforcement action against the Collateral; (j) failure by the Borrower or any Restricted Subsidiary to pay final judgments entered by a court or courts of competent jurisdiction (not subject to appeal) aggregating in excess of $10,000,000 (net of any amounts covered by insurance from a reputable and creditworthy insurance company), which judgments are not paid, discharged or stayed for a period of 60 days after the date on which the right to appeal has expired; (k) the occurrence of any ERISA Event that when taken together with all other ERISA Events that have occurred, could be expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $10,000,000; (l) the occurrence of any Change of Control; (m) TerreStar Parent, the Borrower or any Restricted Subsidiary is enjoined, restrained, or in any way prevented by court order or any Governmental Authority from continuing to conduct all or any material part of its business affairs; (n) the occurrence of any uninsured loss to any material portion of the Collateral; (o) (i) a denial, revocation, cancellation or relinquishment, as applicable, of any Material License held by the Borrower, TerreStar Canada or a Guarantor to operate satellite component or ATC facilities, unless the revocation, cancellation or relinquishment (1) remains subject to reconsideration, review, or appeal at the FCC, Industry Canada, or any court, as applicable; provided that during the pendency of such reconsideration, review or appeal the Borrower, TerreStar Canada or Guarantor, as applicable, is permitted to exercise its rights under the applicable Material License and continues to conduct its business in the ordinary course, or (2) is accompanied by the issuance of a substitute or successor license, permit, or authorization of substantially equivalent utility or the Borrower, TerreStar Canada or a Restricted Subsidiary of the Borrower already holds a license, permit, or authorization of substantially equivalent utility; (ii) Borrower's failure to secure the FCC ATC Authorization by the ATC Operational Date; provided, that, with respect to this clause (ii), such date shall be extended for up to three (3) additional one (1) month periods, so long as (A) the Borrower is engaged in good faith efforts to secure the FCC ATC Authorization and (B) the Interest Rate then in effect increases as provided in Section 2.07(b)(iii). (p) failure to satisfy (i) (x) the FCC's implementation milestone to launch the TerreStar-1 Satellite on or prior to September 30, 2008, (y) the FCC's implementation milestone to certify that the satellite system is operational on or prior to November 30, 2008, or (z) Industry Canada's implementation milestone to place the TerreStar-1 Satellite into its assigned orbital position on or prior to November 30, 2008, unless in the case of (x), (y) or (z), such milestone has been waived by the applicable Governmental Authority, or (ii) any extended deadline issued by the applicable Governmental Authority of the respective implementation milestones listed in (i) above (whichever is later), unless in the case of (i)(x), (y) or (z) or (ii), the Borrower has filed an appropriate application for waiver or extension of such milestone or deadline which application has not been denied; (q) failure to obtain Spectrum Contribution Approval on or prior to July 23, 2008; and (r) (i) a default shall occur in the payment of any amount when due (beyond any applicable grace period), whether by acceleration or otherwise, of any principal or stated amount of, or interest or fees on, any Indebtedness (other than the Obligations under this Agreement or the other Loan Documents) of TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Restricted Subsidiary having a principal or stated amount, individually or in the aggregate, in excess of $10,000,000, or a default shall occur in the performance or observance of any obligation or condition with respect to any such Indebtedness if the effect of such default is to accelerate the maturity of such Indebtedness or to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause or declare such Indebtedness to become immediately due and payable, (ii) a default shall occur (after expiration of any available grace or cure periods) in the performance or observance of any obligation or condition with respect to any Indebtedness which has been subordinated (whether as to payment or Lien priority) to the Obligations under this Agreement or the other Loan Documents or the Collateral Agent's Liens in the Collateral or any such Indebtedness shall be required to be or prepaid, redeemed, purchased or defeased, or require an offer to purchase or defease such Indebtedness to be made, prior to its expressed maturity or (iii) any Indebtedness of TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Restricted Subsidiary having a principal or stated amount, individually or in the aggregate, in excess of $10,000,000 shall otherwise be required to be prepaid, redeemed, purchased or defeased, or require an offer to purchase or defease such Indebtedness to be made, prior to its expressed maturity. The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. SECTION 7.02. ACCELERATION. (a) In the case of an Event of Default specified in clause (f) of Section 7.01, the Commitment shall automatically terminate, and the principal of the Loans then unpaid, together with accrued and unpaid interest thereon and all fees and other Obligations of the Borrower and the Guarantors accrued hereunder and under the other Loan Documents, shall automatically become due and payable in cash, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and the Guarantors. (b) If any other Event of Default occurs and is continuing, any Electing Lender may, by notice to the Borrower, take either or both of the following actions, at the same or different times: terminate the Commitment of such Electing Lender and declare the portion of the Loans owed to such Electing Lender then unpaid to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of such Loans so declared to be due and payable, together with accrued and unpaid interest thereon and all fees and other Obligations of the Borrower and the Guarantors owed to such Electing Lender and accrued hereunder and under the other Loan Documents, shall become due and payable in cash immediately, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and the Guarantors. In the case of an Event of Default specified in clause (f) of Section 7.01 or any declaration specified in clause (b) of this Section 7.02, the Lenders or any Electing Lender (as the case may be) may pursue any available remedy to collect the payment of principal of or interest on the Loans or to enforce the performance of any provision of this Agreement and any other Loan Document. SECTION 7.03. WAIVER OF DEFAULTS. At any time prior to the date of any acceleration pursuant to Section 7.02(a) or (b), the Required Lenders may, on behalf of the Lenders, waive any existing Default or Event of Default and its consequences under this Agreement or any other Loan Document. When a Default or Event of Default is waived, it is deemed cured and ceases to exist and shall be deemed to have been cured and waived for every purpose under this Agreement and the other Loan Documents, but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any consequent right of any Lender or the Collateral Agent. SECTION 7.04. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy conferred or reserved to Collateral Agent or any Lender under this Agreement or any other Loan Document is intended to be exclusive of any other right or remedy, and all such rights and remedies are, to the extent permitted by law, cumulative and in addition to every other right and remedy hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or exercise of any right or remedy hereunder, or otherwise, will not prevent the concurrent or subsequent assertion or exercise of any other right or remedy. SECTION 7.05. DELAY OR OMISSION NOT WAIVER. No delay or omission of any Lender to exercise any right or remedy accruing upon any Event of Default will impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article VII or by law to the Electing Lenders or to the Lenders, as the case may be, may be exercised from time to time, and as often as may be deemed expedient, by the Electing Lenders, the Required Lenders or by the Lenders, as the case may be. ARTICLE VIII GUARANTEES SECTION 8.01. GUARANTEES. (a) Each Guarantor hereby jointly and severally unconditionally and irrevocably guarantees, as a primary obligor and not merely as a surety, to each Lender and to the Collateral Agent and their respective successors and assigns (i) the full and punctual payment of principal of, premium, if any, and interest on all Obligations of the Borrower arising under this Agreement, the Notes and the other Loan Documents, when due, whether at maturity, by acceleration, by required pre-payment or otherwise, subject to any applicable grace period and (ii) the full and punctual performance and observance within applicable grace periods of all other obligations, covenants, agreements and conditions of the Borrower, whether for expenses, indemnification or otherwise under this Agreement (all of the foregoing being hereinafter collectively referred to as the "GUARANTEED OBLIGATIONS"). Each Guarantor further agrees that the Guaranteed Obligations may be extended or renewed, in whole or in part, without notice or further assent from each such Guarantor, and that each such Guarantor shall remain bound under this Article VIII notwithstanding any extension or renewal of any Guaranteed Obligation. (b) Each Guarantor waives presentation to, demand of, payment from and protest to the Borrower of any of the Guaranteed Obligations and also waives notice of protest for nonpayment. Each Guarantor waives notice of any default under the Loans or the Guaranteed Obligations. The obligations of each Guarantor hereunder shall not be affected by (i) the failure of any Lender or the Collateral Agent to assert any claim or demand or to enforce any right or remedy against the Borrower or any other Person under this Agreement, any of the other Loan Documents or any other agreement or otherwise; (ii) any extension or renewal of any Guaranteed Obligations; (iii) any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement, any of the other Loan Documents or any other agreement; (iv) the release of any security held by any Lender or the Collateral Agent for the Guaranteed Obligations or any of them; (v) the failure of any Lender or the Collateral Agent to exercise any right or remedy against any other guarantor of the Guaranteed Obligations; or (vi) any change in the ownership of such Guarantor, except as provided in Section 6.03. (c) Each Guarantor further agrees that its Guarantee herein constitutes a Guarantee of payment, performance and compliance when due (and not a guarantee of collection) and waives any right to require that any resort be had by any Lender or the Collateral Agent to any security held for payment of the Guaranteed Obligations. Each Guarantor irrevocably waives acceptance hereof, presentment, demand, protest and any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Borrower or any other Person. The obligations of each Guarantor hereunder shall not be subject to any reduction, limitation, impairment or termination for any reason, including any claim of waiver, release, surrender, alteration or compromise, and shall not be subject to any defense of setoff, counterclaim, recoupment or termination whatsoever or by reason of the invalidity, illegality or unenforceability of the Guaranteed Obligations or otherwise. Without limiting the generality of the foregoing, the obligations of each Guarantor herein shall not be discharged or impaired or otherwise affected by the failure of any Lender or the Collateral Agent to assert any claim or demand or to enforce any remedy under this Agreement, any of the other Loan Documents or any other agreement, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Guaranteed Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of any Guarantor or would otherwise operate as a discharge of any Guarantor as a matter of law or equity. (d) Each Guarantor further agrees that its Guarantee herein shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Guaranteed Obligation is rescinded or must otherwise be restored by any Lender or the Collateral Agent upon the bankruptcy or reorganization of the Borrower or otherwise. (e) In furtherance of the foregoing and not in limitation of any other right which any Lender or the Collateral Agent has at law or in equity against any Guarantor by virtue hereof, upon the failure of the Borrower to pay the principal of or premium, if any, or interest on any Guaranteed Obligation when and as the same shall become due, whether at maturity, by acceleration, by required pre-payment or otherwise, or to perform or comply with any other Guaranteed Obligation, each Guarantor hereby promises to and shall, upon receipt of written demand by the Collateral Agent, forthwith pay, or cause to be paid, in cash, to the Lenders or the Collateral Agent an amount equal to the sum of (i) the unpaid principal amount of such Guaranteed Obligations, (ii) accrued and unpaid interest or premium, if any, on such Guaranteed Obligations (but only to the extent not prohibited by law) and (iii) all other monetary Guaranteed Obligations of the Borrower to the Lenders and the Collateral Agent. (f) Each Guarantor agrees that it shall not be entitled to any right of subrogation in relation to the Lenders in respect of any Guaranteed Obligations guaranteed hereby until payment in full of all Guaranteed Obligations. Each Guarantor further agrees that, as between it, on the one hand, and the Lenders and the Collateral Agent, on the other hand, (x) the maturity of the Guaranteed Obligations guaranteed hereby may be accelerated as provided in Article VII for the purposes of any Guarantee herein, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the Guaranteed Obligations guaranteed hereby, and (y) in the event of any declaration of acceleration of such Guaranteed Obligations as provided in Article VII, such Guaranteed Obligations (whether or not due and payable) shall forthwith become due and payable by such Guarantor for the purposes of this Section. SECTION 8.02. LIMITATION ON LIABILITY. Any term or provision of this Agreement to the contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by any Guarantor shall not exceed the maximum amount that can be guaranteed without rendering this Agreement and the respective Guarantee, as it relates to such Guarantor, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 8.03. SUCCESSORS AND ASSIGNS. This Article VIII shall be binding upon each Guarantor and its successors and assigns and shall inure to the benefit of the successors and assigns of the Collateral Agent and the Lender and, in the event of any transfer or assignment of rights by any Lender or the Collateral, the rights and privileges conferred upon such party in this Agreement and the other Loan Documents shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions of this Agreement. SECTION 8.04. EXECUTION AND DELIVERY OF THE GUARANTEE. The execution by each Guarantor of this Agreement (or a joinder agreement substantially in form of Exhibit E attached hereto in accordance with Section 5.16(a)) evidences the Guarantee of such Guarantor. ARTICLE IX THE COLLATERAL AGENT SECTION 9.01. APPOINTMENT. Each Lender hereby appoints U.S. Bank National Association as its Collateral Agent under and for purposes of each Loan Document, and hereby authorizes the Collateral Agent to act on behalf of such Lender under each Loan Document and, in the absence of other written instructions from the Lenders pursuant to the terms of the Loan Documents received from time to time by the Collateral Agent, to exercise such powers hereunder and thereunder as are specifically delegated to or required of the Collateral Agent by the terms hereof and thereof, together with such powers as may be incidental thereto. Each Lender hereby irrevocably designates and appoints the Collateral Agent as the agent of such Lender. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Collateral Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Collateral Agent. SECTION 9.02. DELEGATION OF DUTIES. The Collateral Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Collateral Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it with reasonable care. SECTION 9.03. EXCULPATORY PROVISIONS. Neither the Collateral Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except to the extent that any of the foregoing are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from its or such Person's own gross negligence or willful misconduct) or (b) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Guarantor or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Collateral Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Guarantor or other Person to perform its obligations hereunder or thereunder. The Collateral Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of TerreStar Parent, the Borrower, the FCC License Subsidiary or any other Guarantor. SECTION 9.04. RELIANCE BY THE COLLATERAL AGENT. The Collateral Agent shall be entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrower and the Guarantors), independent accountants and other experts selected by the Collateral Agent. The Collateral Agent may deem and treat the payee of any note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Collateral Agent. The Collateral Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders (or, if so specified by this Agreement, all or other requisite Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action. The Collateral Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders (or, if so specified by this Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. SECTION 9.05. NOTICE OF DEFAULT. The Collateral Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Collateral Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Collateral Agent receives such a notice, the Collateral Agent shall give notice thereof to the other Lenders. The Collateral Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders (or, if so specified by this Agreement, all Lenders or any other instructing group of Lenders specified by this Agreement); provided, that unless and until the Collateral Agent shall have received such directions, the Collateral Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as the Collateral Agent shall deem advisable in the best interests of the Lenders. SECTION 9.06. NON-RELIANCE ON THE COLLATERAL AGENTS AND OTHER LENDERS. Each Lender expressly acknowledges that neither the Collateral Agent nor any of its respective officers, directors, employees, agents, attorneys-in-fact or Affiliates have made any representations or warranties to it and that no act by the Collateral Agent hereafter taken, including any review of the affairs of the Borrower, any Guarantor or any their Affiliates, shall be deemed to constitute any representation or warranty by the Collateral Agent to any Lender. Each Lender represents to the Collateral Agent that it has, independently and without reliance upon the Collateral Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower, the Guarantors and their Affiliates and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Collateral Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower, the Guarantors and their Affiliates. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Collateral Agent hereunder, the Collateral Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower, any Guarantor, or any their Affiliates that may come into the possession of the Collateral Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. SECTION 9.07. INDEMNIFICATION. The Lenders agree to indemnify the Collateral Agent in its capacity as such (to the extent not reimbursed by the Borrower and the Guarantors and without limiting the obligation of the Borrower and the Guarantors to do so), ratably according to their respective Commitments in effect on the date on which indemnification is sought under this Section 9.07, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans) be imposed on, incurred by or asserted against the Collateral Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents, or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Collateral Agent under or in connection with any of the foregoing; provided, that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from the Collateral Agent's gross negligence or willful misconduct. The agreements in this Section 9.07 shall survive the payment of the Loans and all other amounts payable hereunder. SECTION 9.08. SUCCESSOR COLLATERAL AGENTS. The Collateral Agent may resign as Collateral Agent upon twenty (20) days' notice to the Lenders and the Borrower. If the Collateral Agent shall resign as the Collateral Agent in such capacity under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor collateral agent, which successor collateral agent shall (unless an Event of Default shall have occurred and be continuing) be subject to approval by the Borrower (which approval shall not be unreasonably withheld or delayed), whereupon such successor collateral agent shall succeed to the rights, powers and duties of the Collateral Agent in its applicable capacity, and the term "Collateral Agent" shall mean such successor agent effective upon such appointment and approval, and the former Collateral Agent's rights, powers and duties as Collateral Agent in its applicable capacity shall be terminated, without any other or further act or deed on the part of such former Collateral Agent or any of the parties to this Agreement or any holders of the Loans. If no applicable successor collateral agent has accepted appointment as the Collateral Agent in its applicable capacity by the date that is twenty (20) days following such retiring Collateral Agent's notice of resignation, such retiring Collateral Agent's resignation shall nevertheless thereupon become effective and the Lenders shall assume and perform all of the duties of the Collateral Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above. After the retiring Collateral Agent's resignation as the Collateral Agent or the Collateral Agent, as applicable, the provisions of this Article IX shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Collateral Agent under this Agreement and the other Loan Documents. SECTION 9.09. THE COLLATERAL AGENT GENERALLY. Except as expressly set forth herein, the Collateral Agent shall not have any duties or responsibilities hereunder in its capacity as such. SECTION 9.10. AGENCY FOR PERFECTION. Collateral Agent hereby appoints each other Lender as its agent (and each Lender hereby accepts such appointment) for the purpose of perfecting the Collateral Agent's Liens in assets which, in accordance with Article 8 or Article 9, as applicable, of the Uniform Commercial Code of any applicable state can be perfected only by possession or control. Should any Lender obtain possession or control of any such Collateral, such Lender shall notify Collateral Agent thereof, and, promptly upon Collateral Agent's request therefor shall deliver possession or control of such Collateral to Collateral Agent or in accordance with Collateral Agent's instructions. ARTICLE X MISCELLANEOUS SECTION 10.01. NOTICES. Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows: (a) if to the Borrower or any Restricted Subsidiary, to: TerreStar Networks Inc. 12010 Sunset Hills Road, 9th Floor Reston, Virginia 20190 Attention: Jeffrey Epstein Tel: (703) 483-7806 Fax: (703) 476-7143 with a copy to: Gibson, Dunn & Crutcher LLP 200 Park Avenue New York, New York 10166 Attention: Joerg H. Esdorn (b) if to Collateral Agent, to: U.S. Bank National Association 60 Livingston Avenue EP-MN-WS3C St. Paul, Minnesota 55107-2292 Attention: Corporate Trust Administration Tel: (651) 495-3918 Fax: (651) 495-8097 (c) if to any Lender, to: Harbinger Capital Partners Master Fund I, Ltd. Harbinger Capital Partners Special Situations Fund, L.P. c/o Harbinger Capital Partners Funds 555 Madison Avenue, 16th Floor New York, New York 10022 Attn: Jeffrey T. Kirshner, Esq. Facsimile: 212-508-3721 with copies to (such copies not constituting notice hereunder): Harbert Management Corporation One Riverchase Parkway South Birmingham, Alabama 35244 Attn: General Counsel Facsimile: 205-987-5568 and Bingham McCutchen LLP 399 Park Avenue New York, New York 10022 Attention: Frederick F. Eisenbiegler Telecopier: (212) 752-5378 Telephone: (212) 705-7000 and to: EchoStar Corporation 90 Inverness Circle E. Englewood, Colorado 80112 Attention: Ms. Ximena Amaya Tel: 1-800-699-7188 x83787 Fax: (___) ___-____ with copies to (such copies not constituting notice hereunder): Sullivan & Cromwell LLP 1870 Embarcadero Road Palo Alto, California 94303 Attention: Scott Miller Tel: (650) 461-5600 Fax: (650) 461-5700 Any party hereto may change its address or telecopy number for notices and other communications hereunder by notice to the other parties hereto. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given when delivered in person or by courier service and signed for against receipt thereof, upon receipt of telefacsimile or telex, or three Business Days after depositing it in the United States mail with postage prepaid and properly addressed. SECTION 10.02. WAIVERS; AMENDMENTS. (a) NO DEEMED WAIVERS; REMEDIES CUMULATIVE. No failure or delay by Collateral Agent or any Lender in exercising any right or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of Collateral Agent and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan shall not be construed as a waiver of any Default or Event of Default, regardless of whether Collateral Agent or any Lender may have had notice or knowledge of such Default or Event of Default at the time. (b) AMENDMENTS. (i) Subject to the provisions of Section 10.05, neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement or agreements in writing entered into by the Borrower and the Required Lenders; provided that no such amendment or waiver shall (A) increase any Commitment of any Lender without the prior written consent of such Lender, (B) reduce the principal of, or rate of interest on, any Loan or any fees specified herein, due to a Lender without the prior written consent of each Lender directly affected thereby, (C) postpone or otherwise change the date fixed for any payment of principal of, or interest on, any Loan or any fees hereunder due to a Lender or for any termination of any Commitment of a Lender, without the prior written consent of each Lender directly affected thereby, (D) decrease any amount payable to a Lender pursuant to the provisions of Article II hereof, without the prior written consent of each Lender directly affected thereby, (E) release the Borrower from its obligations hereunder or release a Guarantor from its obligations under the Subsidiary Guarantee (except as expressly permitted hereby or thereby), without the prior written consent of all of the Lenders, (F) release Collateral from the Liens created by the Security Documents (except as expressly permitted hereby or thereby), without the prior written consent of all of the Lenders, (G) amend or modify the provisions of this Section 10.02(b), without the prior written consent of all of the Lenders, or (H) amend the definition of "Required Lenders," without the prior written consent of all of the Lenders. No such amendment, modification, waiver or consent shall adversely affect the rights and obligations of the Collateral Agent, if any, without their prior written consent. Collateral Agent, each Lender and Participant shall be bound by any amendment, modification, waiver or consent authorized as provided herein (whether or not any applicable Note shall have been marked to indicate such amendment, modification, waiver or consent); and any consent by any holder of a Loan, a Commitment or a Note shall bind any Person subsequently acquiring such Loan, Commitment or Note (whether or not any applicable Note is so marked). (ii) Notwithstanding the foregoing provisions of this Section 10.02(b), in connection with any issue arising under this Agreement or any Loan Document, any Lender may, in its sole discretion, request to receive material, non-public information relating to the Borrower or its business and (A) use such information in connection with such issue, (B) disregard such information and use only Information in connection with such issue or (C) waive its rights with respect to such issue, in which case, such Lender will agree to vote and will be deemed to have voted its Commitment under this Agreement pro rata in accordance with the percentage of the Commitment voted in favor of, and the percentage of the Commitment voted against, any such issue. SECTION 10.03. EXPENSES; INDEMNITY; DAMAGE WAIVER; COMMITMENT FEE. (a) COSTS AND EXPENSES. The Borrower shall pay (i) all reasonable expenses incurred by Collateral Agent, any Lender and their respective Affiliates (including the fees, charges and disbursements of their counsel) in connection with the preparation of this Agreement and the other Loan Documents, (ii) all reasonable expenses incurred by Collateral Agent, any Lender and their respective Affiliates, including the reasonable fees, charges and disbursements of their counsel, in connection with the administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof, (iii) all reasonable expenses incurred by Collateral Agent, any Lender and their respective Affiliates, including the fees, charges and disbursements of any counsel therefor, in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents, including its rights under this Section, or in connection with the Loans made hereunder, including in connection with any workout, restructuring or negotiations in respect thereof and (iv) all taxes, assessments and other charges and reasonable costs and expenses incurred in connection with any filing, registration, recording or perfection of any security interest contemplated by any Loan Document or any other document referred to therein. (b) INDEMNIFICATION BY THE BORROWER. The Borrower shall indemnify Collateral Agent, each Lender and each Related Party of the Lender (each such Person being called an "INDEMNITEE") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement or any agreement or instrument contemplated hereby, the performance by the parties hereto of their respective obligations hereunder or the consummation of the Transactions or any other transactions contemplated hereby, (ii) any Loan or the use of the proceeds therefrom, (iii) any actual or alleged presence or release of Hazardous Materials on or from any property owned or operated by the Borrower or any Environmental Liability related in any way to the Borrower, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. (c) WAIVER OF CONSEQUENTIAL DAMAGES, ETC. To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement or any agreement or instrument contemplated hereby, the Transactions, any Loan or the use of the proceeds thereof. (d) PAYMENTS. All amounts due under this Section shall be payable upon written demand therefor. SECTION 10.04. SUCCESSORS AND ASSIGNS. (a) ASSIGNMENTS GENERALLY. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder or under the other Loan Documents without the prior written consent of the Lenders (and any attempted assignment or transfer by the Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their permitted successors and assigns and, to the extent expressly contemplated hereby, the Related Parties of any Lender) any legal or equitable right, remedy or claim under or by reason of this Agreement. (b) ASSIGNMENT BY THE LENDERS. Any Lender may assign all or a portion of the Loans and of its rights, duties and obligations under this Agreement (including all or a portion of the Commitment) and the other Loan Documents to any other Person without the prior written consent of the Borrower, provided that (i) the aggregate outstanding principal amount of the Loans (or the Commitment) subject to any such assignment shall be $5,000,000 or a whole multiple thereof, unless such assignment is of such Lender's entire interest and (ii) as long as no Default of the type described in clauses (i) or (ii) of Section 7.01 or Event of Default of the type described in clause (f) of Section 7.01 shall have occurred and be continuing at such time, no such assignment shall be made to any Person other than an Eligible Assignee without the Borrower's prior written consent. Upon execution and delivery by the assignee to the Borrower of an instrument in writing pursuant to which such assignee agrees to become a "Lender" hereunder and Borrower's consent, if applicable, the assignee shall have the obligations, rights and benefits hereunder of the assigning Lender in respect of the Commitment (or portion thereof) and Loan(s) theretofore held by such Lender, and the assigning Lender shall be released from the Commitment (or portion thereof) so assigned. For purposes of this Section 10.04(b), the term "ELIGIBLE ASSIGNEE" means (A) a Lender or any Affiliate thereof, (B) any bank, trust company, savings and loan association or other financial institution, any pension plan, any investment company, any insurance company or similar financial institution or entity organized under the laws of (x) the United States, or any state thereof, or (y) any other country which is a member of the OECD, or a political subdivision of any such country, provided that such bank is acting through a branch or agency located either in the country in which it is organized, another country which is also an OECD member or the Cayman Islands and (C) any Person (other than a natural person) that is or will be engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit and has assets under management of at least $500,000,000. "ELIGIBLE ASSIGNEE" shall not include a competitor of the Borrower. (c) The Borrower hereby acknowledges and agrees that in connection with any assignment by any Lender of less than all of the Loans and the Commitment, the Lenders may employ at the expense of the Lenders an administrative agent to act on behalf of the Lenders under this Agreement and the other Loan Documents, and the Borrower agrees to customary and reasonable modifications to this Agreement and the other Loan Documents to reflect the duties and responsibilities of such agent, acting on behalf of the Lenders, and multiple Lenders. For the avoidance of doubt, it is understood and agreed that in no event shall the amount of the Commitment, the rate of interest on the Loans, the Maturity Date, the definition of Required Lenders, the representations or warranties of the Borrower, the negative covenants or the prepayment provisions of the Agreement be modified in connection with the employment of such administrative agent. (d) In connection with any assignment by any Lender (other than assignments requiring the Borrower's approval), the assigning Lender shall provide notice of such assignment to the Borrower, and the Borrower hereby acknowledges and agrees to maintain a register of all assignments by the Lenders. (e) PARTICIPATIONS. Any Lender may, without the consent of the Borrower, sell participations to one or more banks or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights and obligations under this Agreement and the other Loan Documents (including all or a portion of the Loans and the Commitment); provided that (i) such Lender's obligations under this Agreement and the other Loan Documents shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrower shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. Any agreement or instrument pursuant to which any Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and the other Loan Documents and to approve any amendment, modification or waiver of any provision of this Agreement or any other Loan Document. In no event shall the selling Lender agree with the Participant to take or refrain from taking any action under this Agreement or under any other Loan Document except that such Lender may agree with the Participant that it will not, without the consent of the Participant, agree to (1) increase or extend the term, or extend the time or waive any requirement for the reduction, termination or prepayment, of the Loans, (2) extend the date fixed for the payment of principal of or interest on the Loans, (3) reduce the amount of any such payment of principal or any premium payable hereunder, (4) reduce the rate at which interest is payable on any amount under this Agreement, or reduce any fee or other amount payable to the Participant to a level below the rate at which the Participant is entitled to receive such interest or fee, (5) alter the rights or obligations of the Borrower to prepay the Loans, or (6) release any portion of the Collateral or terminate any Lien under the Security Documents prior to the payment in full of the Loan and all amounts required to be paid by the Borrower to Collateral Agent or any Lender under the Loan Documents except as contemplated in the Security Documents. (f) LIMITATIONS ON RIGHTS OF PARTICIPANTS. A Participant shall not be entitled to receive any greater payment under Section 2.08 than the selling Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower's prior written consent. SECTION 10.05. THE BUY OUT. (a) One or more Lenders may (but shall not be obligated to) cause the assignment to such Lender(s) or their designee (each, a "BUYING LENDER"), by any other Lender (each, a "SELLING LENDER"), of all right, title and interest in, to, arising under, or in respect of all Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents owed to the Selling Lenders under the Loan Documents upon written notice from the Buying Lenders to the Selling Lenders given at any time after the date on which the Selling Lenders (i) reject any waiver, amendment or modification of, or deny any departure by the Borrower from, any provision of this Agreement or any Loan Document or (ii) accelerate pursuant to Section 7.02(b) or any automatic acceleration pursuant to Section 7.02(a). (b) Such assignment shall be effected not later than ten (10) Business Days following the giving of such notice upon the execution by the Buying Lenders and the Selling Lenders of an instrument in writing pursuant to which the Buying Lenders agree to assume all Obligations owed to the Selling Lenders under the Loan Documents in exchange for the payment at par, in immediately available funds, of the amount of the Obligations owed to each such Selling Lenders as of the date on which such assignment is made, at which time the Selling Lenders shall be released from all obligations and duties under the Loan Documents. The assignments by the Selling Lenders pursuant to this Section 10.05 shall be without recourse or warranty of any kind. SECTION 10.06. SURVIVAL. All covenants, agreements, representations and warranties made by the Borrower herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of each Loan, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lenders may have had notice or knowledge of any Default or Event of Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid and so long as the Commitment has not expired or terminated. The provisions of Sections 2.08, 2.09 and 10.03 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Commitment or the termination of this Agreement or any provision hereof. SECTION 10.07. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents constitute the entire contract between the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. Except as provided in Article IV, this Agreement shall become effective when it shall have been executed by Collateral Agent and the Lenders and when Collateral Agent and the Lenders shall have received a counterpart hereof bearing the signature of the Borrower, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. SECTION 10.08. SEVERABILITY. Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction. SECTION 10.09. GOVERNING LAW; JURISDICTION; ETC. (a) GOVERNING LAW. THIS AGREEMENT SHALL BE SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING FOR SUCH PURPOSE SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK). (b) SUBMISSION TO JURISDICTION. The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the non-exclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement shall affect any right that Collateral Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against the Borrower or its properties in the courts of any jurisdiction. (c) WAIVER OF VENUE. The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (d) SERVICE OF PROCESS. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.01. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. SECTION 10.11. HEADINGS. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement. SECTION 10.12. CONFIDENTIALITY. Each of the Borrower and the Lenders agree to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to the Borrower's and any Lender's Affiliates and to such Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors who need to know (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and will agree to keep such Information confidential), (b) to the extent requested by any regulatory authority or to the extent required by applicable laws or regulations or by any subpoena or similar legal process (provided, that prompt notice of such requested or required disclosure shall be provided to any other party to this Agreement so as to enable such party to obtain a protective order, confidential treatment or other appropriate remedy), (c) to any other party to this Agreement, (d) in connection with the exercise of any remedies hereunder or under any other Loan Document or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 10.12, to any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement, (f) with the consent of the Borrower or the Lenders, as the case may be, or (g) to the extent such Information (i) becomes publicly available other than as a result of a breach of this paragraph or (ii) becomes available to the Borrower or to the Lenders on a non-confidential basis from a source other than the Borrower or the Lenders as the case may be, provided, that such source is not known to be bound by a confidentiality arrangement or otherwise prohibited from transmitting the Information by a contractual, legal or fiduciary obligation. For the purposes of this Agreement, "INFORMATION" means all information (1) received by a Lender from the Borrower relating to the Borrower or its business, other than any such information that is available to such Lender on a non-confidential basis prior to disclosure by the Borrower; and (2) received by the Borrower from a Lender relating to such Lender or its business, other than such information that is available to the Borrower on a non-confidential basis prior to disclosure by such Lender, provided that, in the case of information received from either party after the date hereof, such information is clearly identified at the time of delivery as confidential. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. SECTION 10.13. USA PATRIOT ACT. Each Lender hereby notifies the Borrower and each Subsidiary Guarantor that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the "PATRIOT ACT"), it is required to obtain, verify and record information that identifies the Borrower and each Subsidiary Guarantor, which information includes the name and address of such Person and other information that will allow such Lender to identify such Person in accordance with the Patriot Act. The Borrower and each Subsidiary Guarantor agrees to provide all such information to the Lenders upon request at any time, whether with respect to the Borrower, any Person who is a Subsidiary Guarantor on the Effective Date or who becomes a Subsidiary Guarantor thereafter. [Remainder of this page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. U.S. BANK NATIONAL ASSOCIATION, as Collateral Agent By: ____________________________ Name: Title: HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., as a Lender By: Harbinger Capital Partners Offshore Manager, L.L.C., as investment manager By: ____________________________ Name: Title: HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P., as a Lender By: Harbinger Capital Partners Special Situations GP, LLC, as general partner By: ____________________________ Name: Title: ECHOSTAR CORPORATION, as a Lender By: ____________________________ Name: Title: TERRESTAR NETWORKS INC., as Borrower By: ____________________________ Name: Title: APPENDIX A-1 COMMITMENTS
====================================================================================== Pro Lender Commitment Rata Share Harbinger Capital Partners Master Fund I, LTD. $33,333,333.33 33 1/3% - -------------------------------------------------------------------------------------- Harbinger Capital Partners Special Situations Fund, L.P. $16,666,666.67 16 2/3% - -------------------------------------------------------------------------------------- EchoStar Corporation $50,000,000 50% - -------------------------------------------------------------------------------------- Total $100,000,000 100% ======================================================================================
SCHEDULE I MATERIAL CONTRACTS 1. TerreStar Networks Inc. Amended and Restated Stockholders' Agreement, dated May 6, 2006, by and among TerreStar Networks Inc. and the stockholders listed therein 2. Second Amended and Restated Intellectual Property Assignment and License Agreement, dated November 21, 2006, by and between TerreStar Networks Inc. and ATC Technologies, LLC 3. Launch Services Agreement dated November 8, 2006 by and between TerreStar Networks Inc. and Arianespace 4. Indenture, dated as of February 14, 2007, among TerreStar Networks Inc., as issuer, the guarantors party thereto and U.S. Bank National Association, as trustee 5. U.S. Security Agreement, dated as of February 14, 2007, among TerreStar Networks Inc. and the future guarantors party thereto in favor of U.S. Bank National Association, as collateral agent. 6. Funding Agreement, dated February 14, 2007, among TerreStar Corporation (f/k/a Motient Corporation), Motient Ventures Holding Inc. and TerreStar Networks Inc. 7. Master Development & Licensing Agreement, dated August 10, 2007, between TerreStar Networks Inc. and Elektrobit, Inc. 8. Master Services Agreement, dated October 22, 2007, between TerreStar Networks Inc. and Bechtel Communications, Inc. 9. Network Equipment and Services Agreement, dated August 28, 2007, between Nokia Siemens Networks US LLC and TerreStar Networks Inc. 10. TerreStar Canada Shareholders' Agreement, dated April 5, 2007, between TerreStar Networks Inc., TMI Communications and Company, LP, TerreStar Networks (Canada) Inc., TerreStar Networks Holdings (Canada) Inc. and BCE Inc. 11. Rights and Services Agreement, dated April 5, 2007, between TerreStar Networks Inc. and TerreStar Canada 12. TMI Guarantee and Share Pledge Agreement, dated April 5, 2007, between TerreStar Networks Inc. and TMI Communications 13. TerreStar Canada Guarantee, dated April 5,2007, between TerreStar Canada and TerreStar Networks Inc. 14. Contract for the Design, Development and Supply of Satellite Base Station Subsystem, dated March 30, 2007, between TerreStar Networks Inc. and Hughes Network Systems, LLC 15. Amended and Restated Contract for TerreStar-2, dated December 12, 2007, between TerreStar Networks Inc. and Space Systems/Loral, Inc. 16. Amended and Restated Contract for TerreStar-1, dated December 12, 2007, between TerreStar Networks Inc. and Space Systems/Loral, Inc. 17. Contract for the TerreStar Space Based Network dated January 19, 2007, between TerreStar Networks Inc. and Space Systems/Loral, Inc. SCHEDULE II MILESTONE PAYMENTS AND PAYMENT DATES PART A [See Attached] SCHEDULE II MILESTONE PAYMENTS AND PAYMENT DATES PART B [See Attached] SCHEDULE 2.09(a) LENDER PAYMENT ACCOUNTS - -------------------------------------------------------------------------------- Lender: Harbinger Capital Partners Master Fund I, Ltd. Wire Info: Bank: Citibank, N.A. New York ABA No: 021000089 F/A/O: Bear Stearns Securities Corporation Account No.: 09253186 F/F/C: Harbinger Capital Partners Master Fund I, Ltd. Account No: 102-28784-23 - -------------------------------------------------------------------------------- Lender: Harbinger Capital Partners Special Situations Fund, LP Wire Info: Bank: Chase Manhattan Bank, NY ABA: 021-000-021 F/A/O: Goldman Sachs & Co., NY Account: 930-1-011483 F/F/C: Harbinger Capital Partners Special Situations Fund, L.P. Account: 00230270-1 - -------------------------------------------------------------------------------- Lender: EchoStar Corporation Wire Info: Bank: Bank of America ABA: 026009593 Beneficiary: EchoStar Holding ACH/Wires Account: 12330-65595 - -------------------------------------------------------------------------------- SCHEDULE 3.05(c) MATERIAL ADVERSE EFFECT EXCEPTIONS Space Systems/Loral, Inc. has informed TerreStar of a delay in construction of TerreStar-1 and given Terrestar a new expected delivery date for the end of November, 2008. There can be no assurance that Space Systems/Loral, Inc. will meet this date or not have additional delays. The Lenders have been given the opportunity to speak with Space Systems/Loral, Inc. about this delay. Allegations of a "Change in Control" or "Change of Control" under the Series A or Series B preferred or the 15% Notes Indenture. Litigation regarding shareholder approval of the transactions contemplated by the Investment Agreement. EXHIBIT A FORM OF NOTICE OF BORROWING [INSERT DATE] Harbinger Capital Partners Master Fund I, Ltd. Harbinger Capital Partners Special Situations Fund, LP c/o Harbinger Capital Partners Funds 555 Madison Avenue, 16th Floor New York, NY 10022 Attention: __________ EchoStar Corporation 90 Inverness Circle E. Englewood, Colorado 80112 Attention: __________ This Notice of Borrowing is delivered pursuant to Section 4.02(e) of the Purchase Money Credit Agreement dated as of February 5, 2008 (as amended, modified or supplemented and in effect from time to time, the "CREDIT AGREEMENT") among TERRESTAR NETWORKS INC. (the "BORROWER"), U.S. BANK NATIONAL ASSOCIATION, as collateral agent for the lenders referred to below, HARBINGER CAPITAL PARTNERS MASTER FUND I, LTD., HARBINGER CAPITAL PARTNERS SPECIAL SITUATIONS FUND, L.P., ECHOSTAR CORPORATION and the other lenders party thereto from time to time. Unless otherwise defined herein, capitalized terms used in this Notice of Borrowing have the meanings given to them (whether by reference to another document or otherwise) in the Credit Agreement. This Notice of Borrowing is irrevocable and constitutes a request for a Loan as follows: 1. Purpose of Loan is to make a Milestone Payment. 2. Aggregate amount of the Loan: $____________ - Amount being paid to Satellite Manufacturer: $____________ 3. Date of Loan: ___________. 4. Deposit Account: The account of the [Borrower / Satellite Manufacturer] at Bank: [________], Routing Number: [________], Account Number: [________]. As contemplated by the Credit Agreement, the Borrower certifies that all applicable conditions of Sections 4.01 and 4.02 of the Credit Agreement have been met and that, as at the date of this Notice of Borrowing and the date of the Loan (including after giving effect to the making of the Loan and the intended use thereof): (a) the representations and warranties of the Borrower set out in Article III of the Credit Agreement shall be true and correct on and as of the date of the making of the Loan; (b) no Default or Event of Default shall have occurred and be continuing. The Borrower further confirms and certifies to the Lender that the proceeds of the requested Loan will be used solely for the purposes specified and permitted by the Credit Agreement; and (c) when the amount of the requested Loan is added to the aggregate principal amount of all Loans theretofore made to the Borrower, the aggregate principal amount of the Loans shall not exceed the Commitment then in effect. Very truly yours, TERRESTAR NETWORKS INC. By: ____________________________________ Name: Title: EXHIBIT B OPINIONS OF NEW YORK AND DELAWARE COUNSEL TO THE BORROWER AND THE GUARANTORS EXHIBIT C FORM OF SECURITY AGREEMENT EXHIBIT D FORM OF NOTE EXHIBIT E FORM OF JOINDER TO GUARANTEE SK 03773 0003 853053 -----END PRIVACY-ENHANCED MESSAGE-----