424B3

PROSPECTUS

Telesat Canada

Telesat LLC

OFFER TO EXCHANGE

Up to US$692,825,000 aggregate principal amount of Senior Notes due 2015 issued by Telesat Canada and Telesat LLC, as co-issuer, which have been registered under the Securities Act of 1933, for any and all outstanding Senior Notes due 2015 (CUSIP Nos. 87952V AA4, C8814P AA8 and 87952V AC0) issued by Telesat Canada and Telesat LLC, as co-issuer.

Up to US$217,175,000 aggregate principal amount of Senior Subordinated Notes due 2017 issued by Telesat Canada and Telesat LLC, as co-issuer, which have been registered under the Securities Act of 1933, for any and all outstanding Senior Subordinated Notes due 2017 (CUSIP Nos. 87952V AB2, C8814P AB6 and 87952V AD8) issued by Telesat Canada and Telesat LLC, as co-issuer.

The exchange notes will be fully and unconditionally guaranteed on an unsecured basis by our parent company, Telesat Holdings Inc., and certain of our domestic and foreign subsidiaries.

We are conducting the exchange offer to provide you with an opportunity to exchange your unregistered outstanding notes for freely tradeable exchange notes that have been registered under the Securities Act of 1933.

The Exchange Offer


	•	We will exchange all outstanding notes that are validly tendered and not validly withdrawn for an equal principal amount of exchange notes representing the same underlying indebtedness that are freely tradeable.

	•	You may withdraw tenders of outstanding notes at any time prior to the expiration date of the exchange offer.

	•	The exchange offer expires at 12:00 midnight, New York City time, on July 28, 2009 which is the 20th business day after the date of this prospectus.

	•	The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for U.S. or Canadian federal income tax purposes.

	•	The terms of the exchange notes to be issued in the exchange offer are substantially identical to the outstanding notes, except that the exchange notes will be freely tradeable.

All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indentures. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act.

You should carefully consider the “Risk Factors” beginning on page 17 of this prospectus before participating in the exchange offer.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the exchange notes to be distributed in the exchange offer or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is June 29, 2009.

TABLE OF CONTENTS


	Page

Prospectus Summary		1
Risk Factors		17
Forward-Looking Statements		38
Use of Proceeds		41
Capitalization		42
The Telesat Canada Transactions		43
Selected Historical Consolidated Financial Data		45
Management’s Discussion and Analysis of Financial Condition and Results of Operations		47
Industry Overview		72
Business		76
Management		102
Principal Shareholders		110
Description of Other Indebtedness and Preferred Stock		118
The Exchange Offer		122
Description of The Senior Notes		131
Description of The Senior Subordinated Notes		196
U.S. Federal Income Tax Consequences		263
Canadian Federal Income Tax Considerations		263
ERISA Considerations		264
Book-Entry, Settlement and Clearance		265
Plan of Distribution		267
Legal Matters		267
Experts		267
Available Information		268
Index to Consolidated Financial Statements		F-1

We have not authorized any dealer, salesperson or other person to give any information or represent anything to you other than the information contained in this prospectus. You must not rely on unauthorized information or representations.

This prospectus does not offer to sell nor ask for offers to buy any of the securities in any jurisdiction where it is unlawful, where the person making the offer is not qualified to do so, or to any person who cannot legally be offered the securities. The information in this prospectus is current only as of the date on its cover, and may change after that date.

Following the date of this prospectus, we will be subject to reporting obligations and any filings we make will be available via the website of the United States Securities and Exchange Commission, or SEC, at www.sec.gov. You can also obtain any filed documents regarding us without charge by written or oral request to:

Telesat Canada
1601 Telesat Court
Ottawa, Ontario, Canada K1B 5P4
Attn. Michael Bolitho
Director, Treasury and Risk Management
Telephone: (613) 748-0123

Please note that copies of documents provided to you will not include exhibits.

In order to receive timely delivery of requested documents in advance of the expiration date of the exchange offer, you should make your request no later than July 21, 2009, which is five business days before you must make a decision regarding the exchange offer.

See “Available Information.”

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Unless we indicate otherwise, financial information in this prospectus has been prepared in accordance with Canadian generally accepted accounting principles, or Canadian GAAP. Canadian GAAP differs in some respects from United States generally accepted accounting principles, or United States GAAP, and thus our financial statements may not be comparable to the financial statements of United States companies. The principal differences as they apply to us are summarized in Note 25 to our audited consolidated financial statements included herein. The financial statements and other financial data of Loral Skynet Corporation and its subsidiaries are prepared in accordance with accounting principles generally accepted in the United States, or United States GAAP.

We present our historical financial statements in Canadian dollars. In this prospectus, except where we indicate otherwise, references to “CAD$,” “$” and “dollars” are to Canadian dollars and references to “US$” and “U.S. dollars” are to United States dollars. This prospectus contains a translation of some Canadian dollar amounts into United States dollars at specified exchange rates solely for your convenience. See “Exchange Rate Information” below for certain information about the rates of exchange between Canadian dollars and United States dollars.

ENFORCEABILITY OF CIVIL LIABILITIES

Telesat Canada is incorporated under the Canada Business Corporations Act. Certain of our guarantors are also incorporated in jurisdictions outside of the United States. Telesat Canada has its principal executive office in Ontario, Canada. Certain of the directors, officers and experts named in this prospectus are not residents of the United States, and all or a substantial portion of their assets and a substantial portion of the assets of Telesat Canada and our non-U.S. guarantors are located outside of the United States. It may be difficult for you to effect service of process within the United States upon us or our directors, officers and experts who are not residents of the United States or to realize in the United States upon judgments of U.S. courts based upon the civil liability under the federal securities laws of the United States. We have been advised by McCarthy Tétrault LLP, our Canadian counsel, that there is doubt as to the enforceability in Canada against us or against our directors, officers or experts who are not residents of the United States, in original actions or in actions for enforcement of judgments of U.S. courts, of certain liabilities based solely upon the federal securities laws of the United States.

EXCHANGE RATE INFORMATION

The following table sets forth, for each period indicated, the low and high exchange rates for Canadian dollars expressed in United States dollars, the exchange rate at the end of such period and the average of such exchange rates on the last day of each month during such period, based on the inverse of the noon buying rate in the City of New York for cable transfers in Canadian dollars as certified for customs purposes by the Federal Reserve Bank of New York. The exchange rates set forth below demonstrate trends in exchange rates, but the actual exchange rates used throughout this prospectus may vary.


	Year Ended December 31,
	2004		2005		2006		2007		2008

High		1.3970		1.2703		1.1726		1.1852		1.2971
Low		1.1775		1.1507		1.0989		0.9168		0.9717
Period End		1.2034		1.1656		1.1652		0.9881		1.2240
Average Rate		1.2984		1.2083		1.1307		1.0665		1.0713

The following table sets forth, for each of the last six months, the low and high exchange rates for Canadian dollars expressed in United States dollars and the exchange rate at the end of the month based on the inverse of the noon buying rate as described above. The source of the exchange rate is: (i) with respect to any period ending on or prior to December 31, 2008, the Federal Reserve Bank of New York, and (ii) with respect to any period ending on or after January 1, 2009, the H.10 statistical release of the Federal Reserve Board.


	Last Six Months
	December		January		February		March		April		May

High		1.2971		1.2749		1.2710		1.2995		1.2640		1.1868
Low		1.1962		1.1822		1.2190		1.2245		1.1939		1.0957
End of Month		1.2240		1.2365		1.2710		1.2606		1.1939		1.0957

On June 26, 2009, the inverse of the noon buying rate was US$1.00 = $1.1531. Unless the context states or requires otherwise, for purposes of United States dollars and Canadian dollar conversions contained in this prospectus, we have assumed the conversion rate of US$1.00/$1.2246 for amounts reported at December 31, 2008 and US$1.00/$1.2602 for amounts reported at March 31, 2009. The source of these exchange rates is the Bank of Canada noon rate on December 31, 2008 and March 31, 2009, respectively.

Canada has no system of exchange controls. There are no Canadian exchange restrictions affecting the remittance of dividends, interest, royalties or similar payments to non-resident holders of our securities.

MARKET, RANKINGS AND OTHER DATA

Unless otherwise indicated, market data and other statistical information contained in this prospectus are based upon information from independent industry publications and management’s knowledge and experience in the industry and markets in which we operate. While management believes this data and information to be reasonable, market data and other statistical information is subject to change and cannot always be verified with complete certainty due to limits on the availability and reliability of raw data and information. In addition, variables, including consumer consumption and discretionary spending patterns and consumer preferences, can and do change. As a result, you should be aware that market, ranking and other similar data and information set forth in this prospectus, and estimates and beliefs based on such data and information, may not be reliable.

iii

PROSPECTUS SUMMARY

Unless otherwise indicated or the context otherwise requires, references in this prospectus to “Telesat,” “we,” “the Company,” “the combined company” and “our” mean Telesat Holdings Inc. and its subsidiaries, including, with respect to the period commencing on and after the closing of the Telesat Canada transaction (as defined below), Telesat Canada, the issuer of the notes and its principal operating subsidiary. References to “Telesat Holdings” mean Telesat Holdings Inc., to the exclusion of its subsidiaries. We refer to the acquisition of Telesat Canada and the related transfer of Loral Skynet to Telesat Canada as the “Telesat Canada transaction.” References to “Telesat Canada” with respect to periods prior to the closing of the Telesat Canada transaction are references to the subsidiary of BCE Inc. (“BCE”) and with respect to the period commencing on and after the closing of the Telesat Canada transaction are references to our principal operating subsidiary. Similarly, unless otherwise indicated, references to “Loral Skynet” with respect to periods prior to the closing of the Telesat Canada transaction are references to the operations of the satellite services segment of Loral Space & Communications Inc. (“Loral”) conducted through Loral Skynet and with respect to the period commencing on and after the closing of the Telesat Canada transaction are references to the Loral Skynet operations within Telesat Canada.

Overview

We are the world’s fourth largest FSS operator and one of only three FSS operators operating on a global basis. The combination of Telesat Canada and Loral Skynet created a powerful international platform supporting (i) strong video distribution and DTH neighborhoods in North America characterized by long-term contracts with blue chip customers, significant contractual backlog and a fully contracted expansion direct-to-home (“DTH”) satellite, (ii) an efficient enterprise and government services business that provides North American customers with end-to-end communications services, and (iii) a strong international video distribution, enterprise services and government services business.

Through our deep commitment to customer service and focus on innovation and technical expertise, we have developed strong relationships with a diverse range of high-quality customers, including many of the world’s largest video and data service providers. Our current customers include North American DTH providers Bell TV, Shaw Direct and EchoStar, and leading telecommunications and media firms such as HBO, Canadian Broadcasting Corporation, Bell Canada and Lockheed Martin.

Our North American Broadcast and Enterprise Services customer service contracts are typically multi-year in duration and, in the past, we have successfully contracted all or a significant portion of a satellite’s capacity prior to commencing construction. As a result, we had approximately $5.3 billion of contracted revenue backlog as of March 31, 2009. See “Business — Our Services — Revenue Backlog” for additional information.

Our fleet of twelve in-orbit satellites is comprised of eleven owned satellites and one satellite of which we lease all but one transponder. Our fleet of eleven owned in-orbit satellites had, as of March 31, 2009, an average of approximately 57.9% service life remaining, with an average service life remaining of approximately 8.3 years. We calculate these figures using, for each satellite, the lesser of its manufacturers’ design service life or its expected end-of-service life.

The North American focused part of our satellite fleet is comprised of three owned FSS satellites, Anik F1R, Anik F2 and Anik F3, and three owned DBS satellites, Nimiq 1, Nimiq 2 and Nimiq 4. In addition, we leased from another satellite operator and operated one satellite, Nimiq 3, which was removed from commercial service on June 1, 2009. We also have one additional North American satellite, Nimiq 5, currently under construction and scheduled for delivery by the manufacturer on the ground in late 2009.

Telstar 10 and to transfer certain related customer contracts in exchange for a payment from APT to us of approximately US$69.5 million, subject to adjustment. The transaction is expected to be completed in July 2009. Proceeds will be used to fund replacement satellites or applied to reduce our indebtedness under our senior secured credit facilities.

We also operate thirteen satellites for third parties: two Mobile Satellite Services (“MSS”) satellites, one for SkyTerra LP and one for SkyTerra Canada; four satellites for SIRIUS XM Radio; one satellite for WildBlue; four satellites for EchoStar; one satellite for XTAR, an affiliate of Loral; and one satellite for MacDonald, Dettwiler and Associates.

We believe our global satellite fleet, access to our desirable orbital locations and strong relationships with our customers underpin our established, predictable core business, and provides us with the opportunity to capitalize on the growth drivers in the satellite industry and the markets we serve.

Industry Overview

We compete in the market for the provision of voice, data, video and internet connectivity services worldwide. Services of this type are provided using various technologies, including satellite networks. We currently operate in the FSS sector of the satellite industry. Operators in the FSS sector provide communications links between fixed points on the earth’s surface, referred to as point-to-point services, and from one point to multiple points, referred to as point-to-multipoint services. Over the last several years, deregulation and privatization have significantly reshaped the FSS sector. In addition, the sector has undergone consolidation, with regional and national operators being acquired by larger companies or seeking to partner with other providers.

Competitive Strengths

Our business is characterized by the following key competitive strengths:

Leading Global FSS Operator

We are the fourth largest FSS operator in the world and the largest in Canada, with a strong and growing business. We have a leading position as a provider of satellite services in the North American video distribution market. We provide services to both of the major DTH providers in Canada, Bell TV and Shaw Direct, who together have approximately 2.7 million subscribers, as well as to EchoStar for the United States DTH market. Our international satellites are well positioned in several emerging, high growth markets and provide strong neighborhoods for high value customers in those markets. Telstar 11N provides service to American, European and African regions and aeronautical and maritime markets of the North Atlantic Ocean Region. Telstar 12 has the capability to provide intercontinental connectivity from the Americas to the Middle East. Telstar 18 delivers video distribution and contribution throughout Asia and offers connectivity to the US mainland via Hawaiian teleport facilities. Our current enterprise services customers include leading telecommunications service providers, as well as a range of network service providers and integrators, who provide services to enterprises, governments and international agencies and multiple internet service providers (“ISPs”).

Blue Chip Customer Base

We offer our broad suite of satellite services to more than 400 customers worldwide, which include some of the world’s leading television broadcasters, cable programmers, DTH service providers, ISPs, telecommunications carriers, corporations and government agencies. Over nearly 40 years of operation, we have established long-term, collaborative relationships with our customers and have developed a reputation for creating innovative solutions and providing services essential for our customers to reach their end users. Our customers represent some of the strongest and most financially stable companies in their respective industries. These customers frequently commit to long-term contracts for our services, which enhances the predictability of our future revenues and cash flows and supports our future growth. Our customers include: North American DTH

providers Bell TV, Shaw Direct and EchoStar, and leading telecommunications and media firms such as HBO, Canadian Broadcasting Corporation, Bell Canada and Lockheed Martin.

Large Contracted Revenue Backlog and Young Satellite Fleet Underpin Anticipated Growth and High Revenue Visibility

Historically, we have been able to generate strong cash flows from our operating activities due to the high operating margins in the satellite industry and our disciplined control of expenses. The stability of our cash flows is underpinned by our large revenue backlog. As of March 31, 2009, we had contracted backlog for future services of approximately $5.3 billion, which represents a multiple of over seven times revenue for the year ended December 31, 2008. Of the approximately $5.3 billion backlog (approximately 1% of which related to Telstar 10), we anticipate that approximately $497 million will be recognized as revenue in 2009 with the remaining approximately $4.8 billion to be recognized in 2010 and thereafter. We have been able to generate significant backlog by entering into long-term contracts with our customers, in some cases for all or a substantial portion of a satellite’s service life.

This revenue backlog supports our anticipated growth. A significant proportion of our expected revenue growth is based on currently contracted business with our DTH provider customers for satellites either recently launched or that will be launched within the next year. In addition to this backlog, we have historically experienced a high proportion of contract renewals with existing customers. Together these two factors have historically produced ongoing, stable cash flows.

The high quality and young age of our satellite fleet also positively impacts our cash flows and enables us to manage capital expenditures. Our fleet of twelve in-orbit satellites is comprised of eleven owned in-orbit satellites and one satellite of which we lease all but one transponder. Our fleet of eleven owned in-orbit satellites had, as of March 31, 2009, an average of approximately 57.9% service life remaining, with an average service life remaining of approximately 8.3 years. We calculate these figures using, for each satellite, the lesser of its manufacturers’ design service life or its expected end-of-service life. One additional satellite, Nimiq 5, is under construction.

Portfolio of Orbital Real Estate

Our satellites generally occupy highly attractive orbital locations that provide distinct competitive advantages given the scarcity of satellite spectrum. Access to these orbital locations, coupled with the high capital intensity of the satellite business, create strong barriers to entry in our markets. We are licensed to occupy a collection of orbital locations that allow us to serve the Americas. Our international satellites also occupy highly desirable orbital locations that enable broad pan-regional service with interconnectivity between regions, making them attractive for both intra- and inter-regional services and customers.

See “Business — Our Orbital Locations” for a more detailed description of our orbital locations, the satellites that occupy them and the geographic regions that they serve.

Global Operations Provide Revenue Diversification and Economies of Scale

The combination of Telesat Canada’s North American broadcast and enterprise services businesses with Loral Skynet’s international business created a company that is well diversified in terms of the customers and regions it serves and the services it provides. Our North American business, particularly our broadcast business, drives our backlog, while our international activities give us access to the higher growth markets for satellite services. We benefit from growth in both the broadcast and enterprise services markets due to our strong presence in each. Our global satellite footprint allows us to meet the global requirements of broadcasters, carriers and government users around the world.

In addition to diversifying our revenues on a customer, product and geographic basis, the combination of Telesat Canada with Loral Skynet allows us to achieve greater economies of scale.

Business Strategy

We are committed to continuing to provide the strong customer service and focus on innovation and technical expertise that have allowed us to successfully build our business to date. Building on our large backlog and significant contracted growth, our focus will be on taking disciplined steps to grow our core business and sell our existing satellite capacity; improve our operating efficiency; and, in a disciplined manner, use the strong cash flow generated by our existing business, contracted expansion satellite and cost savings to strengthen our business.

Continue to Grow Our Core Business

We believe our satellite fleet offers a strong combination of existing backlog, contracted revenue growth and additional capacity on our existing satellites that provides a solid foundation upon which we will seek to grow our revenues and cash flows. To achieve this growth, we will seek to capture the anticipated increased demand for satellite services and capacity, (i) in the broadcast services market, from broadcast video applications, including DTH services, HDTV, IPTV, and expansion in the number of channels and (ii) in the enterprise services market, from developing market requirements, government services and enterprise network demand.

Reduce Costs

Prior to the combination of Telesat Canada and Loral Skynet, we completed a thorough process to formulate, validate and document a comprehensive integration plan. We have substantially implemented this integration plan, which resulted in a substantial headcount reduction in certain areas of the company and consolidation of a number of Loral Skynet facilities, including satellite and network operations centres and teleports. In 2008, we realized substantial cost synergies. In 2009, we expect to continue to review all aspects of our business to contain operating costs and improve our operating efficiency.

Follow a Disciplined Satellite Expansion Strategy

With our current satellite fleet, we believe we are well positioned to serve our customers and the markets in which we participate. We regularly pursue opportunities to develop new satellites, particularly in conjunction with current or prospective customers, who will commit to a substantial amount of capacity at the time the satellite construction contract is signed. We also evaluate the performance of our business on an ongoing basis and may carry out strategic dispositions of assets, including one or more satellites, as part of that process.

Increase Cash Flow, Reduce Leverage and Maintain Strong Liquidity Profile

The satellite industry is characterized by a relatively fixed cost base that allows significant revenue growth with relatively minimal increases in operating costs, particularly for sales of satellite capacity. Thus, we anticipate that we can increase our revenues without proportional increases in our operating expenses, allowing us to expand our margins. To further enhance our liquidity, at the closing of the Telesat Canada transaction we established a five-year $153 million revolving credit facility that can be used for general corporate purposes including working capital and capital expenditures of which nil million dollars was outstanding at December 31, 2008 (excluding outstanding letters of credit).

Issuer Information

Our principal executive offices are located at 1601 Telesat Court, Ottawa Ontario, KIB 5P4. Our telephone number at this address is (613) 748-0123. Our corporate website address is http://www.telesat.com. Our website and the information contained on our website do not constitute a part of this prospectus and is not incorporated by reference herein.

The Telesat Canada Transactions

The Telesat Canada Acquisition

On October 31, 2007, Telesat Interco, a Canadian company and wholly-owned subsidiary of Telesat Holdings, a Canadian company indirectly owned by PSP and Loral, acquired 100% of the stock of Telesat Canada and certain other assets from BCE for $3.25 billion (approximately US$3.42 billion at an October 31, 2007 exchange rate of US$1.00/$0.9499) which we refer to as the Telesat Canada Acquisition.

PSP, through its wholly-owned subsidiary, Red Isle Private Investments Inc. (“Red Isle”), contributed to Telesat Holdings US$525 million in cash in exchange for (a) shares of 7% fixed rate senior non-convertible PIK mandatorily redeemable preferred stock of Telesat Holdings (the “Holding PIK Preferred Stock”), (b) common shares of Telesat Holdings representing approximately 30% of the participating equity of Telesat Holdings, and (c) voting participating preferred shares of Telesat Holdings representing approximately 6% of the participating equity of Telesat Holdings. The voting participating preferred shares are convertible into common shares on a one-for-one basis and have all of the rights of common shares, except that they do not have the right to vote for the election of directors of Telesat Holdings. The voting participating preferred shares do not have any liquidation preference or dividend rights above the common shares. In a related transaction, Red Isle transferred to Telesat Holdings $55,163,172, representing the market value of certain foreign exchange contracts entered into by Red Isle, in exchange for the issuance to Red Isle of a portion of the 36% equity shareholding acquired by Red Isle, in the form of voting participating preferred shares. We refer to these equity contributions as the Equity Financing.

The Skynet Transaction

On October 31, 2007, in connection with the Telesat Canada acquisition, Loral Skynet transferred substantially all of its assets (the “Loral Skynet Business”) to Telesat Holdings pursuant to an asset transfer agreement (the “Asset Transfer Agreement”). In exchange for the transfer of such assets, Telesat Holdings issued to a subsidiary of Loral common shares representing 331/3% of all voting and participating equity rights outstanding after such issuance and non-voting participating preferred shares representing 302/3% of all participating equity of Telesat Holdings outstanding after such issuance. The non-voting participating preferred shares of Telesat Holdings acquired by a subsidiary of Loral are convertible into common shares on a one-for-one basis if held by a shareholder that is “Canadian” for Canadian regulatory purposes. These non-voting participating preferred shares do not have any liquidation preference or dividend rights above common shares of Telesat Holdings. Under current regulations, neither Loral nor any subsidiary of Loral is able to convert any of these shares into common shares of Telesat Holdings.

In addition, on October 31, 2007, Skynet Satellite Corporation (“SSC”), a Delaware corporation which became an indirect wholly-owned subsidiary of Telesat Holdings as of the closing of the Asset Transfer Agreement, purchased from Loral Skynet certain other assets and assumed certain liabilities of Loral Skynet for the purchase price of US$25,472,000 in marketable securities pursuant to the terms of an asset purchase agreement (the “Asset Purchase Agreement”). We refer to the transfer of the Loral Skynet Business to us pursuant to the Asset Transfer Agreement and the Asset Purchase Agreement as the Skynet Transaction.

Telesat Holdings also, subject to certain exceptions, assumed the liabilities of the Loral Skynet Business.

Senior Secured Credit Facilities and Bridge Facilities

In connection with the Telesat Canada Acquisition, we entered into senior secured credit facilities, a senior bridge facility and a senior subordinated bridge facility. The obligations under the bridge facilities were exchanged for the notes issued in June 2008. See “Description of Other Indebtedness and Preferred Stock.”

Refinancing

Loral Skynet’s existing 12% preferred stock was redeemed in connection with the Skynet Transaction on November 5, 2007 and Telesat Canada’s existing 8.2% senior notes were redeemed on November 30, 2007. In addition, in connection with the Telesat Canada transaction, Loral Skynet’s 14% senior secured notes were

repaid on September 5, 2007 with amounts borrowed under an interim refinancing facility of Loral Skynet provided by a third party lender. All outstanding amounts under this facility were repaid and all obligations thereunder discharged upon consummation of the Telesat Canada transaction out of transaction proceeds. We refer to these redemptions and refinancings as the Refinancing.

Telesat Reorganization

Immediately following the Telesat Canada acquisition, (i) all of the shares of Telesat Canada acquired by Telesat Interco in the Telesat Canada acquisition were transferred to 4363230 Canada Inc. in exchange for the issuance to Telesat Interco of common shares of 4363230 Canada Inc.; (ii) the senior secured credit facilities and the bridge facilities were assigned by Telesat Interco to, and were assumed by, 4363230 Canada Inc.; (iii) 4363230 Canada Inc. and Telesat Canada were amalgamated under the name “Telesat Canada”; and (iv) the Loral Skynet Business acquired by Telesat Holdings was transferred to Telesat Interco, and then to Telesat Canada, in exchange for the issuance to Telesat Interco of common shares of Telesat Canada. These transactions are referred to as the Telesat Reorganization.

As a result of the Telesat Reorganization, the obligations under the senior secured credit facilities and the bridge facilities became obligations of Telesat Canada by operation of law, all of the assets of Telesat Canada before its amalgamation became the assets of the amalgamated Telesat Canada, the Loral Skynet Business became owned by Telesat Canada and Telesat Canada became a wholly-owned subsidiary of Telesat Interco.

The obligations under the bridge facilities were exchanged for the notes issued in June 2008.

The Telesat Canada acquisition, the Skynet Transaction, the Equity Financing, the Refinancing, the senior secured credit facilities, the bridge facilities (which have since been exchanged for the notes) and the initial borrowings thereunder, together with the payment of related fees and expenses, and the Telesat Reorganization, are collectively referred to as the Telesat Canada transaction.

Loral indirectly holds shares in Telesat Holdings effectively representing 64% of the economic interests and 331/3% of the voting power of Telesat Holdings and PSP indirectly holds shares effectively representing 36% of the economic interests, 662/3% of the voting power, other than in respect of the election of directors, and together with two other Canadian investors, 662/3% of the voting power for the election of directors, of Telesat Holdings. Telesat Holdings owns all of the issued and outstanding shares of Telesat Interco, and Telesat Interco owns all of the issued and outstanding shares of Telesat Canada.

Summary of the Terms of the Exchange Offer

On June 30, 2008, Telesat Canada and Telesat LLC, as Co-Issuer, issued US$692,825,000 aggregate principal amount of 11% Senior Notes due November 1, 2015, which we refer to in this prospectus as the “outstanding senior notes,” and US$217,175,000 aggregate principal amount of 12.5% Senior Subordinated Notes due November 1, 2017, which we refer to in this prospectus as the “outstanding senior subordinated notes,” in a transaction exempt from registration under the Securities Act of 1933, as amended, or the “Securities Act.” We refer to this transaction in this prospectus as the “private placement.”

In this prospectus, the term “outstanding notes” refers to the outstanding senior notes and the outstanding senior subordinated notes; the term “exchange notes” refers to the 11% Senior Notes due November 1, 2015, or the “senior exchange notes,” and the 12.5% Senior Subordinated Notes due November 1, 2017, or the “senior subordinated exchange notes,” each as registered under the Securities Act; and the term “notes” refers to both the outstanding notes and the exchange notes.


General		In connection with the private placement, we entered into registration rights agreements with Morgan Stanley & Co. Incorporated and UBS Securities LLC, as representatives of the other initial purchasers of the outstanding notes, in which we and the guarantors agreed, among other things, to use our commercially reasonable efforts to file a registration statement by June 25, 2009 and to consummate the exchange offer by September 23, 2009.

		You are entitled to exchange in the exchange offer your outstanding notes for exchange notes representing the same underlying indebtedness, which are identical in all material respects to the outstanding notes except:

		• the exchange notes have been registered under the Securities Act;

		• the exchange notes are not entitled to certain registration rights which are applicable to the outstanding notes under the registration rights agreements; and

		• certain additional interest rate provisions of the registration rights agreements are no longer applicable.

The Exchange Offer		We are offering to exchange up to:

		• US$692,825,000 aggregate principal amount of 11% Senior Notes due November 1, 2015, which have been registered under the Securities Act, for any and all outstanding 11% Senior Notes due November 1, 2015; and

		• US$217,175,000 aggregate principal amount of 12.5% Senior Subordinated Notes due November 1, 2017, which have been registered under the Securities Act, for any and all outstanding 12.5% Senior Subordinated Notes due November 1, 2017.

		Subject to the satisfaction or waiver of specified conditions, we will exchange, as evidence of the same underlying indebtedness, the exchange notes for all outstanding notes that are validly tendered and not validly withdrawn prior to the expiration of the applicable exchange offer. We will cause the exchange to be effected promptly after the expiration of the exchange offer.

		Upon completion of the exchange offer, there may be no market for the outstanding notes and you may have difficulty selling them.


Resales		Based on interpretations by the staff of the Securities and Exchange Commission, or the “SEC,” set forth in no-action letters issued to third parties referred to below, we believe that you may resell or otherwise transfer exchange notes issued in the exchange offer without complying with the registration and prospectus delivery requirements of the Securities Act, if:

		1. you are acquiring the exchange notes in the ordinary course of your business;

		2. you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes;

		3. you are not an “affiliate” of Telesat Canada, Telesat LLC or any of the guarantors within the meaning of Rule 405 under the Securities Act; and

		4. you are not engaged in, and do not intend to engage in, a distribution of the exchange notes.

		If you are not acquiring the exchange notes in the ordinary course of your business, or if you are engaging in, intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the exchange notes, or if you are an affiliate of the Issuers, then:

		1. you cannot rely on the position of the staff of the SEC enunciated in Morgan Stanley & Co., Inc. (available June 5, 1991), Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling, dated July 2, 1993, or similar no-action letters; and

		2. in the absence of an exception from the position of the SEC stated in (1) above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale or other transfer of the exchange notes.

		If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making or other trading activities, you must acknowledge that you will deliver a prospectus, as required by law, in connection with any resale or other transfer of the exchange notes that you receive in the exchange offer. See “Plan of Distribution.”

Expiration Date		The exchange offer will expire at 12:00 midnight, New York City time, on July 28, 2009, which is the 20th business day after the date of this prospectus, unless extended by us. We do not currently intend to extend the expiration date of the exchange offer.

Withdrawal		You may withdraw the tender of your outstanding notes at any time prior to the expiration date of the exchange offer. We will return to you any of your outstanding notes that are not accepted for any reason for exchange, without expense to you, promptly after the expiration or termination of the exchange offer.


Conditions to the Exchange Offer		The exchange offer is subject to customary conditions, which we may assert or waive. See “The Exchange Offer — Conditions to the Exchange Offer.”

Procedures for Tendering Outstanding Notes		If you wish to participate in the exchange offer, you must complete, sign and date the accompanying letter of transmittal, or a facsimile of the letter of transmittal, according to the instructions contained in this prospectus and the letter of transmittal. You must then mail or otherwise deliver the letter of transmittal, or a facsimile of the letter of transmittal, together with the outstanding notes and any other required documents, to the exchange agent at the address set forth on the cover page of the letter of transmittal. If you hold outstanding notes through The Depository Trust Company, or “DTC”, and wish to participate in the exchange offer for the outstanding notes, you must comply with the Automated Tender Offer Program procedures of DTC. By signing, or agreeing to be bound by, the letter of transmittal, you will represent to us that, among other things:

		1. you are acquiring the exchange notes in the ordinary course of your business;

		2. you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes;

		3. you are not an “affiliate” of Telesat Canada, Telesat LLC or any of the guarantors within the meaning of Rule 405 under the Securities Act; and

		4. you are not engaged in, and do not intend to engage in, a distribution of the exchange notes.

		If you are a broker-dealer and receive exchange notes for your own account in exchange for outstanding notes that you acquired as a result of market-making or other trading activities, you must represent to us that you will deliver a prospectus, as required by law, in connection with any resale or other transfer of such exchange notes.

		If you are not acquiring the exchange notes in the ordinary course of your business, or if you are engaged in, or intend to engage in, or have an arrangement or understanding with any person to participate in, a distribution of the exchange notes, or if you are an affiliate of any of the Issuers, then you cannot rely on the positions and interpretations of the staff of the SEC and you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale or other transfer of the exchange notes.

Special Procedures for Beneficial Owners		If you are a beneficial owner of outstanding notes that are held in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender those outstanding notes in the exchange offer, you should contact such person promptly and instruct such person to tender those outstanding notes on your behalf.


Guaranteed Delivery Procedures		If you wish to tender your outstanding notes and your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal and any other documents required by the letter of transmittal or you cannot comply with the DTC procedures for book-entry transfer prior to the expiration date, then you must tender your outstanding notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.”

Effect on Holders of Outstanding Notes		In connection with the private placement, we entered into registration rights agreements with Morgan Stanley & Co. Incorporated and UBS Securities LLC, as representatives of the other initial purchasers of the outstanding notes, which grant the holders of the outstanding notes registration rights. By making the exchange offer, we will have fulfilled most of our obligations under the registration rights agreements.

		If you do not tender your outstanding notes in the exchange offer, you will continue to be entitled to all the rights and limitations applicable to the outstanding notes as set forth in the indenture for those notes, except we will not have any further obligation to you to provide for the registration of the outstanding notes under the registration rights agreements, except in certain limited circumstances.

		To the extent that outstanding notes are tendered and accepted in the exchange offer, the trading market for outstanding notes could be adversely affected.

Consequences of Failure to Exchange		All untendered outstanding notes will continue to be subject to the restrictions on transfer set forth in the outstanding notes and in the indenture applicable to those notes. In general, the outstanding notes may not be offered or sold, unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities laws. Other than in connection with the exchange offer, we do not currently anticipate that we will register the outstanding notes under the Securities Act.

U.S. and Canadian Federal Income Tax Consequences		The exchange of outstanding notes for exchange notes in the exchange offer will not be a taxable event for United States or Canadian federal income tax purposes. See “U.S. Federal Income Tax Consequences” and “Canadian Federal Income Tax Considerations.”

Use of Proceeds		We will not receive any cash proceeds from the issuance of exchange notes in the exchange offer.

Exchange Agent		The Bank of New York Mellon, whose address and telephone number are set forth in the section captioned “The Exchange Offer — Exchange Agent” of this prospectus, is the exchange agent for the exchange offer.

Summary of the Terms of the Exchange Notes

The terms of the exchange notes are identical in all material respects to the terms of the outstanding notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreements. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be governed by the same indentures under which the outstanding notes were issued, and each series of the exchange notes and the outstanding notes will constitute a single class and series of notes for all purposes under the respective indenture. The following summary is not intended to be a complete description of the terms of the notes. For a more detailed description of the notes, see “Description of the Senior Notes” and “Description of the Senior Subordinated Notes.”


Issuer		Telesat Canada.

Co-Issuer		Telesat LLC, a Delaware limited liability company, or the “Co-Issuer,” is a wholly-owned subsidiary of Telesat Canada and exists primarily for the purpose of serving as a co-issuer of the outstanding notes and a co-borrower under our senior secured credit facilities.

Notes		US$692,825,000 aggregate principal amount of 11.0% Senior Notes due November 1, 2015 and US$217,175,000 aggregate principal amount of 12.5% Senior Subordinated Notes due 2017.

Maturity Date		Senior Notes: November 1, 2015.

		Senior Subordinated Notes: November 1, 2017.

Interest		Senior Notes: 11.0% per annum, payable semi-annually in arrears.

		Senior Subordinated Notes: 12.5% per annum, payable semi-annually in arrears.

Interest Payment Dates		May 1 and November 1 of each year, beginning on November 1, 2008. Interest will accrue from the most recent date to which interest has been paid on the notes or the notes surrendered in exchange therefor.

Optional Redemption of Senior Notes		We may redeem the senior notes, in whole or in part, at any time on or after May 1, 2012 at the redemption prices described under “Description of the Senior Notes — Redemption; Offers to Repurchase; Open Market Purchases — Optional Redemption.”

		We may also redeem all or part of the senior notes at any time prior to May 1, 2012, at a redemption price equal to 100% of the principal amount of the senior notes to be redeemed, plus the Applicable Premium, as defined under “Description of the Senior Notes,” as of, and accrued and unpaid interest to, the redemption date.

		We may redeem up to 35% of the principal amount of the senior notes prior to May 1, 2011 with the net cash proceeds of certain sales of our capital stock at 111.0% of the principal amount of the senior notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 65% of the aggregate principal amount of the senior notes issued under the applicable indenture remains outstanding and the notice of redemption is mailed within 90 days of such sale of capital stock. See


		“Description of the Senior Notes — Redemption; Offers to Repurchase; Open Market Purchases — Optional Redemption.”

Optional Redemption of Senior Subordinated Notes		We may redeem the senior subordinated notes, in whole or in part, at any time on or after May 1, 2013 at the redemption prices described under “Description of the Senior Subordinated Notes — Redemption; Offers to Repurchase; Open Market Purchases — Optional Redemption.”

		We may also redeem all or part of the senior subordinated notes at any time prior to May 1, 2013, at a redemption price equal to 100% of the principal amount of the senior subordinated notes to be redeemed, plus the Applicable Premium, as defined under “Description of the Senior Subordinated Notes,” as of, and accrued and unpaid interest to, the redemption date.

		We may redeem up to 35% of the principal amount of the senior subordinated notes prior to May 1, 2011 with the net cash proceeds of certain sales of our capital stock at 112.5% of the principal amount of the senior subordinated notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 65% of the aggregate principal amount of the senior subordinated notes issued under the applicable indenture remains outstanding and the notice of redemption is mailed within 90 days of such sale of capital stock. See “Description of the Senior Subordinated Notes — Redemption; Offers to Repurchase; Open Market Purchases — Optional Redemption.”

Change of Control		Upon a change of control, as defined under “Description of the Senior Notes” and “Description of the Senior Subordinated Notes,” we will be required to offer to purchase all the notes then outstanding at a purchase price equal to 101% of their principal amount, plus accrued interest (if any) to the payment date.

Guarantees		Telesat Holdings, Telesat Interco and, subject to certain exceptions described herein, substantially all of our direct and indirect subsidiaries in existence on the date of this prospectus have guaranteed the outstanding notes and will guarantee the exchange notes. In addition, subject to certain exceptions described herein, substantially all of our future direct and indirect subsidiaries will guarantee the notes.

		Our subsidiary, Telesat Asia Pacific Satellite (HK) Limited (“TAPS”) and our non-restricted subsidiaries have not guaranteed the outstanding notes and will not guarantee the exchange notes. For the three months ended March 31, 2009, TAPS had revenues of approximately $9.2 million. At March 31, 2009, TAPS had total assets of approximately $111.0 million and $4.0 million of liabilities (excluding trade payables). In addition, we have other non-material subsidiaries that have de minimis assets, revenue and liabilities and accordingly, have not guaranteed the outstanding notes and will not guarantee the exchange notes.

		In addition, our non-restricted subsidiaries have not guaranteed the outstanding notes and will not guarantee the exchange notes. All of


		our subsidiaries are restricted subsidiaries, other than The Access Centre LLC and The SpaceConnection, Inc. At March 31, 2009, The Access Centre LLC had less than US$11,000 of assets, less than US$48,000 of revenue and less than US$31,000 of liabilities, and The SpaceConnection, Inc. had less than US$20 million of assets, less than US$7 million of revenue and less than US$31 million of liabilities.

Ranking of Senior Notes		The outstanding senior notes are, and the senior exchange notes will be, our general senior unsecured obligations and:

		• rank equal in right of payment with all of our existing and future unsubordinated indebtedness;

		• rank senior in right of payment to all existing and future subordinated indebtedness;

		• are effectively junior to all of the obligations, including trade payables, of our subsidiaries that are not guarantors; and

		• are structurally subordinated to all of our secured indebtedness to the extent of the value of the assets securing such indebtedness.

		The guarantees of the outstanding senior notes are, and the guarantees of the senior exchange notes will be, general senior unsecured obligations of the guarantors and:

		• rank equal in right of payment with all existing and future unsubordinated indebtedness of the guarantors;

		• rank senior in right of payment with all future subordinated indebtedness of the guarantors; and

		• are structurally subordinated to all secured indebtedness of the guarantors to the extent of the value of the assets securing such indebtedness.

		At March 31, 2009, we had outstanding secured indebtedness of US$1,953 million (excluding capital lease obligations of US$31 million) at an exchange rate of US$1.00/$1.2602 (total secured debt by currency consists of $193 million (excluding capitalized lease obligations of $39 million) and US$1,800 million (including US$1,041 million converted to $1,209 million on October 31, 2007 as part of an amortizing basis swap at US$1.00/$1.1615; $1,209 million was the equivalent of US$959 million as at March 31, 2009)) and $153 million of unused available revolving capacity under our senior secured credit facilities (not giving effect to outstanding letters of credit).

Ranking of Senior Subordinated Notes		The outstanding senior subordinated notes are, and the senior subordinated exchange notes will be, our general senior unsecured obligations and:

		• are subordinated in right of payment with all of our existing and future unsubordinated indebtedness, including the senior notes offered hereby;

		• rank equal in right of payment to all future senior subordinated indebtedness;


		• are effectively junior to all of the obligations, including trade payables, of our subsidiaries that are not guarantors; and

		• are structurally subordinated to all of our secured indebtedness to the extent of the value of the assets securing such indebtedness.

		The guarantees of the outstanding senior subordinated notes are, and the guarantees of the senior subordinated exchange notes will be, senior subordinated unsecured obligations of the guarantors and:

		• are subordinated in right of payment with all existing and future unsubordinated indebtedness of the guarantors;

		• rank equal in right of payment with all future senior subordinated indebtedness of the guarantors: and

		• are structurally subordinated to all secured indebtedness of the guarantors to the extent of the value of the assets securing such indebtedness.

		As of March 31, 2009, we had outstanding indebtedness of approximately US$2,646 million which would be expressly senior to the outstanding senior subordinated notes. In addition, we had undrawn available capacity under our senior secured credit facilities as described above, which if and when drawn, would also be expressly senior to the outstanding senior subordinated notes.

Additional Amounts		All payments we make with respect to the notes will be made without withholding or deduction for Canadian taxes unless we are legally required to do so, in which case we will pay such additional amounts as may be necessary so that the net amount received by holders of the notes (other than certain excluded holders) after such withholding or deduction will not be less than the amount that would have been received in the absence of such withholding or deduction. See “Description of the Senior Notes” and “Description of the Senior Subordinated Notes.”

Certain Covenants		The terms of the notes limit our ability and the ability of our restricted subsidiaries to, among other things:

		• incur additional debt and issue preferred stock;

		• create liens;

		• pay dividends, acquire shares of capital stock, make payments on subordinated debt or make investments;

		• place limitations on distributions from restricted subsidiaries;

		• issue guarantees;

		• issue or sell the capital stock of restricted subsidiaries;

		• sell or exchange assets;

		• modify or cancel our satellite insurance;

		• enter into transactions with affiliates; and

		• effect mergers.


		These covenants are subject to a number of important exceptions and qualifications. See “Description of the Senior Notes” and “Description of the Senior Subordinated Notes.”

Covenant Suspension		During any period of time that (i) the ratings assigned to an applicable series of notes by both of Moody’s Investors Service, Inc. and Standard & Poor’s Ratings Service are equal to or higher than Baa3 (or the equivalent) and BBB- (or the equivalent), respectively, and (ii) no default or event of default has occurred and is continuing under the indenture relating to the notes of such series, we will not be subject to most of the covenants discussed above with respect to such series of notes. In the event that we are not subject to such covenants for any period of time as a result of the preceding sentence and, on any subsequent date, one or both of such rating agencies withdraws its ratings or downgrades the ratings assigned to the notes of such series below the level set forth above or a default or event of default occurs and is continuing under the indenture relating to the notes of such series, then we will thereafter again be subject to such covenants with respect to such series of notes.

Tax Redemption		If certain changes affecting Canadian withholding taxes occur, we can redeem the notes at their face amount, plus accrued and unpaid interest. See “Description of the Senior Notes Redemption; Offers to Repurchase; Open Market Purchases — Redemption for Changes in Withholding Taxes” and “Description of the Senior Subordinated Notes Redemption; Offers to Repurchase; Open Market Purchases Redemption for Changes in Withholding Taxes.”

No Prior Market Listing		The exchange notes will generally be freely transferable but will be a new issue of securities for which there will not initially be a market. Accordingly, there can be no assurance as to the development or liquidity of any market for the exchange notes.

ERISA Considerations		The notes may, subject to certain restrictions described in “ERISA Considerations” herein, be sold and transferred to ERISA plans.

Use of Proceeds		We will not receive any cash proceeds from the exchange offer.

Risk Factors

See “Risk Factors” for a description of some of the risks you should consider before deciding to participate in the exchange offer.

RISK FACTORS

You should consider carefully the following information about these risks, together with the other information contained in this prospectus, before participating in the exchange offer.

If you choose not to exchange your outstanding notes in the exchange offer, the transfer restrictions currently applicable to your outstanding notes will remain in force and the market price of your outstanding notes may decline.

If you do not exchange your outstanding notes for exchange notes representing the same underlying indebtedness in the exchange offer, then you will continue to be subject to the transfer restrictions on the outstanding notes as set forth in the notes and the indentures that govern the notes. In general, the outstanding notes may not be offered or sold unless they are registered or exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreements, we do not intend to register resales of the outstanding notes under the Securities Act. You should refer to “Prospectus Summary — Summary of the Terms of the Exchange Offer,” and “The Exchange offer — Procedures for Tendering Outstanding Notes” for information about how to tender your outstanding notes.

The tender of outstanding notes under the exchange offer will reduce the principal amount of the outstanding notes outstanding, which may have an adverse effect upon and increase the volatility and market price of the outstanding notes due to reduction in liquidity.

Your ability to transfer the notes may be limited by the absence of an active trading market, and there is no assurance that any active trading market will develop for the notes.

An active market for any of the exchange notes may not develop or, if developed, it may not continue. Historically, the market for non investment-grade debt has been subject to disruptions that have caused substantial volatility in the prices of securities similar to the exchange notes. The market, if any, for any of the exchange notes may experience similar disruptions and any such disruptions may adversely affect the prices at which you may sell your exchange notes. In addition, once issued, the exchange notes may trade at a discount from their initial offering price, depending upon prevailing interest rates, the market for similar notes, our performance and other factors.

Risks Related to Our Indebtedness and the Notes

Our substantial debt may adversely affect our cash flow and prevent us from fulfilling our obligations under the notes.

We have a significant amount of debt. As of March 31, 2009, we had total debt of US$2,863 million (excluding capital lease obligations of US$31 million) at an exchange rate of US$1.00/$1.2602. Our total debt by currency consists of $193 million (excluding capitalized lease obligations of $39 million) and US$2,710 million (including US$1,041 million converted to $1,209 million on October 31, 2007 as part of an amortizing basis swap at US$1.00/$1.1615; $1,209 million was the equivalent of US$959 million as at March 31, 2009).

Our substantial amount of debt may have important consequences for you. For example, it may:


	•	make it more difficult for us to satisfy our obligations under the notes;

	•	increase our vulnerability to general adverse economic and industry conditions;

	•	require us to dedicate a substantial portion of our cash flow from operations to make interest and principal payments on our debt, thereby limiting the availability of our cash flow to fund future capital expenditures, working capital and other general corporate requirements;

	•	limit our flexibility in planning for, or reacting to, changes in our business and in the industries that we service;

	•	place us at a competitive disadvantage compared with competitors that have less debt; and

	•	limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity.

In addition, a substantial portion of our available borrowings bear interest at variable rates. If market interest rates increase, variable-rate debt will create higher debt service requirements, which may adversely affect our cash flow. While we may enter into agreements limiting our exposure to higher interest rates, any such agreements may not offer adequate protection from this risk.

Despite our current levels of debt, we may still be able to incur substantially more debt. This may further exacerbate the risks associated with our substantial debt.

We may be able to incur additional debt in the future. The terms of our senior secured credit facilities and the indentures governing the notes allow us to incur substantial amounts of additional debt, subject to certain limitations. If new debt is added to our current debt levels, the related risks discussed under “Risk Factors” may be magnified.

The notes are effectively subordinated to the co-issuers’ and the guarantors’ secured debt to the extent of the value of the assets securing such debt.

The notes, and each guarantee of the notes, are unsecured and therefore are effectively subordinated to any secured debt that the co-issuers or the guarantors may incur to the extent of the value of the assets securing such debt. In the event of a bankruptcy or similar proceeding involving a co-issuer or guarantor, the assets which serve as collateral for any secured debt will be available to satisfy the obligations under the secured debt before any payments are made on the notes. At March 31, 2009, we had outstanding secured indebtedness of US$1,953 million (excluding capital lease obligations of US$31 million) at an exchange rate of US$1.00/$1.2602 (total secured debt by currency consists of $193 million (excluding capitalized lease obligations of $39 million) and US$1,800 million (including US$959 million related to the US$1,041 million which has been converted to $1,209 million as part of a basis swap at US$1.00/$1.1615)) and $153 million of unused available revolving capacity under our senior secured credit facilities (not giving effect to outstanding letters of credit). The notes are effectively subordinated to any borrowings under our senior secured credit facilities and our other secured debt to the extent of the value of the assets securing such debt.

Your right to receive payments on the senior subordinated notes is subordinated to the co-issuers and the guarantors senior debt.

Payment on the senior subordinated notes is subordinated in right of payment to all of the senior debt of the co-issuers and the guarantors, including obligations under senior secured credit facilities and the senior notes. As of March 31, 2009, we had outstanding indebtedness of approximately US$2,646 million which is expressly senior to the senior subordinated notes. In addition, we have undrawn available capacity under our senior secured credit facilities as described above, which, if and when drawn, would also be expressly senior to the senior subordinated notes. Upon any distribution to our or our subsidiaries’ creditors in a bankruptcy, litigation or reorganization or similar proceeding relating to us or our subsidiaries or our or their property, the holders of senior debt will be entitled to be paid in full in cash (including with respect to post-petition interest) before any payment may be made on the senior subordinated notes. In these cases, sufficient funds may not be available to pay all of our creditors, and holders of senior subordinated notes may receive less, ratably, than the holders of senior debt and, due to the turnover provisions in the indenture governing the senior subordinated notes, less, ratably, than the holders of unsubordinated obligations, including trade payables. In addition, all payments on the senior subordinated notes will be blocked in the event of a payment default on senior debt and may be blocked for limited periods in the event of certain nonpayment defaults on our senior secured credit facilities.

The agreements governing our debt, including the notes and our senior secured credit facilities, contain various covenants that impose restrictions on us that may affect our ability to operate our business and to make payments on the notes.

Our existing agreements impose and future financing agreements are likely to impose operating and financial restrictions on our activities. These restrictions require us, in the case of our senior secured credit facilities, to comply with or maintain certain financial tests and ratios, including a minimum interest coverage ratio and a leverage ratio, and limit or prohibit our ability to, among other things:


	•	incur additional debt and issue preferred stock;

	•	create liens;

	•	pay dividends, acquire shares of capital stock, make payments on subordinate debt or make investments;

	•	receive distributions from restricted subsidiaries;

	•	issue guarantees;

	•	issue or sell the capital stock of restricted subsidiaries;

	•	sell or exchange assets;

	•	modify or cancel our satellite insurance;

	•	enter into transactions with affiliates;

	•	in the case of our senior secured credit facilities, exceed certain levels of capital expenditures; and

	•	effect mergers.

These restrictions on our ability to operate our business could seriously harm our business by, among other things, limiting our ability to take advantage of financing, merger and acquisition and other corporate opportunities.

Various risks, uncertainties and events beyond our control could affect our ability to comply with these covenants and maintain these financial tests and ratios. Failure to comply with any of the covenants in our existing or future financing agreements could result in a default under those agreements and under other agreements containing cross-default provisions. A default would permit lenders to accelerate the maturity for the debt under these agreements and to foreclose upon any collateral securing the debt. Under these circumstances, we might not have sufficient funds or other resources to satisfy all of our obligations, including our obligations under the notes. In addition, the limitations imposed by financing agreements on our ability to incur additional debt and to take other actions might significantly impair our ability to obtain other financing.

To service our debt and to fund planned capital expenditures, we will require a significant amount of cash, which may not be available to us.

Our ability to make payments on, or repay or refinance our debt, including the notes, and to fund planned capital expenditures will depend largely upon our future operating performance. Our future performance, to a certain extent, is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. In addition, our ability to borrow funds in the future to make payments on our debt will depend on the satisfaction of the covenants in our senior secured credit facilities and in the indentures governing the notes and other agreements we may enter into in the future. Specifically, we need to maintain certain financial ratios or meet an exemption that allows us to borrow under our senior secured credit facilities. The indentures governing the notes also contain limitations on our ability to incur additional debt. We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us under our senior secured credit facilities or from other sources in an amount sufficient to enable us to pay our debt, including the notes, or to fund our other liquidity needs. As of March 31, 2009, we had $153 million of unused available revolving capacity under our senior secured credit

facilities (not giving effect to outstanding letters of credit). In addition, although there has recently been an improvement in the credit markets, if market conditions that prevailed in the latter part of 2008 and early 2009 were to return, our ability to raise additional capital to refinance our debt or to fund our operations may be significantly impaired.

We may be unable to make a change of control offer required by the indentures governing the notes, which would cause defaults under the indentures governing the notes, our senior secured credit facilities and our other financing arrangements.

The terms of the notes require us to make an offer to purchase the notes upon the occurrence of a change of control at a purchase price equal to 101% of the principal amount of the notes, plus accrued interest to the date of the purchase. The terms of our senior secured credit facilities require, and other financing arrangements may require, repayment of amounts outstanding in the event of a change of control and may, therefore, limit our ability to fund the repurchase of the notes in certain circumstances. It is possible that we will not have sufficient funds at the time of the change of control to make the required repurchase of the notes or that restrictions in our senior secured credit facilities and other financing agreements will not allow the repurchases.

Because of the Telesat Canada Reorganization and Divestiture Act, a Canadian act uniquely applicable to Telesat Canada (but not the guarantors, other subsidiaries or Telesat LLC), Telesat Canada may not have access to the usual protections from creditors and other rights available to insolvent persons, and creditors, including holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws generally available to creditors of insolvent persons.

Under the Telesat Canada Reorganization and Divestiture Act (“Telesat Divestiture Act”), Telesat Canada (as a corporate entity,) is subject to certain special conditions and restrictions. The Telesat Divestiture Act provides that no legislation relating to the solvency or winding-up of a corporation applies to Telesat Canada and in no case shall the affairs of Telesat Canada be wound up unless authorized by an Act of the Parliament of Canada. As a result of such legislative provisions, Telesat Canada and its creditors, including creditors under the senior secured credit facilities and holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws, including the imposition of a stay of proceedings, or a regulated and orderly process to settle or compromise claims and make distributions to creditors, or recourse to fraudulent conveyance laws. The effect of the Telesat Divestiture Act upon an insolvency of Telesat Canada has not been considered by a Canadian court and, accordingly, the application of Canadian federal bankruptcy and insolvency laws and provincial receivership and assignment and preference laws, and the exercise by a Canadian court of any judicial discretion which could affect the enforcement of rights and remedies or other equitable relief against Telesat Canada in the context of an insolvency, is uncertain. To the extent bankruptcy and insolvency laws do not apply to Telesat Canada, its creditors may individually seek to pursue any available rights or remedies, as secured or unsecured creditors as the case may be, against Telesat Canada and its assets. The assets of Telesat Canada only (including its shares in its subsidiaries) are subject to the Telesat Divestiture Act, but the assets of the guarantors, including the subsidiary guarantors, are not. To date, Industry Canada and the CRTC have taken the position that we are subject to certain Canadian foreign ownership and control restrictions which are set out in the Telecommunications Act, the Radiocommunication Act and the regulations under each, and in Industry Canada policies. These restrictions may have a material impact on the sale of Telesat Canada or its assets in any bankruptcy or reorganization scenario.

Not all of our subsidiaries guarantee the notes, and the assets of our non-guarantor subsidiaries may not be available to make payments on the notes.

The guarantors of the notes do not include all of our subsidiaries. Additionally, not all of our future restricted subsidiaries (i.e., subsidiaries required to comply with the covenants in the indentures governing the notes) will be required to guarantee the notes. The indentures provide that each existing and future restricted subsidiary that guarantees our obligations under the senior secured credit facilities will guarantee the notes,

except, that due to certain regulatory and other considerations, our subsidiary Telesat Asia Pacific Satellite (HK) Limited (“TAPS”) was not initially required to, and has not yet guaranteed, our senior secured credit facilities and was not required to guarantee the notes on the issue date, but we are required under the senior secured credit facilities to use commercially reasonable efforts to cause TAPS to become a guarantor.

Payments on the notes are only required to be made by us and the guarantors. As a result, no payments are required to be made from assets of subsidiaries that do not guarantee the notes, unless those assets are transferred by dividend or otherwise to us or a subsidiary guarantor. Also, the notes are structurally subordinated to all liabilities of non-guarantor subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of our non-guarantor subsidiaries, these non-guarantor subsidiaries will pay the holders of their debts and their trade creditors before they will be able to distribute any of their assets to us.

For the year ended December 31, 2008, TAPS had revenues of approximately $30.3 million. At December 31, 2008, TAPS had total assets of approximately $105.6 million and $3.4 million of liabilities (excluding trade payables). Currently, all of our subsidiaries are restricted subsidiaries, other than The Access Centre LLC and The SpaceConnection, Inc. (“SpaceConnection”), which are unrestricted subsidiaries. The Access Centre LLC and SpaceConnection are not currently guarantors of the senior secured credit facilities and are not guarantors of the notes. At December 31, 2008, The Access Centre LLC had less than US$13,000 of assets, less than US$187,000 of revenues and less than US$34,000 of liabilities, and SpaceConnection had less than US$21 million assets, less than US$26 million of revenues and less than US$32 million of liabilities. In addition, we have other non-material subsidiaries that have de minimis assets, revenues and liabilities and accordingly do not guarantee the senior secured credit facilities or the notes.

The guarantees associated with our notes may not be enforceable because of fraudulent conveyance laws.

Fraudulent conveyance laws in the United States and in the Canadian provinces have been enacted for the protection of creditors. Under these fraudulent conveyance laws, a United States or Canadian court could subordinate the guarantees granted under the indentures governing the notes (and in the case of the senior subordinated notes, further subordinate such guarantees) to the guarantors’ present and future indebtedness and a United States or Canadian court could take other detrimental actions, including voiding the guarantees and payments made under the guarantees. The United States or Canadian court could take that action if it found that at the time the guarantee was incurred, such guarantor:


	•	incurred this debt with the intent of hindering, delaying or defrauding current or future creditors;

	•	received less than reasonably equivalent value or fair consideration for incurring this debt and the guarantor;

	•	was insolvent or was rendered insolvent by reason of the related financing transactions;

	•	was engaged, or about to engage, in a business or transaction for which its remaining assets constituted unreasonably small capital to carry on its business; or

	•	intended to incur, or believed that it would incur, debts beyond its ability to pay these debts as they mature, as all of the foregoing terms are defined in or interpreted under the relevant fraudulent transfer or conveyance statutes.

The measure of insolvency for purposes of the foregoing considerations will vary depending upon the law of the jurisdiction that is being applied in any such proceeding. Generally, an entity would be considered insolvent if, at the time it incurred the debt or issued the guarantee:


	•	it could not pay its debts or contingent liabilities as they become due;

	•	the sum of its debts, including contingent liabilities, is greater than its assets, at fair valuation; or

	•	the present fair saleable value of its assets is less than the amount required to pay the probable liability on its total existing debts and liabilities, including contingent liabilities, as they become absolute and mature.

If a guarantee is voided as a fraudulent conveyance or found to be unenforceable for any other reason, you will not have a claim against that obligor and will only be our creditor or that of any guarantor whose obligation was not set aside or found to be unenforceable. In addition, the loss of a guarantee will constitute a default under the applicable indenture, which default could cause all outstanding notes to become immediately due and payable and would likewise trigger a default under the senior secured credit facilities.

We believe that, at the time the guarantors initially incurred the debt represented by the guarantees, the guarantors:


	•	were not insolvent or rendered insolvent by the incurrence;

	•	had sufficient capital to run our or their businesses effectively; and

	•	were able to pay obligations on the notes and the guarantees as they mature or become due.

In reaching the foregoing conclusions we have relied upon our analyses of internal cash flow projections and estimated values of the assets and liabilities of the guarantors. In addition, we have relied on a limitation to be contained in the guarantors’ guarantees that limits each guarantee as necessary to prevent it from constituting a fraudulent conveyance under applicable law. However, a court passing on these questions might not reach the same conclusions. See also “Risk Factors — Risks Related to the Notes — Because of the Telesat Canada Reorganization and Divestiture Act, a Canadian act uniquely applicable to Telesat Canada (but not the guarantors, other subsidiaries or Telesat LLC), Telesat Canada may not have access to the usual protections from creditors and other rights available to insolvent persons, and creditors, including holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws generally available to creditors of insolvent persons.”

You should not rely on the Co-Issuer in evaluating an investment in the notes.

Telesat LLC was formed in connection with the initial funding of the Telesat Canada transaction and for the issuance of the notes and currently has no independent operations and no assets and generally will be prohibited from engaging in any material business activities, except in connection with the incurrence of indebtedness permitted under the indentures governing the notes, including guaranteeing or borrowing under the senior secured credit facilities, and activities incidental thereto. You should therefore not rely upon the Co-Issuer in evaluating whether to invest in the notes.

Risks Related to Our Business

Our in-orbit satellites may fail to operate as expected due to operational anomalies resulting in lost revenues, increased costs and/or termination of contracts.

Satellites utilize highly complex technology and operate in the harsh environment of space and therefore are subject to significant operational risks while in orbit. The risks include in-orbit equipment failures, malfunctions and other kinds of problems commonly referred to as anomalies. Satellite anomalies include, for example, circuit failures, transponder failures, solar array failures, battery cell and other power system failures, satellite control system failures and propulsion system failures. Some of our satellites have had malfunctions and other anomalies in the past. See “Business — In-Orbit Satellites” for more information relating to our significant anomalies and their impact on the health of our satellites. Acts of war, terrorism, magnetic, electrostatic or solar storms, space debris, satellite conjunctions or micrometeoroids could also damage our satellites.

Despite working closely with satellite manufacturers to determine the causes of anomalies and mitigate them in new satellites and to provide for intrasatellite redundancies for certain critical components to minimize or eliminate service disruptions in the event of failure, anomalies are likely to be experienced in the future, whether due to the types of anomalies described above or arising from the failure of other systems or components, and intrasatellite redundancy may not be available upon the occurrence of such anomalies. We cannot assure you that, in these cases, it will be possible to restore normal operations. Where service cannot

be restored, the failure could cause the satellite to have less capacity available for sale, to suffer performance degradation, or to cease operating prematurely, either in whole or in part.

Any single anomaly or series of anomalies or other failure (whether full or partial) of any of our satellites could cause our revenues, cash flows and backlog to decline materially, could require us to repay prepayments made by customers of the affected satellite and could have a material adverse effect on our relationships with current customers and our ability to attract new customers for satellite services. A failure could result in a customer terminating its contract for service on the affected satellite. In the event we are unable to provide alternate capacity to an affected customer, such customer may decide to procure all or a portion of its future satellite services from an alternate supplier or such customer’s business may be so adversely affected by the satellite failure that it may not have the financial ability to procure future satellite services. In addition, an anomaly that has a material adverse effect on a satellite’s overall performance or anticipated future commercial service life could require us to recognize an impairment loss. It may also require that we expedite our planned replacement program, adversely affecting our profitability, increasing our financing needs and limiting the availability of funds for other business purposes. Finally, the occurrence of anomalies may adversely affect our ability to insure satellites at commercially reasonable premiums, if at all, and may cause insurers to demand additional exclusions in policies they issue.

The actual commercial service lives of our satellites may be shorter than we anticipate.

We anticipate that our satellites will have the expected end-of-commercial-service life dates described in “Business — In-Orbit Satellites.” For all but two of our satellites, the expected end-of-commercial-service life goes beyond the manufacturer’s end-of-service life date. It is possible that the actual commercial service lives of our satellites will be shorter than anticipated. A number of factors will affect the actual commercial service lives of our satellites, including:


	•	the amount of propellant used in maintaining the satellite’s orbital location or relocating the satellite to a new orbital location (and, for newly-launched satellites, the amount of propellant used during orbit raising following launch);

	•	the durability and quality of their construction;

	•	the performance of their components;

	•	conditions in space such as solar flares and space debris;

	•	operational considerations, including operational failures and other anomalies; and

	•	changes in technology which may make all or a portion of our satellite fleet obsolete.

When we began operating Nimiq 4iR, it was anticipated to have an expected end-of-commercial-service life of October 2009. However, it was removed from commercial service on February 9, 2009. When we began operating Nimiq 3, it was anticipated to have an expected end-of-commercial-service life of July 2010. However, it was removed from commercial service on June 1, 2009. It is possible that the actual commercial service lives of one or more of our other satellites may also be shorter than originally anticipated.

We periodically review the anticipated commercial service lives of each of our satellites using current engineering data. A reduction in the commercial service life of any of our satellites could result in a reduction of the revenues generated by that satellite, the recognition of an impairment loss, and an acceleration of capital expenditures.

Our satellites may have launch failures or may fail to reach their planned orbital locations. Any such failure could result in the loss of a satellite or cause significant delays in the deployment of the satellite which could have a material adverse effect on our results of operations, business prospects and financial condition.

Satellites are subject to certain risks related to failed launches. Launch vehicles may fail. Launch failures result in significant delays in the deployment of satellites because of the need to construct replacement satellites, which typically takes up to 30 months or longer, and to obtain another launch vehicle. Such

significant delays could have a material adverse effect on our results of operations, business prospects and financial condition. A delay or perceived delay in launching replacement satellites may cause our current customers to move to another satellite provider if they determine that the delay may cause an interruption in continuous service. In addition, our contracts with customers who purchase or reserve satellite capacity may allow the customers to terminate their contracts in the event of a delay. Launch vehicles may also underperform, in which case the satellite may be lost or, if it can be placed into service by using its onboard propulsion systems to reach the desired orbital location, will have a shorter useful life. The launch vehicle scheduled to be used by us to launch Nimiq 5 has experienced launch failures in the past when used to launch satellites of other operators. For example, on March 15, 2008, the Proton launch vehicle experienced a failure stranding a telecommunications satellite of another satellite operator in a low orbit. The resulting investigation of the March 15, 2008 failure delayed the launch of our Nimiq 4 satellite until September 2008. The launch of Nimiq 5, which is planned for late 2009, may likewise also be delayed if the launch vehicle on which it is scheduled to be launched suffers a failure prior to the launch of Nimiq 5. Although we have had launch insurance on all of our launches to date and have contracted launch insurance for Nimiq 5, should we not be able to obtain launch insurance on reasonable terms in the future and a launch failure were to occur, we could directly suffer the loss of the cost of the satellite, launch vehicle and related costs. A failed launch (including a failure for other satellite operator) could also increase, perhaps prohibitively, our cost of insuring future launches. In addition, we do not have insurance against business interruption, loss of revenues or delay of revenues to cover such events and such revenues may not be recoverable.

Our insurance will not protect us against all satellite-related losses. Further, we may not be able to renew insurance on our existing satellites or obtain insurance on future satellites on acceptable terms or at all.

Our current satellite insurance does not protect us against all satellite-related losses that we may experience, and we do not have in-orbit insurance coverage for all of the satellites in our fleet. As of March 31, 2009, the total net book value of in-orbit satellites for which we do not have insurance is approximately $88 million. Our insurance does not protect us against business interruption, loss of revenues or delay of revenues. In addition, we do not insure the net book value of performance incentives that may be payable to a satellite’s manufacturer as these are payable only to the extent that the satellite operates in accordance with contracted technical specifications. Our existing launch and in-orbit insurance policies include, and any future policies that we obtain can be expected to include, specified exclusions, deductibles and material change limitations. Typically, these insurance policies exclude coverage for damage or losses arising from acts of war, anti-satellite devices, electromagnetic or radio frequency interference and other similar potential risks for which exclusions are customary in the industry at the time the policy is written. In addition, they typically exclude coverage for satellite health-related problems affecting our satellites that are known at the time the policy is written or renewed. Any claims under existing policies are subject to settlement with the insurers and may, in some instances, be payable to our customers.

The price, terms and availability of satellite insurance has fluctuated significantly in recent years. These fluctuations may be affected by recent satellite launch or in-orbit failures and general conditions in the insurance industry. Launch and in-orbit policies on satellites may not continue to be available on commercially reasonable terms or at all. To the extent we experience a launch or in-orbit failure that is not fully insured, or for which insurance proceeds are delayed or disputed, we may not have sufficient resources to replace the affected satellite. In addition, higher premiums on insurance policies increase our costs, thereby reducing our profit. In addition to higher premiums, insurance policies may provide for higher deductibles, shorter coverage periods, higher loss percentages required for constructive total loss claims and additional satellite health-related policy exclusions. There can be no assurance that, upon the expiration of an in-orbit insurance policy, which typically has a term of one year, we will be able to renew the policy on terms acceptable to us.

Subject to the requirements contained in the indentures governing the notes and our senior secured credit facilities, we may elect to reduce or eliminate insurance coverage for certain of our existing satellites, or elect not to obtain insurance policies for our future satellites, especially if exclusions make such policies ineffective, the costs of coverage make such insurance impractical or if self-insurance is deemed more effective.

Replacing a satellite upon the end of its service life will require us to make significant expenditures and may require us to obtain shareholder approval.

To ensure no disruption in our business and to prevent loss of customers, we will be required to commence construction of a replacement satellite approximately three to five years prior to the expected end-of-life of the satellite then in orbit. Typically, it costs in the range of US$250 to US$300 million to construct, launch and insure a satellite. There is no assurance that we will have sufficient cash, cash flow or be able to obtain third party or shareholder financing to fund such expenditures on favorable terms, if at all, or that we will obtain shareholder approval, where required, to procure replacement satellites. Certain of our satellites are nearing their expected end-of-commercial-service life. See “Business — In-Orbit Satellites” for more information on the expected end-of-commercial-service life of our satellites. Should we not have sufficient funds available to replace those satellites or should we not receive approval from our shareholders, where required, to purchase replacement satellites, it could have a material adverse effect on our results of operations, business prospects and financial condition.

The launch of satellites may be delayed which could have a material adverse effect on our ability to meet our contractual commitments and to generate and grow future revenues.

Delays in launching satellites are not uncommon and result from construction delays, the periodic unavailability of reliable launch opportunities, delays in obtaining required regulatory approvals and launch failures. If satellite construction schedules are not met, a launch opportunity may not be available at the time the satellite is ready to be launched. Delays in the commencement of service may affect plans to replace an in-orbit satellite prior to the end of its service life, may result in the expiration or cancellation of launch insurance and may result in the loss of rights to use orbital locations. A delay or perceived delay in launching replacement satellites may cause our current customers to move to another satellite provider if they determine that the delay may cause an interruption in service. In addition, our contracts with customers who purchase or reserve satellite capacity may allow those customers to terminate their contracts in the event of delays. For example, our service contract with Bell TV (previously Bell ExpressVu), which has purchased all the capacity on Nimiq 5 for a period of 15 years or such later date as the customer may request, allows Bell TV to terminate the service contract in certain circumstances if there is a launch failure or delay. Any such termination would require us to refund any prepayment we may have received from Bell TV, and would result in a reduction in our contracted backlog and would delay or prevent us from securing the commercial benefits of the new satellite. Certain of our satellites are nearing their expected end-of-commercial-service life. See “Business — In-Orbit Satellites” for more information on the expected end-of-commercial-service life of our satellites. The failure to implement new or replacement satellite deployment plans on schedule could have a material adverse effect on our results of operations, business prospects and financial condition.

The ability to replace two of our satellites is subject to additional risk and cannot be assumed.

In addition to the risks with respect to our ability to renew our licenses to orbital locations discussed under “Risk Factors — Risks Related to Our Business — We operate in a highly regulated industry and government regulations may adversely affect our ability to sell our services, or increase the expense of such services or otherwise limit our ability to operate or grow our business,” there are also specific risks with respect to our being able to replace Telstar 10 and Telstar 18. We participate in the operations of Telstar 10 and Telstar 18 pursuant to agreements with APT Satellite Company Limited (“APT”) that has licenses to use orbital locations controlled by the governments of China and Tonga, respectively. Although our agreements with APT provide us with renewal rights with respect to replacement satellites at these orbital locations, there can be no assurance that renewal rights will be granted. Should we be unsuccessful in obtaining renewal rights for either or both of the orbital locations, because of the control over the orbital locations exercised by foreign governments, or we otherwise fail to enter into agreements with APT with respect to such replacement satellites, all revenues obtained from the affected satellite or satellites would cease and could have a material adverse effect on our results of operations, business prospects and financial condition.

On June 1, 2009, we entered into an agreement with APT to terminate our leasehold interest in Telstar 10, including our renewal rights with respect to a replacement satellite at the Telstar 10 orbital location, and to transfer

certain related customer contracts in exchange for a payment from APT to us of approximately US$69.5 million, subject to adjustment.

We are subject to significant and intensifying competition. We experience competition both within the satellite industry and from other providers of communications capacity. Our failure to compete effectively would result in a loss of revenues and a decline in profitability, which would adversely affect our business and results of operations.

We provide point-to-point and point-to-multipoint services for voice, data and video communications and for high-speed Internet access. A trend toward consolidation of major FSS providers has resulted in the creation of global competitors who are substantially larger than we are in terms of both the number of satellites they have in orbit as well as in terms of their revenues. Due to their larger sizes, these operators are able to take advantage of greater economies of scale, may be more attractive to customers, may (depending on the specific satellite and orbital location in question) have greater flexibility to restore service to their customers in the event of a partial or total satellite failure and may be able to offer expansion capacity for future requirements. We also compete against regional satellite operators who may enjoy competitive advantages in their local markets. As a condition of our licenses for certain satellites, we are required by Industry Canada to invest in research and development related to satellite communication activities. See “Business — Research and Development”. Our global competitors may not face this additional financial burden.

We expect that a substantial portion of our ongoing business will continue to be in the Canadian domestic market. This market is characterized by increasing competition among satellite providers and rapid technological development. The Canadian regulatory framework has always required the use of Canadian-licensed satellites for the delivery of DTH programming in Canada. It is possible that this framework could change and allow non-Canadian satellite operators that have adequate service coverage in Canadian territory to compete for future business from our DTH customers. Moreover, as a result of the June 13, 2007 Industry Canada announcement regarding the outcome of the orbital location award process, another Canadian operator, Ciel Satellite Group (“Ciel”), was awarded spectrum which is suitable for providing services to Canadian customers, including DTH.

Our business is also subject to competition from ground based forms of communications technology. For many point-to-point and other services, the offerings provided by terrestrial companies can be more competitive than the services offered via satellite. A number of companies are increasing their ability to transmit signals on existing terrestrial infrastructures, such as fiber optic cable, DSL (digital subscriber line) and terrestrial wireless transmitters often with funding and other incentives provided by government. See “Business — Competition.” The ability of any of these companies to significantly increase their capacity and/or the reach of their network likely would result in a decrease in the demand for our services. Increasing availability of satellite capacity, improvements in transmission technology and increasing capacity from other forms of communications technology can create an excess supply of telecommunications capacity, decreasing the prices we would be able to charge for our services under new service contracts and thereby negatively affecting our profitability. New technology could render satellite-based services less competitive by satisfying consumer demand in other ways. We also compete for local regulatory approval in places where more than one provider may want to operate and with other satellite operators for scarce frequency assignments and a limited supply of orbital locations. Our failure to compete effectively could result in a loss of revenues and a decline in profitability, a decrease in the value of our business and a downgrade of our credit rating, which would restrict our access to the capital markets.

Ciel has been awarded a number of licenses by Industry Canada which may adversely affect our business.

Canada has the rights to a limited number of orbital locations, in conformity with the ITU Radio Regulations. Industry Canada has authorized us to access spectrum at three Canadian FSS locations and three DBS orbital locations. In September 2004, Ciel received provisional authority from Industry Canada to operate a broadcast satellite at 129° WL, and in February 2009, Ciel announced that it had begun providing commercial service at that orbital location. In July, 2006, Industry Canada invited applications for up to 29 licenses to be awarded for Canadian satellite spectrum. Telesat Canada applied for ten of these licenses and

Ciel for nine, in applications submitted November 15, 2006. In June, 2007, Industry Canada announced it planned to award five licenses to Telesat Canada and seven to Ciel. Ciel subsequently declined one of its licenses, which was subsequently awarded to Telesat. In June 2008, Industry Canada provided Ciel with six approvals in principle to develop and operate satellite services in various frequency bands and orbital positions. The licensing of these Canadian orbital locations to Ciel could have an adverse effect on our current plans for growth. As a result of increased competition in Canada for access rights to Canadian orbital locations, we may in the future lose our access rights to certain Canadian orbital locations. Our failure to retain access rights to the orbital locations we currently have would have a material adverse effect on our results of operations, business prospects and financial condition.

We derive a substantial amount of our revenues from only a few of our customers. A loss of one or more of these major customers, or a material adverse change in any such customer’s business or financial condition, could materially reduce our future revenues and contracted backlog and result in our discontinuing service offerings that we consider to be no longer sufficiently profitable.

For the year ended December 31, 2008, two of our customers together accounted for approximately 29% of our revenues, and our top five customers together accounted for approximately 42%. At December 31, 2008, two of our customers accounted for approximately 50% of our backlog, and our top five backlog customers together accounted for approximately 80%. Any of our major customers could refuse to renew their contracts or could seek to negotiate concessions, particularly on price, that would have a material adverse effect on our results of operations, business prospects and financial condition. Our customers could experience a downturn in their business or find themselves in financial difficulties, which could result in their ceasing or reducing their use of our services (or becoming unable to pay for services they had contracted to buy). In addition, some of our customers’ industries are undergoing significant consolidation, and our customers may be acquired by other companies, including by our competitors. Such acquisitions could adversely affect our ability to sell services to such customers and to any end-users whom they serve. A portion of the costs we incur in providing certain services is fixed, and those costs cannot be reduced proportionately in response to a reduction in demand for those services. The loss of a major customer or reduction in demand for those services could result in our discontinuing those service offerings altogether, thereby causing further reductions in our future revenues.

Additionally, our largest customer, Bell TV, is part of BCE. Since the Telesat Canada transaction, we are no longer a subsidiary of BCE or an affiliate of Bell TV and may have lost certain competitive advantages with respect to them. There is no guarantee that Bell TV will continue using our services after the expiration of our current contracts.

The current global recession may have significant effects on our customers and suppliers, which could adversely affect our business, operating results and financial condition.

The current global recession, as well as a slow recovery period, may lead to lower demand for our services, increased incidences of our customers’ inability to pay for our services, or the insolvency of our customers. In addition, if our suppliers face challenges in obtaining credit, selling their products or otherwise in operating their businesses profitably, they may raise prices, lower production levels or cease operations. The current recession in the United States economy and the global economy may be prolonged as a result of the deterioration in the credit markets and related financial crisis, as well as a variety of other factors. Any of these events may negatively impact our sales, revenue generation, cash flow (e.g., receivables) and margins, and consequently adversely affect our business, operating results and financial condition.

Demand for our services may decrease materially due to downturns in the economy and technological developments which could have a material adverse effect on our results of operations, business prospects and financial condition.

The market for FSS services may not grow or may shrink due to downturns in the economy and competing technologies that provide cheaper or better service. As a result, we may be unable to attract customers for our services. Also, the implementation of new transmission technologies, or the improvement of

existing technologies such as signal compression, may reduce the transponder capacity needed to transmit a given amount of information thereby reducing the total demand for capacity. Decreasing demand could reduce the number and value of our contract renewals and otherwise reduce the rates we can charge for our services and could have a material adverse effect on our results of operations, business prospects and financial condition going forward. In addition, there could be a negative impact on our credit ratings and our ability to access the capital markets.

Developments that we expect to support the growth of the satellite service industry, such as continued growth in data traffic and the proliferation of HDTV, may fail to materialize or may not occur in the manner or to the extent we anticipate.

The soundness of financial institutions and counterparties could adversely affect us.

We have exposure to many different financial institutions and counterparties (including those under our credit, financing and insurance arrangements), including brokers and dealers, commercial banks, investment banks, insurance providers and other institutions and industry participants. We are exposed to risk, including credit risk resulting from many of the transactions we execute in connection with our hedging activities, in the event that any of our lenders or counterparties, including our insurance providers, are unable to honor their commitments or otherwise default under an agreement with us.

Our business is capital intensive, and we may not be able to raise adequate capital to finance our business strategies, or we may be able to do so only on terms that significantly restrict our ability to operate our business.

Implementation of our business strategy requires a substantial outlay of capital. As we pursue our business strategies and seek to respond to developments in our business and opportunities and trends in our industry, our actual capital expenditures may differ from our expected capital expenditures. There can be no assurance that we will be able to satisfy our capital requirements in the future. In addition, if one of our satellites failed unexpectedly, there is no assurance of insurance recovery or the timing thereof and we may need to exhaust or significantly draw upon our revolving credit facility or obtain additional financing to replace the satellite. We currently expect that the majority of our liquidity requirements in 2009 will be satisfied by cash on hand, cash generated from our operations and borrowings under our credit facility. However, if we determine we need to obtain additional funds through external financing and are unable to do so, we may be prevented from fully implementing our business strategy.

The availability and cost to us of external financing depend on a number of factors, including our credit rating and financial performance and general market conditions. Our ability to obtain financing generally may be influenced by the supply and demand characteristics of the telecommunications sector in general and of the FSS sector in particular. Declines in our expected future revenues under contracts with customers and challenging business conditions faced by our customers are among the other factors that may adversely affect our credit. Other factors that could impact our credit rating include the amount of debt in our current capital structure, activities associated with our strategic initiatives, the health of our satellites, the success or failure of our planned launches, our expected future cash flows and the capital expenditures required to execute our business strategy. The overall impact on our financial condition of any transaction that we pursue may be negative or may be negatively perceived by the financial markets and ratings agencies and may result in adverse rating agency actions with respect to our credit rating. A credit rating downgrade or deterioration in our financial performance could limit our ability to obtain financing or could result in any such financing being available only at greater cost or on more restrictive terms than might otherwise be available.

In certain circumstances, we are required to obtain the approval of our shareholders to incur additional indebtedness. There can be no assurances that we will receive such approval, if required.

Volatility in financial markets could adversely affect the cost and availability of financing.

Long-term disruptions in the capital and credit markets as a result of uncertainty due to the current global recession, changing or increased regulation or failures of significant financial institutions could adversely

affect our access to capital. If financial market disruptions intensify, it may make it difficult for us to raise additional capital or refinance debt when needed, on acceptable terms, or at all. Any disruption could require us to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring or reducing capital expenditures and reducing or eliminating other discretionary uses of cash.

Our significant shareholders may have interests that conflict with yours.

Loral owns through a subsidiary 64% of the economic interest of Telesat Holdings, and Canada’s Public Sector Pension Investment Board (“PSP”) owns 36%. We are controlled by our board of directors comprised of ten members, three nominated by Loral, three nominated by PSP and four independent directors selected by a nominating committee comprised of one PSP nominee, one Loral nominee and one of the independent directors then in office. Loral and PSP together can effectively control any vote. Additionally, Loral has approval rights with respect to certain decisions including, in some circumstances, our proposed purchase of new or replacement satellites or our incurring additional indebtedness. Circumstances may occur in which the interests of one or more of these shareholders could be in conflict with the interests of holders of the notes issued by us. In addition, one or more of these shareholders may have an interest in pursuing acquisitions, divestitures or other transactions that, in their judgment, could enhance their equity investment, even though such transactions might involve risks to the holders of the notes if the transactions resulted in our being more leveraged or significantly changed the nature of our business operations or strategy. In addition, if we encounter financial difficulties, or we are unable to pay our debts as they mature, the interests of our shareholders might conflict with those of the holders of the notes. In that situation, for example, the holders of the notes might want us to raise additional equity from existing shareholders or other investors to reduce our leverage and pay our debts, while existing shareholders might not want to increase their investment in us or have their ownership diluted and may instead choose to take other actions, such as selling our assets.

Various funds affiliated with MHR Fund Capital Management (“MHR”) hold, as of March 31, 2009, approximately 40.1% of Loral’s outstanding voting common stock and 59.2% of Loral’s total outstanding voting and non-voting common stock. Mark H. Rachesky, M.D., chairman of our board of directors and non-executive chairman of the board of directors of Loral, is the co-founder and president of MHR.

Loral’s ownership interest in us and in Space Systems/Loral, Inc. (“SS/L”) may adversely affect our consulting business.

Loral owns 100% of a satellite manufacturer, SS/L. Historically, Telesat Canada has been retained by certain customers to provide independent advice on and evaluation of the customer’s satellite procurement programs, including advice on selection of satellite manufacturers. Despite providing customers with assurances regarding our impartiality, potential consulting customers may decide not to retain us due to a concern that we may be biased in favor of SS/L due to our and SS/L’s common ownership.

Loral’s ownership interest in us and in SS/L may adversely affect our future satellite procurements.

When procuring our own satellites, we may find it more difficult to implement a competitive bidding process. Other satellite manufacturers may decline to bid or provide non-competitive bids if they believe that we will be biased in favor of an SS/L bid. Our Shareholders Agreement provides to Loral the right of approval over many large capital expenditures, a first right of acceptance of an offer by us to procure equipment, products and services, and a first right to negotiate in those areas where Loral and its affiliates carry on business, subject to approval of any such contract by a majority of our directors, excluding Loral nominees, but not an exclusive obligation to deal with, or purchase from, Loral or its affiliates. Under certain circumstances, Loral can withhold its approval of purchases and/or financing of new satellites by us. See “Related Party Transactions — Shareholders Agreement.”

We may experience a failure of ground operations infrastructure or interference with our satellite signals that impairs the commercial performance of, or the services delivered over, our satellites or the satellites of other operators for whom we provide ground services, which could result in a material loss of revenues.

We operate an extensive ground infrastructure including our satellite control centre in Ottawa, our main earth station and back up satellite control facility at Allan Park, our six teleports throughout Canada, our two teleports located in the United States and two in Brazil, and our telemetry, tracking and control (“TT&C”) facility in Perth, Australia. These ground facilities are used for controlling our satellites and for the provision of end-to-end services to our customers. For example, our Toronto teleport houses equipment used in the provision of broadcast services for major broadcasters and DTH customers, very small aperture terminals (“VSAT”) services for enterprise customers and gateway services for the provision of DTH internet services to consumers.

We may experience a partial or total loss of one or more of these facilities due to natural disasters (tornado, flood, hurricane or other such acts of God), fire, acts of war or terrorism or other catastrophic events. A failure at any of these facilities would cause a significant loss of service for our customers. Additionally, we may experience a failure in the necessary equipment at the satellite control centre, at the back-up facility, or in the communication links between these facilities and remote teleport facilities. A failure or operator error affecting tracking, telemetry and control operations might lead to a break-down in the ability to communicate with one or more satellites or cause the transmission of incorrect instructions to the affected satellite(s), which could lead to a temporary or permanent degradation in satellite performance or to the loss of one or more satellites. Intentional or non-intentional electromagnetic or radio frequency interference could result in a failure of our ability to deliver satellite services to our customers. A failure at any of our facilities or in the communications links between our facilities or interference with our satellite signal could cause our revenues and backlog to decline materially and could adversely affect our ability to market our services and generate future revenues and profit.

We purchase equipment from third party suppliers and depend on those suppliers to deliver, maintain and support these products to the contracted specifications in order for us to meet our service commitments to our customers. We may experience difficulty if these suppliers do not meet their obligations to deliver and support this equipment. We may also experience difficulty or failure when implementing, operating and maintaining this equipment, or when providing services using this equipment. This difficulty or failure may lead to service interruptions or degradations in service, which could cause our revenues and backlog to decline materially and could adversely affect our ability to market our services and generate future revenues and profit.

We operate in a highly regulated industry and government regulations may adversely affect our ability to sell our services, or increase the expense of such services or otherwise limit our ability to operate or grow our business.

As an operator of a global satellite system, we are regulated by government authorities in Canada, the United States and other countries in which we operate.

In Canada, our operations are subject to regulation and licensing by Industry Canada pursuant to the Radiocommunication Act (Canada) and by the Canadian Radio-Television and Telecommunications Commission (“CRTC”), under the Telecommunications Act (Canada). Industry Canada has the authority to issue licenses, establish standards, assign Canadian orbital locations, and plan the allocation and use of the radio frequency spectrum, including the radio frequencies upon which our satellites and earth stations depend. The Minister responsible for Industry Canada has broad discretion in exercising this authority to issue licenses, fix and amend conditions of licenses, and to suspend or even revoke them. The CRTC has authority over the allocation (and reallocation) of satellite capacity to particular broadcasting undertakings. We are required to pay different forms of “universal service” charges in Canada and have certain research and development obligations that do not apply to other satellite operators we compete with. These rates and obligations could change at any time.

In the United States, the Federal Communications Commission (“FCC”) regulates the provision of satellite services to, from, or within the United States. Certain of our satellites are owned and operated through a US subsidiary and are regulated by the FCC. In addition, to facilitate the provision of FSS satellite services in C- and Ku-band frequencies in the United States market, foreign licensed operators can apply to have their satellites placed on the FCC’s Permitted Space Station List. Our Anik Fl, Anik Fl-R, Anik F2, and Anik F3 satellites are currently on this list. The export from the United States of satellites and technical information related to satellites, earth station equipment and provision of services to certain countries are subject to State Department, Commerce Department and Treasury Department regulations, in particular the International Traffic in Arms Regulations (“ITAR”) which currently include satellites on the list of items requiring export permits. These ITAR provisions have constrained our access to technical information and have had a negative impact on our international consulting revenues. In addition, we and our satellite manufacturers may not be able to obtain and maintain necessary export authorizations which could adversely affect our ability to procure new United States-manufactured satellites; control our existing satellites; acquire launch services; obtain insurance and pursue our rights under insurance policies; or conduct our satellite-related operations and consulting activities.

We also operate satellites through licenses granted by, and are subject to regulations in, countries other than Canada and the United States. For example, the Brazilian national telecommunications agency, ANATEL, has authorized us, through our subsidiary, Telesat Brasil Capacidade de Satélites Ltda. (“TBCS”), to operate a Ku-band FSS satellite at 63° WL pursuant to a Concession Agreement. Telstar 10 is operated by APT which has been granted the right to use the 76.5° EL orbital location by the Government of Hong Kong, People’s Republic of China. Telstar 18 operates at the 138° EL orbital location under an agreement with APT, which has been granted the right to use the 138° EL orbital location by The Kingdom of Tonga.

In addition to regulatory requirements governing the use of orbital locations, most countries regulate transmission of signals to and from their territory.

If we fail to obtain or maintain particular authorizations on acceptable terms, such failure could delay or prevent us from offering some or all of our services and adversely affect our results of operations, business prospects and financial condition. In particular, we may not be able to obtain all of the required regulatory authorizations for the construction, launch and operation of any of our future satellites, or for the orbital locations for these satellites. Even if we were able to obtain the necessary authorizations and orbital locations, the licenses we obtain may impose significant operational restrictions, or not protect us from interference that could affect the use of our satellites. Countries or their regulatory authorities may adopt new laws, policies or regulations, or change their interpretation of existing laws, policies or regulations, that could cause our existing authorizations to be changed or cancelled, require us to incur additional costs, impose or change existing price ceilings, or otherwise adversely affect our operations or revenues. As a result, any currently held regulatory authorizations are subject to rescission and renewal and may not remain sufficient or additional authorizations may be necessary that we may not be able to obtain on a timely basis or on terms that are not unduly burdensome. Further, because the regulatory schemes vary by country, we may be subject to regulations in foreign countries of which we are not presently aware that we are not in compliance with, and as a result could be subject to sanctions by a foreign government. See “Business — Government Regulations.”

Our operations may be limited or precluded by ITU rules or processes, and we are required to coordinate our operations with those of other satellite operators. We cannot guarantee that other operators will comply with ITU rules requiring coordination of operations, and failure of such other operators to comply could cause harmful interference to the signals that we, or our customers, transmit.

The International Telecommunication Union (“ITU”), a specialized United Nations agency, regulates the global allocation of radio frequency spectrum and the registration of radio frequency assignments and any associated orbital location in the geostationary satellite orbit. We participate in the activities of the ITU. However, only national administrations have full standing as ITU members. Consequently, we must rely on the relevant government administrations to represent our interests.

The ITU establishes the Radio Regulations, an international treaty which contains the rules concerning frequency allocations and the priority to, coordination of, and use of, radio frequency assignments. The ITU Radio Regulations define the allocation of radio frequencies to specific uses. The ITU Radio Regulations are periodically reviewed and revised at World Radio communication Conferences (“WRC”), which take place typically every three to four years. As a result, we cannot guarantee that the ITU will not change its allocation decisions and rules in the future in a way that could limit or preclude our use of some or all of our existing or future orbital locations or spectrum.

The ITU Radio Regulations also establish operating procedures for satellite networks and prescribe detailed coordination, notification and recording procedures. With respect to the frequencies used by commercial geostationary satellites, the ITU Radio Regulations set forth a process for protecting earlier-registered satellite systems from interference from later-registered satellite systems. In order to comply with these rules, we must coordinate the operation of our satellites, including any replacement satellite that has performance characteristics that are different from those of the satellite it replaces, with other satellites. This process requires potentially lengthy and costly negotiations with parties who operate or intend to operate satellites that could affect or be affected by our satellites. For example, as part of our coordination effort on Telstar 12, we agreed to provide four 54 MHz transponders on Telstar 12 to Eutelsat S.A. (“Eutelsat”) for the life of the satellite and have retained risk of loss with respect to those transponders. We also granted Eutelsat the right to acquire, at cost, four transponders on the replacement satellite for Telstar 12. We have leased back from Eutelsat three of the four transponders to provide service to our customers. In addition, there are operators that maintain that they have priority over our satellites and we continue to discuss coordination issues with these and other operators and may need to make additional concessions in connection with future coordination efforts which, in turn, could have a material adverse impact on our financial condition, as well as on the value of our business. The failure to reach an appropriate arrangement with such satellite operators may result in substantial restrictions on the use and operation of our existing satellites at their orbital locations. The coordination process may require us to modify our proposed coverage areas, or satellite design or transmission plans, in order to eliminate or minimize interference with other satellites or ground-based facilities. Those modifications may mean that our use of a particular orbital location is restricted, possibly to the extent that it may not be commercially desirable to place a new satellite in that location.

In accordance with the ITU Radio Regulations, governments have rights to use certain orbital locations and frequencies. Certain of these governments have in turn authorized Telesat to use several orbital locations and radio frequencies in addition to those used by our current satellites. Under the ITU Radio Regulations, we must begin using these orbital locations and frequencies within a fixed period of time, or the governments in question would lose their priority rights and the orbital location and frequencies likely would become available for use by another satellite operator. Licensing administrations often impose additional deadlines or series of deadlines.

In certain countries, a failure to resolve coordination issues is used by regulators as a justification to limit or condition market access by foreign satellite operators. In addition, while the ITU Radio Regulations require later-in-time systems to coordinate their operations with us, we cannot guarantee that other operators will conduct their operations so as to avoid transmitting any signals that would cause harmful interference to the signals that we, or our customers, transmit. This interference could require us to take steps, or pay or refund amounts to our customers, that could have a material adverse effect on our results of operations, business prospects and financial condition. The ITU’s Radio Regulations do not contain mandatory dispute resolution or enforcement regulations and neither the ITU specifically, nor international law generally, provides clear remedies if the ITU coordination process fails. Failure to successfully coordinate our satellites’ frequencies or to obtain or maintain other required regulatory approvals could have an adverse effect on our financial condition, as well as on the value of our business.

If we do not occupy unused orbital locations by specified deadlines, or do not maintain satellites in orbital locations we currently use, those orbital locations may become available for other satellite operators to use.

Our in-orbit satellites do not currently occupy all of the orbital locations for which we have obtained regulatory authorizations. If we are unable to place satellites into currently unused orbital locations by specified deadlines and in a manner that satisfies the ITU, or national regulatory requirements, or if we are unable to maintain satellites at the orbital locations that we currently use, we may lose our rights to use these orbital locations and the locations could become available for other satellite operators to use. We cannot operate our satellites without a sufficient number of suitable orbital locations in which to place the satellites. The loss of one or more of our orbital locations could negatively affect our plans and our ability to implement our business strategy.

Our dependence on outside contractors could result in delays related to the design, manufacture and launch of our new satellites, which could in turn adversely affect our operating results.

There are a limited number of manufacturers that are able to design and build satellites according to the technical specifications and standards of quality we require, including EADS Astrium, Thales Alenia Space, Boeing, Lockheed Martin, Orbital and SS/L. There are also a limited number of suppliers able to launch such satellites, including International Launch Services, Arianespace, Lockheed Martin and Sea Launch. Adverse events with respect to any of our manufacturers or launch suppliers could result in the delay of the design, construction or launch of our satellites. General economic conditions may also affect the ability of our manufacturers and launch suppliers to provide services on commercially reasonable terms or to fulfill their obligations in terms of manufacturing schedules, launch dates, pricing, or other items. Even where alternate suppliers for such services are available, we may have difficulty identifying them in a timely manner, we may incur significant additional expense in changing suppliers, and this could result in difficulties or delays in the design, construction or launch of our satellites. Any delays in the design, construction or launch of our satellites could have a material adverse effect on our business, financial condition and results of operations.

Our future reported net income could be adversely affected by an impairment of the value of certain intangible assets.

The assets listed on our consolidated balance sheets as of March 31, 2009 include goodwill valued at approximately $2,446 million and other intangible assets valued at approximately $569 million. Goodwill and other intangible assets (such as orbital locations) with indefinite useful lives were recorded as a result of the Telesat Canada transaction and an assessment of their valuation is undertaken on an annual basis, or whenever events or changes in circumstances indicate that the carrying amount is likely to exceed their fair value. We generally measure for impairment using a projected discounted cash flow method and confirm the assessment using other valuation methods. If the asset’s carrying value is more than its fair value, the difference is recorded as a reduction in the amount of the asset on the balance sheet and an impairment charge in the statement of earnings. Testing for impairment requires significant subjective judgments by management. Any changes in the estimates used could have a material impact on the calculation of the fair value and result in an impairment charge. As a result, we are not able to reasonably quantify the changes in overall financial performance had different assumptions been used. We cannot predict whether an event that triggers impairment will occur, when it will occur or how it will affect the reported asset values. If our goodwill or other intangible assets are deemed to be impaired in whole or in part, we could be required to reduce or write off such assets, which could have a material adverse effect on our reported net income.

For example, during the fourth quarter of 2008, we performed our annual valuation of goodwill and indefinite life intangible assets, which resulted in an impairment charge of $483.0 million to our orbital locations. The impairment charge was measured as the excess of the carrying amount of orbital locations over their fair value, with the estimated fair value being based on the present value of the expected future cash flows to be generated through the use of the orbital locations, and was recorded in other expense. See Note 12 to our audited consolidated financial statements for additional information. The increase of the discount rate due to current market conditions, the impact of a strengthened U.S. dollar on the cost of satellites, as well as

increases to insurance costs and launch services in 2008 reduced the present value of the expected future cash flows for those orbital locations.

The amount that we could be required to pay counterparties under the indemnifications and guarantees which we provide in the ordinary course of business is uncertain. If these payments were to become significant, our future liquidity, capital resources or our credit risk profile may be adversely affected.

In the normal course of business, we enter into agreements that provide for indemnification and guarantees to counterparties in transactions involving sales of assets, sales of services, purchases and development of assets, securitization agreements and operating leases. The nature of almost all of these indemnifications prevents us from making a reasonable estimate of the maximum potential amount that we could be required to pay counterparties. If these payments were to become significant, our future liquidity, capital resources and our credit risk profile may be adversely affected.

Significant changes in exchange rates could have a material adverse effect on our financial results.

Approximately 45% of our revenues for the year ended December 31, 2008, certain of our expenses and a substantial portion of our indebtedness and capital expenditures are denominated in U.S. currency. As a result, the volatility of U.S. currency may in the future expose, and has in 2008 exposed, us to foreign exchange risks. We may seek to mitigate these risks through the use of forward currency contracts or other currency hedges, but we may not be successful. To date, our use of forward currency contracts and other currency hedges has been limited and may not adequately protect us from foreign exchange risk. In 2008, as a result of a significant decline in the value of the Canadian dollar, we recorded foreign exchange losses of approximately $700 million, prior to any gains on hedging instruments.

The most significant impact of variations in the exchange rate is on our U.S. dollar denominated debt financing. The Company’s main currency exposures as at December 31, 2008 lie in its U.S. dollar denominated cash and cash equivalents, accounts receivable, accounts payable and debt financing. A five percent weakening of the Canadian dollar against the U.S. dollar at December 31, 2008 would have increased the net loss and decreased other comprehensive loss for the year by $189.4 million and $0.3 million, respectively. A five percent strengthening of the Canadian dollar against the U.S. dollar at December 31, 2008 would have decreased the net loss and increased other comprehensive loss for the year by $189.4 million and $0.3 million, respectively. This analysis assumes that all other variables, in particular interest rates, remain constant.

Significant changes in exchange rates could materially increase our interest and other payment obligations under our financing arrangements.

At the time of the Telesat Canada transaction, we entered into a credit facility, a portion of which is denominated in U.S. currency and has a maturity of October 31, 2014 (“U.S. Credit Facility”). As at October 31, 2007, the Canadian dollar equivalent of our U.S. Credit Facility was $1,667.1 million, excluding bridge loans of $864.4 million which have since been exchanged for the notes issued in June 2008. Between October 31, 2007 and March 31, 2009, the U.S. Credit Facility increased by US$126.9 million as a result of drawings thereunder; however, as at March 31, 2009, the Canadian dollar equivalent of our U.S. Credit Facility had increased by $704.4 million to $2,371.5 million, prior to the impact of any currency hedging.

On June 30, 2008, we issued approximately US$692.8 million of 11% senior notes and approximately US$217.2 million of 12.5% senior subordinated notes. The Canadian dollar equivalent of the principal amount of the notes at the time of issue was $705.7 million for the senior notes and $221.2 million for the senior subordinated notes. Due to significant changes in exchange rates, as at March 31, 2009 the Canadian dollar equivalent of the principal amount of the notes had increased to $873.1 million for the senior notes and $273.7 million for the senior subordinated notes.

For the year ended December 31, 2008, approximately 55% of our revenues were received in currency other than U.S. currency, the majority of our revenues being in Canadian currency. The revenues that we receive in U.S. currency may mitigate a portion of our exchange rate risk, but do not fully protect us from that risk.

Changes in exchange rates impact the amount that we pay in interest, and may significantly increase the amount that we are required to pay in Canadian dollar terms to redeem the notes either at maturity, or earlier if redemption rights are exercised or other events occur which require us to offer to purchase the notes prior to maturity, and to repay funds drawn under the U.S. Credit Facility.

We may seek to mitigate part of this risk through the use of forward currency contracts or other currency hedges, but we may not be successful. To date, our use of forward currency contracts and other currency hedges has been limited to hedging interest and principal payments on a portion of our secured credit facility and does not fully protect us from foreign exchange risk. To date, we have not hedged our foreign currency exposure arising from the notes.

Market performance or changes in other assumptions could require us to make significant unplanned contributions to our employees’ pension and other post retirement benefits plans.

We maintain one contributory and three non-contributory defined benefit pension plans which provide benefits based on length of service and rate of pay. We are responsible for adequately funding the defined benefit pension plans. Contributions, where permitted by law, are made based on actuarial cost methods permitted by pension regulatory bodies and reflect assumptions about future investment returns, salary projections and future service benefits. We also provide other retirement benefits, including health care and life insurance benefits on retirement. Pension costs and other retirement benefits are determined using the projected benefit method prorated on service and management’s best estimate of expected investment performance, salary escalation, employee turnover, retirement ages of employees and expected health care costs. Two of our pension plans and our post retirement benefits are not funded, and our payment obligations are funded from current cash flow. A valuation of the funded pension plan assets is performed at least every three years to determine the present value of the accrued pension and other retirement benefits.

A decline in the market value of funded plan assets may increase our funding requirements for these plans. The costs of providing pension and other post retirement benefits are also affected by other factors, including the assumed rate of return on plan assets, discount rates used in determining future benefit obligations, assumptions concerning salary projections and future service benefits and future government regulation.

The most recent valuation of the pension plans for funding purposes was as of January 1, 2007, and the next required valuation is as of January 1, 2010. If we are required to make significant unplanned contributions to fund the pension and postretirement plans, or if we are required to make significant benefit payments from our unfunded plans, the contributions and/or benefit payments would negatively affect our financial condition, results of operations, and cash flows.

We may pursue acquisitions, dispositions and strategic transactions which could result in the incurrence of additional costs, liabilities or expenses in connection with the implementation of such transactions.

In the future, we may pursue acquisitions, dispositions and strategic transactions, which may include joint ventures and strategic relations, as well as business combinations or the acquisition or disposition of assets. Acquisitions, dispositions and strategic transactions involve a number of risks, including:


	•	potential disruption of our ongoing business;

	•	distraction of management;

	•	may result in our being more leveraged;

	•	the anticipated benefits and costs savings of those transactions may not be realized fully or at all or may take longer to realize than expected;

	•	increasing the scope and complexity of our operations; and

	•	loss or reduction of control over certain of our assets.

The presence of one or more material liabilities of an acquired company that are unknown to us at the time of acquisition could have a material adverse effect on our results of operations, business prospects and financial condition. A strategic transaction may result in a significant change in the nature of our business, operations and strategy. In addition, we may encounter unforeseen obstacles or costs in implementing a strategic transaction.

We continue to evaluate the performance of all of our businesses and may sell businesses or assets. Such a sale could include a strategic disposition of one or more of our satellites. In addition to the risks listed above that may occur with any acquisition, disposition or strategic transaction, a satellite divestiture could result in a loss of revenues or significant write-offs, including those related to goodwill and other intangible assets, which could have a material adverse effect on our financial condition, results of operations and cash flows. There can be no assurance that we will be successful in addressing these or any other significant risks encountered.

In addition to the pending sale of our leasehold interest in Telstar 10, we continue to be in discussions regarding the potential sale of our interest in another of our international satellites. We cannot at this time assess the probability of concluding any transaction under discussion or under what terms, including price, the assets may be sold.

We could experience the departure of key employees or may be unable to recruit the employees needed for our success.

We rely on a number of key employees, including members of our management and certain other employees possessing unique experience in technical and commercial aspects of the satellite services business. If we are unable to retain these employees, it could be difficult to replace them. In addition, our business, with its constant technological developments, must continue to attract highly qualified and technically skilled employees. In the future, our inability to retain or replace these employees, or our inability to attract new highly qualified employees, could have a material adverse effect on our results of operations, business prospects and financial condition.

If we are unable to successfully complete the integration of Loral Skynet into Telesat, it may have a material adverse effect on our results of operations, business prospects and financial condition.

Completing the integration of Loral Skynet into Telesat involves a number of risks, including, but not limited to:


	•	difficulties in restructuring our operations, processes, people and systems and the contemporaneous consolidation of the operations of Loral Skynet and the former Telesat Canada;

	•	the diversion of management’s attention from the management of daily operations to the integration of operations;

	•	higher integration costs than anticipated;

	•	difficulties in the assimilation and retention of employees;

	•	difficulties in the integration of departments, systems, including accounting and information systems, technologies, books and records and controls and procedures;

	•	difficulties in the assimilation of different cultures and practices, as well as in the assimilation of broad and geographically dispersed personnel and operations; and

	•	difficulties in the timely preparation of financial statements for the combined entity, and the potential to miss financial reporting deadlines as a result.

If we cannot successfully complete the integration of Loral Skynet into Telesat, we may experience a material adverse effect on our results of operations, business prospects and financial condition.

Loral Skynet has a history of net losses and there is no assurance that its business will achieve profitability.

Loral Skynet’s business has a history of net losses. No assurance can be given that the Loral Skynet business can achieve profitability. Furthermore, Loral Skynet adopted fresh-start accounting as of October 1, 2005 in connection with Loral’s emergence from Chapter 11 bankruptcy and, accordingly, its financial information for the periods ended after such date is presented on a basis different from, and is therefore not comparable to, its financial information presented for the period then ended or for prior periods.

We face certain risks relating to our global operations which may adversely affect our business.

Due to our global operations we face certain risks. As a result, civil unrest or wars or economic, political or social instability in the areas that we provide our services may result in our being unable to perform our contracts or otherwise successfully operate. We also may encounter difficulties in enforcing our contracts for payment for services in certain countries due to the legal systems in place in such countries. Our international operations also expose us to exchange controls and foreign currency exchange risks. These risks could impact our revenues. In addition, certain countries may impose withholding taxes on us or on our customers. These taxes can make our services more expensive or impose an unanticipated tax burden on us. In addition, such taxes may not be imposed equally on our competitors and may not be alleviated or subject to appeal under existing tax treaties.

The content of third-party transmissions over our satellites may affect us since we could be subject to sanctions by various governmental entities for the transmission of certain content.

We provide satellite capacity for transmissions by third parties. We do not decide what content is transmitted over our satellites, although our contracts generally provide us with rights to prohibit certain types of content or to cease transmission or permit us to require our customers to cease their transmissions under certain circumstances. A governmental body or other entity may object to some of the content carried over our satellites, such as “adult services” video channels or content deemed political in nature. Issues arising from the content of transmissions by these third parties over our satellites could affect our future revenues, operations or our relationship with certain governments or customers.

Enforcement of civil liabilities against us may be more difficult because we are a Canadian corporation.

We are a Canadian corporation. Most of our directors, officers and controlling persons are neither residents nor citizens of the United States, and a substantial portion of their assets and our assets are located outside the United States. As a result, it may be difficult for you to effect service of process within the United States upon us or our directors, controlling persons, officers and experts who are not residents of the United States. Furthermore, enforcement of United Stated federal securities laws against such non-residents may be adversely affected by the fact that such persons are not residents of the United States and a substantial portion of their assets are located outside of the United States.

FORWARD-LOOKING STATEMENTS

We make statements in this prospectus that are forward-looking. When used in this prospectus, statements which are not historical in nature, or which contain the words “aim,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “possible,” “project,” “seek,” “should,” “target,” “would” or similar expressions, are forward-looking statements. Forward-looking statements appear in a number of places and include statements with respect to, among other things:


	•	our future growth and profitability;

	•	our competitive strengths; and

	•	our business strategy and the trends we anticipate in the industries and economies in which we operate.

These forward-looking statements are based on our current expectations and are subject to a number of risks, uncertainties and assumptions. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond our control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. Important factors that could cause actual results to differ materially from those in forward-looking statements include:


	•	The reoffering and resale of the notes is subject to significant legal restrictions;

	•	Our substantial debt could adversely affect our cash flow and prevent us from fulfilling our obligations under the notes;

	•	Despite our current levels of debt, we may still be able to incur substantially more debt. This could further exacerbate the risks associated with our substantial debt;

	•	The notes are effectively subordinated to our and the guarantors’ secured debt to the extent of the value of the assets securing such debt;

	•	Your right to receive payments on the senior subordinated notes is subordinated to our senior debt and the senior debt of the guarantors;

	•	The agreements governing our debt, including the notes and our senior secured credit facilities, contain various covenants that impose restrictions on us that may affect our ability to operate our business and to make payments on the notes;

	•	To service our debt and to fund planned capital expenditures, we will require a significant amount of cash, which may not be available to us;

	•	We may be unable to make a change of control offer required by the indentures governing the notes, which would cause defaults under the indentures governing the notes, our senior secured credit facilities and our other financing arrangements;

	•	Because of the Telesat Canada Reorganization and Divestiture Act, a Canadian act uniquely applicable to Telesat Canada (but not the guarantors, other subsidiaries or Telesat LLC), Telesat Canada may not have access to the usual protections from creditors and other rights available to insolvent persons, and creditors, including holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws generally available to creditors of insolvent persons;

	•	Not all of our subsidiaries guarantee the notes, and the assets of our non-guarantor subsidiaries may not be available to make payments on the notes;

	•	The guarantees associated with our notes may not be enforceable because of fraudulent conveyance laws;

	•	You should not rely on the Co-Issuer in evaluating an investment in the notes;


	•	Our in-orbit satellites may fail to operate as expected due to operational anomalies resulting in lost revenues, increased costs and/or termination of contracts;

	•	The actual commercial service lives of our satellites may be shorter than we anticipate;

	•	Our satellites may have launch failures or may fail to reach their planned orbital locations. Any such failure could result in the loss of a satellite or cause significant delays in the deployment of the satellite which could have a material adverse effect on our results of operations, business prospects and financial condition;

	•	Our insurance will not protect us against all satellite-related losses. Further, we may not be able to renew insurance on our existing satellites or obtain insurance on future satellites on acceptable terms or at all;

	•	Replacing a satellite upon the end of its useful life will require us to make significant expenditures and may require us to obtain shareholder approval;

	•	The launch of satellites may be delayed which could have a material adverse effect on our ability to meet our contractual commitments and to generate and grow future revenues;

	•	The ability to replace two of our satellites is subject to additional risk and cannot be assumed;

	•	We are subject to significant and intensifying competition. We experience competition both within the satellite industry and from other providers of communications capacity. Our failure to compete effectively would result in a loss of revenues and a decline in profitability, which would adversely affect our business and results of operations;

	•	Ciel Satellite Group (“Ciel”) has been awarded a number of licenses by Industry Canada which may adversely affect our business;

	•	We derive a substantial amount of our revenues from only a few of our customers. A loss of one or more of these major customers, or a material adverse change in any such customer’s business, could materially reduce our future revenues and contracted backlog and result in our discontinuing service offerings that we consider to be no longer sufficiently profitable;

	•	The current global recession may have significant effects on our customers and suppliers, which could adversely affect our business, operating results and financial condition;

	•	Demand for our current and planned services may decrease materially due to downturns in the economy and technological developments which could have a material adverse effect on our results of operations, business prospects and financial condition;

	•	The soundness of financial institutions and counterparties could adversely affect us;

	•	Our business is capital intensive, and we may not be able to raise adequate capital to finance our business strategies, or we may be able to do so only on terms that significantly restrict our ability to operate our business;

	•	Volatility in financial markets could adversely affect the cost and availability of financing;

	•	Our significant shareholders may have interests that conflict with yours;

	•	Loral’s ownership interest in us and in Space Systems/Loral, Inc. (“SS/L”) may adversely affect our consulting business;

	•	Loral’s ownership interest in us and in SS/L may adversely affect our future satellite procurements;

	•	We may experience a failure of ground operations infrastructure or interference with our satellite signals that impairs the commercial performance of, or the services delivered over, our satellites or the satellites of other operators for whom we provide ground services, which could result in a material loss of revenues;


	•	We operate in a highly regulated industry and government regulations may adversely affect our ability to sell our services, or increase the expense of such services or otherwise limit our ability to operate or grow our business;

	•	Our operations may be limited or precluded by ITU rules or processes, and we are required to coordinate our operations with those of other satellite operators. We cannot guarantee that other operators will comply with ITU rules requiring coordination of operations, and failure of such other operators to comply could cause harmful interference to the signals that we, or our customers, transmit;


	•	If we do not occupy unused orbital locations by specified deadlines, or do not maintain satellites in orbital locations we currently use, those orbital locations may become available for other satellite operators to use;


	•	Our dependence on outside contractors could result in delays related to the design, manufacture and launch of our new satellites, which could in turn adversely affect our operating results;

	•	Our future reported net income could be adversely affected by an impairment of the value of certain intangible assets;

	•	The amount that we could be required to pay counterparties under the indemnifications and guarantees which we provide in the ordinary course of business is uncertain. If these payments were to become significant, our future liquidity, capital resources or our credit risk profile may be adversely affected;

	•	Significant changes in exchange rates could have a material adverse effect on our financial results;

	•	Significant changes in exchange rates could materially increase our interest and other payment obligations under our financing arrangements;

	•	Market performance or changes in other assumptions could require us to make significant unplanned contributions to our employees’ pension and other post retirement benefit plans;

	•	We may pursue acquisitions, dispositions and strategic transactions which could result in the incurrence of additional costs, liabilities or expenses in connection with the implementation of such transactions;

	•	We could experience the departure of key employees or may be unable to recruit the employees needed for our success;

	•	If we are unable to successfully complete the integration of Loral Skynet into Telesat, it may have a material adverse effect on our results of operations, business prospects and financial condition;

	•	Loral Skynet has a history of net losses and there is no assurance that its business will achieve profitability;

	•	We face certain risks relating to our global operations which may adversely affect our business;

	•	The content of third-party transmissions over our satellites may affect us since we could be subject to sanctions by various governmental entities for the transmission of certain content;

	•	Enforcement of civil liabilities against us may be more difficult because we are a Canadian corporation; and


	•	the other factors referenced in this prospectus, including, without limitation, under “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. Furthermore, forward-looking statements speak only as of the date they are made. If any of these risks or uncertainties materialize, or if any of our underlying assumptions are incorrect, our actual results may differ significantly from the results that we express in or imply by any of our forward-looking statements. These and other risks are detailed in this prospectus. We do not undertake any obligation to update or revise these forward-looking statements after the date of this prospectus to reflect future events or circumstances. We qualify any and all of our forward-looking statements by these cautionary factors.

USE OF PROCEEDS

The exchange offer is intended to satisfy our obligations under the registration rights agreements that we entered into in connection with the private placement. We will not receive any cash proceeds from the issuance of the exchange notes in the exchange offer. As consideration for issuing the exchange notes as contemplated in this prospectus, we will receive in exchange a like principal amount of outstanding notes, the terms of which are identical in all material respects to the exchange notes and represent the same underlying indebtedness, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreements. The outstanding notes that are surrendered in exchange for the exchange notes will be retired and cancelled and cannot be reissued. As a result, the issuance of the exchange notes will not result in any increase or decrease in our capitalization.

CAPITALIZATION

The following table sets forth our cash and cash equivalents and our capitalization as at March 31, 2009. The information should be read in conjunction with “The Transactions,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and our consolidated financial statements and the consolidated financial statements of Loral Skynet Corporation and the related notes included elsewhere in this prospectus.


	March 31, 2009
	CAD$		US$		CAD$(1)
			(In thousands)

Cash and cash equivalents		95,774		—		95,774

Debt:
Senior Secured Revolving Credit Facility(2)		—		—		—
Canadian Term Loan Facility(3)		192,500		—		192,500
U.S. Term Loan Facility(4)		1,208,918		692,238		2,081,276
U.S. Term Loan II Facility(5)		—		148,850		187,581
Senior Notes(6)		—		692,825		873,098
Senior Subordinated Notes(7)		—		217,175		273,684
Other		10		—		10

Total debt(8)		1,401,428		1,751,088		3,608,149
Holding PIK Preferred Stock Mandatorily Redeemable 2019						141,435
Shareholders’ equity						431,289

Total capitalization						4,180,873


(1)		U.S. dollar amounts converted to Canadian dollars at US$1.00/$1.2602, except where noted.

(2)		5-year revolver with $152.6 million available. No drawn balance at March 31, 2009, other than $0.4 million of outstanding letters of credit.

(3)		5-year Canadian dollar term loan.

(4)		7-year U.S. dollar term loan, with US$1,733.1 million outstanding at March 31, 2009. Includes US$1,040.8 million which has been converted to $1,208.9 million as part of a basis swap at US$1.00/$1.1615.

(5)		7-year delayed draw U.S. dollar term loan. Fully drawn and US$148.9 million outstanding at March 31, 2009.

(6)		11% Senior Notes due November 1, 2015.

(7)		12.5% Senior Subordinated Notes due November 1, 2017.

(8)		Does not include capital lease obligations in the amount of $38.7 million, or US$30.7 million. Total Debt is reflected gross of estimated financing fees and expenses incurred in connection with the debt financing of $81.3 million.

THE TELESAT CANADA TRANSACTIONS

The Telesat Canada Acquisition

PSP, through its wholly-owned subsidiary, Red Isle Private Investments Inc. (“Red Isle”), contributed to Telesat Holdings US$525 million in cash in exchange for (a) shares of 7% fixed rate senior non-convertible PIK mandatorily redeemable preferred stock of Telesat Holdings, which we refer to as the Holding PIK Preferred Stock, (b) common shares of Telesat Holdings representing approximately 30% of the participating equity of Telesat Holdings, and (c) voting participating preferred shares of Telesat Holdings representing approximately 6% of the participating equity of Telesat Holdings. The voting participating preferred shares are convertible into common shares on a one-for-one basis and have all of the rights of common shares, except that they do not have the right to vote for the election of directors of Telesat Holdings. The voting participating preferred shares do not have any liquidation preference or dividend rights above the common shares. In a related transaction, Red Isle transferred to Telesat Holdings $55,163,172, representing the market value of certain foreign exchange contracts entered into by Red Isle, in exchange for the issuance to Red Isle of a portion of the 36% equity shareholding acquired by Red Isle, in the form of voting participating preferred shares. We refer to these equity contributions as the Equity Financing.

The Skynet Transaction

Telesat Holdings also, subject to certain exceptions, assumed the liabilities of the Loral Skynet Business.

Senior Secured Credit Facilities and Bridge Facilities

In connection with the Telesat Canada acquisition, we entered into senior secured credit facilities, a senior bridge facility and a senior subordinated bridge facility. The obligations under the bridge facilities were exchanged for the notes issued in June 2008. See “Description of Other Indebtedness and Preferred Stock.”

Refinancing

addition, in connection with the Telesat Canada transaction, Loral Skynet’s 14% senior secured notes were repaid on September 5, 2007 with amounts borrowed under an interim refinancing facility of Loral Skynet provided by a third party lender. All outstanding amounts under this facility were repaid and all obligations thereunder discharged upon consummation of the Telesat Canada transaction out of transaction proceeds. We refer to these redemptions and refinancings as the Refinancing.

Telesat Reorganization

The obligations under the bridge facilities were exchanged for the notes issued in June 2008.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following information is only selected information and should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Telesat Holdings’ and Loral Skynet’s audited and unaudited consolidated financial statements and their notes included elsewhere in this prospectus, as well as the other financial information included herein.

The selected consolidated statement of operations data and cash flow data for the ten months ended October 30, 2007 and the year ended December 31, 2006 have been derived from Telesat Canada’s audited consolidated financial statements which have been prepared in accordance with Canadian GAAP and are included elsewhere in this prospectus. The selected consolidated statement of operations data and cash flow data for the years ended December 31, 2005 and 2004 and the consolidated balance sheet data as of October 31, 2007 and December 31, 2006, 2005 and 2004 has been derived from Telesat Canada’s audited financial statements that are not included in this prospectus. The selected consolidated statement of operations data, cash flow data and balance sheet data for and as of the year ended December 31, 2008 and the two-month period ended December 31, 2007 have been derived from Telesat’s audited consolidated financial statements that have been prepared in accordance with Canadian GAAP and are included elsewhere in this prospectus.

The selected consolidated statement of operations data, balance sheet data and cash flow data for the three month periods ended March 31, 2009 and 2008 have been derived from Telesat Holdings’ unaudited consolidated financial statements that have been prepared in accordance with Canadian GAAP and are included elsewhere in this prospectus. The Telesat Holdings unaudited condensed consolidated financial statements have been prepared on the same basis as the respective audited consolidated financial statements, and in the opinion of our management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the information set forth herein. Interim financial results are not necessarily indicative of results that may be expected for the full year or any future reporting period.

Telesat Canada and Telesat Holdings Inc.
Selected Historical Consolidated Financial Information


	Predecessor Entity									Successor Entity
								Ten		Two
								Months		Months
								Ended		Ended			Year Ended			Three Months Ended
	Year Ended December 31,							October 30,		December 31,			December 31,			March 31,
	2004			2005		2006		2007		2007			2008			2008			2009
	(In CAD$ millions)
Canadian GAAP
Statement of Operations Data:
Operating revenues
Broadcast		200.0			243.0		249.7		254.3		52.8			345.4			79.0			106.0
Enterprise		138.8			205.5		199.6		178.9		53.7			333.8			78.6			90.5
Consulting and Other		23.4			26.2		29.7		24.6		4.9			32.2			5.1			7.6

Total operating revenues		362.2			474.7		479.0		457.8		111.4			711.4			162.7			204.1
Operating expenses:
Amortization		84.3			111.8		120.7		105.8		40.0			235.6			58.7			61.3
Operations and administration		117.7			161.0		183.4		144.3		43.3			247.6			59.5			58.2
Cost of equipment sales		18.9			45.7		33.6		34.7		6.5			24.4			6.0			4.4
Cost of sales-type lease		—			—		1.0		15.5		—			—			—			—
Impairment loss of long-lived assets		—			—		—		2.1		—			2.4			—			—
Impairment loss of intangible assets		—			—		—		—		—			483.0			—			—

Earnings from operations		141.3			156.2		140.3		155.4		21.6			(281.6	)		38.5			80.2
Other expenses (income)
Interest expense, net		8.9			14.6		12.5		8.6		43.9			257.6			65.3			71.1
Other expense (income)		(0.7	)		0.2		2.1		8.0		44.0			448.1			90.9			43.9
Income tax expense (recovery)		47.9			50.7		21.7		57.1		(62.2	)		(164.9	)		(16.3	)		4.3

Net earnings (loss)		85.2			90.7		104.0		81.7		(4.1	)		(822.4	)		(101.4	)		(39.1	)


	Predecessor Entity												Successor Entity
										Ten			Two
										Months			Months
										Ended			Ended			Year Ended			Three Months Ended
	Year Ended December 31,									October 30,			December 31,			December 31,			March 31,
	2004			2005			2006			2007			2007			2008			2008			2009
	(In CAD$ millions)
Statement of Cash Flow Data:
Net cash provided by operating activities		335.8			245.2			229.3			252.6			225.3			279.1			31.7			101.0
Net cash used in investing activities		(195.4	)		(149.6	)		(160.2	)		(187.0	)		(3,258.7	)		(263.5	)		(47.5	)		(91.9	)
Net cash (used in) provided by financing activities		(111.5	)		(13.4	)		(143.8	)		(44.8	)		3,074.4			41.5			14.6			(12.4	)

Balance Sheet Data (end of period):
Cash and cash equivalents		30.9			113.5			38.7			57.8			42.2			98.5			42.4			95.8
Total assets		1,531.4			1,693.2			1,802.3			1,693.0			5,545.4			5,166.8			5,542.2			5,250.0
Total debt (including current portion)		287.2			285.0			203.9			731.9			2,794.3			3,536.5			2,921.5			3,629.5
Total shareholders’ equity		587.8			678.3			909.6			215.5			1,293.5			469.4			1,191.0			431.3
Common shares		341.1			341.1			341.1			341.1			756.4			756.4			756.4			756.4
Preferred shares		50.0			50.0			—			—			541.8			541.8			541.8			541.8

U.S. GAAP(1)
Statement of Operations Data:
Operating revenues
Broadcast		200.0			243.0			249.7			231.4			55.9			365.1			83.6			107.5
Enterprise		138.8			205.5			199.6			178.9			53.7			333.8			78.6			90.5
Consulting and Other		23.4			26.2			29.7			24.6			4.9			32.2			5.1			7.6

Total operating revenues		362.2			474.7			479.0			434.9			114.5			731.1			167.3			205.6
Operating expenses:
Amortization		84.3			111.8			120.7			105.8			40.0			235.6			58.8			61.3
Operations and administration		117.7			161.0			183.4			144.3			44.6			255.7			61.4			59.8
Cost of equipment sales		18.9			45.7			34.6			23.9			6.5			25.1			6.0			4.4
Cost of sales-type lease		—			—			—			15.5			—			—			—			—
Impairment loss of long-lived assets		—			—			—			2.1			—			2.4			—			—
Impairment loss of intangible assets		—			—			—			—			—			483.0			—			—

Earnings from operations		141.3			156.2			140.3			143.3			23.4			(270.7	)		41.1			80.1
Interest expense, net		8.9			14.6			12.5			8.5			42.2			246.5			62.5			67.4
Other income		(20.4	)		(1.3	)		3.2			25.5			42.4			430.1			88.7			42.8
Income tax expense (recovery)		54.9			51.3			20.0			44.3			(59.9	)		(149.2	)		(17.1	)		8.7

Net earnings (loss)		97.9			91.6			104.6			65.0			(1.3	)		(798.1	)		(93.0	)		(38.8	)

Balance Sheet Data (end of period):
Cash and cash equivalents		30.9			113.5			38.7			57.8			42.2			98.5			42.4			95.8
Total assets		1,585.0			1,742.4			1,844.1			1,698.2			5,543.3			5,208.1			5,552.9			5,293.5
Total debt (including current portion)		287.2			285.0			203.9			731.9			2,794.3			3,536.5			2,921.5			3,629.5
Net assets		613.0			704.5			933.8			224.7			1,294.6			483.8			1,198.1			444.5
Common shares		341.1			341.1			341.1			341.1			756.4			756.4			756.4			756.4
Preferred shares		50.0			50.0			—			—			541.8			541.8			541.8			541.8


(1)		Other than what is presented in the United States GAAP reconciliation, there is no other difference between the Canadian GAAP and the United States GAAP Statement of Cash Flow Data.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with Telesat Holdings’ and Loral Skynet’s consolidated financial statements beginning at Page F-1 of this prospectus. As used in this management’s discussion and analysis of financial condition and results of operations (“MD&A”), unless the context states or requires otherwise, references to “Telesat”, “we”, “our” and “us” refer to Telesat Holdings Inc. and its subsidiaries. Unless the context states or requires otherwise, reference herein to “the consolidated financial statements” or “the financial statements” or similar terms refer to the consolidated financial statements of Telesat Holdings Inc. included herein.

Except for the historical information contained in the following MD&A, the matters discussed below are not historical facts, but are “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. In addition we or our representatives have made and may continue to make forward-looking statements, orally or in writing, in other contexts. These forward-looking statements can be identified by the use of words such as “believes”, “expects”, “plans”, “may”, “will”, “would”, “could”, “should”, “anticipates”, “estimates”, “project”, “intend”, or “outlook” or other variations of these words. These statements, including, without limitation, those relating to Telesat, Telesat Canada and Loral Skynet, are not guarantees of future performance and involve risks and uncertainties that are difficult to predict or quantify. Actual events or results may differ materially as a result of a wide variety of factors and conditions, many of which are beyond our control. For a detailed discussion of these and other factors and conditions, please refer to “Risk Factors” and to note 22 to our audited consolidated financial statements. We operate in an industry sector in which the value of securities may be volatile and may be influenced by economic and other factors beyond our control. We undertake no obligation to update any forward-looking statements.

We are the world’s fourth largest provider of FSS and one of only three FSS providers operating on a global basis. Headquartered in Ottawa, Canada, with offices and facilities around the world, we provide voice, data, video and internet connectivity services using a global fleet of eleven owned and operated satellites and one satellite of which we lease all but one transponder, with one additional satellite under construction.

On October 31, 2007, PSP and Loral, through a newly formed entity called Telesat Holdings Inc., completed the acquisition of Telesat Canada from BCE. PSP holds through a subsidiary a 36% economic interest in Telesat, a 662/3% voting interest on all matters except for the election of directors, and a 30% voting interest for the election of directors. Loral holds through a subsidiary a 64% economic interest in Telesat and a 331/3% voting interest on all matters. As part of the same Telesat Canada transaction, substantially all of the assets of a Loral subsidiary, Loral Skynet, were transferred to Telesat Canada, along with the shares of all of the legacy Loral Skynet subsidiaries. Loral Skynet is a satellite communications company with substantial activities in satellite based communication services.

The consolidated financial statements of Telesat Canada presented for the year ended December 31, 2006 and the period January 1, 2007 to October 30, 2007 represent the “Predecessor” entity. The consolidated financial statements of Telesat for the two months ended December 31, 2007 and the year ended December 31, 2008 represent the “Successor” entity. As a result of the application of purchase accounting, the financial statements of the Predecessor are not comparable with the financial statements of the Successor, because they are, in effect, those of a new entity. Please refer to note 3 to our audited consolidated financial statements for an explanation of the Telesat Canada acquisition.

The financial information presented herein has been prepared on the basis of Canadian GAAP, which differs in certain respects from United States GAAP. Please refer to note 25 to our audited consolidated financial statements for a summary of differences between Canadian and United States GAAP.

All amounts in this MD&A are in Canadian dollars unless otherwise specified.

Overview

We are the leading satellite service provider in Canada, with a significant presence throughout the world. We provide our satellite and communication services from a fleet of satellites that occupy Canadian and other

orbital locations to which we have been granted access. We are organized into one operating segment, the satellite services business, however we provide our services through three business categories: Broadcast, Enterprise and Consulting & Other.

The satellite services business is capital intensive and the build-out of a satellite fleet requires substantial time and investment. Once these investments are made, however, the costs to maintain and operate the fleet are relatively low with the exception of in-orbit insurance. Returns on initial investments are earned through the leasing of transponders to customers over the life of the satellite. After nearly forty years of operation, Telesat Canada has established collaborative relationships with its customers so annual receipts from the satellite services business are fairly predictable with long term contracts and high contract renewal rates.

Competition in the satellite services market has been intense in recent years due to a number of factors, including transponder over-capacity in certain geographic regions and increased competition from terrestrial-based communication networks. This competition puts pressure on prices, depending on market conditions in various geographic regions and frequency bands.

At March 31, 2009, we had thirteen in-orbit satellites. Our fleet of eleven owned in-orbit satellites had, as of March 31, 2009, an average of approximately 57.9% service life remaining, with an average service life remaining of approximately 8.3 years. We calculate these figures using, for each satellite, the lesser of its manufactures’ design service life or its expected end-of-service life. Nimiq 3, a leased satellite, was removed from commercial service on June 1, 2009. We have one additional satellite, Nimiq 5, under construction. The construction contract is for delivery by the manufacturer on the ground in late 2009. We have contracted for the sale of all of the capacity on this satellite to Bell TV for 15 years or such later date as the customer may request. Bell TV has signed an agreement to provide service to EchoStar on 16 of the BSS transponders for 15 years or such later date as EchoStar may request.

On June 1, 2009, we entered into an agreement to terminate our leasehold interest in Telstar 10 and to transfer certain related customer contracts in exchange for a payment from APT to us of approximately US$69.5 million, subject to adjustment. The transaction is expected to be completed in July 2009.

Telesat Canada is regulated as a telecommunications common carrier by the CRTC as well as being licensed by Industry Canada for access and use of Canadian orbital locations and associated spectrum resources. The use of our orbital locations, as well as our other operations, is subject to a variety of other Canadian and international regulations.

Reorganization and Sale of Telesat Canada

BCE owned 100% of Telesat Canada and on December 18, 2006 announced the sale of Telesat Canada to a new company formed by PSP and Loral.

On January 1, 2007, Telesat Canada, its parent Alouette Telecommunications Inc. (“Alouette”), a wholly owned subsidiary of BCE, and Telesat Canada’s subsidiary 4387678 Canada Inc. (4387678) were amalgamated. The name of the newly amalgamated entity was Telesat Canada. See note 1 to our consolidated financial statements.

On October 31, 2007, PSP and Loral completed the acquisition of 100% of the common shares of Telesat Canada from BCE. As part of this acquisition, substantially all of the assets of Loral Skynet were transferred to Telesat Canada, along with the shares of all of the legacy Loral Skynet subsidiaries. See note 3 to our consolidated financial statements.

Revenue Sources and Recognition

We earn the majority of our revenues by providing video and data services using satellite transponder capacity. We also earn revenues by providing ground-based transmit and receive services, selling equipment, managing satellite networks, and providing consulting services in the field of satellite communications. Our broadcast and enterprise categories each generate revenues from both satellite (or space) services and ground (or earth) services.

We recognize revenues when earned, as services are rendered or as products are delivered to customers. For us to recognize revenues there must be clear proof that an arrangement exists, the amount of revenues must be fixed or determinable and our ability to collect must be reasonably assured. In particular, broadcast and some enterprise revenues are generally pre-billed to the customers and recognized in the month for which the service is rendered. Equipment sales revenues are recognized when the equipment is delivered to the customer and accepted. Consulting revenues for cost plus contracts are recognized after the work has been completed and accepted by the customer. The percentage of completion method is used for fixed price contracts.

Expenses

A significant expense is the straight-line amortization of the cost of each of our satellites over its useful life.

Our operations and administration expense consists mainly of labour, the cost of which is relatively stable. As we take advantage of growth opportunities through the addition of satellites to our fleet, we believe we can increase revenues with relatively smaller increases in expenses from operations and administration. Our most significant variable expenses are in-orbit insurance and direct-billed expenses, such as third-party contractor services.

Cost of equipment sales has historically been significant because of our role in setting up comprehensive communication networks for our large corporate customers. We generally do not bear inventory risk but rather purchase equipment as part of an overall service to the customer.

Interest expense has increased in 2008 and will continue to be a significant expense for the foreseeable future as a result of the new debt facilities entered into on October 31, 2007 in order to finance the Telesat Canada transaction. The most important components of other expense are the foreign exchange gains (losses) incurred on the translation of the U.S. dollar denominated debt, and the gains (losses) on financial instruments resulting from variations in the exchange rate and interest rates on the market value of the cross-currency basis swap and interest rate swaps for the debt.

Future Outlook

We are committed to continuing to provide the strong customer service and focus on innovation and technical expertise that has allowed us to successfully build our business to date. Building on our backlog and significant contracted growth, our focus is on taking disciplined steps to grow the core business and sell newly launched and existing in-orbit satellite capacity; and, in a disciplined manner, use the cash flow generated by existing business, contracted expansion satellites and cost savings to strengthen the business.

We believe our satellite fleet offers a strong combination of existing backlog, contracted revenue growth on our Nimiq 4 satellite (which entered commercial service in October 2008) and on our expansion satellite Nimiq 5, and additional capacity on our existing satellites. This satellite fleet provides a solid foundation upon which we will seek to grow our revenues and cash flows.

We believe we are well-positioned to serve our customers and the markets in which we participate. We actively pursue opportunities to develop new satellites, particularly in conjunction with current or prospective customers, who will commit to a substantial amount of capacity at the time the satellite construction contract is signed. Although we regularly pursue opportunities to develop new satellites, we do not procure additional or replacement satellites until we believe there is a demonstrated need and a sound business plan for such capacity.

The satellite industry is characterized by a relatively fixed cost base that allows significant revenue growth with relatively minimal increases in operating costs, particularly for sales of satellite capacity. Thus, we anticipate that we can increase revenues without proportional increases in operating expenses, allowing for margin expansion. The fixed cost nature of the business, combined with contracted revenue growth and other growth opportunities, is expected to produce growth in operating income and cash flow.

For 2009, we are focused on the execution of our business plan to serve our customers and the markets in which we participate, the sale of capacity on our existing satellites, the continuing efforts to achieve operating efficiencies, and on the completion and launch of our in-construction satellite, Nimiq 5.

We regularly explore and evaluate possible strategic transactions.

Critical Accounting Matters

The preparation of financial statements in conformity with Canadian GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses reported for the period. Actual results could differ from estimates.

Purchase Price Accounting

In connection with the Telesat Canada transaction, we recorded the estimated fair value of the assets acquired and the liabilities assumed at the date of the acquisition. Significant judgment was exercised by management in estimating the fair values.

Revenue Recognition

Our consulting contracts are split between fixed-price and cost-plus contracts. Under our firm fixed-price consulting contracts, work performed is paid for at a fixed price without adjustment for actual costs incurred in connection with the contract; accordingly, favourable changes in estimates in a period will result in additional revenues and profit, and unfavourable changes in estimates will result in a reduction of revenues and profit or the recording of a loss that will be borne solely by us. When it is questionable whether or not we are the principal in a transaction, the transaction is evaluated to determine whether it should be recorded on a gross or net basis.

Only equipment sales are subject to warranty or return. Historically, we have not incurred significant expense for warranties and consequently no provision for warranty is recorded. When a transaction involves more than one product or service, revenues are allocated to each deliverable based on its relative fair value; otherwise, revenues are recognized as services are provided over the term of the contract.

Lease contracts that qualify for capital lease treatment are accounted for as sales-type leases where substantially all of the benefits and risks of ownership are transferred to the customer.

Satellites, Property and Other Equipment and Finite Life Intangible Assets

We assess any potential impairment loss relating to long-lived assets, including finite life intangible assets and satellites, property and other equipment, when events or changes in circumstances occur, by verifying whether the carrying amount of these assets can be recovered over their remaining lives through undiscounted future expected cash flows generated by those assets. If the expected undiscounted future cash flows are determined to be less than the carrying value of the long-lived asset, an impairment charge would be calculated and recorded. Changes in estimates of future cash flows could result in a write-down of the asset in a future period. Estimated future cash flows could be impacted by, among other things:


	•	changes in estimates of the useful life of the satellite;

	•	changes in estimates of our ability to operate the satellite at expected levels;

	•	changes in the manner in which the satellite is to be used; and

	•	the loss of one or several significant customer contracts on the satellite.

If an impairment loss was indicated, such amount would be recognized in the period of the occurrence, net of any insurance proceeds (if any) to be received so long as such amounts are determinable and receipt is probable. If no impairment loss was indicated and insurance proceeds were received, the proceeds would offset the carrying value of the satellite. In the event that the insurance proceeds received exceeded the carrying value of the satellite, the excess of the proceeds over the carrying value of the satellite would be recognized in the statement of earnings.

Management makes assumptions of the estimated useful lives of assets which it believes are reasonable. The recoverability of tangible assets is significantly impacted by the estimated useful lives of assets. A $2 million impairment loss was recorded in 2008 on the Nimiq 3 satellite, and a $2 million impairment loss related to the capital assets of Telesat Serviços de Telecomunicação Ltda. (“TSL”) was booked in the ten months ended October 30, 2007 (see note 11 to our consolidated financial statements).

The estimated useful lives of the satellites are based upon the lesser of the satellite’s design life or the estimated life of the satellite as determined by an engineering analysis performed during initial in-orbit testing. As the telecommunications industry is subject to rapid technological change and the satellites can be subject to certain anomalies, the estimated useful lives of satellites and communications equipment may have to be revised and the carrying value adjusted. Accordingly, the estimated useful lives of the satellites are periodically reviewed using current engineering data. If a significant change in the estimated useful lives of the satellites is identified, the effect of such changes on amortization expense would be accounted for on a prospective basis. Reductions in the estimated useful lives of the satellites would result in additional amortization expense in future periods and may necessitate acceleration of planned capital expenditures in order to replace or supplement the satellite earlier than planned. If the reduction in the estimated useful life of a satellite results in undiscounted future cash flows for the satellite to be less than the carrying value of the satellite, an impairment charge would be calculated and recorded.

Goodwill and Other Intangible Assets with Indefinite Useful Lives

Goodwill and other intangible assets with indefinite useful lives were recorded as a result of the Telesat Canada transaction and their valuation is undertaken on an annual basis, or whenever events or changes in circumstances indicate that the carrying amount is likely to exceed their fair value. We generally measure for impairment using a projected discounted cash flow method and confirm the assessment using other valuation methods. If the asset’s carrying value is more than its fair value, the difference is recorded as a reduction in the amount of the asset on the balance sheet and an impairment charge in the statement of earnings. Testing for impairment requires significant subjective judgments by management. A $483 million impairment loss was recorded in 2008 on the orbital slots (see note 12 to our consolidated financial statements).

Any changes in each of the estimates used could have a material impact on the calculation of the fair value and resulting impairment charge. As a result, we are not able to reasonably quantify the changes in the overall financial performance had different assumptions been used. We cannot predict whether an event that triggers impairment will occur, when it will occur or how it will affect the reported asset values.

Contingencies

We accrue a potential loss where management believes the loss is probable and it can be reasonably estimated. The decision is based on information that is available at the time. The amount of the loss is estimated by consulting with outside counsel, when applicable, and can involve analyzing potential outcomes and assuming various litigation and settlement strategies.

If the final resolution of a legal or regulatory matter results in a judgment against us or requires the payment of a large settlement, it could have a material and negative effect on the results of operations, cash flows and financial position in the period that the judgment or settlement occurs. Any accrual would be charged to operating income and included in other current or long-term liabilities. Any cash settlement would be included in cash from operating activities.

We do not have any significant provisions relating to pending litigation, regulatory initiatives or regulatory proceedings at December 31, 2008. There have not been any significant changes to the Company’s estimates in the past two years.

Income Taxes

The calculation of income taxes in many cases requires significant judgment in interpreting tax rules and regulations, which are constantly changing.

Tax filings are also subject to audits, which could materially change the amount of current and future income tax assets and liabilities. Any change would be recorded as a charge or a credit to income tax expense. Any cash payment or receipt would be included in cash from operating activities. There were no significant changes to the estimates made in the past three years.

Results of Operations — Three Months Ended March 31, 2009 Compared with Three Months Ended March 31, 2008

Revenues


	Three Months
	Ended				% Increase
	March 31,				(Decrease)
	2009		2008		2009 vs. 2008
	(In CAD$ millions except percentages)

Broadcast		106		79		34	%
Enterprise		90		79		15	%
Consulting and Other		8		5		49	%

Total revenues		204		163		25	%

Total revenues for the three months ended March 31, 2009 increased by $41 million to $204 million compared to the three months ended March 31, 2008. Service revenues increased by $44 million to $199 million in 2009, or a 28% increase over the corresponding period in 2008. The increase can be mainly attributed to a full quarter of revenues on Nimiq 4 with no corresponding revenues in 2008 (the satellite was only launched in September 2008), to the impact of the stronger U.S. dollar on the U.S. dollar denominated revenue and to new fixed satellite service customers. The average exchange rate to convert U.S. dollars into Canadian dollars during the first quarter of 2008 was approximately 0.99, whereas the average exchange rate for the equivalent period in 2009 was 1.24. Equipment sale revenues decreased by $2 million for the three months ended March 31, 2009 compared to the same period in 2008, with the decrease mainly due to lower equipment sales as a result of the slow down in the oil and gas industry occurring in 2009.

Broadcast revenues in 2009 represent 52% of total revenues compared to 49% for the same period in 2008, in part due to Nimiq 4 and to the U.S. dollar denominated revenues. Enterprise revenues in 2009 were 44% of total revenues compared to 48% for the quarter ended March 31, 2008. Consulting and other revenues were 4% in 2009 compared to 3% for the quarter ended March 31, 2008.

Operating Expenses


	Three Months
	Ended				% Increase
	March 31,				(Decrease)
	2009		2008		2009 vs. 2008
	(In CAD$ millions except percentages)

Amortization		61		59		4	%
Operations and administration		58		59		(2	)%
Cost of equipment sales		5		6		(27	)%

Total operating expenses		124		124

Amortization

Amortization expense for the three months ended March 31, 2009 increased by $2 million compared to the same period in 2008, mainly due to the amortization on Nimiq 4 with no comparative amount in 2008, partially offset by lower amortization on the backlog intangible asset. Telstar 11N was moved out of construction in progress to satellites at the end of the first quarter of 2009, however amortization will only

begin in April 2009. Amortization expense for the three months ended March 31, 2009 was 49% of total operating expenses compared to 47% for the same period in 2008.

Operations and Administration

Operations and administration expense for the three months ended March 31, 2009 decreased by $1 million to $58 million compared to the same period in 2008. This decrease was mainly due to lower compensation costs of $5 million partially offset by a stock option expense of $2 million, and to higher capacity costs. As the initial stock option grant under the new Telesat Holdings stock incentive plan was in September 2008, there was no comparative expense in the first quarter of 2008. Additional stock options were granted in the first quarter of 2009. In April 2008, the terms of two capital leases were renegotiated, reducing the cost of transponders under capital lease and capital lease liabilities, however the capacity is still being used and has been booked since April 2008 as an operating lease expense. Operations and administration expense was 47% of total operating expenses for the first quarter of 2009 compared to 48% for the same quarter in 2008.

Cost of Equipment Sales

Cost of equipment sales decreased $2 million in 2009 compared to the three months ended March 31, 2008 as a result of the equipment sales decrease due to the slow down in the oil and gas industry. Cost of equipment sales was 4% of total operating expenses for 2009 compared to 5% for the three months ended March 31, 2008.

Interest Expense


	Three Months Ended March 31,
	2009			2008
	(In CAD$ millions)

Debt service costs		77			72
Dividends on senior preferred shares		3			2
Capitalized interest		(9	)		(9	)

Interest expense		71			65

Interest expense for the three months ended March 31, 2009 increased by $6 million compared to the same period in 2008. Debt service costs increased $5 million in the first quarter of 2009 compared to the same period in 2008 due to higher debt levels and to the foreign exchange impact of the stronger U.S. dollar on the U.S. dollar denominated component of debt. Dividends on senior preferred shares are included in interest expense as a result of the shares being classified as a liability on the balance sheet. The dividend expense increased by $1 million for the three months ended March 31, 2009. Capitalized interest remained constant at $9 million in both periods, and was charged to the Nimiq 5 and Telstar 11N construction programs in 2009, and to the Nimiq 4, Nimiq 5 and Telstar 11N construction programs in 2008.

Other Expense


	Three Months Ended March 31,
	2009			2008
	(In CAD$ millions)

Foreign exchange loss		(101	)		(123	)
Gain on financial instruments		58			32
Performance incentive payments and milestone interest expense		(1	)		(1	)
Other		—			1

Other expense		(44	)		(91	)

The foreign exchange loss for the three months ended March 31, 2009 decreased by $22 million to $101 million from the same period in 2008. The decrease is due to the higher volatility in the exchange rates in early 2008 as the portion of loss attributable to the conversion of the U.S. dollar denominated debt was $107 million at March 31, 2008 compared to $99 million at March 31, 2009, despite a higher debt balance in 2009. The conversion of the financial instrument liability generated a $9 million loss at March 31, 2008 compared to basically a nil amount at March 31, 2009, as the fair value liability balance was $265 million at March 31, 2008 compared to $75 million at March 31, 2009.

The gain on financial instruments for the three months ended March 31, 2009 increased by $26 million to $58 million when compared to the same period in 2008. The increase is due to changes in the fair values associated with the cross-currency basis swap and interest rate swaps. The fair value calculations are a function of changes in foreign exchange rates, in interest rates, in interest rate spreads and in credit risk spreads for both Telesat and the counterparties.

Income Taxes

Income tax expense for the three months ended March 31, 2009 was $4 million compared to an income tax recovery of $16 million for the same period in 2008. The increase in the expense of $20 million is mainly attributable to the lower loss before income taxes balance in 2009, which was $35 million compared to $118 million at March 31, 2008.

Backlog

Our backlog, which is our expected actual future revenues under our customer contracts, was approximately $5.3 billion as of March 31, 2009, approximately 1% of which related to Telstar 10. Approximately 9.3% of our backlog will be recognized as revenues during the remaining nine months of 2009. Included in the backlog as of March 31, 2009 is a contract covering the entire capacity of the Nimiq 5 satellite, which has been leased for the life of the satellite. This contract contains provisions, such that the customer, assuming the satellite is successfully and timely launched and is operating nominally, may only terminate its contract by paying Telesat Canada the present value of the entire contracted amounts that would have been due for the remaining life of the satellite.

As of March 31, 2009, Telesat Canada had received approximately $371 million of customer prepayments. If the launch of Nimiq 5 was to fail or a customer were to terminate its contract with Telesat Canada as a result of a substantial delay in the launch of the satellite, Telesat Canada would be obligated to return the customer prepayments applicable to Nimiq 5. Such repayment obligations would be funded by insurance proceeds (if any), cash on hand and/or borrowing availability under the revolving credit facility.

Results of Operations — 2008 Compared with Two Months 2007, Two Months 2007 Compared with Ten Months 2007, Ten Months 2007 Compared with 2006

As a result of the October 31, 2007 acquisition of Telesat Canada and substantially all of the net assets of Loral Skynet, purchase price accounting adjustments were applied in accordance with Canadian GAAP in order to reflect the fair value of the net assets of both companies. This resulted in finite and indefinite life intangible assets being recorded as well as the value of certain other assets and liabilities being increased or decreased to reflect fair value. The on-going impact on the statement of earnings from these fair value adjustments will be to decrease revenues for a decrease in the value of deferred revenues, decrease cost of equipment sales for a decrease in the value of deferred charges associated with the deferred revenues, partially offset by an increase in the value of inventory, an increase in operations and administrative expenses for the recording of the fair value of operating lease commitments, and an increase in amortization expense for the recording of finite life intangible assets partially offset by a decrease in the value of satellites, property and other equipment.

The following compares our consolidated results for 2008, 2007 and 2006 as presented in our financial statements:

Revenues


	Successor Entity				Predecessor Entity				% Increase (Decrease)
												Two
												Months
			For the Period		For the Period				2008 vs.			2007 vs.			Ten
	Year Ended		October 31 to		January 1 to		Year Ended		Two			Ten			Months
	December 31,		December 31,		October 30,		December 31,		Months			Months			2007 vs.
	2008		2007		2007		2006		2007			2007			2006
	(In CAD$ millions except percentages)
Broadcast		345		53		254		250		551	%		(79	)%		2	%
Enterprise		334		53		179		199		531	%		(70	)%		(10	)%
Consulting and other		32		5		25		30		540	%		(80	)%		(17	)%

Total revenues		711		111		458		479		540	%		(76	)%		(4	)%

Total revenues for the twelve months ended December 31, 2008 increased by $600 million to $711 million compared to the two months ended December 31, 2007, as a result of the shorter period in 2007. Both periods include the Loral Skynet contribution and revenues from Anik F3, which was launched in April 2007, but only 2008 reflects the impact of Nimiq 4, which went into service in October 2008. Broadcast revenues in 2008 represent 49% of total revenues and are comparable to 48% for the two months ended December 31, 2007. Enterprise revenues in 2008 were 47% of total revenues compared to 48% for the two months ended December 31, 2007. Consulting and other revenues were 4% of total revenues in both periods.

Total revenues for the two months ended December 31, 2007 decreased by $347 million to $111 million compared to the ten months ended October 30, 2007, as a result of the shorter period in 2007. Loral Skynet revenues were included in the two months ended December 31, 2007 but were not included in the ten months ended October 31, 2007. There were one-time revenues from a sales-type lease of Nimiq 4iR to Bell ExpressVu of $33 million in the ten months ended October 30, 2007, and in the two months ended December 31, 2007 revenues decreased by $2 million due to the amortization of fair value adjustments resulting from the fair value adjustments to deferred revenues. Broadcast revenues for the two months ended December 31, 2007 were 48% of total revenues compared to 55% for the ten months ended October 30, 2007, or 52% for the ten months if the impact of the one-time revenues for the sales-type lease is eliminated from the ten months ended October 30, 2007. Enterprise revenues for the two months ended December 31, 2007 were 48% compared to 39% for the ten months ended October 30, 2007, or 42% for the ten months if the impact of the one-time sales-type lease revenues is eliminated from the ten months ended October 30, 2007. The increase in the two months ended December 31, 2007 is due to the higher level of enterprise revenues in the Loral Skynet business which was only picked up subsequent to the Telesat Canada transaction date. Consulting and other revenues for the two months ended December 31, 2007 were 4% of total revenues compared to 6% for the ten months ended October 30, 2007.

Total revenues for the ten months ended October 30, 2007 decreased by $21 million to $458 million compared to the twelve months ended December 31, 2006. Specific items contributing to the decrease in 2007 were lower Enterprise revenues relating to non-recurring revenues for the installation of an interactive distance learning network for a large North American business in 2006, the completion of a contract in 2006 in Brazil, and lower Consulting and other as a significant portion of consulting revenues are one-time contracts in specific periods and do not normally recur year-over-year; however, the decrease is mainly attributable to the shorter reporting period in 2007. These decreases were partially offset by higher Broadcast revenues in 2007 from the sales-type lease of Nimiq 4iR and services provided to EchoStar on Anik F3. Broadcast revenues for the ten months ended October 30, 2007 were 55% of total revenues, or 52% after eliminating the one-time sales-type lease sale, which is comparable to 52% for 2006. Enterprise revenues for the ten months ended October 30, 2007 were 39% of total revenues, or 42% after eliminating the one-time sales-type lease revenues and compared to 42% for 2006. Consulting and other revenues were 6% of total revenues in both periods.

Operating Expenses


	Successor Entity				Predecessor Entity				% Increase (Decrease)
												Two
												Months
			For the Period		For the Period				2008 vs.			2007 vs.			Ten
	Year Ended		October 31 to		January 1 to		Year Ended		Two			Ten			Months
	December 31,		December 31,		October 30,		December 31,		Months			Months			2007 vs.
	2008		2007		2007		2006		2007			2007			2006
	(In CAD$ millions except percentages)
Amortization		236		40		106		121		490	%		(62	)%		(12	)%
Operations and administration		248		43		144		183		477	%		(70	)%		(21	)%
Cost of equipment sales		24		7		35		34		243	%		(80	)%		3	%
Cost of sales-type lease		—		—		15		1					(100	)%		1400	%
Impairment loss on long-lived assets		2		—		2		—					(100	)%
Impairment loss on intangible assets		483		—		—		—

Total operating expenses		993		90		302		339		1003	%		(70	)%		(11	)%

Amortization

The $196 million increase in amortization expense for 2008 from the two months ended December 31, 2007 resulted from the shorter reporting period in 2007. Amortization on the finite life intangible assets for the twelve months ended December 31, 2008 was $55 million compared to $8 million for the two months ended December 31, 2007. Amortization on satellites, property and other equipment for the twelve months ended December 31, 2008 was $181 million compared to $32 million for the two months ended December 31, 2007. The 2008 expense included approximately three months of amortization on Nimiq 4, which was launched in September 2008. Amortization expense for 2008 was 24% of total operating expenses, but was 46% with the exclusion of the one-time impairment losses from the total operating expenses, and compared to 44% for the two months ended December 31, 2007.

Amortization expense for the two months ended December 31, 2007 decreased by $66 million compared to the ten months ended October 30, 2007, with the decrease due to the shorter period at December 31, 2007. This shorter period includes the amortization expense for the Loral Skynet assets and for the finite life intangible assets set up on the acquisition of Telesat Canada and of Loral Skynet, which are not part of the expense for the ten months ended October 30, 2007. Amortization expense for the two months ended December 31, 2007 was 44% of total operating expenses compared to 35% for the ten months ended October 30, 2007. This is mainly due to the additional amortization of finite life intangible assets set up with the Telesat Canada transaction.

Amortization expense for the ten months ended October 30, 2007 decreased by $15 million compared to the twelve months ended December 31, 2006. The decrease is due to the shorter reporting period in 2007 and is partially offset by higher amortization on Anik F3 which went into service in May 2007. Amortization expense for the ten months ended October 30, 2007 was 35% of total operating expenses compared to 36% for 2006.

Operations and Administration

The $205 million increase in operations and administration for 2008 from the two months ended December 31, 2007 is due to the shorter reporting period in 2007. The 2008 expense of $248 million included a stock option charge of $5 million representing 14 months of expense booked in the last quarter of 2008, a full year of expenses associated with the Loral Skynet operations compared to only two months for 2007, and higher in-orbit insurance for Anik F3. Operations and administration expense for 2008 was 25% of total operating expenses, or 49% after eliminating the one-time impairment losses, and compared to 48% for the two months ended December 31, 2007.

Operations and administration expense for the two months ended December 31, 2007 decreased by $101 million to $43 million from the ten months ended October 30, 2007, due to the shorter reporting period. This decrease was partially offset by one-time compensation expenses of $2 million in the two months ended December 31, 2007 and by the Loral Skynet expenses, which are not included in the expenses for the ten months ended October 30, 2007. Operations and administration expense was 48% of total operating expenses for both the two months ended December 31, 2007 and the ten months ended October 30, 2007.

Operations and administration expense for the ten months ended October 30, 2007 decreased by $39 million to $144 million compared to the twelve months ended December 31, 2006. The decrease is due to the shorter reporting period in 2007 and to non-recurring special compensation costs for executive changes at Telesat Canada with the appointment of a new President in September 2006. The decrease was partially offset by higher in-orbit insurance and license fees in 2007. Operations and administration expense was 48% of total operating expenses for the ten months ended October 30, 2007 and 54% for 2006 as a result of the additional expenses in 2006.

Cost of Equipment Sales

Cost of equipment sales increased $17 million in 2008 compared to the two months ended December 31, 2007 due to the shorter reporting period at December 31, 2007. Cost of equipment sales was 2% of total operating expenses for 2008, or 5% after eliminating the one-time impairment losses, and compared to 8% for the two months ended December 31, 2007.

Cost of equipment sales for the two months ended December 31, 2007 decreased by $28 million compared to the ten months ended October 30, 2007. The decrease is associated with the shorter reporting period at December 31, 2007 and to the fair value impact of the purchase price adjustments to deferred revenues and the associated deferred charges, which are expensed in cost of equipment sales in the ten months ended October 30, 2007 results. Cost of equipment sales was 8% of total operating expenses for the two months ended December 31, 2007 and 12% for the ten months ended October 30, 2007.

Cost of equipment sales for the ten months ended October 30, 2007 increased $1 million from the twelve months ended December 31, 2006. Ka-band and Telipro service equipment sales in 2007 made up the shortfall resulting from the shorter reporting 2007. Cost of equipment sales was 12% of total operating expenses for the ten months ended October 30, 2007 and 10% for 2006.

Cost of Sales-Type Lease

During the ten months ended October 30, 2007, Telesat Canada entered into a sales-type lease agreement for the Nimiq 4iR satellite. This compares to the expense of $1 million in 2006 for the sale of telecommunications equipment by TSL.

Impairment Loss on Long-Lived Assets

During the fourth quarter of 2008, we determined that as a result of certain satellite fuel studies, the life span of the Nimiq 3 satellite was shorter than previously expected and this resulted in an impairment loss of $2 million. The loss was measured as the excess of the net carrying amount of the satellite over its fair value. Nimiq 3 will continue to be amortized until the end of its revised estimated service life. Nimiq 3 was removed from commercial service on June 1, 2009. This compares to an asset impairment loss of $2 million in the ten months ended October 30, 2007 recognized on certain capital assets of TSL as a result of the decision to lease TSL’s Belo Teleport, equipment and hub and discontinue the provision of earth segment services in Brazil.

Impairment Loss on Intangible Assets

During 2008, we determined that the implied fair value of our orbital slots, which had been established in 2007 with the purchase price accounting treatment for the Telesat Canada transaction, had decreased below their carrying value. Several factors influenced the valuation of the orbital slots, including the current challenging macro environment, the stronger U.S. dollar as well as increases at the time of the valuation to

satellite insurance and launch service costs. We recorded a charge to expense in the fourth quarter of 2008 of $483 million to reflect this impairment.

Interest Expense


	Successor Entity						Predecessor Entity
				For the Period			For the Period
	Year Ended			October 31 to			January 1 to			Year Ended
	December 31,			December 31,			October 30,			December 31,
	2008			2007			2007			2006
	(In CAD$ millions)
Debt service costs		287			47			18			25
Dividends on senior preferred shares		10			2			—			—
Capitalized interest		(39	)		(5	)		(9	)		(12	)

Interest expense		258			44			9			12

Debt service costs increased by $240 million for 2008 compared to the two months ended December 31, 2007 as a result of the shorter period in 2007. Dividends on senior preferred shares are attributable to the senior preferred shares issued in exchange for cash on October 31, 2007 as part of the Telesat Canada transaction. These shares have been classified as a liability on the balance sheet and therefore the accrued dividends are included as interest expense. The increase of $8 million for 2008 compared to the two months ended December 31, 2007 was a result of the shorter period in 2007. Capitalized interest increased by $34 million for 2008 compared to the two months ended December 31, 2007 as a result of the shorter period in 2007, and was charged to the Nimiq 4, Nimiq 5 and Telstar 11N construction programs.

Debt service costs increased by $29 million for the two months ended December 31, 2007 compared to the ten months ended October 30, 2007 due to the new debt facilities entered into by Telesat Canada on October 31, 2007. Dividends on senior preferred shares were $2 million for the two months ended December 31, 2007 with no equivalent charge for the ten months ended October 30, 2007. Capitalized interest decreased by $4 million for the two months ended December 31, 2007 compared to the ten months ended October 30, 2007 as a result of the shorter period in 2007, partially offset by the addition of capitalized interest on Telstar 11N in the two-month period as a result of the contribution of the Loral Skynet assets as part of the Telesat Canada transaction.

Debt service costs decreased by $7 million for the ten months ended October 30, 2007 compared to the twelve months ended December 31, 2006, resulting from lower debt levels for Telesat Canada due to the repayment of $150 million notes in June 2006 and to the shorter reporting period in 2007. Capitalized interest decreased $3 million for the ten months ended October 30, 2007 compared to the twelve months ended December 31, 2006 due to the shorter reporting period and the status of the various satellite construction programs: Nimiq 4 and Anik F3 were under construction in 2006 compared to Nimiq 4 and Nimiq 5 in 2007.

Other Expense


	Successor Entity						Predecessor Entity
				For the Period			For the Period
	Year Ended			October 31 to			January 1 to			Year Ended
	December 31,			December 31,			October 30,			December 31,
	2008			2007			2007			2006
	(In CAD$ millions)
Foreign exchange loss		(698	)		(118	)		(1	)		(1	)
Gain (loss) on financial instruments		252			76			(7	)		—
Interest income		2			—			3			5
Performance incentive payments & milestone interest expense		(4	)		(1	)		(4	)		(6	)
Other		—			(1	)		1			—

Other expense		(448	)		(44	)		(8	)		(2	)

The foreign exchange loss for the year ended December 31, 2008 increased by $580 million compared to the two-month period ended December 31, 2007 and is largely due to the weakening Canadian dollar and the resulting impact on our U.S. dollar denominated debt. The increase of the loss was partially offset by the increase of $176 million in the gain on financial instruments, which was caused by variations in the exchange rate and interest rates on the market value of our cross-currency basis swap and interest rate swaps. The U.S. dollar denominated debt, the cross-currency basis swap and the interest rate swaps were issued subsequent to the ten months ended October 30, 2007. The loss on financial instruments for the ten months ended October 30, 2007 was attributable to forward exchange contracts not designated for hedging covering construction milestones for the Nimiq 4 satellite.

Income Taxes

The income tax recovery for the year ended December 31, 2008 was $165 million and was an increase of $103 million compared to the recovery for the ten months ended October 31, 2007. The increase is mainly attributable to the impact of the orbital slot impairment on our future tax liability.

The income tax recovery for the two months ended December 31, 2007 was $62 million compared to an income tax expense of $57 million for the ten months ended October 30, 2007 mainly due to a reduction in future income tax rates in the fourth quarter of 2007 combined with the increase in value of the net assets from the Telesat Canada transaction as a result of the application of purchase price accounting on October 31, 2007.

Income taxes for the ten months ended October 30, 2007 were $35 million higher than the $22 million of expense for the year ended December 31, 2006. The increase can be attributed to higher earnings before income taxes in 2007, the write down of historical investments for tax purposes as a result of the Telesat Canada transaction and to the 2006 impact of the Canadian federal budget proposals in the second quarter of 2006 which lowered future tax rates and eliminated the large corporation tax, thereby significantly reducing taxes.

Backlog

Our backlog, which is our expected actual future revenues under our customer contracts, was approximately $5.2 billion as of December 31, 2008. Approximately 12% of our backlog will be recognized as revenues during 2009. Included in the backlog as of December 31, 2008 is a contract covering the entire capacity of the Nimiq 5 satellite, which has been leased for the life of the satellite. This contract contains provisions, such that the customer, assuming the satellite is successfully and timely launched and is operating nominally, may only terminate its contract by paying Telesat Canada the present value of the entire contracted amounts that would have been due for the remaining life of the satellite.

As of December 31, 2008, Telesat Canada had received approximately $379 million of customer prepayments. If the launch of Nimiq 5 was to fail or a customer were to terminate its contract with Telesat Canada as a result of a substantial delay in the launch of the satellite, Telesat Canada would be obligated to return the customer prepayments applicable to Nimiq 5. Such repayment obligations would be funded by insurance proceeds (if any), cash on hand and/or borrowing availability under the revolving credit facility.

Liquidity and Capital Resources

Cash and Available Credit

As of March 31, 2009, we had $96 million of cash and short-term investments as well as approximately $153 million of borrowing availability under our Revolving Facility. We believe that cash and short-term investments as of March 31, 2009, net cash provided by operating activities, cash flow from customer prepayments, and drawings on the available lines of credit under the Credit Facility (as defined below) will be adequate to meet our expected cash requirement for activities in the normal course of business, including interest and required principal payments on debt as well as planned capital expenditures.

We have adopted conservative policies relating to and governing the investment of our surplus cash. The investment policy does not permit us to engage in speculative or leveraged transactions, nor does it permit us to hold or issue financial instruments for trading purposes. The investment policy was designed to preserve capital and safeguard principal, to meet all of our liquidity requirements and to provide a competitive rate of return. The investment policy addresses dealer qualifications, lists approved securities, establishes minimum acceptable credit ratings, sets concentration limits, defines a maturity structure, requires all firms to safe keep securities, requires certain mandatory reporting activity and discusses review of the portfolio. We operate our investment program under the guidelines of our investment policy.

Cash Flows From Operating Activities

Cash provided by operating activities for the three months ended March 31, 2009 was $101 million. This was primarily due to net earnings after adjustment for non-cash items of $67 million, customer prepayments on future satellites of $3 million and an increase in cash flows from operating assets and liabilities of $31 million. The net earnings after adjustment for non-cash items of $67 million include the net loss of $39 million, the unrealized gain on derivatives of $54 million and other items of $10 million which is essentially the recognition of deferred revenues. These items were more than offset by the amortization of $61 million, the unrealized foreign exchange loss of $101 million, the unpaid dividends on preferred shares of $4 million treated as interest expense and the stock-based compensation of $2 million.

Cash provided by operating activities for the three months ended March 31, 2008 was $32 million. This was primarily due to net earnings after adjustment for non-cash items of $13 million, customer prepayments on future satellites of $18 million and an increase in cash flows from operating assets and liabilities of $1 million. The net earnings after adjustment for non-cash items of $13 million include the net loss of $101 million, the future income tax recovery of $18 million, the unrealized gain on derivatives of $19 million and other items of $10 million. These items were more than offset by the amortization of $59 million, the unrealized foreign exchange loss of $100 million and the unpaid dividends of $2 million.

Cash provided by operating activities for 2008 was $279 million. This was primarily due to net earnings after adjustment for non-cash items of $141 million, customer prepayments on future satellites of $89 million and an increase in cash flows from operating assets and liabilities of $49 million. The net earnings after adjustment for non-cash items of $141 million include the net loss of $822 million, the future income taxes recovery of $176 million, the unrealized gain on derivatives of $248 million and other items of $44 million which is essentially the recognition of deferred revenues. These items were more than offset by the amortization of $236 million, the unrealized foreign exchange loss of $695 million, the unpaid dividends on preferred shares of $10 million treated as interest expense, the stock-based compensation of $5 million and the impairment losses of $485 million.

Cash provided by operating activities for the two months ended December 31, 2007 was $225 million. This was primarily due to net earnings after adjustment for non-cash items of $20 million and an increase in cash flows from operating assets and liabilities of $205 million as a result of the Telesat Canada transaction. The net earnings after adjustment for non-cash items of $20 million include the net loss of $4 million and the future income tax recovery of $61 million, which were more than offset by the amortization of $40 million, the unrealized foreign exchange loss of $43 million and the unpaid dividends of $2 million.

Cash provided by operating activities for the ten months ended October 30, 2007 was $253 million. This was primarily due to net earnings after adjustment for non-cash items of $206 million, customer prepayments on future satellites of $18 million and an increase in cash flows from operating assets and liabilities of $27 million. The net earnings after adjustment for non-cash items of $206 million include the net earnings of $82 million, amortization of $106 million and future income taxes of $24 million, partially offset by the gross profit on a sales-type lease of $6 million.

Cash provided by operating activities for 2006 was $229 million. This was primarily due to net earnings after adjustment for non-cash items of $205 million, customer prepayments on future satellites of $12 million and an increase in cash flows from operating assets and liabilities of $12 million. The net earnings after adjustment for non-cash items of $205 million include the net earnings of $104 million, amortization of

$121 million, future income taxes of $1 million, partially offset by other non-cash items of $19 million for a change in contributed surplus on the acquisition of a numbered company from BCE in exchange for a promissory note.

Cash Flows Used in Investing Activities

Cash used in investing activities for the three months ended March 31, 2009 was $92 million, primarily resulting from capital expenditures for the construction of the Telstar 11N (launched in February 2009) and Nimiq 5 satellites.

Cash used in investing activities for the three months ended March 31, 2008 was $48 million, primarily resulting from capital expenditures for the construction of the Nimiq 4 (launched in September 2008), Telstar 11N and Nimiq 5 satellites.

Cash used in investing activities for 2008 was $263 million, primarily resulting from capital expenditures of $273 million, partially offset by proceeds on the disposal of assets and the receipt of insurance proceeds received for the Anik F3 satellite. The main components of the capital expenditure programs were the construction of the Nimiq 4 (launched in September 2008), Telstar 11N (launched in February 2009) and Nimiq 5 satellites.

Cash used in investing activities for the two months ended December 31, 2007 was $3.259 billion, primarily resulting from the $3.229 billion October 31, 2007 acquisition of Telesat Canada and substantially all of the net assets of Loral Skynet, and from capital expenditures of $30 million.

Cash used in investing activities for the ten months ended October 30, 2007 was $187 million, primarily resulting from capital expenditures of $189 million, partially offset by $2 million for the maturity of short-term investments. The main components of the capital expenditure programs were for the construction of the Nimiq 4, Nimiq 5 and Anik F3 (launched in April 2007) satellites and the final deferred milestone payment for Anik F2.

Cash used in investing activities for 2006 was $160 million, primarily resulting from capital expenditures of $205 million, the finalization of a contingent acquisition payment of $3 million for Space Connection and a $1 million payment for the Infosat acquisition of Able Leasing Co., partially offset by $49 million for the maturity of short-term investments. The main components of the capital expenditure programs were for the construction of the Anik F3 and Nimiq 4 satellites, and deferred milestone payments for Anik F2.

Cash Flows From (Used in) Financing Activities

Cash used in financing activities for the three months ended March 31, 2009 was $12 million, primarily resulting from the repayment of $9 million of debt financing, capital lease payments of $2 million and satellite performance incentive payments of $1 million.

Cash from financing activities for the three months ended March 31, 2008 was $15 million, primarily resulting from the proceeds of $71 million for debt financing and bank loans, partially offset by the repayment of $53 million of debt financing and capital lease payments of $3 million.

Cash from financing activities for 2008 was $42 million, primarily resulting from the proceeds from borrowings of $187 million under the senior secured credit facilities, partially offset by repayments of bank loans and debt financing of $92 million, the payment of debt issuance costs of $19 million on the exchange of the Senior bridge loan and Senior subordinated bridge loan for the Senior notes and Senior subordinated notes, capital lease payments of $31 million and satellite performance incentive payments of $3 million.

Cash from financing activities for the two months ended December 31, 2007 was $3.074 billion, primarily resulting from the proceeds of $2.768 billion for debt financing and bank loans, and $570 million for the issuance of common and preferred shares, all incurred for the acquisition of Telesat Canada and substantially all of the net assets of Loral Skynet. These proceeds were partially offset by loan repayments of $45 million, the payment of debt issuance costs of $83 million, a note repayment of $129 million, capital lease payments of $1 million and satellite performance incentive payments of $4 million.

Cash used in financing activities for the ten months ended October 30, 2007 was $45 million, primarily resulting from the repayment of $84 million on bank loans, the payment of $24 million success fees on the Telesat Canada transaction, capital lease payments of $8 million and satellite performance incentive payments of $2 million, partially offset by the receipt of proceeds from borrowings from the banks of $73 million.

Cash used in financing activities for 2006 was $144 million, primarily resulting from debt repayments of $15 million, the repayment of Telesat Canada notes of $150 million and preferred shares of $50 million, capital lease payments of $5 million, satellite performance incentive payments of $6 million and preferred dividends of $2 million, partially offset by proceeds from bank loans of $84 million.

Liquidity

The Telesat Canada purchase price of $3.25 billion as well as transaction fees and expenses, the repayment of existing Loral Skynet debt and preferred stock, and Telesat Canada debt were funded by cash from Loral and PSP as well as borrowings by Telesat Canada.

A large portion of our annual cash receipts are reasonably predictable because they are primarily derived from an existing backlog of long-term customer contracts and high contract renewal rates. We believe our cash flow from operations will be sufficient to provide for our capital requirements and to fund our interest and debt payment obligations through 2009.

Three of our satellites — Anik F1, Telstar 14, and Telstar 10 — have an expected end-of-commercial service life between 2011 and 2013. Replacement of one or more of these satellites, in order to retain existing revenues, will require significant capital expenditures during the 2010-2013 period. Where economically feasible, we may choose to invest in new satellites to utilize available orbital slots and further grow our business. Cash required for current and future satellite construction programs will be funded from some or all of the following: cash and short-term investments, cash flow from operations, cash flow from customer prepayments or through borrowings on available lines of credit under the Credit Facility. In addition, we may sell certain satellite assets, including our leasehold interest in Telstar 10, and in accordance with the terms and conditions of our Credit Facility, reinvest the proceeds in replacement satellites or pay down indebtedness under that senior Credit Facility. Subject to market conditions, and subject to compliance with the terms and conditions of our Credit Facility and the financial leverage covenant tests therein, we may also have the ability to obtain additional secured or unsecured financing to fund replacement or additional satellites. However, our ability to access these sources of funding is not guaranteed, and, therefore, we may not be able to fully fund replacement and new satellite construction programs.

We maintain a target of approximately $25 million in cash and cash equivalents within our subsidiary operating entities for the management of our liquidity. Our intention is to maintain at least this level of cash and cash equivalents to assist with the day-to-day management of our cash flows. We may typically transfer funds between subsidiary entities without restriction. Exceptions, where restrictions apply, include transfers to and from unrestricted subsidiaries, as defined in borrowing arrangements. Transfers across international boundaries may be subject to withholding taxes or local legal restrictions, including foreign exchange controls, or solvency tests governing dividends.

Debt

In connection with the Telesat Canada acquisition, we entered into agreements with a syndicate of banks to provide Telesat Canada with, in each case as described below, senior secured credit facilities (the “Credit Facility”), a senior bridge loan facility (the “Senior Bridge Loan”) and a senior subordinated bridge loan facility (the “Senior Subordinated Bridge Loan”) (together the “Facilities”). The Facilities are also guaranteed by Telesat Holdings and certain Telesat Canada subsidiaries.

Senior Secured Credit Facilities

The Credit Facility consists of several tranches, which are described below.

The Credit Facility is secured by substantially all of our assets. Under the terms of the Credit Facility, we are required to comply with certain covenants which are usual and customary for highly leveraged transactions, including financial reporting, maintenance of certain financial covenant ratios for leverage and interest coverage, a requirement to maintain minimum levels of satellite insurance, restrictions on capital expenditures, a restriction on fundamental business changes or the creation of subsidiaries, restrictions on investments, restrictions on dividend payments, restrictions on the incurrence of additional debt, restrictions on asset dispositions and restrictions on transactions with affiliates. We were also required to enter into swap agreements that will effectively fix or cap the interest rates on at least 50% of our funded debt for a three year period ending October 31, 2010. Each tranche of the Credit Facility is subject to mandatory principal repayment requirements, which, in the initial years, are generally 1/4 of 1% of the initial aggregate principal amount.

Revolving Facility

The Revolving Facility is a $153 million loan facility with a maturity date of October 31, 2012. Loans under the Revolving Facility currently bear interest at a floating rate of the Bankers Acceptance borrowing rate plus an applicable margin of 275 basis points. The applicable margin is subject to a leverage pricing grid. The Revolving Facility currently has an unused commitment fee of 50 bps that is subject to adjustment based upon a leverage pricing grid. As of March 31, 2009, other than approximately $0.4 million in drawings related to letters of credit, there were no borrowings under this facility.

Canadian Term Loan Facility

The Canadian Term Loan Facility is a $200 million loan with a maturity date of October 31, 2012. The Canadian Term Loan Facility bears interest at a floating rate of the Bankers Acceptance borrowing rate plus an applicable margin of 275 basis points. The required repayments on the Canadian term loan facility were $5 million for the year ended December 31, 2008 and will be $10 million for the year ended December 31, 2009.

U.S. Term Loan Facility

The U.S. Term Loan Facility is a US$1.905 billion ($2.401 billion) loan facility denominated in U.S. dollars with a final maturity date of October 31, 2014. As of March 31, 2009, US$1.882 billion ($2.372 billion) was drawn. The U.S. Term Loan Facility is made up of two facilities, a US$1.755 billion U.S. Term Loan I Facility and a US$150 million U.S. Term Loan II Facility that was a 12 month delayed draw facility for satellite capital expenditures. The U.S. Term Loan Facility bears interest at LIBOR plus an applicable margin of 300 basis points.

The U.S. Term Loan II Facility has an unused commitment fee of 1/2 the applicable margin which is 150 basis points. We drew the full amount of this facility during the 12 month availability period. As of March 31, 2009, US$148.9 million of the facility was drawn.

In order to hedge our currency risk both at closing and over the life of the loans, Loral Skynet entered into a currency basis swap to synthetically convert US$1.054 billion of U.S. dollar commitment to $1.224 billion and transferred the benefit of the basis swap to Telesat Canada prior to closing. This currency basis swap is being amortized on a quarterly basis at 1/4 of 1% of the original amount. As of March 31, 2009 the balance was $1.209 billion and bears interest at a floating rate of Bankers Acceptance plus an applicable margin of approximately 387 basis points.

Senior Bridge Loan

The Senior Bridge Loan was a US$692.8 million senior unsecured loan facility denominated in U.S. dollars advanced on the closing date. The Senior Bridge Loan had a maturity of October 31, 2008 and an initial interest rate per annum equal to the greater of 9% or three-month LIBOR plus the applicable margin. The applicable margin increased over time subject to an interest rate cap of 11%. The Senior Bridge Loan was subject to a securities demand on or after April 28, 2008.

On June 30, 2008, we exchanged the outstanding US$692.8 million Senior Bridge Loan for US$692.8 million Senior notes ($873.1 million at March 31, 2009). The Senior notes bear interest at an annual rate of 11.0% and are due November 1, 2015. The Senior notes include covenants or terms that restrict our ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) modify or cancel our satellite insurance, (vi) effect mergers with another entity, and (vii) redeem the Senior notes prior to May 1, 2012, in each case subject to exceptions provided in the Senior notes indenture.

Senior Subordinated Bridge Loan

The Senior Subordinated Bridge Loan was a US$217.2 million senior subordinated unsecured loan facility denominated in U.S. dollars advanced on the closing date. The Senior Subordinated Bridge Loan had a maturity of October 31, 2008 and an initial interest rate per annum equal to the greater of 10.5% or three-month LIBOR plus the applicable margin. The applicable margin increased over time subject to an interest rate cap of 12.5%. The Senior Subordinated Bridge Loan was subject to a securities demand on or after April 28, 2008.

On June 30, 2008, we also exchanged the outstanding US$217.2 million Senior Subordinated Bridge Loan for US$217.2 million Senior subordinated notes ($273.7 million at March 31, 2009). The Senior subordinated notes bear interest at a rate of 12.5% and are due November 1, 2017. The Senior subordinated notes include covenants or terms that restrict our ability to, among other things, (i) incur additional indebtedness, (ii) incur liens, (iii) pay dividends or make certain other restricted payments, investments or acquisitions, (iv) enter into certain transactions with affiliates, (v) modify or cancel our satellite insurance, (vi) effect mergers with another entity, and (vii) redeem the Senior subordinated notes prior to May 1, 2013, in each case subject to exceptions provided in the Senior subordinated notes indenture.

Interest Expense

An estimate of the interest expense on the Facilities is based upon assumptions of LIBOR and Bankers Acceptance rates and the applicable margin for the Credit Facility, the Senior Bridge Loan and the Senior Subordinated Bridge Loan. Our estimated interest expense for 2009 is approximately $288 million.

Derivatives

We have used interest rate and currency derivatives to hedge our exposure to changes in interest rates and changes in foreign exchange rates.

We use forward contracts to hedge our foreign currency risk on anticipated transactions, mainly related to the construction of satellites. At March 31, 2009, we had outstanding foreign exchange contracts which require us to pay Canadian dollars to receive US$39.5 million for future capital expenditures. The fair value of these derivative contract liabilities was an unrealized gain of $8.6 million as of March 31, 2009. These forward contracts are due between May 1, 2009 and December 1, 2009.

In order to hedge our currency risk, both at closing and over the life of the loans, Loral Skynet entered into a currency basis swap to synthetically convert US$1.054 billion of the U.S. Term Loan Facility debt into $1.224 billion of debt. Loral Skynet transferred the currency basis swap to Telesat Canada prior to closing. The fair value of this derivative contract at March 31, 2009 resulted in an unrealized gain of $57.2 million.

On November 30, 2007, we entered into a series of five interest rate swaps to fix interest rates on US$600 million of U.S. dollar denominated debt and $630 million of Canadian dollar denominated debt for an average term of 3.2 years. Average rates achieved, before any borrowing spread, were 4.12% on the U.S. dollar denominated swaps and 4.35% on the Canadian dollar denominated swaps. As of March 31, 2009, the fair value of these derivative contract liabilities was an unrealized loss of $74.6 million. With these transactions, we met our requirement under the Credit Facility to effectively fix or cap at least 50% of our funded debt for a three year period from October 31, 2007. These contracts are due between January 31, 2010 and November 28, 2011.

Capital Expenditures

We have entered into contracts for the construction, insurance and launch of the Nimiq 5 satellite. The outstanding commitments as of March 31, 2009 on these contracts are approximately $129.4 million or US$102.7 million. These expenditures will be funded from some or all of the following: cash and short-term investments, cash flow from operations, cash flow from customer prepayments or through borrowings on available lines of credit under the Credit Facility.

For fiscal 2009, we expect our major cash requirements to include capital expenditures of approximately $183 million, repayment of $33 million in principal payments on long-term debt, $19 million in capital lease payments and $11 million for performance incentive payments. We expect to meet our cash needs for fiscal 2009 through a combination of operating cash and short-term investments, cash flow from operations, cash flow from customer prepayments or through borrowings on available lines of credit under the Credit Facility.

Capital expenditures are as follows:


	Successor Entity				Predecessor Entity
			For the Period		For the Period
	Year Ended		October 31 to		January 1 to		Year Ended
	December 31,		December 31,		October 30,		December 31,
	2008		2007		2007		2006
	(In CAD$ millions)
Canada		200		22		189		205
United States		72		8		—		—
Other		1		—		—		—

Total capital expenditures		273		30		189		205

Contractual Obligations and Other Commercial Commitments

The following table summarizes the contractual obligations at December 31, 2008 that are due in each of the next five years and after 2013. This table does not include any future satellite expenditures not committed to at year end.


	2009		2010		2011		2012		2013		After 2013		Total
	(In CAD$ in millions)

Senior secured credit facilities and notes, excluding interest and amortization of debt issue costs(1)		33.3		38.3		113.3		103.3		23.3		3,308.2		3,619.7
Other debt financing, including interest(2)		0.3		—		—		—		—		—		0.3
Capital leases, including interest		18.7		6.0		6.1		6.0		6.0		6.1		48.9
Operating leases		29.2		23.7		20.0		14.0		11.7		23.6		122.2
Post-retirement and employment benefit payments(3)		9.5		9.9		10.2		10.2		10.6		64.8		115.2
Commitments for capital expenditures(4)		183.3		1.0		0.9		1.0		1.0		17.0		204.2
Other purchase obligations(4)		5.8		11.8		—		—		—		—		17.6
Other long-term liabilities (including current portion)(5)		11.4		5.2		4.5		3.8		4.0		43.4		72.3

Total		291.5		95.9		155.0		138.3		56.6		3,463.1		4,200.4


(1)		See Note 14 to the audited consolidated financial statements of Telesat Holdings at December 31, 2008.

(2)		Other debt financing does not include the $0.6 million of committed but undrawn letters of credit at December 31, 2008.

(3)		Benefit payments to 2018 only as obligations beyond this date are not quantifiable.


(4)		The commitments for capital expenditures include the construction, launch and insurance of the Nimiq 5 and Telstar 11N satellites (see note 22 to the audited consolidated financial statements of Telesat at December 31, 2008), inventory purchases and the further development of the Ka-band ground infrastructure. Other purchase obligations consist mainly of contractual obligations under service contracts.

(5)		Other long-term liabilities included in the table relate to performance incentive payments on various satellites within our fleet (see note 13 to the audited consolidated financial statements of Telesat at December 31, 2008).

Our future contributions to the pension plans and future income tax liabilities have not been included in the table as the timing and amount of cash required cannot be accurately determined as:


	•	future contributions to the pension plans depend largely on the result of actuarial valuations that are performed periodically and on the investment performance of the pension fund assets; and

	•	future payments of income taxes depend on the amount of taxable earnings and on whether there are tax loss carry forwards available to reduce income tax liabilities.

Deferred revenues and gains on assets have not been included in the table above because they do not represent future cash payments. See note 13 to our audited consolidated financial statements.

Related Party Transactions

As at December 31, 2008 and 2007, related parties consisted of PSP and Loral. We have entered into various commercial arrangements with Loral and subsidiaries and affiliates of Loral. These arrangements primarily relate to the purchase of satellites by us, the sale or use of satellite transponder capacity and consulting services, and are entered into in the form of satellite purchase agreements, service agreements or consulting service agreements. See note 23 to the consolidated financial statements.

Pursuant to Section 27 of the Telecom Act, the rates, terms and conditions that we provide to our customers must be just and reasonable and not be unduly discriminatory, nor convey an undue preference.

Accounting Standards

Recent Changes to Canadian Accounting Standards

On January 1, 2008, the Company adopted the new accounting standards that were issued by the Canadian Institute of Chartered Accountants (“CICA”): Handbook sections 1400 “General Standards of Financial Statement Presentation”, 1535 “Capital Disclosures”, 3031 “Inventories”, 3862 “Financial Instruments — Disclosures”, and 3863 Financial Instruments — Presentation”. Sections 1535, 3862 and 3863 have been applied prospectively in note 18, Capital Disclosures, and note 19, Financial Instruments. Sections 1400 and 3031 were also applied prospectively; however, there was no impact on these financial statements.

CICA Handbook Section 1400, “General Standards of Financial Statement Presentation”, specifies that Management is required to make an assessment of an entity’s ability to continue as a going concern and should take into account all available information about the future, which is at least but not limited to 12 months from the balance sheet date. Disclosure is required of material uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to continue as a going concern.

CICA Handbook Section 1535 “Capital Disclosures” specifies the disclosure of an entity’s objectives, policies and processes for managing capital and how it is meeting those objectives.

CICA Handbook Section 3031, “Inventories”, replaced the old Section 3030, “Inventories”. Under the new section, inventories are required to be measured at the “lower of cost and net realizable value”, which is different from the previous guidance of the “lower of cost and market”. The new section also requires, when applicable, the reversal of any write-downs previously recognized.

provide information about the significance of financial instruments to the Company’s financial position and performance, and the nature and extent of risks arising from financial instruments to which the Company is exposed and how the Company manages those risks. Section 3863 carries forward standards for presentation of financial instruments and non-financial derivatives and provides guidance for the classification of financial instruments, from the perspective of the issuer, between liabilities and equity, the classification of related interest, dividends, losses and gains, and circumstances in which financial assets and financial liabilities are offset.

On January 1, 2009 the Company adopted the CICA handbook section 3064 “Goodwill and Intangible Assets” This standard applies to goodwill and intangible assets subsequent to the initial recognition in a business combination and establishes standards for the recognition, measurement, presentation and disclosure of intangible assets. The standard has not had a material impact on the Company’s reporting.

In January 2009, the CICA’s Emerging Issues Committee (“EIC”) issued Abstract No. 173 “Credit Risk and the Fair Value of Financial Assets and Financial Liabilities”. EIC 173 requires an entity to take into account its own credit risk and that of the relevant counterparty(s) when determining the fair value of financial assets and financial liabilities, including derivative instruments. This EIC, which was effective for the Company on January 1, 2009, had no impact on the Company’s Balance Sheet or on the Statement of Loss because the aforementioned credit risks had been incorporated into the valuation methodology before the EIC was issued.

The Company is assessing the impact of the following standards on its financial reporting.

In January 2009, the CICA issued handbook section 1582 “Business Combinations” which replaces section 1581. This standard establishes the principles and requirements of the acquisition method for business combination and related disclosures and applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after January 2011 with earlier adoption permitted.

In January 2009, the CICA issued handbook section 1601 “Consolidated Financial Statements” and section 1602 “Non-controlling Interest” which replace section 1600. Section 1601 establishes standards for the preparation of consolidated financial statements. Section 1602 provides guidance on accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. These standards are effective on or after the beginning of the first annual reporting period on or after January 2011 with earlier adoption permitted.

International Financial Reporting Standards

In May 2007, the CICA published an updated version of its “Implementation Plan for Incorporating International Financial Reporting Standards (“IFRS”) into Canadian GAAP”. This Plan will result in having publicly accountable enterprises being fully converged with IFRS as issued by the International Accounting Standards Board over a transitional period to be complete by 2011. We will be required to report using the converged standards effective for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011, the date we have selected for adoption.

New pronouncements are expected to be issued during this transitional period and, as a result, the IFRS as at the transition date are expected to differ from their current form. In August 2008, the United States Securities and Exchange Commission issued a proposed “road map” that would permit certain United States reporting issuers to use IFRS in their filings. The proposal contemplates mandatory usage of IFRS by all United States reporting issuers as early as 2014.

We are in the process of assessing the impacts of the Canadian convergence initiative. There are several phases that we will have to complete in order to begin reporting under IFRS:


	•	initial assessment and scoping phase, including the identification of significant differences between existing Canadian GAAP and IFRS with respect to our relevant circumstances;


	•	accounting policy selection phase, including the identification, evaluation and selection of the specific policies; and

	•	embedding phase, which will integrate the selections into our underlying financial system and processes.

In 2010, we will effectively have to maintain two parallel books of account: one set will use the existing version of Canadian GAAP for reporting during the year, the second set will use the existing version of IFRS for comparative reporting to be used in 2011.

Recent Changes to Accounting Standards for the United States

In November 2007, the Securities and Exchange Commission issued SAB 109, Written Loan Commitments Recorded at Fair Value Through Earnings. It requires that the expected net future cash flows related to the associated servicing of the loan should be included in the measurement of all written loan commitments that are accounted for at fair value through earnings. In addition, internally developed intangible assets should not be recorded as part of the fair value of any written loan commitment that is accounted for at fair value through earnings. SAB 109 became effective for the Company on January 1, 2008 and did not have a material impact on the financial results.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141(R), Business Combinations, which broadens the guidance of SFAS 141, extending its applicability to all transactions and other events in which one entity obtains control over one or more other businesses. It broadens the fair value measurement and recognition of assets acquired, liabilities assumed, and interests transferred as a result of business combinations. SFAS 141(R) expands on required disclosures to improve the statement users’ abilities to evaluate the nature and financial effects of business combinations. It requires the acquirer to recognize as an adjustment to income tax expense changes in the valuation allowance for acquired deferred assets. SFAS 141(R) is effective for the Company on January 1, 2009.

In April 2008, the FASB issued FSP No. FAS 142-3, Determination of the Useful Life of Intangible Assets, which amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS 142, Goodwill and Other Intangible Assets. It is intended to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other applicable accounting literature. FSP FAS 142-3 is effective for the Company on January 1, 2009. It is not anticipated to have a material impact on our financial reporting.

In September 2006, the FASB issued SFAS 157, Fair Value Measurement, which provides a definition of fair value, establishes a framework for measuring fair value, and requires expanded disclosures about fair value measurements. SFAS 157 became effective as of January 1, 2008 except for the provisions relating to non-financial assets and liabilities measured at fair value on a nonrecurring basis, for which the effective date has been deferred until January 1, 2009.

In October 2008, the FASB issued FSP FAS 157-3, Determining Fair Value of a Financial Asset When the Market for that Asset is not Active. This FSP clarifies the application of SFAS 157 in a market that is not active and provides key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. FSP FAS 157-3 was effective upon issuance and did not have a material impact on these financial statements.

In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Liabilities. SFAS 159 provides an entity the option to report selected financial assets and liabilities at fair value and establishes new disclosure requirements when the fair value option is applied. The Company has opted not to adopt this standard.

In December 2007, the FASB issued SFAS 160, Non-controlling Interests in Consolidated Financial Statements — an amendment of ARB No. 51. SFAS 160 requires that a non-controlling interest in a subsidiary be reported as equity and the amount of consolidated net income specifically attributable to the non-controlling

interest be identified in the consolidated financial statements. It also calls for consistency in the manner of reporting changes in the parent’s ownership interest and requires fair value measurement of any non-controlling equity investment retained in a deconsolidation. SFAS is effective for the Company on January 1, 2009.

In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities, which requires specific disclosures regarding the location and amounts of derivative instruments in the financial statements; how derivative instruments and related hedged items are accounted for; and how derivative instruments and related hedged items affect financial position, financial performance and cash flows. SFAS 161 is effective for the Company on January 1, 2009. The Company is currently assessing the impact of this standard on its financial reporting.

In May 2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 162 identifies a consistent framework for selecting accounting principles to be used in preparing financial statements that are presented in conformity with GAAP for nongovernmental entities. SFAS 162 will become effective 60 days following the SEC’s approval of the Public Company accounting Oversight Board amendments to AU Section 411, “The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles”.

Market Risk

Credit Risk Related to Financial Instruments

Financial instruments that potentially subject us to a concentration of credit risk consist of cash and cash equivalents and short-term investments. Investment of these funds is done with high quality financial institutions and is governed by our corporate investment policy, which aims to reduce credit risk by restricting investments to high-grade U.S. dollar and Canadian dollar denominated investments.

We are exposed to credit risk if counterparties to our derivative instruments are unable to meet their obligations. It is expected that these counterparties will be able to meet their obligations as they are institutions with strong credit ratings which have generally received support from national governments. We regularly monitor their credit risk and credit exposure.

Foreign Exchange Risk

Our operating results are subject to fluctuations as a result of exchange rate variations to the extent that transactions are made in currencies other than Canadian dollars. The most significant impact of variations in the exchange rate is on the U.S. dollar denominated debt financing. We are also exposed to foreign currency risk on anticipated transactions, such as the costs of satellite construction and acquisition.

Our main currency exposures as at December 31, 2008 lie in its U.S. dollar denominated cash and cash equivalents, accounts receivable, accounts payable and debt financing.

Approximately 45% of our revenues for the year ended December 31, 2008, certain of our expenses and a substantial portion of our indebtedness and capital expenditures are denominated in US$. As a result, the volatility of United States currency may expose us to foreign exchange risks. In 2008, as a result of a significant decline in the value of the Canadian dollar, we recorded foreign exchange losses of approximately $700 million, prior to any gains on hedging instruments.

Interest Rate Risk

We are exposed to interest rate risk on our cash and cash equivalents and our long term debt which is primarily variable rate financing. Changes in the interest rates could impact the amount of interest we are required to pay.

Derivative Financial Instruments

We use derivative instruments to manage our exposure to foreign currency and interest rate risk. Our policy is that we do not use derivative instruments for speculative purposes.

We use the following instruments:


	•	forward currency contracts to hedge foreign currency risk on anticipated transactions, mainly related to the construction of satellites;

	•	a cross-currency basis swap to hedge the foreign currency risk on a portion of our U.S. dollar denominated debt; and

	•	interest rate swaps to hedge the interest rate risk related to debt financing which is primarily variable rate financing.

These estimates are affected significantly by the assumptions for the amount and timing of estimated future cash flows and discount rates, which all reflect varying degrees of risk. Potential income taxes and other expenses that would be incurred on disposition of these financial instruments are not reflected in the fair values. As a result, the fair values are not necessarily the net amounts that would be realized if these instruments were actually settled.

The tables below provide information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps and debt obligations, and our derivate instruments and other financial instruments that are sensitive to changes in foreign exchange rates, including currency forwards and our cross-currency basis swap. The information is reported in Canadian dollar equivalents, which is our reporting currency, as at December 31, 2008.

Interest Rate Sensitivity


	Expected Maturity Date
	2009			2010			2011			2012			2013			Thereafter			Total			Fair Value
	(CAD$ equivalent in millions except percentages)

Liabilities
Long-term Debt
Variable rate (CAD denominated)		10.0			15.0			90.0			80.0			—			—			195.0			125.8
Average interest rate		3.58	%		4.37	%		4.62	%		4.79	%		—			—			—			—
Variable rate (USD denominated)		23.3			23.3			23.3			23.3			23.3			2,193.8			2,310.4			1,518.4
Average interest rate		4.24	%		5.01	%		5.39	%		5.57	%		5.60	%		5.91	%		—			—
Fixed rate (USD denominated)		—			—			—			—			—			1,114.4			1,114.4			726.9
Average interest rate		—			—			—			—			—			11.36	%		11.36	%		—


	Expected Maturity Date
	2009		2010			2011			2012		2013		Thereafter		Total		Fair Value
	(CAD$ equivalent in millions except percentages)

Interest Rate Derivatives
Interest Rate Swaps
Variable to Fixed (CAD notional)		—		330.0			300.0			—		—		—		630.0		(33.6	)
Average pay rate		—		4.30	%		4.40	%		—		—		—		—		—
Average receive rate		—		1.37	%		1.62	%		—		—		—		—		—
Variable to Fixed (USD notional)		—		122.5			612.3			—		—		—		734.8		(48.7	)
Average pay rate		—		4.05	%		4.14	%		—		—		—		—		—
Average receive rate		—		2.01	%		2.39	%		—		—		—		—		—

Exchange Rate Sensitivity


	Expected Maturity Date
	2009			2010			2011			2012			2013			Thereafter			Total			Fair Value
	(CAD$ equivalent in millions except percentages)

On-Balance Sheet Financial Instruments
USD Functional Currency
Assets
Derivative Assets (Cross-currency basis swap)		12.2			12.2			12.2			12.2			12.2			1,150.8			1,212.0			8.8
Liabilities
USD denominated long-term debt
Variable rate (USD denominated)		23.3			23.3			23.3			23.3			23.3			2,193.8			2,310.4			1,518.4
Average interest rate		4.24	%		5.01	%		5.39	%		5.57	%		5.60	%		5.91	%		—			—
Fixed rate (USD denominated)		—			—			—			—			—			1,114.4			1,114.4			726.9
Average interest rate		—			—			—			—			—			11.36	%		11.36	%		—


	Expected Maturity Date
	2009		2010		2011		2012		2013		Thereafter		Total		Fair Value
	(CAD$ in millions except exchange rates)

Anticipated Transactions and Related Derivatives
USD Functional Currency
Firmly Committed Transactions:
Forward Exchange Agreements
(Receive USD/Pay CAD)
Contract Amount		61.0		—		—		—		—		—		61.0		10.8
Average Contractual Exchange Rate		1.0395		—		—		—		—		—		1.0395		—

INDUSTRY OVERVIEW

We compete in the market for the provision of voice, data, video and Internet connectivity services worldwide. Services of this type are provided using various technologies, including satellite networks. We currently operate in the FSS sector of the satellite industry. Operators in the FSS sector provide communications links between fixed points on the earth’s surface, referred to as point-to-point services, and from one point to multiple points, referred to as point-to-multipoint services. Over the last several years, deregulation and privatization have significantly reshaped the FSS sector. In addition, the sector has undergone consolidation, with regional and national operators being acquired by larger companies or seeking to partner with other providers.

Satellite Systems and Frequencies

A generic satellite system consists of a space segment and an earth segment. The “space segment” is comprised of the satellites and the tracking, telemetry and command (“TT&C”) systems and facilities used to control and monitor the satellites. The “earth segment” is made up of all of the communication earth stations and other devices that access operational satellites. A satellite has two primary components: the communications payload and the spacecraft bus. In its simplest form, the communications payload consists of the antennas and transponders which receive the signals from earth at one frequency, amplify them, and transmit them back to earth at a different frequency. The spacecraft bus is essentially comprised of all of the non-communications equipment, including the electrical and TT&C subsystems, the propulsion and thermal subsystems and the spacecraft structure itself.

Geosynchronous satellites circle the earth from orbital locations approximately 22,300 miles (35,700 kilometers) above the equator. The speed at which they orbit the earth corresponds to the speed of the earth’s rotation. As a result, each geosynchronous satellite in essence “blankets” a fixed geographic area with its signals, and an earth station antenna on the ground can communicate continuously with a particular satellite if it is pointed to, and has an unobstructed view of, that satellite’s orbital location. An individual satellite can be designed to communicate with major landmasses via large, geographically dispersed beams, to focus its coverage more specifically on particular markets or regions through regional or spot beams, or to use a portion of its total capacity for each type of coverage.

The most common frequency bands that satellites use to provide commercial communications services are:


	•	C-band. These frequencies were the first to be exploited for commercial communications satellites. C-band frequencies have longer wavelengths than Ku-band or Ka-band frequencies and therefore are less susceptible to atmospheric absorption. However, regulatory limits on satellite transponder power make it necessary to use larger earth station antennas, typically two to six meters in diameter, relative to Ku-band or Ka-band. In most countries, the C-band frequencies are shared with terrestrial microwave users and therefore each earth station must be individually frequency coordinated to prevent interference between the two services. Typical C-band applications include broadcast video transmission, programming distribution to cable operators, telecommunications services, and a broad range of government services.


	•	Ku-band. These frequencies have shorter wavelengths than C-band. In most of the Americas, the Ku-band is not shared with other services, which allows more powerful satellite transponders, thereby allowing customers to use smaller antennas, typically 45 to 180 centimetres in diameter. Frequency coordination of individual earth stations is not required. The Ku-band spectrum is split into two main segments: the FSS portion and the Broadcast Satellite Service (“BSS”) (known in the United States, and sometimes referred to in this prospectus, as “DBS”) portion. The BSS portion is intended for the provision of broadcast signals directly to the end user. The FSS portion is used for a variety of purposes. Small earth station antennas make it well suited for transportable services and enterprise VSAT networks, since the reduced antenna size makes it substantially easier and less expensive to install a network than is the case with C-band. The FSS portion may also be used for DTH services, albeit with greater constraints on signal throughput and larger antennas.


	•	Ka-band. These frequencies have the shortest wavelength of the three principal commercial fixed satellite bands and are most affected by atmospheric absorption. The short wavelength facilitates the creation of multiple spot beams each of which concentrates the satellite power into a smaller geographic area. In


		Canada and the United States, the Ka-band frequencies are not shared with terrestrial services and earth stations need not be individually coordinated. Spot beam Ka-band satellites are well suited for two-way broadband services such as high-speed Internet access from homes and small businesses. Currently, Ka-band is not as widely utilized as C-band or Ku-band, but Ka-band use is increasing. Our Anik F2 satellite was the first satellite to be used commercially for Ka-band direct-to-home Internet services.

Satellite Communication Benefits

Satellite operators compete with terrestrial network operators (e.g., cable, DSL, fiber optic, microwave broadcasting and VHF/UHF broadcasts) in the market for video, data and voice communication services. We believe that satellite services have several advantages over these competing communication platforms, including:


	•	the ability to provide ubiquitous coverage over a large geographic region allowing for the addition of sites at a lower marginal cost. Unlike cable and fiber lines, satellites can readily provide broadcast and communication services over large areas and to remote locations where the population density may not be high enough to warrant the expense of building a terrestrial-based communications network;

	•	the ability to bypass shared and congested terrestrial links, further enhancing network performance;

	•	ease and speed of service provision through a one-stop-shop solution. In cases where a terrestrial-based communications network does not reach 100% of a customer’s sites, a satellite-based network that covers the entire area may provide a complete solution for the customer; and

	•	sufficient bandwidth for new technologies and video and data offerings, such as HDTV.

Terrestrial alternatives, such as fiber optic cable, are superior to satellite in some circumstances and can be used in conjunction with satellite to provide a hybrid network that takes advantage of the inherent abilities of both technologies. Generally, in areas well-served by terrestrial networks or for point-to-point communications, terrestrial alternatives may have a cost advantage, while more dispersed, point-to-multipoint communications may be better served by satellite. See “Business — Competition” for additional information about terrestrial based-services.

Satellite Services

Satellite services can be used for a variety of content distribution, data communications and other applications:


	•	TV Programming Distribution: Throughout the world, the primary method for delivering television programming to cable and other terrestrial networks is via satellite. The ability to uplink the content once, and distribute it to thousands of cable headends and other video aggregation facilities over broad geographic areas makes satellite technology a compelling value for distributors of television programming because the cost of distribution is often based on the amount of content being distributed, irrespective of the number of receive sites or the distance from the uplink sites to the receive sites.

	•	Direct-To-Home Video: The same dynamics that make satellite technology ideal for distributing television programming to terrestrial networks also makes it ideal for delivering television programming directly to consumers using smaller antennas, or satellite dishes, and Ku-band satellite capacity. This is known as “Direct-To-Home” or “DTH” video broadcasting.

	•	Enterprise Services: By combining satellites with ground based infrastructure such as teleports that transmit signals to, and receive signals from, satellites, satellite network services operators are able to provide enterprises and governments with rapid and reliable communications solutions.

Enterprise services are generally provided via either point-to-point links which directly connect two locations, or via VSAT networks which use small user antennas to connect multiple locations either to each other or to a central site. A VSAT network consists of many VSAT remote sites and a central hub with a large antenna that transmits signals to, and receives signals from, the remote sites.

VSATs are used for a wide variety of purposes:


	•	Transaction processing and data transfer: VSAT networks can be used by retail chains for rapid credit card authorization and inventory control, by banks to connect automated teller machines to processing computers, and by news agencies to disseminate news and financial information on a timely basis.

	•	Corporate communications and internet access: In the developing world, terrestrial networks may be unavailable, unreliable or more expensive than satellite networks, and satellite technology may be the only available means of international communication. Satellite networks often provide the only way for businesses in the oil and gas, mining and forestry industries to reach their remote locations. Even in regions where developed terrestrial infrastructure exists, VSAT networks may be the preferred option for creating a single corporate network without the complexity, operational difficulties and risks inherent in linking multiple terrestrial networks that serve different geographic areas.

	•	Maritime and aeronautical communications: As bandwidth needs on planes and cargo, cruise and military ships increase, FSS applications play a growing role in satisfying these requirements.

Government Services. Governments use satellite services to address many of the same communications requirements as commercial enterprises. In addition, satellites are well suited to meet government requirements for security (satellite networks bypass local terrestrial networks allowing for governments to operate more securely outside of their home countries), and communicating with ships, military transportables and unmanned aerial vehicles. Using satellite networks, governments can quickly and easily bring up and turn down sites around the globe for intelligence and defense requirements, for communicating with ships at sea, and for bringing both basic and advanced communication services to rural and remote areas.

Supply and Demand Dynamics for Fixed Satellite Services

Satellite operators typically lease or sell capacity on their satellites to customers who use the capacity for their own communications requirements or to provide satellite-based services to customers further down the distribution chain.

Demand for satellite capacity is primarily driven by: economic growth, both generally and within a particular geographic area; growth in product or service markets; growth in demand for bandwidth-intensive applications, such as broadband Internet services and high-definition television; technical advancements, in terms of either satellite throughput or terrestrial components such as VSAT networks and satellite dishes, with less expensive and more capable technologies allowing customers’ businesses to grow; and improved regulatory access to new and existing markets. Events of a shorter-term nature, such as major sporting events or news events, also influence demand.

The supply of satellite capacity is determined by the availability of existing capacity and the launch of new satellites serving a particular region. Satellite capacity supply is impacted by the significant resource, financial, regulatory and other barriers to entry that characterize the satellite services industry. There are a limited number of orbital locations and limited radio frequency spectrum available to commercial communications satellite operators. As a result, a limited number of satellites can be placed into service over any particular geographic area. New entrants must face the significant capital costs of procuring a satellite and must maintain the financial and highly specialized technical resources required to operate a satellite system and market its services. Other regulatory requirements must also be satisfied before a new entrant can provide services to, from, or within a specific country.

Available supply of satellite capacity varies significantly by region, frequency and customer requirements. Existing FSS and DBS providers that already have access to the best orbital locations have a significant competitive advantage over potential new entrants. With respect to video distribution, “neighborhoods” develop where many thousands or even millions of cable headends or consumer satellite dishes are pointed at a specific orbital location or locations. Due to the often prohibitive cost of re-pointing dishes, video distribution networks have a strong preference for securing expansion satellite capacity from satellites located at the orbital location(s), or neighbourhoods, to which their or their customers satellite dishes are pointed.

BUSINESS

Our Company

We are the world’s fourth largest FSS operator and one of only three FSS operators operating on a global basis. The combination of Telesat Canada and Loral Skynet created a powerful international platform supporting (i) strong video distribution and DTH neighborhoods in North America characterized by long-term contracts with blue chip customers, significant contractual backlog and a fully contracted expansion DTH satellite, (ii) an efficient enterprise and government services business that provides North American customers with end-to-end communications services, and (iii) a strong international video distribution, enterprise services and government services business.

Our North American Broadcast and Enterprise Services customer service contracts are typically multi-year in duration and, in the past, we have successfully contracted all or a significant portion of a satellite’s capacity prior to commencing construction. As a result, we had approximately $5.3 billion in contracted revenue backlog as of March 31, 2009. See “Business — Our Services — Revenue Backlog” for additional information.

The North American focused part of our satellite fleet is comprised of three owned FSS satellites, Anik F1R, Anik F2 and Anik F3, and three owned DBS satellites, Nimiq 1, Nimiq 2 and Nimiq 4. In addition, we leased from another satellite operator and operated one satellite, Nimiq 3, which was removed from commercial service on June 1, 2009. We also have one additional North American satellite, Nimiq 5, which is currently under construction and scheduled for delivery by the manufacturer on the ground in late 2009.

The international focused part of our satellite fleet is comprised of five owned FSS satellites: Anik F1, Telstar 11N, Telstar 12, Telstar 14/Estrela do Sul and Telstar 18. In addition, we lease all but one transponder on one FSS satellite, Telstar 10, from APT under a fully prepaid lease through the end of the satellite’s life, for which we have risk of loss and the right to replace the satellite at the end of its life. On June 1, 2009, we entered into an agreement with APT to terminate our leasehold interest in Telstar 10 and transfer certain customer contracts in exchange for a payment from APT to us of approximately US$69.5 million, subject to adjustment. The transaction is expected to be completed in July 2009. Proceeds will be used to fund replacement satellites or applied to reduce our indebtedness under our senior secured credit facilities.

We also operate thirteen satellites for third parties: two Mobile Satellite Services (“MSS”), satellites, one for SkyTerra LP and one for SkyTerra Canada; four satellites for SIRIUS XM Radio; one satellite for WildBlue; four satellites for EchoStar; one satellite for XTAR, an affiliate of Loral; and one satellite for MacDonald, Dettwiler and Associates.

We believe our global satellite fleet, access to our desirable orbital locations and strong relationships with our customers underpin our established, predictable core business, and provide us with the opportunity to capitalize on the growth drivers in the satellite industry and the markets we serve.

Our History

Telesat Interco Inc. (“Telesat Interco”) was incorporated under the Canada Business Corporations Act (the “CBCA”) on November 6, 2006 in contemplation of an acquisition of Telesat Canada and the related transfer of Loral Skynet to Telesat Canada, which we refer to as “the Telesat Canada transaction.” Telesat Canada was originally formed in 1969 by the Telesat Canada Act, or the Telesat Act. In 1972, Telesat Canada launched the world’s first domestic commercial satellite in geostationary orbit and continued as a pioneer in technical and commercial innovation with the first commercial Ku-band satellite in 1978, Canada’s first DBS satellite in 1999 and the first consumer 2-way Ka-band broadband Internet service via satellite in 2004. Since the mid-1970’s, Telesat has provided satellite services for voice, data and broadcast communications across Canada, including the far north, bringing to those isolated areas services similar to ones available in major centres. As part of the government divestiture pursuant to the Telesat Divestiture Act, Telesat Canada was continued on March 27, 1992 under the CBCA, the Telesat Act was repealed and the government sold its shares in Telesat Canada to Alouette Telecommunications Inc. (“Alouette”), which subsequently became a wholly-owned subsidiary of BCE. Alouette was amalgamated with Telesat Canada on January 1, 2007 under the name “Telesat Canada.” On October 31, 2007, Telesat Canada amalgamated with 436320 Canada Inc., a wholly owned subsidiary of Telesat Interco, to continue as Telesat Canada.

Loral Skynet, a Delaware corporation, was a wholly-owned subsidiary of Loral Space & Communications Holdings Corporation, a Delaware corporation (“LSC Holdings”). Through earlier mergers and acquisitions, Loral Skynet traces its history to two of the originating businesses in United States satellite communications with more than 40 years of experience: AT&T Skynet and Orion Satellite Corporation (“Orion”). AT&T Skynet and its predecessor organizations in AT&T Bell Laboratories launched the satellite industry by demonstrating the first trans-Atlantic satellite delivery of television on Telstar 1 in 1962. Through the 1970s, 1980s and 1990s, AT&T Skynet provided industry-leading telephone and television services in the United States for AT&T and leading television broadcasters and cable operators on the Comstar and Telstar series of satellites. In 1997, AT&T Skynet was acquired from AT&T by LSC Holdings, became Loral Skynet, and expanded from United States only to global satellite operations. Orion was formed in 1988 for the purpose of launching international VSAT services and expanding newly enabled “separate system” international services. In 1994, Orion launched Orion 1, which provided early trans-Atlantic VSAT services between the United States and Europe. Orion was the second United States licensed “separate system” authorized to compete directly with Intelsat for certain types of international satellite services. Orion was acquired by LSC Holdings in 1998 and merged operationally with Loral Skynet in 1999. In July 2003, Loral Space & Communications Ltd. (“Old Loral”) and its subsidiaries, including the predecessor business that constitutes Loral Skynet, sought protection under chapter 11 of the United States federal bankruptcy code. Loral and Loral Skynet succeeded to the business of Old Loral in connection with a chapter 11 plan of reorganization when Old Loral emerged from bankruptcy in November 2005.

Our Shareholders

PSP is a Canadian Crown corporation established by the Canadian Parliament pursuant to the Public Sector Pension Investment Board Act (the “PSP Act”) and is mandated to manage employer/employee pension contributions made after April 1, 2000 to the federal Public Service, the Canadian Forces and the Royal Canadian Mounted Police pension funds and contributions made after March 1, 2007 to the Reserve Force Pension Fund. PSP holds its interest in Telesat Holdings through a wholly-owned subsidiary, Red Isle Private Investments Inc. (“Red Isle”), a corporation organized under the CBCA. Red Isle’s direct interest and PSP’s indirect interest in Telesat Holdings is a 36% equity interest, a 662/3% voting interest on all matters except for the election of directors, and a 30% voting interest for the election of directors.

stock. Mark H. Rachesky, M.D., chairman of our board of directors and non-executive chairman of the board of directors of Loral, is the co-founder and president of MHR.

Corporate Structure

Our corporate structure is as follows:


(1)		PSP holds 30% of the shares eligible to vote for directors; the remaining 362/3% of shares eligible to vote for directors are held by two independent individuals.

(2)		Held by PSP; liquidation preference as of December 31, 2007. Dividend at a rate of 7% per annum or 8.5% following a performance failure.

(3)		Telesat LLC, a Delaware limited liability company, is a wholly-owned subsidiary of Telesat Canada and exists primarily for the purpose of serving as a co-issuer of the notes offered hereby.

Competitive Strengths

Our business is characterized by the following key competitive strengths:

Leading Global FSS Operator

and contribution throughout Asia and offers connectivity to the US mainland via Hawaiian teleport facilities. Our current enterprise services customers include leading telecommunications service providers as well as a range of network service providers and integrators, who provide services to enterprises, governments and international agencies and multiple ISPs.

Blue Chip Customer Base


	Broadcast:	North American DTH providers Bell TV, Shaw Direct and EchoStar, and leading telecommunications and media firms such as HBO and Canadian Broadcasting Corporation.


	Enterprise:	Bell Canada and NorthwesTel.


	Consulting:	WildBlue, SkyTerra LP, SkyTerra Canada, SIRIUS XM Radio, EchoStar and MacDonald, Dettwiler and Associates

Large Contracted Revenue Backlog and Young Satellite Fleet Underpin Anticipated Growth and High Revenue Visibility

The high quality and young age of our satellite fleet also positively impacts our cash flows as we manage capital expenditures. Our fleet of twelve in-orbit satellites is comprised of eleven owned in-orbit satellites and one satellite of which we lease all but one transponder. Our fleet of eleven owned in-orbit satellites had, as of March 31, 2009, an average of approximately 57.9% service life remaining, with an average service life remaining of approximately 8.3 years. We calculate these figures using, for each satellite, the lesser of its manufacturers’ design service life or its expected end-of-service life. One additional satellite, Nimiq 5, is under construction.

Portfolio of Orbital Real Estate

also occupy highly desirable orbital locations that enable broad pan-regional service with interconnectivity between regions, making them attractive for both intra- and inter-regional services and customers.

See “Business — Our Orbital Locations” for a more detailed description of our orbital locations, the satellites that occupy them and the geographic regions that they serve.

Global Operations Provides Revenue Diversification and Economies of Scale

In addition to diversifying our revenues on a customer, product and geographic basis, the combination of Telesat Canada with Loral Skynet allows us to achieve greater economies of scale.

Business Strategy

We are committed to continuing to provide the strong customer service and focus on innovation and technical expertise that have allowed us to successfully build our business to date. Building on our large backlog and significant contracted growth, our focus will be on taking disciplined steps to grow our core business and sell our existing satellite capacity, improve our operating efficiency and, in a disciplined manner, use the strong cash flow generated by our existing business, contracted expansion satellite and cost savings to strengthen our business.

Continue to Grow Our Core Business

Reduce Costs

Follow a Disciplined Satellite Expansion Strategy

With our current satellite fleet we believe we are well positioned to serve our customers and the markets in which we participate. We regularly pursue opportunities to develop new satellites, particularly in conjunction with current or prospective customers who will commit to a substantial amount of capacity at the time the satellite construction contract is signed. We also evaluate the performance of our business on an ongoing basis and may carry out strategic dispositions of assets, including one or more satellites as part of that process.

Increase Cash Flow, Reduce Leverage and Maintain Strong Liquidity Profile

Our Services

We earn the majority of our revenues by providing transponder capacity to customers, who use the capacity for their own communications requirements or to provide satellite-based services to customers further down the distribution chain for video and data services. We also earn revenue by providing ground-based transmit and receive services, selling equipment, installing, managing and maintaining satellite networks, and providing consulting services in the field of satellite communications. Historically, Telesat Canada categorized its revenues into five categories: Broadcast, Business Networks, Carrier, Consulting & Other and Subsidiaries. In this document, we categorize our revenues into: Broadcast, Enterprise Services and Consulting & Other. Business Networks and Carrier are now in Enterprise Services. Revenue from our subsidiaries is now included in the category that corresponds to the services that they provide.

Broadcast: Our broadcast services business provided approximately 49% of our revenues for the year ended December 31, 2008. These services include:


	•	DTH. Both Canadian DTH service providers (Bell TV and Shaw Direct) use our satellites as a distribution platform for their services, delivering television programming, audio and information channels directly to customers’ homes. For the year ended December 31, 2008, our two largest customers accounted for 18% and 11% of our revenues, respectively. In addition, EchoStar uses our Anik F3 satellite and will use our Nimiq 5 satellite for DTH services in the United States.

	•	Video Distribution and Contribution. Major broadcasters, cable networks and DTH service providers use our satellites for the full-time transmission of television programming. Additionally, we provide certain broadcasters and DTH service providers bundled, value-added services that include satellite capacity, digital encoding of video channels and uplinking and downlinking services to and from our satellites and teleport facilities. Telstar 18 delivers video distribution and contribution throughout Asia and offers connectivity to the US mainland via Hawaiian teleport facilities. Our Telstar 12 satellite is also used to transmit television services. In both Brazil and Chile, we provide video distribution services on Telstar 14/Estrela do Sul.

	•	Occasional Use Services. Occasional use services consist of satellite transmission services for the timely broadcast of video news, sports and live event coverage on a short-term basis enabling broadcasters to conduct on-the-scene transmissions using small, portable antennas.

Enterprise Services: Our enterprise services provided approximately 47% of our revenues for the year ended December 31, 2008. These services include:

Data networks in North America and the related ground segment and maintenance services supporting these networks: We operate very small aperture terminal, or VSAT, networks in North America, managing thousands of VSAT terminals at customer sites. For some of these customers, we offer end-to-end services including installation and maintenance of the end user terminal, maintenance of the VSAT hub, and provision of satellite capacity. For other customers, we may provide a subset of these services. Examples of North American data network services include point of sale services for customers in Canada and communications services to remote locations for the oil and gas industry.

International Enterprise Networks: Our global IP-based network services infrastructure allows us to provide worldwide IP-based terrestrial extension services that allow enterprises to reach all of their locations worldwide — many of which cannot be connected via terrestrial means. In addition, these managed service solutions enable multi-cast and broadcast functionality, as with traditional video

broadcast distribution, which take full advantage of satellite’s one-to-many attributes. We are delivering these services to enterprises whose headquarters are typically in the United States or Europe both through terrestrial partners and directly.

Ka-band Internet Services: We provide Ka-band satellite capacity to Barrett Xplore Inc. and other resellers in Canada who use it to provide two way broadband Internet services in Canada. We also provide Ka-band satellite capacity to WildBlue who uses it to provide similar services in the United States.

Telecommunication carrier services: We provide satellite capacity and end-to-end services for data and voice transmission to telecommunications carriers located throughout the world. These services include (i) connectivity and voice circuits to remote locations in Canada for customers such as Bell Canada and NorthwesTel and (ii) space segment capacity and terrestrial facilities for internet backhaul and access, GSM backhaul, and services such as rural telephony to carriers around the world.

Government Services: The United States Government is the largest single consumer of fixed satellite services in the world, and a significant user of our international satellites. Over the course of several years we have implemented a successful strategy to sell through government service integrators, rather than directly to United States Government agencies. We are also a significant provider of satellite services to the Canadian Government, providing a variety of services from a maritime network for a Canadian Government entity to protected satellite capacity to the Department of National Defence for the North Warning System.

Consulting & Other: Our consulting and other category provided approximately 4% of our revenues for the year ended December 31, 2008. Our consulting operations allow us to realize operating efficiencies by leveraging our existing employees and the facility base dedicated to our core satellite communication business. With almost forty years of engineering and technical experience, we are a leading consultant in establishing, operating and upgrading satellite systems worldwide, having provided services to businesses and governments in approximately thirty countries across six continents. Currently, our international consulting business provides satellite-related services in approximately seventeen countries.

We benefit from revenue diversity both in terms of the geographic location of our customers, based on the billing address of our customers, and the nature of the services provided. For the year ended December 31, 2008, we derived operating revenues, based on the billing address of the customer, in the following geographic regions:


	Year Ended
	December 31,
	2008
	(In CAD$ millions)

North America	$	598
Asia and Australia		34
Europe, Middle East and Africa		47
Latin America		32

For the year ended December 31, 2008, we derived operating revenues from the following services:


	Year Ended
	December 31,
	2008

Broadcast		49	%
Enterprise Services		47	%
Consulting and Other		4	%

Sales and Marketing

We have organized our sales effort by North American Broadcast, North American Enterprise, and International to allow our sales teams to focus on different customer bases that can take advantage of the different types of services enabled by our various satellites. Our account teams typically include an experienced sales executive, supported by an application engineering team that provides both pre-sale and

post-sale technical advice and consultation to our customers. Our sales staff is partially compensated based on meeting and exceeding individual revenue quota targets and overall corporate performance.

We sell our services worldwide primarily through a direct sales force located at our headquarters in Ottawa and at our regional offices including our offices in London, Singapore, Sao Paulo, Rio de Janeiro, Bedminster (New Jersey), Rockville (Maryland), Montreal and Toronto.

Contracts

We have generally sold satellite transponder capacity, ground services and end-to-end managed services to our customers using three different contractual arrangements:


	•	Service agreements: The most common type of agreement that we have entered into for the provision of satellite capacity, ground services and end-to-end managed services is the service agreement. In our service agreements, a customer commits to purchase a specific type of capacity or service. These service agreements contain terms that are generally consistent with industry practices and, for our North American DTH customers, are often for the entire service life of a satellite. Typically, our service agreements can only be terminated by our customers prior to the expiration date in the event of a continued period of service interruption.

	•	Transponder purchase and operating services agreements: We have also entered into transponder purchase and operating services agreements with a number of our customers to provide them with access to capacity on Anik F1, Anik F1R, Anik F2, Nimiq 1 and Nimiq 2. We refer to these transponder purchase and operating services agreements as “condominium style” agreements as the customer purchases the transponder on the satellite and then pays us ongoing operating fees for the life of the satellite. Typically, our customers are only entitled to terminate these transponder purchase and operating agreements in the event of a transponder failure. If such an event were to occur, barring a specified degree of negligence or misconduct on our part, our customers may no longer be required to pay us the ongoing operating fees, but would not be entitled to be reimbursed other fees paid by them in connection with the purchase of the transponder. We have not entered into any transponder purchase and operating services agreements since 2005.

	•	License agreements: We have also entered into a license arrangement for the majority of the Ka-band capacity on Anik F2. This license agreement provides our customer with the exclusive right to access and use the licensed Ka-band capacity for the life of the satellite. Payment for the license has been received and we have no obligation to reimburse such payment in the event of service interruption.

We plan to sell satellite capacity in the future through service contracts or, in unique circumstances, through exclusive license agreements.

Revenue Backlog

Contracted revenue backlog represents our expected future revenues (without discounting for present value) under all current contractual service agreements, including any deferred revenues that we will recognize in the future in respect of cash already received. The significant majority of this contractual backlog is in respect of service or other agreements for satellite capacity. Our contracted backlog is comprised of all amounts due under a contract through the expiration date. We do not assume a given contract will be renewed beyond its stated expiration date. Contracted backlog is attributable both to satellites currently in orbit and to one satellite, Nimiq 5, currently under construction and scheduled for launch in late 2009. As of March 31, 2009, our contracted backlog, including the Nimiq 5 satellite, was approximately $5.3 billion (approximately 1% of which related to Telstar 10). This amount includes approximately $371 million of customer prepayments that Telesat has already received.

Generally, following the successful launch of a satellite, if the satellite is operating nominally, our customers may only terminate their service agreements for satellite capacity by paying us the present value of the payments that would have otherwise become due over the term of the service agreement. In the case of our satellite under construction, Nimiq 5, we would be obligated to return the customer prepayments made

under service agreements for that satellite, plus interest, if the launch was to fail. Those repayments would be funded by insurance proceeds, cash on hand and/or funds available under our revolving credit facility. Also, if the launch of Nimiq 5 was significantly delayed, our customer could exercise a right of termination under its service agreement and we may in such instance be obligated to return certain prepayments received from the customer plus interest. On March 15, 2008, the Proton launch vehicle, which is currently scheduled to launch our Nimiq 5 satellite, experienced a failure stranding a telecommunications satellite of another satellite operator in a low orbit. The resulting investigation delayed the launch of our Nimiq 4 satellite to September 2008. A similar future failure could delay the launch of the Nimiq 5 satellite, which is currently anticipated to occur in late 2009.

Our actual realized revenues may differ from the revenues we expect to realize based on our contractual backlog, and such differences may be material. See “Risk Factors — Risks Related to Our Business” for a discussion of some of the factors that may affect our revenues.

In-Orbit Satellites

Our North American focused fleet is comprised of three owned FSS satellites, Anik F1R, Anik F2 and Anik F3, and three owned direct broadcast services, or DBS, satellites, Nimiq 1, Nimiq 2 and Nimiq 4. In addition, we leased and operated one satellite, Nimiq 3, which was removed from commercial service on June 1, 2009. Our international fleet is comprised of five owned FSS satellites, Anik F1, Telstar 11N, Telstar 12, Telstar 14/Estrela do Sul and Telstar 18 and one satellite, Telstar 10, on which we lease all but one transponder through the satellite’s end-of-life.

Our operations and engineering personnel are actively involved in all stages from the design through the deorbiting of the satellites that we procure. Our personnel work directly with our contractors at the contractor’s site to provide technical input and monitor progress during the satellite’s design, construction and launch phases. Our personnel operate all of our owned satellites throughout the service life of the satellite. Our close monitoring of earth station operations and around-the-clock satellite control and network operations support ensure timely corrections when problems occur. In addition, we have in place contingency plans, which we review on a regular basis, for technical problems that may occur during the service life of a satellite. We also work closely with earth station manufacturers to test and implement the earth stations that we procure, and to resolve technical problems as they arise.

The table below summarizes selected data relating to our owned and leased in-orbit satellite capacity as of March 31, 2009:

Expected

End-of-

Orbital Location

Manufacturer’s

Commercial-

Hosted

Regions

End-of-

Service

Our Transponders(1)

Transponders

Covered

Launch Date

Service- Life

Life(1)

C-band(2)

Ku-band(2)

Ka-band

L-band(3)

Model

Nimiq 1

91.1° WL Canada, Continental United States

May 1999

2011

2024

—

32@24MHz

—

A2100 AX (Lockheed Martin)

Nimiq 2(4)

91.1° WL Canada, Continental United States

December 2002

2015

2022

—

11@24MHz

—

A2100 AX (Lockheed Martin)

Nimiq 3(5)

82° WL Canada Continental United States

June 1995

2007

2009

—

16@24MHz

—

BSS 601 (Boeing)

Nimiq 4

82° WL Canada

September 2008

2023

2027

32@24MHz

8@54MHz

E3000 (EADS Astrium)

Anik F1

107.3° WL South America

November 2000

2016

2013

12@36MHz
(S. America)

16@27MHz
(S. America)

—

BSS702 (Boeing)

Anik F2

111.1° WL Canada, Continental United States

July 2004

2019

2027

24@36MHz

32@27MHz

31@56/112MHz
6@500MHz
1@56/112MHz

—

BSS702 (Boeing)

Anik F1R(3)

107.3° WL North America

September 2005

2020

2023

24@36MHz

32@27MHz

—

2@20MHz

E3000 (EADS Astrium)

Anik F3

118.7° WL Canada, Continental United States

April 2007

2022

2026

24@36MHz

32@27MHz

2@75MHz
(500MHz)

—

E3000 (EADS Astrium)

Telstar 10(6)

76.5° EL Asia and Portions of Europe, Africa and Australia

October 1997

2009

2012

1@30MHz
26@36MHz

7@54MHz

—

SS/L 1300

Telstar 11N (10)

37.55° WL North and Central America, Europe, Africa and the maritime Atlantic Ocean region

February 2009

2024

2026

39@27/54MHz

SS/L 1300

Telstar 12(7)

15° WL Eastern United States, SE Canada, Europe, Russia, Middle East, North Africa, portions of South and Central America

October 1999

2012

2016

—

37@54MHz

—

SS/L 1300

Telstar 14/Estrela do Sul

63° WL Brazil And portions of Latin America, North America, Atlantic Ocean

January 2004

2019

2011

—

9@72MHz
10@36MHz
2@28MHz
1@56MHz

—

SS/L 1300

Telstar 18(8)(9)

138° EL India, South East Asia, China, Australia And Hawaii

June 2004

2017

2018

16@36MHz
1@54MHz

5@54MHz
1@40MHz

—

SS/L 1300


(1)		Our current estimate of each satellite’s capacity and service life, taking account of anomalies and malfunctions the satellites have experienced and other factors such as remaining fuel levels, consumption rates and other available engineering data. These estimates are subject to change and it is possible that the actual service life of any of these satellites will be shorter than we currently anticipate. See “Risk Factors — Risks Related to Our Business — The actual commercial service lives of our satellites may be shorter than we anticipate.”

(2)		Includes the DBS Ku-band, extended C-band and extended Ku-band in certain cases.

(3)		We do not provide service in the L-band. The L-band payload is licensed to our customer by the FCC.

(4)		It is expected that the available capacity on Nimiq 2 will be reduced over time as a result of power system limitations due to malfunctions affecting available power. The number of Ku-band transponders stated above refers to the number of active saturated Ku-band transponders as of March 31, 2009.

(5)		Nimiq 3 was removed from commercial service on June 1, 2009.

(6)		We have a fully paid-up leasehold interest from APT in this satellite and all of its transponder capacity except for one transponder through the end of the satellite’s service life. Pursuant to our lease agreement with APT relating to Telstar 10, we have the exclusive right to lease any replacement satellite launched by APT to be located at the 76.5° EL orbital location, upon substantially similar terms and conditions as the current lease agreement and at a lease rate equal to the cost of constructing and launching the replacement satellite plus an additional fee. We also have the right to require APT to launch replacement satellites to be located at the 76.5° EL orbital location, with the procurement of the replacement satellite(s) to be effected in various manners, at our discretion, including in the form of a sale leaseback transaction pursuant to which (i) we would arrange for the construction and launching of such replacement satellite; (ii) we would sell the satellite to APT; and (iii) we would lease back the satellite at a lease price equal to the sale price to APT plus an additional fee. Our agreement with APT provides that in no event is APT required to make any payment to us of the sale price until it has received the related lease payment from us. On June 1, 2009, we entered into an agreement to terminate our leasehold interest in


		Telstar 10 and to transfer certain related customer contracts in exchange for a payment from APT to us of approximately U.S.$69.5 million, subject to adjustment. The transaction is expected to be completed in July 2009.

(7)		Telstar 12 has 38 54MHz transponders. Four of these transponders are leased to Eutelsat to settle coordination issues, and we lease back three of these transponders.

(8)		Includes 16.6MHz of C-band capacity provided to the Government of Tonga in lieu of a cash payment for the use of the orbital location.

(9)		The satellite carries additional transponders, not shown on the table, as to which APT has a prepaid lease through the end of life of the satellite in consideration for APT’s funding a portion of the satellite’s cost. This transaction was accounted for as a sales-type lease, because substantially all of the benefits and risks incident to the ownership of the leased transponders were transferred to APT. We have agreed with APT among other things that if we are able to obtain the necessary approvals and licenses from the U.S. government under U.S. export laws, we would transfer title to the APT transponders on Telstar 18 to APT, as well as a corresponding interest in the elements on the satellite that are common to or shared by the APT transponders and our transponders. Telesat is contractually obligated to re-acquire from APT two transponders for an additional payment in August 2009. We have the right pursuant to an agreement with APT to exchange, subject to availability, up to four Ku-band transponders on Telstar 10 for C-band transponders on APT’s APSTAR VI satellite or its transponders on Telstar 18, with a cash adjustment for the difference in market value between the transponders so exchanged. Any such exchange shall remain in effect through the end of life of Telstar 10, following which we may under certain limited circumstances continue our use of any exchanged C-band transponder by paying an additional annual fee per transponder. This exchange right terminates on the date that is three years before the anticipated end of life of Telstar 10.

(10)		Telstar 11N entered commercial service on March 31, 2009.

In addition to the pending sale of our leasehold interest in Telstar 10, we are in negotiations regarding the potential sale of our interest in another of our international satellites. Telesat cannot at this time assess the probability of concluding any further transaction under discussion or under what terms, including price, the assets may be sold.

Nimiq Satellites

In July 2008, Nimiq 1 suffered a solar array circuit failure but normal operation has since been restored.

On February 20, 2003, Nimiq 2 experienced an anomaly affecting the available power on the satellite. Lockheed Martin, the satellite’s manufacturer, concluded the most likely cause of this anomaly was an electrical short-circuit caused by foreign object debris located in a single power-carrying connector. As a result of this anomaly, the south solar array power cannot be recovered. Following this event, Nimiq 2 was relocated into the 82^o WL orbital location.

At the time of this anomaly, Nimiq 2 was insured. During the third quarter of 2003, we successfully settled with our insurers a claim for the loss valued at US$49.8 million; 50% of the proceeds were paid to our customer.

On September 28, 2006, Nimiq 2 experienced a failure of a solar array circuit, resulting in a reduction of available power. A number of LM A2100 series of satellites have suffered similar in-orbit failures of circuits on their solar arrays. Lockheed Martin is currently investigating the cause of these failures. On March 10, 2009, Nimiq 2 experienced a failure of an additional solar array circuit, resulting in further reduction in available power.

Presently, we are able to support eleven of the satellite’s 32 Ku-band transponders operating at saturation; however, as a result of the most recent circuit failure, it is currently expected that the available capacity will be reduced to ten saturated Ku-band transponders by mid-2010. By the end of the satellite’s service life, the number of transponders is currently projected to decrease to nine saturated transponders due to array

degradation. There is insufficient power to operate the Ka-band payload carried by the satellite (which consists of two transponders) and these transponders are no longer active.

In April 2005, another satellite operator reported that a satellite of the same series as Nimiq 2 suffered a solar array anomaly that resulted in the complete loss of one array and a corresponding 50% reduction in available satellite power. Lockheed Martin, the manufacturer, has traced the most likely cause of this failure to a component on the solar array drive. Unlike Nimiq 1, Nimiq 2 has this component in its remaining functioning solar array. If this same component failed on the functioning array of Nimiq 2, this would result in a total loss of the satellite which could have a material adverse effect on our business.

Anik Satellites

Anik F1 was designed with the capability to cover both North America and South America from the 107.3° WL orbital location. In August 2001, Boeing, the manufacturer of the Anik F1 satellite, advised us of a gradual decrease in available power on-board the satellite. Boeing investigated the cause of the power loss and reported that the power will continue to degrade resulting in a premature end-of-life of Anik F1. We procured a replacement satellite, Anik F1R, which was launched in 2005. The North American traffic on Anik F1 was transferred to Anik F1R. We now use Anik F1 to provide coverage of South America only.

In December 2002, Telesat Canada filed a claim for Anik F1 as a constructive total loss under its insurance policies. See “Business — Legal Proceedings” for a more detailed description of Telesat’s claim and the proceeding.

In November 2006, Telesat commenced arbitration proceedings against Boeing in connection with the Anik F1 power loss. A portion of its claim was in respect of the subrogated rights of its insurers. See “Business — Legal Proceedings” for a more detailed description of Telesat’s claim and the proceeding.

We have experienced and continue to experience intermittent anomalies with certain amplifiers in the Ka-band and Ku-band payloads on Anik F2. Boeing, the manufacturer, has completed its investigation of these anomalies. The majority of these affected units continue to remain in service through modifying operational configurations.

There is a small Ka-band payload on Anik F3 which experienced an anomaly following launch. We have implemented a plan to remedy the effect of this anomaly and the Ka-band payload is now operational. A US$4 million settlement was agreed with the insurance underwriters in 2008.

Telstar Satellites

Telstar 10 has experienced power loss caused by solar array failures. As a result, certain unutilized transponders have been removed from service on Telstar 10. We will remove additional transponders from service in order to maintain sufficient power to operate the remaining transponders for the satellite’s specified life. The rate of future solar array degradation, and the corresponding number of transponders that must be removed from service, if any, cannot be predicted, and therefore the impact on future revenue generation is uncertain. Prior to February 2005, Telstar 10 experienced a loss of one of two command receivers. Full command-receiver redundancy was subsequently restored through the loading of a software upgrade.

Telstar 12 has experienced losses of power from its solar arrays. These losses of power have not resulted in any operational impact or reduction in the number of available transponders to date. The rate of any future solar array degradation and the corresponding number of transponders that may have to be removed from service, if any, cannot be predicted. Therefore the impact on future revenue generation is uncertain. Telstar 12 experienced a loss of one of two command receivers. Full command-receiver redundancy was subsequently restored through the loading of a software upgrade. Telstar 12 has experienced a loss of some redundant equipment that has not impacted satellite operations to date.

Telstar 14/Estrela do Sul (Telstar 14)’s North solar array only partially deployed after launch, diminishing the power and life expectancy of the satellite. At the end of March 2004, the satellite began commercial service with substantially reduced available transponder capacity and with an expected life reduced to 2011. An

insurance claim was filed and paid to Loral in 2005 for these losses. Telstar 14 has experienced a loss of some redundant equipment that has not impacted satellite operations to date.

Telstar 18 has experienced a failure of one of two telemetry transmitters and the investigation is underway to review options to restore some level of redundancy. Telstar 18 has experienced a loss of some redundant equipment that has not impacted satellite operations to date.

Rights to Other Satellites

In addition, we have rights to the following satellite capacity to end of service life of those satellites:


	•	Satmex 5: three 36MHz Ku transponders;

	•	Satmex 6: two 36MHz C-band transponders; two 36 MHz Ku transponders; and

	•	Agila 2 (Mabuhay): three 36MHz C-band transponders.

We have an option to cause Loral to assign to us its rights and obligations with respect to the payload of the yet-to-be launched ViaSat-1 satellite providing coverage into Canada upon payment by us to Loral of (i) all amounts paid by Loral with respect to the payload of ViaSat-1 providing coverage into Canada on or prior to the date we exercise the option plus (ii) an option premium of between US$6 million and US$13 million depending on the date of exercise. See “Related Party Transactions — Other Related Party Arrangements — ViaSat-1” for additional information about Telesat’s option and ViaSat-1.

Planned Satellites

We entered into contractual arrangements with SS/L for the construction of Nimiq 5, currently scheduled to be delivered by the manufacturer on the ground in late 2009. Nimiq 5 is designed to have 32 24 MHz Ku-band transponders, be located at the 72.7° WL orbital location, and provide coverage of Canada and the continental United States. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Contractual Obligations and Other Commercial Commitments” for a discussion on the contractual obligations due for Nimiq 5.

Potential Future Satellites

We have certain satellite spectrum resources and access to orbital locations as described below, see “Business — Our Orbital Locations.” These spectrum resources and orbital locations provide us with the opportunity to expand our satellite capacity by procuring and bringing into service new satellites. At this time, we have no committed capital expenditures for new satellites beyond Nimiq 5.

Our Orbital Locations

To date, Telesat Canada has been authorized by Industry Canada to operate spacecraft in the following Canadian DBS and FSS orbital locations, each of which is located between the east and west coasts of North America:


DBS
72.5°/72.7° WL		In December 2003, Industry Canada awarded Telesat Canada approval in principle to use the 72.5° WL DBS orbital location. To facilitate frequency coordination, the ITU Region 2 BSS Plan was subsequently modified to change the Plan entry from 72.5° WL to 72.7° WL. Two satellites that are owned, operated and used by other satellite operators are currently located in the 72.5° WL and 72.7° WL orbital locations, under our direction and control. We have until December 31, 2009 to occupy the 72.7° WL orbital location with a new satellite. The Nimiq 5 satellite, which is currently under construction and scheduled to be delivered by the manufacturer on the ground in late 2009, is expected to be operated in that orbital location.
82.0° WL		In November 2000, Industry Canada granted Telesat Canada a spectrum license to access the 82.0° WL DBS orbital location until the earlier of March 2016 or the end of the service life of the satellite. In March 2009, the term of that license was extended to December 31, 2023. Currently, Nimiq 4 occupies the 82.0° WL orbital location.
91.0°/ 91.1° WL		In March 1999, Industry Canada amended the spectrum license granted to Telesat Canada in 1997 (which had originally applied to the 82.0° WL orbital location) to transfer our rights to the 91.0° WL DBS orbital location. These rights currently expire in March 2011. In order to facilitate frequency coordination, the ITU Region 2 BSS Plan was subsequently amended to change the Plan entry from 91.0° to 91.1° WL. Currently, Nimiq 1 and Nimiq 2 occupy the 91.0° WL orbital location.
FSS
107.3° WL		In November 1997, Industry Canada granted Telesat Canada approval for C-band and Ku-band operations on Anik F1 at the 107.3° WL orbital location.
111.1° WL		In November 1997, Industry Canada granted Telesat Canada approval for C-band and Ku-band operations on Anik F2 at the 118.7° WL orbital location. In April 1999, the approval for Anik F2 was altered so that Telesat Canada could use the 111.1° WL, rather than the 118.7° WL, orbital location. In June 1999, Industry Canada granted Telesat Canada approval to add the Ka-band spectrum on Anik F2 at 111.1° WL
118.7° WL		In June 2001, Industry Canada granted Telesat Canada approval in principle to develop and operate a C- and Ku-band communications satellite at the 118.7° WL orbital location, and temporary authority to access the Ka-band spectrum at this orbital location. In June 2008, we were issued permanent authorization to access the Ka-band spectrum. Anik F3 currently occupies this orbital location.

At the present time, we have satellites that are authorized by the United States, the Kingdom of Tonga, China and Brazil to operate in the following FSS orbital locations:


76.5° EL		The government of Hong Kong S.A.R. granted APT Satellite Company Limited the license(s) to operate the APSTAR-IIR satellite at 76.5° EL. APSTAR-IIR (which we refer to as Telstar 10) which was launched on October 16, 1997 and commenced service in December 1997. Effective August 18, 1999, APT and Loral Asia Pacific Satellite (HK) Limited, now known as Telesat Asia Pacific Satellite (HK) Limited (“TAPS”), entered into an agreement to lease all except one transponder on the satellite. The lease agreement has provisions for TAPS to implement a replacement satellite at that orbital location. See “Business--In-Orbit Satellites” for more information.
37.55° WL		In June 2001, the FCC granted the authority to construct, launch and operate Telstar 11N at 37.5^o WL. In September 2004, the FCC granted an application to add 250 MHz of extended Ku-band spectrum to the satellite authorization. In September 2007, the FCC amended the authorization to permit Telstar 11N to operate at the 37.55^o WL orbital location. Telstar 11N entered commercial service at the 37.55^o WL orbital location on March 31, 2009.
15.0° WL		In September 1995, the FCC granted conditional authority to construct and launch Telstar 12 at the 12.0^o WL orbital location, and Telstar 12 commenced commercial service in December 1999. In March 2000, the FCC released an Order granting authority to operate Telstar 12 at the 15^o WL orbital location.
63.0° WL		Telstar 14/Estrela do Sul was initially authorized to operate under a Concession Agreement issued by the Brazilian regulatory agency, ANATEL, and executed in May 1999. In December 2008, Telesat Brasil Capacidade de Satélites Ltda. (“TBCS”) entered into a new 15-year Concession Agreement with ANATEL allowing TBCS to operate a Ku-band satellite at 63^o WL and requiring TBCS to dedicate a minimum amount of bandwidth to serve only Brazil until May 2014.
138.0° EL		In July 2003, the Friendly Islands Satellite Communications Company (“TONGASAT”) entered into an agreement with APT Satellite Company Limited (“APT”) for the use of the Kingdom of Tonga’s orbital location at 138^o EL. In August 2003, APT entered into a sub-license agreement with Loral Skynet for the 138^o EL orbital location. In June 2004, the FCC granted the request to conduct TT&C operations for Telstar 18 via the Kapolei, HI earth station. In late August 2004, Telstar 18 commenced service under authorization from the Kingdom of Tonga.

In June 2007, Canada’s Minister of Industry announced that five additional authorizations for orbital spectrum would be awarded to Telesat Canada as follows: for 17 GHz BSS (also known as RDBS) at each of the 72.5^o WL, 82^o WL and 86.5^o WL orbital locations; and for both 17 GHz BSS and Ka-band at the 118.7^o WL orbital location. Telesat Canada was subsequently awarded an authorization for extended Ku-band FSS spectrum at the 111.1° WL orbital location. We have also been authorized to use a number of C-, Ku- and Ka-band FSS and 17 GHz DBS orbital locations by the Isle of Man government. There can be no assurance that we will make use of all orbital spectrum available to us. As part of our strategy to expand our existing operations, we routinely seek to develop orbital locations and frequencies available to us.

In general, our satellites are exposed to the potential of risk of loss. See “Risk Factors — Risks Related to Our Business — Our in-orbit satellites may fail to operate as expected due to operational anomalies resulting in lost revenues, increased costs and/or termination of contracts,” for a more information about the risk of loss associated with satellite anomalies.

Satellite Operations and Related Facilities

Satellite Control Centre and Teleport/Earth Station Facilities

Our primary Satellite Control Centre (“SCC”) is located at our headquarters in Ottawa, Ontario. The SCC is the hub for our satellite-related activities. The facility is staffed 24 hours per day and currently operates

twenty-four satellites. Of that number, eleven are Telesat owned satellites: Anik F1, Anik F1R, Anik F2, Anik F3, Nimiq 1, Nimiq 2, Nimiq 4, Telstar 11N, Telstar 12, Telstar 14/Estrela do Sul and Telstar 18. Thirteen are satellites that we operate for third parties: one for WildBlue; two MSS satellites — one for SkyTerra LP and one for SkyTerra Canada; four for SIRIUS XM Radio; four for EchoStar; one for XTAR, a Loral affiliate; and one for MacDonald, Dettwiler and Associates.

The headquarters building, which consists of approximately 212,000 rentable square feet on 10 acres, is co-owned by Telesat Canada and a pension fund, each having a fifty percent interest as tenants-in-common. Telesat has signed an offer to lease and is finalizing a lease which provides for a fifteen year term (terminable by Telesat Canada at any time after ten years upon two years’ notice), commencing February 1, 2009, for an area in the headquarters building of approximately 112,000 rentable square feet. The balance of the area in the headquarters building is occupied by third parties.

The Allan Park earth station, located northeast of Toronto, Ontario on approximately 65 acres of land, houses a customer support centre and a technical control centre. This facility is the single point of contact for Telesat’s customers internationally and is also the main earth station complex providing TT&C services for the satellites that we operate. The Allan Park earth station also houses our back-up satellite control centre for the Nimiq and Anik satellites. The back-up satellite control centre for the Telstar satellites is located at the Mount Jackson earth station. We would have the functional ability to restore satellite control services via the Allan Park and Mount Jackson back-up control centres if our primary SCC became disabled.

In addition to the Ottawa headquarters and the Allan Park earth station, we operate a number of teleports, including the following:


		Teleport Lands
		Owned/Leased
		by us or
Teleport		Our Subsidiaries

Vancouver, British Columbia, Canada		Owned
Calgary, Alberta, Canada		Owned
Edmonton, Alberta, Canada		Leased
Winnipeg, Manitoba, Canada		Owned
Montreal, Quebec, Canada		Owned
Toronto, Ontario, Canada		Leased
Mount Jackson, Virginia, USA		Owned
Macomb, Michigan, USA		Leased
Perth, Australia		Leased
Belo Horizonte, Brazil		Owned
Rio de Janeiro, Brazil		Leased

The teleport that Telesat Canada operated in Harrietsfield, Nova Scotia, Canada has been closed, and is listed for sale. The teleport that we operate in Rio de Janeiro, Brazil is in the process of being closed and its operations will be transferred to the Belo Horizonte teleport.

In addition to these facilities, we lease facilities for administrative and sales offices in various locations throughout Canada and the United States as well as in Brazil, England, India, The Netherlands and Singapore. One of our subsidiaries, SpaceConnection, owns the office building in North Hollywood, California from which it conducts its operations.

Satellite Operations Risk Management

Satellites utilize highly complex technology and operate in the harsh environment of space and, accordingly, are subject to significant operational risks while in orbit. These risks include anomalies that have occurred in our satellites and the satellites of other operators. Once our satellites are in orbit, there is a risk that a failure could prevent them from completing their commercial mission of providing uninterrupted service to customers. See “Risk Factors — Risks Related to Our Business — Our in-orbit satellites may fail to operate

as expected due to operational anomalies resulting in lost revenues, increased costs and/or termination of contracts.”

To ensure continuity of service to our customers, we engineer satellites with on-board redundancies by including spare equipment on the satellite, conduct standard testing programs that provide high confidence of performance levels, and purchase insurance.

Our primary consideration in managing our satellite telecommunications systems is to provide reliable and cost-effective services to our customers. We endeavor to limit the assumption of risk to activities under our control. Our space risk management program has been designed to achieve these objectives.

Non-Insurance Risk Management Initiatives

The risk management program begins at the technical analysis and design stage of the satellites. We engineer certain redundancy on-board every satellite. Furthermore, we are involved in overseeing the manufacture of all of our satellites. We require the manufacturer and its subcontractors to follow assembly and quality assurance programs. We secure and maintain access to work performed by the satellite manufacturer and its subcontractors for the purpose of observing the quality and progress of such work. Comprehensive testing is conducted at the manufacturer’s or a subcontractor’s plant which must meet industry standards and, in many cases, be supervised by our engineering personnel. Our engineering personnel review program management and construction schedules, engineering, design, manufacturing and integration and testing activities at both the manufacturer’s and subcontractor’s sites. After construction is complete, we conduct final acceptance inspections of all deliverable items.

We believe it is crucial to have knowledge and insight into the launch vehicles being used to launch our satellites. Our engineering personnel are on site before and during all launches to observe that all checks and integration steps are completed.

We believe that these quality assurance and manufacturing process monitoring programs help us reduce the risk of satellite failures and anomalies and result in lower launch and in-orbit insurance costs.

Emergency Committee

Protecting and maintaining service to customers is of vital importance to us. Our emergency committee is responsible for managing the restoration of services in the event of an actual or threatened critical condition, such as a satellite failure, the loss of telemetry and tracking ability or the loss of earth station functionality. Despite our efforts, satellite failures or other anomalies may occur. See “Risk Factors — Risks Related to Our Business — Our in-orbit satellites may fail to operate as expected due to operational anomalies resulting in lost revenues, increased costs and/or termination of contracts.” We may also experience a failure of our ground operations infrastructure. See “Risk Factors — Risks Related to Our Business — We may experience a failure of ground operations infrastructure or electromagnetic or radio frequency interference with our satellite signals that impairs the commercial performance of, or the services delivered over, our satellites of other operators for whom we provide ground services, which could result in a material loss of revenues.”

Satellite Insurance

We are required to maintain certain satellite insurance under the covenants of our senior secured credit facilities and under the indentures governing the notes. In addition, we may purchase additional insurance as we deem appropriate.

Satellite insurance falls into three categories: Pre-Launch Insurance, Launch Insurance and In-Orbit Insurance.

Pre-Launch Insurance

Pre-launch risks (risks during the manufacturing and transport phase) are primarily managed through contractual arrangements between us and the satellite manufacturer.

Launch Insurance

The procurement of satellite launch insurance is, and has been, an integral part of our risk management program. It has been our practice to insure our launches where we bear the risk of loss. Typically, our launch insurance has covered the following events during the period of coverage: (i) delivery from the launch pad to orbit; (ii) separation from the launch vehicle; (iii) drift orbit maneuvers; (iv) solar array and antenna deployment; (v) testing and commissioning; and (vi) eclipse periods.

In-Orbit Insurance

In-orbit (life) insurance provides coverage for total and/or partial losses during the operating phase of a satellite. In-orbit insurance may be purchased at the same time launch insurance is procured (for new satellites) or once the satellite is in orbit, in the case of existing satellites, subject to functionality and insurance market conditions. Premium rates are dependent on the operating condition of the satellite and other satellites of the same design or using the same components as well as prevailing insurance market conditions. Typically, these insurance policies exclude coverage for damage arising from acts of war, lasers, and other similar potential risks for which exclusions are customary in the industry at the time the policy is written. In addition, they typically exclude coverage for satellite health-related problems affecting our satellites and other satellites of the same design or using the same components that are known at the time the policy is written.

Current Insurance Coverage

With respect to in-orbit satellites, Nimiq 4, launched in September 2008, is insured for its book value until September 2009, under a series of launch insurance policies. A portion of the Nimiq 4 launch and in-orbit insurance is in place until September 2013. Telstar 11N is insured for its book value until February 2010, under a series of launch insurance policies. A portion of the Telstar 11N launch and in-orbit insurance is in place until February 2014. Anik F3, Nimiq 1 and Anik F1R are insured to May 2010 for approximately their book value. Anik F2 is insured for approximately 68% of its book value until July 2009. Telstar 10 and Telstar 12 are insured until May 2010 for their book value. Telstar 18 is insured until May 2010 for approximately 75% of its book value. We may discontinue or change these practices in the future. We have insured our interest in certain transponders on Satmex 6 until May 2010. Some of our satellite insurance policies contain deductibles or coverage exclusions related to the future failure of certain specific on-board components.

Telstar 14/Estrela do Sul is uninsured. The satellite’s North solar array only partially deployed after launch, diminishing the power and life expectancy of the satellite.

In December 2004, we ceased to insure our interest in the residual value of Nimiq 2. We also do not insure our interest in transponders on Satmex 5.

In August 2001, the manufacturer of the Anik F1 satellite advised us of a gradual decline in power on the satellite. We had insurance in place to cover the power loss on Anik F1. See “Business — In-Orbit Satellites — Anik F1” for a discussion of the insurance claim filed by Telesat and settlement agreement reached with the insurers. Anik F1 is currently uninsured.

Nimiq 5, which is currently under construction and scheduled to be launched in late 2009, is insured for its book value until one year after launch under a series of launch insurance policies. A portion of the Nimiq 5 launch and in-orbit insurance is in place until five years after launch.

Competition

We are one of three global satellite operators. We compete against other global, regional and national satellite operators and, to a lesser extent, with providers of terrestrial-based communications services.

Satellite operators

The other two global satellite operators are Intelsat, Ltd. (“Intelsat”) and SES S.A. (“SES”). We also compete with a number of nationally or regionally focused satellite operators around the world, including Eutelsat, the third largest satellite operator in the world.

Intelsat, SES and Eutelsat are each substantially larger than we are in terms of both the number of satellites they have in-orbit as well as their revenues. We believe that Intelsat and its subsidiaries together have a global fleet of over fifty satellites, that SES and its subsidiaries have a fleet of approximately forty satellites, and that Eutelsat and its subsidiaries have a fleet of approximately twenty satellites and additional capacity on another five satellites. Due to their larger sizes, these operators are able to take advantage of greater economies of scale, may be more attractive to customers, and may (depending on the specific satellite and orbital location in question) have greater flexibility to restore service to their customers in the event of a partial or total satellite failure. In addition, their larger sizes may enable them to devote more resources, both human and financial, to sales, operations, product development, and strategic alliances and acquisitions.

Regional and domestic providers: We also compete against regional satellite operators, including:


	•	in Europe, Middle East, Africa: Eutelsat, SES Astra, Arabsat, Nilesat, HellaSat and Turksat;

	•	in Asia: AsiaSat, Measat, Thaicom, APT, PT Telkom, and Optus; and

	•	in Latin America: Satmex, Star One, Arsat and HispaSat.

A number of other countries have domestic satellite systems that we compete against in those markets.

In Canada, our largest market, Ciel, whose majority equity shareholder is SES Americom Inc. (a wholly-owned subsidiary of SES), has begun operations in the DBS band, successfully launched Ciel 2 in 2008, and in February 2009 announced that it had begun providing commercial service on Ciel 2 at the 129^o WL orbital location. In June 2008, Industry Canada granted Ciel six approvals in principle to develop and operate satellite services in other frequency bands and orbital positions.

The Canadian Government opened Canadian satellite markets to foreign satellite operators as part of its 1998 World Trade Organization commitments to liberalize trade in basic telecommunications services. As of April 2009, approximately 75 non-Canadian FSS satellites had been approved by Industry Canada for use in Canada.

Terrestrial Service Providers

Providers of terrestrial-based communications services compete with satellite operators. Increasingly, in developed and developing countries alike, governments are providing funding and other incentives to encourage the expansion of terrestrial networks resulting in increased competition for FSS operators.

Consulting Services

The market for satellite consulting services is generally comprised of a few service providers qualified to provide services in specific areas of expertise. Our competitors are primarily United States and European-based companies.

Government Regulation

Canadian Regulatory Environment

The Telesat Divestiture Act

Telesat Canada was established by the Government of Canada in 1969 under the Telesat Canada Act. As part of the Canadian government’s divestiture of its shares in Telesat Canada, pursuant to the Telesat Canada Reorganization and Divestiture Act (1991), or the Telesat Divestiture Act, Telesat Canada was continued on March 27, 1992 as a business corporation under the CBCA, the Telesat Act was repealed and the Canadian government sold its shares in Telesat Canada. The Telesat Divestiture Act provides that no legislation relating

to the solvency or winding-up of a corporation applies to Telesat Canada and that its affairs cannot be wound up unless authorized by an Act of Parliament. See “Risk Factors — Risks Related to the Notes — Because of the Telesat Canada Reorganization and Divestiture Act, a Canadian act uniquely applicable to Telesat Canada (but not the guarantors, other subsidiaries or Telesat LLC), Telesat Canada may not have access to the usual protections from creditors and other rights available to insolvent persons, and creditors, including holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws generally available to creditors of insolvent persons.” In addition, Telesat Canada and its shareholders and directors cannot apply for Telesat Canada’s continuation in another jurisdiction or dissolution unless authorized by an Act of Parliament.

Telecommunications Regulation

We are subject to regulation by government authorities in Canada, the United States and other countries in which we operate and are subject to the frequency and orbital location coordination process of the ITU. Our ability to provide satellite services in a particular country or region is subject also to the technical constraints of our satellites, international coordination, local regulation including as it applies to securing landing rights and licensing requirements.

The Telecommunications Act

Telesat Canada is a Canadian carrier under the Telecommunications Act (Canada), or the Telecom Act. The Telecom Act authorizes the Canadian Radio-Television and Telecommunications Commission (“CRTC”) to regulate various aspects of the provision of telecommunications services by us and other telecommunications service providers. Since the passage of the Act in 1993, the CRTC has gradually forborne from regulating an increasing number of services provided by regulated companies. As of March 1, 2000, coincident with the end of Telesat Canada’s FSS monopoly in Canada (described below), the CRTC abandoned rate-of-return regulation of our FSS services and no longer requires us to file tariffs in respect of these services. Under the current regulatory regime, we have pricing flexibility subject to a price ceiling of $170,000 per transponder per month on certain full period FSS services offered in Canada under minimum five-year arrangements. DBS services offered within Canada are also subject to CRTC regulation, but have been treated as distinct from its FSS services and facilities. To date, we have sought and received CRTC approval of customer agreements relating to the sale of capacity on all Nimiq DBS satellites, including the rates, terms and conditions of service set out therein. Section 28(2) of the Telecom Act provides that the CRTC may allocate satellite capacity to particular broadcasting undertakings if it is satisfied that the allocation will further the implementation of the broadcasting policy for Canada.

Radiocommunication Act

Our operations are also subject to regulation and licensing by Industry Canada pursuant to the Radiocommunication Act (Canada). Industry Canada has the authority to issue licenses, establish standards, assign Canadian orbital locations, and plan the allocation and use of the radio frequency spectrum, including the radio frequencies upon which our satellites and earth stations depend. The Minister responsible for Industry Canada has broad discretion in exercising this authority to issue licenses, fix and amend conditions of licenses, and to suspend or even revoke them. Our licenses to operate the Anik and Nimiq satellites require us to comply with research and development and other industrial and public benefit commitments, to pay annual radio authorization fees, to provide all-Canada satellite coverage and to comply with foreign ownership restrictions.

To date, Industry Canada and the CRTC have taken the position that we are subject to certain Canadian foreign ownership and control restrictions which are set out in the Telecommunications Act, the Radiocommunication Act and the regulations under each, and in Industry Canada policies.

Industry Canada traditionally licensed satellite radio spectrum and associated orbital locations on a first-come, first-served basis. Currently, however, a competitive licensing process is employed for certain spectrum resources where it is anticipated that demand will likely exceed supply, including the licensing of FSS and

BSS orbital locations and associated spectrum resources. Authorizations are granted for the life of a satellite although radio licenses (e.g., FSS licenses) are renewed annually. As a result of policy concerns about the continuity of service and other factors, there is generally a strong presumption of renewal provided license conditions are met.

The Canadian Government opened Canadian satellite markets to foreign satellite operators as part of its 1998 World Trade Organization (“WTO”) commitments to liberalize trade in basic telecommunications services, with the exception of DTH television services provided through FSS or DBS facilities. Satellite digital audio radio service markets were also closed to foreign entry until recently. In September 2005, the Canadian Government revised its satellite-use policy to permit the use of foreign-licensed satellites for digital audio radio services in Canada. Further liberalization of the policy may occur and could result in increased competition in Canadian satellite markets. See “Business — Competition” for more information about our competitors in the Canadian satellite market.

Section 28(2) of the Telecommunications Act (Canada) legislates that the CRTC may allocate satellite capacity to particular broadcasting undertakings if it is satisfied that the allocation will further the implementation of the broadcasting policy for Canada. Third parties have a right to petition the CRTC for reallocation of satellite capacity and on three occasions between 1997 and 2001 a customer or potential customer has made such a petition, in one case succeeding in blocking our ability to “claw back” transponder capacity in accordance with a contract with that customer. The exercise by the CRTC of its rights under section 28(2) of the Telecommunications Act could affect our relationship with existing customers, which could have a material adverse effect on our results of operations, business prospects and financial condition.

Contribution Collection Mechanism

Since November 2000, pursuant to the CRTC’s Decision CRTC 2000-745, virtually all telecommunications service providers are required to pay contribution charges based on their Canadian telecommunications service revenues, minus certain deductions (e.g., retail Internet and paging revenues, terminal equipment sales and inter-carrier payments). The contribution rate varies from year to year. It was initially set at 4.5% of eligible revenues but was significantly reduced in subsequent years. The CRTC has set the interim rate for 2009 at 0.87% and will set a final rate later in the year, retroactive to January 1, 2009.

United States Regulatory Environment

The FCC regulates the provision of satellite services to, from, or within the United States.

We have chosen to operate our U.S.-authorized satellites on a non-common carrier basis. Consequently, they are not subject to rate regulation or other common carrier regulations enacted under the Communications Act of 1934. We pay FCC filing fees in connection with our space station and earth station applications and annual fees to defray the FCC’s regulatory expenses. Annual and quarterly status reports must be filed with the FCC for interstate/international telecommunications and we must contribute funds supporting the FCC’s Universal Service Fund (“USF”) with respect to eligible United States telecom revenues on a quarterly and annual basis. The USF contribution rate is adjusted quarterly and is currently set at 9.5% for the first quarter of 2009. At the present time, the FCC does not assess USF contributions with respect to bare transponder capacity (i.e., agreements for space segment only).

The FCC currently grants satellite authorizations on a first-come, first-served basis to applicants who demonstrate that they are legally, technically and financially qualified, and that the public interest will be served by the grant. Under licensing rules, a bond must be posted for up to US$3 million when an FSS satellite authorization is granted. Some or the entire amount of the bond may be forfeited if there is failure to meet any of the milestones for satellite construction, launch and commencement of operations. According to current licensing rules, the FCC will issue new satellite licenses for an initial fifteen-year term and will provide a licensee with an “expectancy” that a subsequent license will be granted for the replacement of an authorized satellite using the same frequencies. At the end of the 15 year term, a satellite that has not been replaced, or that has been relocated to another orbital location following its replacement, may be allowed to continue operations for a limited period of time subject to certain restrictions.

Telesat has through its U.S. subsidiary, Skynet Satellite Corporation, FCC authorization for two existing U.S.-licensed satellites: Telstar 12 which operates in the Ku band at 15 WL, and Telstar 11N which operates in the Ku-band at 37.55 WL.

To facilitate the provision of FSS in C- and Ku-band frequencies in the United States market, foreign licensed operators can apply to have their satellites placed on the FCC’s Permitted Space Station List. Our Anik F1, Anik F1R, Anik F2, Anik F3 and Telstar 14/Estrela do Sul satellites are currently on this list. The FCC Order placing Anik F2 on the list also approved Telesat Canada’s application to use Ka-band capacity on this satellite to provide two-way broadband communications services in the United States.

The United States made no WTO commitment to open its DTH, DBS or digital audio radio services to foreign competition, and instead indicated that provision of these services by foreign operators would be considered on a case-by-case basis, based on an evaluation of the effective competitive opportunities open to United States operators in the country in which the foreign satellite was licensed (i.e., an ECO-sat test) as well as other public interest criteria. While Canada currently does not satisfy the ECO-sat test in the case of DTH and DBS service, the FCC has found, in a number of cases, that provision of these services into the United States using Canadian-licensed satellites would provide significant public interest benefits and would therefore be allowed. In cases involving us, United States service providers Digital Broadband Applications Corp., DIRECTV and EchoStar have all received FCC approval to access Canadian-authorized satellites under Telesat’s direction and control in Canadian-licensed orbital locations to provide DTH-FSS or DBS service into the United States.

The approval of the FCC for the Telesat Canada acquisition and the Skynet Transaction was conditioned upon Telesat Holdings’, Telesat Interco’s and Loral Skynet’s compliance with commitments made to the Department of Justice, the Federal Bureau of Investigation and the Department of Homeland Security relating to the availability of certain records and communications in the United States in response to lawful United States law enforcement requests for such access.

The export of United States-manufactured satellites and technical information related to satellites, earth station equipment and provision of services to certain countries are subject to State Department, Commerce Department and Treasury Department regulations.

In 1999, the United States State Department published amendments to the International Traffic in Arms Regulations (“ITAR”) which included satellites on the list of items requiring export licenses. These provisions have limited our access to technical information and have had a negative impact on our international consulting revenues.

If we do not maintain our existing authorizations or obtain necessary future authorizations under the export control laws and regulations of the United States, we may be unable to export technical information or equipment to non-U.S. persons and companies, including to our own non-U.S. employees, as required to fulfill existing contracts. If we do not maintain our existing authorizations or obtain necessary future authorizations under the trade sanctions laws and regulations of the United States, we may not be able to provide satellite capacity and related administrative services to certain countries subject to U.S. sanctions. Our ability to acquire new United States-manufactured satellites, procure launch services and launch new satellites, operate existing satellites, obtain insurance and pursue our rights under insurance policies or conduct our satellite-related operations and consulting activities could also be negatively affected if we and our suppliers are not able to obtain and maintain required U.S. export authorizations.

Brazil Regulatory Environment

The Brazilian national telecommunications agency, ANATEL, has authorized us, through our subsidiary, Telesat Brasil Capacidade de Satélites Ltda. (“TBCS”), to operate a Ku-band FSS satellite at the 63° WL orbital location. In December 2008, TBCS entered into a new 15-year Concession Agreement with ANATEL which requires TBCS to dedicate a minimum amount of bandwidth to serve only Brazil until May 2014. After May 2014, this requirement will be removed. The Concession Agreement obligates TBCS to operate the satellite in accordance with Brazilian telecommunications law and contains provisions to enable ANATEL to

levy fines for failure to perform according to the Concession terms. Brazil also has a Universal Service Fund (“FUST”) to subsidize the cost of telecommunications service in Brazil. The sale of “bare transponder capacity” in Brazil, however, which is TBCS’ primary business, is not considered a telecommunications service and revenues from such sales are not assessable for contributions to the fund.

Tonga and People’s Republic of China Regulatory Environment

Pursuant to agreements with APT, we, through our subsidiary Telesat Asia Pacific Satellite (HK) Limited, have the right to use and sublease all but one C-band transponder on the Telstar 10 satellite. Telstar 10 is operated by APT, which has been granted the right to use the 76.5° EL orbital location by the Government of Hong Kong, People’s Republic of China. We, through our subsidiary Telesat Satellite LP, own Telstar 18, which operates at the 138° EL orbital location under an agreement with APT, which has been granted the right to use the 138° EL orbital location by The Kingdom of Tonga. APT is the direct interface with these regulatory bodies. Because we have gained access to these orbital locations through APT, there is greater uncertainty with respect to our ability to maintain access to these orbital locations for replacement satellites.

Landing Rights and Other Regulatory Requirements

In addition to regulatory requirements governing the use of orbital locations, most countries regulate transmission signals to, and for uplink signals from, their territory. Telesat has landing rights in more than 140 countries worldwide.

International Regulatory Environment — International Telecommunication Union

The ITU is responsible for allocating the use by different countries of a finite number of orbital locations and radio frequency spectrum available for use by commercial communications satellites. The ITU Radio Regulations set forth the processes that governments must follow to secure rights to use orbital locations and the obligations and restrictions that govern such use. The process includes, for example, a “first in time, first in right” system for allocating most orbital locations and time limits for bringing orbital locations into use.

The Canadian, United States and other governments have rights to use certain orbital locations and frequencies. Telesat has been authorized to use certain orbital locations and frequencies in addition to those used by our current satellites. Under the ITU Radio Regulations, the filing government (through the satellite operator the government in question has authorized) we must begin using these orbital locations and frequencies within a fixed period of time, or lose their priority rights. As a result, the orbital location and frequencies likely would become available for use by another government and satellite operator.

The ITU Radio Regulations also govern the process used by satellite operators to coordinate their operations with other satellites, so as to avoid harmful interference. Each member state is required to give notice of, coordinate, and register its proposed use of radiofrequency assignments and associated orbital locations with the ITU Radiocommunications Bureau (the “ITU-BR”).

Once a member state has filed with the ITU-BR its proposed use of a given frequency at a given orbital location, other member states notify that state and the ITU-BR of any use or intended use that would conflict with the original proposal. These nations are then obligated to negotiate with each other in an effort to coordinate the proposed uses and resolve interference concerns. If all outstanding issues are resolved, the member state governments notify the ITU-BR that coordination has been successfully completed, which is a requirement for the frequency use to be entered into the ITU’s Master Register (“MIFR”). Registered satellite networks are entitled under international law to interference protection from subsequent or nonconforming uses. A state is not entitled to invoke the protections in the ITU Radio Regulations against harmful interference if that state decided to operate a satellite at the relevant orbital location without completing the coordination process.

Under the ITU Radio Regulations, a country that places a satellite or any ground station into operation without completing coordination and notification would be vulnerable to interference from other systems and

might have to alter the operating parameters of its satellite network if the ITU found that the satellite caused harmful interference to other users already entered in the MIFR.

Some of our satellites have been coordinated and registered in the MIFR and therefore enjoy priority over all later-filed requests for coordination and any non-conforming uses. In other cases, entry into the MIFR is still pending. In some of the cases where entry into the MIFR is pending, there are operators that maintain that they have priority over our satellites and we continue to discuss coordination issues with these and other operators and may need to make additional concessions in connection with future coordination efforts which, in turn, could have a material adverse impact on our financial condition, as well as on the value of our business. The failure to reach an appropriate arrangement with such satellite operators may render it impossible to secure entry into the MIFR and result in substantial restrictions on the use and operations of our existing satellites at their orbital locations. In the event disputes arise during the coordination process or thereafter, the ITU Radio Regulations do not contain a mandatory dispute resolution mechanism or an enforcement mechanism. Rather, the rules invite a consensual dispute resolution process for parties to reach a mutually acceptable agreement. Neither the rules nor international law provide a clear remedy for a party where this voluntary process fails.

Although non-governmental entities, including us, participate at the ITU, only national administrations have full standing as ITU members. Consequently, we must rely on the government administrations of Canada, the United States, Brazil and the United Kingdom (respectively, Industry Canada, the FCC, ANATEL and OFCOM) to represent our interests there, including filing and coordinating our orbital locations within the ITU process and with the national administrations of other countries, obtaining new orbital locations, and resolving disputes through the consensual process provided for in the ITU’s rules. See “Risk Factors — Risks Related to Our Business” for a discussion on how the international regulatory environment may affect our revenues.

Patents and Proprietary Rights

As of December 31, 2008, Telesat had eleven patents, all in the United States. These patents expire between 2016 and 2021. Telesat also has 2 patents pending.

There can be no assurance that any of the foregoing pending patent applications will be issued. Moreover, there can be no assurance that infringement of existing third party patents has not occurred or will not occur. Additionally, because the U.S. and Canadian patent application process is confidential, there can be no assurance that third parties, including competitors, do not have patents pending that could result in issued patents which we would infringe. In such event, to obtain a license from a patent holder, royalties would have to be paid, which would increase the cost of doing business.

Research and Development

Our research and development expenditures are incurred for the studies associated with advanced satellite system designs, and experimentation and development of space, satellite and ground communications products. This also includes the development of innovative and cost effective satellite applications for sovereignty, defense, broadcast, broadband, and enterprise services segments. Telesat has undertaken proof-of-concept interactive broadband technologies trials to support health, education, government and other applications to remote and under-served areas. It continues to research advanced compression and transmission technology to support HDTV and other advanced television services and evaluate technology on behalf of the World Broadcast Union and European Space Agency. Telesat Canada’s research and development expenditures for each of 2008 and 2007 were approximately $3 million. For 2006, research and development expenditures were approximately $4 million.

Capital Expenditures

For a description of our principal capital expenditures during the past 3 fiscal years, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Capital Expenditures.”

Employees

As of December 31, 2008, Telesat Canada, including subsidiaries, had 560 employees, approximately 2% of whom are subject to collective bargaining agreements. Our employee body is primarily comprised of professional engineering, sales and marketing staff, administrative staff and skilled technical workers. Telesat Canada considers its employee relations to be good.

Property

We own or lease, as described, the satellites and other property identified under “Business — In-Orbit Satellites”, “Business — Rights to Other Satellites” and “Business — Satellite Operations and Related Facilities — Satellite Control Centre and Teleport/Earth Station Facilities.”

Legal Proceedings

We frequently participate in proceedings before national telecommunications regulatory authorities. See “Business — Government Regulation.” In addition, we also may become involved from time to time in other legal proceedings arising in the normal course of our business.

Telesat Canada is in a dispute with one of its customers, Société Radio-Canada/Canadian Broadcasting Corporation (“CBC”). In October 2007, Telesat Canada was served with a Statement of Claim issued by CBC in the Superior Court of Justice of Ontario. In the Statement of Claim the CBC advances a number of legal theories in respect of an alleged degradation in the quality of services provided by Telesat Canada and seeks monetary and injunctive relief, and costs, and alleging that the cost of re-establishing an acceptable service level is estimated to be $40 million. Telesat Canada filed a Statement of Defence to the claim on December 17, 2007 and CBC served a Reply dated January 15, 2008. While it is not possible to determine with any degree of certainty the ultimate outcome of this claim, Telesat is of the view that CBC’s claim has no merit and Telesat Canada intends to vigorously defend its position.

Telesat Canada’s Anik F1 satellite, built by Boeing and launched in November 2000, has defective solar arrays that have caused a drop in power output on the satellite and reduced its operational life. Telesat Canada filed a claim for Anik F1 as a constructive total loss under its insurance policies and received an amount from its insurers in settlement of that claim. Telesat Canada continues to seek recovery of an additional approximately $18 million, as noted below. In November 2006, Telesat Canada commenced arbitration proceedings against Boeing. A portion of its claim was in respect of the subrogated rights of its insurers. Telesat Canada is alleging in this proceeding that Boeing was grossly negligent and/or engaged in willful misconduct in the design and manufacture of the Anik F1 satellite and in failing to warn Telesat Canada prior to the launch of a material deficiency in the power performance of a similar satellite previously launched. The arbitration tribunal has been constituted and Telesat Canada has filed its Statement of Claim seeking approximately $331 million plus costs and post-award interest. Boeing has responded by alleging that Telesat Canada failed to obtain what it asserts to be contractually required waivers of subrogation rights such that, if Telesat Canada is successful in obtaining an award which includes an amount in respect of the subrogated rights of the insurers, Boeing is entitled to off-setting damages in that amount. This amount is alleged to be as much as US$182,353,754. Boeing also asserts that Telesat Canada owes Boeing performance incentive payments pursuant to the terms of the satellite construction contract in the amount of approximately US$5.5 million. It is anticipated that Telesat Canada and Boeing will exchange further submissions and evidence and a hearing will take place during November 2010. While it is not possible to determine the ultimate outcome of the arbitration, Telesat Canada intends to vigorously prosecute its claims and defend its position that no liability is owed Boeing in connection with the dispute and that, in the circumstances of this case, it was not contractually required to obtain waivers of the subrogation rights at issue.

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Telesat Canada filed a claim with its insurers on December 19, 2002 for Anik F1 as a constructive total loss under its insurance policies for losses suffered as a result of the power loss on the satellite. In March 2004, Telesat reached a settlement agreement with its insurers pursuant to which the insurers made an initial payment in 2004 of US$136.2 million, with potential additional payments to be made according to the amount of degradation of the power on Anik F1 through 2007. In December 2005, a number of insurers elected to pay a discounted amount, equal to US$26.2 million, of the proceeds potentially due in 2007. In October 2007, Telesat submitted final claims to its insurers for approximately US$20 million as a result of the continued power degradation. In January 2008, those insurers disputed Telesat’s determination of the available power, contending that the final payment should be approximately US$2.7 million. During 2008, one insurer paid Telesat approximately US$2.0 million in full settlement of its share of Telesat’s claim, such that the amount in dispute now totals approximately US$18 million. Telesat has advised the insurers of its intention to proceed with arbitration of the dispute. At March 31, 2009, Telesat had not recorded any receivable related to this claim.

Other than these potential issues, we are not aware of any litigation outstanding or threatened as of the date hereof by or against us or relating to our business which would be material to our financial condition or results of operations.

Environmental Matters

We are subject to various laws and regulations relating to the protection of the environment and human health and safety (including those governing the management, storage and disposal of hazardous materials). Some of our operations require continuous power supply, and, as a result, current and past operations at our teleport and other technical facilities include fuel storage and batteries for back-up generators. As an owner or operator of property and in connection with current and historical operations at some of our sites, we could incur costs, including cleanup costs, fines, sanctions and third-party claims, as a result of violations of or liabilities under environmental laws and regulations. We are not aware, however, of any environmental matters outstanding or threatened as of the date hereof by or against us or relating to our business which would be material to our financial condition or results of operations.

Exchange Controls

There are no governmental laws, decrees or regulations in Canada relating to restrictions on the export or import of capital, or Canadian exchange restrictions affecting the remittance of dividends, interest, royalties or similar payments to non-resident holders of our securities.

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MANAGEMENT

Directors and Senior Management

In the following table are listed the names, ages as of March 31, 2009 and positions of the individuals who serve as the directors and senior management of Telesat Holdings and Telesat Canada, along with the date that each individual was elected or appointed:


				Date First Elected or Appointed a
				Director or Member of Senior
Name	Age		Title	Management

Directors
Mark H. Rachesky, M.D.(2)		50	Chairman of the Board	October 31, 2007
Michael B. Targoff(1)		64	Director	October 31, 2007
Hank Intven		60	Director	October 31, 2007
Gordon J. Fyfe		50	Director	October 31, 2007
Derek Murphy(2)		51	Director	October 31, 2007
James Pittman(1)		45	Director	October 31, 2007
John P. (Jack) Cashman		68	Director	October 31, 2007
Colin D. Watson(1)		66	Director, Chair of Audit Committee	October 31, 2007
Clare R. Copeland		73	Director	October 31, 2007
V. Peter Harder(2)		56	Director, Chair of Corporate Governance Committee	October 31, 2007
Senior Management
Daniel S. Goldberg		43	President and Chief Executive Officer (Telesat Holdings and Telesat Canada)	October 31, 2007 (Telesat Holdings)
				September 18, 2006 (Telesat Canada)
Paul D. Bush		50	Vice President, North American Sales (Telesat Canada)	August 7, 1997
Michel G. Cayouette		50	Chief Financial Officer and Treasurer (Telesat Holdings and Telesat Canada)	September 17, 2008
Christopher S. DiFrancesco		45	Vice President, General Counsel and Secretary (Telesat Holdings and Telesat Canada)	January 5, 2009
Patrick M. Enright		50	Vice President, Network Operations (Telesat Canada)	December 1, 2004
Nigel J. Gibson		41	Vice President, International Sales (Telesat Canada)	June 1, 2009
Michael C. Schwartz		44	Vice President, Marketing and Corporate Development (Telesat Canada)	February 7, 2007
David N. Wendling		46	Vice President, Space and Network Engineering (Telesat Canada)	October 31, 2007


(1)		Member of Audit Committee.

(2)		Member of Compensation and Corporate Governance Committee.

There are no family relationships among any of the directors, members of the board of managers or executive officers. Except for the Shareholders Agreement described in “Related Party Transactions”, there are no material arrangements or understandings with major shareholders or between any two or more directors or executive officers pursuant to which any person was selected as a director or officer.

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Each of the directors has served in his respective capacity since his election, and we expect that he will serve until the next annual meeting of shareholders, unless his office is earlier vacated in accordance with the by-laws of the corporation or with the provisions of the CBCA.

Each of the officers is appointed by the board to serve, subject to the discretion of the board, until their successors are appointed or they resign.

The following is a brief description of the principal business activities of the directors, members of the board of managers of Telesat LLC and senior management.

Directors and Members of the Board of Managers

Mark H. Rachesky, M.D. is a co-founder of MHR Fund Management LLC and has been its President since its inception in 1996 and has been non-executive Chairman of the Board of Directors of Loral since March 1, 2006. Dr. Rachesky is also non-executive Chairman of the Board of Leap Wireless International, Inc. and a director of NationsHealth Inc. and Emisphere Technologies, Inc.

Michael B. Targoff has been Chief Executive Officer of Loral since March 1, 2006 and Vice Chairman of Loral since November 21, 2005. From 1998 to February 2006, Mr. Targoff was founder and principal of Michael B. Targoff & Co., a private investment company. Mr. Targoff is also Chairman of the Board and Member of the Audit Committee of Communication Power Industries, Director and Chairman of the Audit Committee of Leap Wireless International, Inc. and Director of ViaSat, Inc.

Hank Intven leads the telecommunications practice of the law firm, McCarthy Tétrault LLP. He served as Executive Director of Telecommunications at the Canadian Radio-television and Telecommunications Commission from 1980 to 1985. Over the past 27 years, he has advised on many of the major commercial, regulatory and policy developments in the Canadian telecommunications industry and has worked on commercial and regulatory telecommunications matters in more than 20 other countries.

Gordon J. Fyfe joined PSP Investments as President and Chief Executive Officer in October 2003. Before joining PSP Investments, Mr. Fyfe served as President of World Markets at CDP Capital. From 1992 to 2002, Mr. Fyfe was President and Chief Operating Officer of TAL International, a division of TAL Global Asset Management. Prior to joining TAL International, from 1986 to 1992, Mr. Fyfe was Vice President at JP Morgan in London, England. Mr. Fyfe is a director of Revera, a privately held company that is wholly owned by PSP investments. Mr. Fyfe received his MBA from INSEAD in 1986.

Derek Murphy joined PSP Investments as First Vice President, Private Equity in March 2004. From 1998 to 2004, he was President and Chief Executive Officer, as well as founder, of Barnridge Inc., a private investment company. Prior to Barnridge, he worked in the investment banking sector from 1986 to 1997 for such companies as J.P. Morgan and Swiss Bank Corporation Warburg.

James Pittman joined PSP Investments in February 2005 and is currently Vice President, Private Equity. From 2002 to 2005, he was Executive Vice-President and Chief Financial Officer of Provincial Aerospace Limited. Prior to Provincial Aerospace, Mr. Pittman was CFO and Co-Owner of two other operating businesses in the technology and pharmaceutical industries that were taken through successful public and private sale processes. He currently sits on the Board of Directors for Herbal Magic Inc. and the Institutional Limited Partners Association. Mr. Pittman received his Chartered Accountant designation in 1990 while articling with Deloitte & Touche and also completed a tax specialty with PricewaterhouseCoopers in 1996.

John P. (Jack) Cashman is currently a director of Transat A.T. Inc. (TSX: TRZ) and the Chairman of Vectura Group Plc. (LSE: VEC). From 2002-2005 he was the Chairman of Advanced Surgical Concepts Ltd., Ireland, and a director of Bespak Plc. Mr. Cashman is also the former Chairman and joint CEO of R.P. Scherer Corporation.

Colin D. Watson is currently a director of Rogers Communications, Louisiana Pacific Corp, Northstar Aerospace, Vector Aerospace, The Weather Network, DALSA Corp, SL Split Corp and B Split II Corp. He chairs the Compensation Committees of Louisiana Pacific and Vector, and is a member of the Compensation Committee of Northstar. He was President and CEO of Rogers Cablesystems (1979-1996), Spar Aerospace (1996-2002) and Vector Aerospace (2003-2005).

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Clare R. Copeland is the Chief Executive Officer of Falls Management Company, a commercial development and casino in Niagara Falls, Ontario. He is also Chairman of Toronto Hydro Corporation, a Canadian electricity provider. Between 2000 and 2002 Clare was Chairman and Chief Executive Officer of OSF Inc., a manufacturer of retail store interiors. He is also on the Boards of RioCan, Danier Leather, Chesswood Inc., MDC Corp. and Entertainment One. Between 1993 and 1999, he was COO of Peoples Jewelers Corporation, Chairman, Sun Media (1997-1999), and President and CEO of Granada Canada Limited (1984-1988). He has also held several senior management positions, including Chief Operating Officer, with Zale Corporation (1991-1992).

V. Peter Harder was, until he left the Government of Canada in 2007, its longest serving Deputy Minister. Between 1991 and 2007, he served as the most senior public servant in a number of Canadian government departments, including the Departments of Industry, Foreign Affairs and International Trade. Peter has joined the Boards of IGM Financial, Power Financial Corporation, ARISE Technologies, KRIA Resources Inc., and Pinetree Capital Limited. He is also a member of a Board of Governors of the University of Ottawa and The United Church Foundation. Peter was appointed a Trudeau Foundation Mentor for 2009-2010 and also serves as the Chair of the National Arts Centre’s Governance, Nominating, and Ethics Committee. In 2008, Peter was elected the President of the Canada China Business Council (CCBC). He also serves on the Board of Directors of the Canada Eurasia Russia Business Association (CERBA) and is a member of the International Institute for Strategic Studies.

Senior Management

Daniel S. Goldberg became President and Chief Executive Officer of Telesat Canada in September 2006, and of Telesat Holdings in October 2007. Prior to September 2006, Mr. Goldberg served as Chief Executive Officer of SES New Skies, a position he held since March 2006 following the purchase of New Skies by SES. During that time, Mr. Goldberg also served as a member of the SES Executive Committee. Prior to that, Mr. Goldberg served as the Chief Executive Officer of New Skies Satellites since January 2002 and was President and a member of the New Skies Satellites Holdings board of directors since its formation in January 2005. Mr. Goldberg was also a managing director and a member of the executive management committee formed by New Skies Satellites. Prior to becoming its Chief Executive Officer, he had served as Chief Operating Officer of New Skies since February 2000, and prior to that time, he had served as New Skies General Counsel since October 1998. Prior to joining New Skies, he worked at PanAmSat as the Associate General Counsel and Vice President of Government and Regulatory Affairs during 1998. From 1993 to 1997, Mr. Goldberg was an associate at Goldberg, Godles, Wiener & Wright, a law firm in Washington, D.C. Mr. Goldberg received a Bachelor of Arts degree from the University of Virginia, graduating with highest honors, and a Juris Doctor degree, cum laude, from Harvard Law School.

Paul D. Bush joined Telesat Canada in 1980, and since that time he has held a variety of positions in Administration, Engineering and Sales until being appointed Vice-President, Corporate Development in 1997, then Vice-President, Broadcasting and Corporate Development in 2004, and now Vice-President, North American Sales since 2007. Mr. Bush is a Board member of the Canadian Advanced Technology Association (CATA) and Society of Satellite Professionals International (SSPI). He holds both a Bachelor of Health Science degree from the University of Ottawa, and a Bachelor of Education degree from Queen’s University in Kingston, Ontario.

Michel G. Cayouette became Chief Financial Officer and Treasurer of Telesat Canada and Telesat Holdings in September 2008. Prior to that, Mr. Cayouette was Managing Partner of Gordon Blake, LLC since August 2003. From January 2002 to July 2003 he served as Chief Financial Officer of Flag Telecom Holdings Ltd. From January 2001 to November 2001, he served as Executive Vice President and Chief Financial Officer of TIW Asia N.V. From June 1992 to December 2000, he held several senior executive positions for Teleglobe Communications Corporation and Teleglobe Inc. Mr. Cayouette is a chartered accountant and a certified public accountant. He holds a Master of Business Administration degree and a Bachelor of Administration degree from the University of Montreal (École des Hautes Études Commerciales).

Christopher S. DiFrancesco became Vice President, General Counsel and Secretary of Telesat Canada and Telesat Holdings in January 2009. Prior to that, Mr. DiFrancesco served as Senior Vice President, Legal,

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General Counsel and Secretary of Corel Corporation, a position he held since October 2006. From December 2003 to October 2006, he served as Corel Corporation’s Vice President, Legal, General Counsel and Secretary, and as Corporate Counsel from September 2000 to December 2003. From 1998 to 2000, he served as Associate Counsel for the National Hockey League Players’ Association. From 1991 to 1998, he practiced with the law firm of Gowling Lafleur Henderson in Toronto, Canada. He has a Bachelor of Engineering Science in Mechanical Engineering and a Bachelor of Laws from the University of Western Ontario.

Nigel J. Gibson joined Telesat Canada in June 2009. Prior to that, from October 2002 Mr. Gibson served as Vice President of Sales for Europe, CLS and Middle East with SES New Skies. Prior to joining SES New Skies, from July 1999 he was Vice President of Sales for Northern Europe of GlobeEast and, from June 1996 was Head of DTH Marketing for Sky Television in the UK. Mr. Gibson holds an Honours Degree in Business Studies from Leeds Metropolitan University in the U.K.

Patrick M. Enright joined Telesat Canada in 1981, and held progressively responsible management positions until being appointed Vice-President, Network Services in 2004 with a title change to Vice President, Network Operations in 2008. Mr. Enright holds a diploma in Electronic Engineering Technology from Conestoga College of Applied Arts and Technology. He is a graduate of the Western Executive Program, University of Western Ontario, as well as a graduate of the Executive Management Development Program from the Banff Centre for Management.

Michael C. Schwartz became Vice President, Marketing and Corporate Development of Telesat Canada in February 2007. Mr. Schwartz joined Telesat Canada from SES New Skies, where he served as Senior Vice President of Marketing and Corporate Development, a position he held since March 2006 following the purchase of New Skies Satellites by SES. Prior to that, Mr. Schwartz served in the same position for New Skies Satellites since September 2003. Prior to joining New Skies Satellites, he served as Chief Development and Financial Officer of Terabeam Corporation (Terabeam), responsible for business and corporate development as well as financial operations. Prior to Terabeam, he was a co-founder and president of an Internet infrastructure company, which was sold in December 2000. He also held two senior positions at AT&T Wireless Services, most recently as Vice President of Acquisitions and Development. Mr. Schwartz graduated magna cum laude from Harvard University in physics and magna cum laude from Harvard Law School.

David N. Wendling joined Telesat Canada in 1986, and has held a variety of key positions within the Space Systems Department prior to being appointed Vice-President, Space Systems in 2007 with a title change to Vice-President Space and Network Engineering in 2008. As Director of the Satellite Control Division, he was responsible for operating Telesat satellites and designing, developing, and procuring the Satellite Control ground segment. He was also responsible for the development, management, and delivery of three of Telesat’s international consulting business lines: Transfer Orbit Services, 3^rd Party Satellite Operations and the provisioning of Satellite Control Facilities. Mr. Wendling holds a Bachelor of Applied Science from the University of Waterloo. He is registered as a Professional Engineer with the Professional Engineers of Ontario.

Board of Managers and Executive Officers of the Co-Issuer

The members of the board of managers of the Co-Issuer are Michael B. Targoff, Mark H. Rachesky, M.D., Hank Intven, James Pittman, Derek Murphy, John P. (Jack) Cashman, Colin D. Watson, Clare R. Copeland and V. Peter Harder. The executive officers of Telesat LLC are Daniel S. Goldberg, President and Chief Executive Officer, and Michel G. Cayouette, Chief Financial Officer and Treasurer. Mr. Goldberg has served as Chief Executive Officer since October 31, 2007. Mr. Cayouette has served as Chief Financial Officer since September 17, 2008.

Board Practices

Board of Directors

The board currently consists of ten members. Each director is elected annually, and we expect that he will serve until the next annual meeting of shareholders, unless his office is earlier vacated in accordance with the by-laws of the corporation or with the provisions of the CBCA. Each of the directors has served in his respective capacity since his election; see “Management — Directors and Senior Management” for the period during which each director and member of senior management has served in that office.

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Directors’ Service Contracts

There are no director service contracts between Telesat Canada and its directors providing for benefits upon termination of employment.

Committees of the Board

The board has an Audit Committee, and a Compensation and Corporate Governance Committee.

Audit Committee

The Audit Committee is comprised of Messrs. Targoff, Pittman and Watson.

The principal duties and responsibilities of the Audit Committee, which are included in our Audit Committee charter, are to assist the board in its oversight of:


	•	the integrity of the corporation’s financial statements and related information;

	•	the corporation’s compliance with applicable legal and regulatory requirements;

	•	the independence, qualifications and appointment of the corporation’s auditor;

	•	management responsibility for reporting on internal controls and risk management; and

	•	the administration, funding and investment of the corporation’s pension plans and fund.

Our Audit Committee is also responsible for:


	•	appointing, compensating, retaining and overseeing the work of the corporation’s accounting firm;

	•	establishing procedures for (a) the receipt, retention and treatment of complaints received by the corporation regarding accounting, internal controls or auditing matters and (b) confidential, anonymous submission of complaints by employees regarding questionable accounting or auditing matters;

	•	pre-approving all engagements for permitted non-audit services provided by the corporation’s auditor to the corporation; and

	•	reviewing and discussing the annual consolidated financial statements with management.

The Audit Committee has the authority to engage outside counsel and other outside advisors as it deems appropriate to assist it in the performance of its functions.

Compensation and Corporate Governance Committee

The Compensation and Corporate Governance Committee is comprised of Dr. Rachesky and Messrs. Murphy and Harder.

The principal duties and responsibilities of the Compensation and Corporate Governance Committee, which are included in the Compensation and Corporate Governance Committee charter, are to assist the board in its oversight of:


	•	the compensation, nomination, evaluation and succession of officers and other management personnel;

	•	the corporation’s health and safety policies and practices, and developing and implementing the corporation’s corporate governance guidelines;

	•	identifying individuals qualified to become board members;

	•	determining the composition of the board of directors and its committees;

	•	determining the directors’ remuneration for board and committee service;

	•	developing and overseeing a process to assess the board Chair, board committees, Chairs of committees and individual directors; and

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	•	overseeing the corporation’s policies concerning business conduct, ethics, and other matters, and if required, public disclosure of material information.

Compensation

Director Compensation

During the fiscal year ended December 31, 2008, the aggregate compensation paid to the directors by us was $338,000.

Loral and PSP are each entitled to nominate three directors to the board. None of those six directors who are shareholder nominees are paid a fee by us for his services as a director.

We pay the other four directors an annual fee of $75,000 for acting as a director. In addition to the annual fee, the Chair of the Audit Committee is paid $15,000 for acting in such capacity, and the Chair of the Corporate Governance Committee is paid $7,500 for acting in such capacity. For each attendance at a meeting of the board or a board committee, each director who is paid the annual fee is also paid a meeting fee of $1,000 for each meeting attended in person, and a meeting fee of $500 for each meeting attend by telephone, except for telephone meetings of under 30 minutes in duration unless the Chair of the meeting determines that such meeting required significant advance preparation by board of committee members. Directors may be offered a right to elect to participate in one or more compensation plans which may be developed by us, in which case the annual fee paid by us of the participating director may be reduced by any value attributed to such right of participation.

All directors are entitled to be reimbursed for travel and other expenses properly incurred by them in attending meetings of the board or of any committee of the board.

The directors of Telesat Holdings are also directors of Telesat Canada and Telesat Interco, and are members of the board of managers of Telesat LLC. They do not receive additional remuneration from us for acting in that capacity.

Senior Management Compensation

The aggregate salary and benefits paid by us to Telesat Canada’s senior management for the year ended December 31, 2008 amounted to $6,001,126. The aggregate salary and benefits paid by us to the five highest-paid officers of Telesat Canada for the fiscal year ended December 31, 2008 was $3,475,842.

In addition, former senior managers of Telesat Canada whose employment ceased between January 1, 2008 and December 31, 2008 received severance from us in the form of lump sum payments in the aggregate amount of $2,275,537.

As a Canadian company which is not a reporting issuer under the securities legislation of any jurisdiction in Canada, Telesat Canada is not required to publicly disclose individual compensation information either as a requirement under its governing statute or under any securities legislation. Telesat Canada does not publicly disclose individual compensation information in Canada.

On September 19, 2008, Telesat Holdings adopted a stock incentive plan for certain of our key employees. The plan provides for the grant of up to 8,824,646 options to purchase non-voting participating preferred shares of Telesat Holdings, convertible into common shares of Telesat Holdings. See “Management — Share Ownership” for more information about the Telesat Holdings stock options.

In addition, the total amounts set aside or accrued by us in 2008 to provide pension, retirement or similar benefits to senior managers of Telesat Canada amounted to $881,000.

Directors’ and Senior Management’s Liability Insurance; Indemnity Payments

We have acquired and maintain liability insurance for our directors and officers as well as those of our subsidiaries. The total coverage limit of such insurance is US$60 million per claim and US$60 million in the annual aggregate. In the last fiscal year we paid premiums of US$162,500 for this coverage and entered into a

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one-year contract ending October 31, 2009. Claims for which we grant indemnification to insured persons are subject to a US$500,000 deductible for any one loss.

There were no claims made or paid under this insurance coverage in 2008.

We have entered into indemnity agreements with certain directors and members of senior management that may require us to indemnify them against certain liabilities that may arise by reason of their status or service as our directors or members of senior management. No indemnity payments were made under these agreements in 2008.

Share Ownership

The following table presents information regarding the ownership of certain classes of shares of Telesat Holdings by our directors and senior management as of March 31, 2009.


			Voting		Non-Voting		Director
			Participating		Participating		Voting		Senior		Percentage of
Name (Title)	Common		Preferred		Preferred		Preferred		Preferred		Class

Mark H. Rachesky, M.D.(1)		—		—		—		—		—		—
Michael B. Targoff		—		—		—		—		—		—
Hank Intven		—		—		—		—		—		—
Gordon J. Fyfe		—		—		—		—		—		—
Derek Murphy		—		—		—		—		—		—
James Pittman		—		—		—		—		—		—
John P. (Jack) Cashman		—		—		—		820		—		82	%
Colin D. Watson		—		—		—		180		—		18	%
Clare R. Copeland		—		—		—		—		—		—
V. Peter Harder		—		—		—		—		—		—
Daniel S. Goldberg		—		—		—		—		—		—
Paul D. Bush		—		—		—		—		—		—
Michel G. Cayouette		—		—		—		—		—		—
Christopher S. DiFrancesco		—		—		—		—		—		—
Patrick M. Enright		—		—		—		—		—		—
Michael C. Schwartz		—		—		—		—		—		—
David N. Wendling		—		—		—		—		—		—


(1)		Various funds affiliated with MHR Fund Capital Management (“MHR”) hold, as of March 31, 2009, approximately 40.1% of Loral’s outstanding voting common stock and 59.2% of Loral’s total outstanding voting and non-voting common stock. Dr. Rachesky, chairman of our board of directors and non-executive chairman of the board of directors of Loral, is the co-founder and president of MHR.

Telesat Holdings Stock Options

Two different types of stock options may be granted under the plan: time-vesting options and performance-vesting options. The time-vesting options generally become vested and exercisable over a five year period by 20% increments on each October 31st starting in 2008. The vesting amount is prorated for optionees whose employment with us started after October 31, 2007. The performance-vesting options become vested and exercisable over a five year period starting March 31, 2009, provided that Telesat Holdings has achieved or exceeded an annual or cumulative target consolidated EBITDA established and communicated on the grant date by the board of directors.

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The exercise period of the share options expires ten years from the grant date. The exercise price of each share underlying the options will be the higher of a fixed price, established by the board of directors on the grant date, and the fair market value of a non-voting participating preferred share on the grant date. As at December 31, 2008, the weighted-average remaining life of the outstanding options was 9 years, and the exercise price of all outstanding options was $11.07 per share.

The following table sets forth, as of March 31, 2009, the share options granted to Telesat Canada’s senior management.


	Number of				Expiration
Name (Title)	Option(s)		Type of Options	Grant Date	Date

Daniel S. Goldberg, President and Chief Executive Officer		3,781,991	Non-Voting Participating Preferred Shares	September 19, 2008	September 19, 2018
Paul D. Bush, Vice President, North American Sales		1,071,564	Non-Voting Participating Preferred Shares	September 19, 2008	September 19, 2018
Michel G. Cayouette, Chief Financial Officer and Treasurer		756,398	Non-Voting Participating Preferred Shares	September 19, 2008	September 19, 2018
Christopher S. DiFrancesco, Vice President, General Counsel and Secretary		289,953	Non-Voting Participating Preferred Shares	January 5, 2009	January 5, 2019
Patrick M. Enright, Vice President, Network Operations		289,953	Non-Voting Participating Preferred Shares	September 19, 2008	September 19, 2018
Michael C. Schwartz, Vice President, Marketing and Corporate Development		1,260,664	Non-Voting Participating Preferred Shares	September 19, 2008	September 19, 2018
David N. Wendling, Vice President, Space and Network Engineering		289,953	Non-Voting Participating Preferred Shares	September 19, 2008	September 19, 2018

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PRINCIPAL SHAREHOLDERS

Telesat Interco holds 145 shares of common stock of Telesat Canada, which represents all of the issued and outstanding common stock of Telesat Canada. Telesat Holdings holds 1,100,001 shares of common stock of Telesat Interco, which represents all of the issued and outstanding common stock of Telesat Interco.

The following table sets forth the ownership of shareholders that are the beneficial owners of 5% or more of each class of shares of Telesat Holdings as of March 31, 2009.


			Voting		Non-Voting		Director
			Participating		Participating		Voting		Senior
			Preferred		Preferred		Preferred		Preferred		Percentage
Name (Title)	Common (C)		(VPP)		(NPP)		(DVP)		(SP)		of Class

Red Isle Private Investments Inc.(1)		35,172,218		7,034,444		—		—		141,435	C: 47.4% VPP: 100% SP: 100%
Loral Holdings Corporation(1)(2)		39,080,242		—		35,953,824		—		—	C: 52.6% NPP: 100%
John P. (Jack) Cashman		—		—		—		820		—	DVP: 82%
Colin D. Watson		—		—		—		180		—	DVP: 18%


(1)		Each of Red Isle’s and Loral’s economic and voting interests on a combined basis taking into account the number and classes of shares owned by each of them are described below.

(2)		Various funds affiliated with MHR Fund Capital Management (“MHR”) hold, as of March 31, 2009, approximately 40.1% of Loral’s outstanding voting common stock and 59.2% of Loral’s total outstanding voting and non-voting common stock. Mark H. Rachesky, M.D., chairman of our board of directors and non-executive chairman of the board of directors of Loral, is the co-founder and president of MHR.

On December 16, 2006, Telesat Interco, a subsidiary of Telesat Holdings, entered into a share purchase agreement with BCE and Telesat Canada to acquire all of the issued and outstanding common shares of Telesat Canada, formerly a wholly owned subsidiary of BCE. Pursuant to the share purchase agreement, Telesat Holdings, owned indirectly by PSP and Loral, acquired, through a subsidiary, all of the issued and outstanding shares of Telesat Canada from BCE.

PSP is a Canadian Crown corporation established by the Canadian Parliament pursuant to the Public Sector Pension Investment Board Act (the “PSP Act”) and is mandated to manage employer/employee pension contributions made after April 1, 2000 to the federal Public Service, the Canadian Forces and the Royal Canadian Mounted Police pension funds and contributions made after March 1, 2007 to the Reserve Force Pension Fund. There are eleven current members of the PSP Board of Directors, all of whom are citizens of Canada. PSP holds its interest in Telesat Holdings through a wholly-owned subsidiary, Red Isle Private Investments Inc. (“Red Isle”), a corporation organized under the CBCA. Red Isle’s direct interest and PSP’s indirect interest in Telesat Holdings is a 36% equity interest, a 662/3% voting interest on all matters except for the election of directors, and a 30% voting interest for the election of directors. PSP’s principal offices are at 1250 Boulevard René Lévesque West, Suite 900, Montreal, Quebec, Canada, H3B 4W8 and its registered offices are at 440 Laurier Avenue West, Ottawa, Ontario, Canada, K1R 7X6.

Loral is a Delaware corporation and, together with its subsidiaries, is a leading satellite communications company engaged in satellite manufacturing with investments in satellite-based communications services. Loral owns through a subsidiary 64% of the economic interest of Telesat Holdings and a 331/3% voting interest on all matters. Loral’s principal offices are located at 600 Third Avenue, New York, New York 10016. Loral’s registered office in the State of Delaware is located at 1209 Orange Street, Wilmington County of New Castle, Delaware 19801. Various funds affiliated with MHR hold, as of March 31, 2009, approximately 40.1% of Loral’s outstanding voting common stock and 59.2% of Loral’s total outstanding voting and non-voting common stock. Mark H. Rachesky, M.D., chairman of our board of directors and non-executive chairman of the board of directors of Loral, is the co-founder and president of MHR.

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RELATED PARTY TRANSACTIONS

Transaction Agreements

Loral Skynet Asset Transfer Agreement and Asset Purchase Agreement

On October 31, 2007, pursuant to the terms of the Asset Transfer Agreement, substantially all of the assets of Loral Skynet were transferred to Telesat Holdings in exchange for Telesat Holdings’ assumption of the principal amount of Loral Skynet’s senior secured debt and substantially all of its liabilities relating to the transferred assets, and the issuance to Loral Skynet of common shares and non-voting participating preferred shares of Telesat Holdings. The transactions contemplated by the Asset Transfer Agreement were consummated on October 31, 2007. The assets that were transferred consisted principally of Loral Skynet’s fixed satellite services and network services assets, with the exception of certain excluded assets, and the shares of subsidiaries, including all of the issued and outstanding shares of Skynet Satellite Corporation (“SSC”), the purchaser under the Asset Purchase Agreement described below. In a related transaction, Loral Skynet also transferred to Telesat Holdings prior to the closing of the transactions contemplated under the Asset Transfer Agreement the benefit of certain foreign exchange contracts in exchange for non-voting participating preferred shares of Telesat Holdings and the assumption by Telesat Holdings of the related liabilities under such contracts. Thus, in the aggregate, Telesat Holdings issued shares to Loral Skynet representing 64% of the economic interests and 331/3% of the voting power of Telesat Holdings. The Asset Transfer Agreement contains representations and warranties of the parties based on the Telesat Canada purchase agreement with BCE and an indemnity in favor of Telesat Holdings for losses resulting from a breach of representations, warranties or covenants, as well as against excluded liabilities not assumed by Telesat Holdings. Loral Skynet’s obligation to indemnify Telesat Holdings is subject to minimum thresholds of US$8.4 million and US$42.0 million for losses relating to representations and warranties made on the signing and closing of the Asset Transfer Agreement, respectively, and a cap of US$83.9 million. The indemnification thresholds and cap are not applicable to breaches of certain specified representations and warranties and are subject to reduction based on adjustments made, if any, to the purchase price. Loral has guaranteed all of Loral Skynet’s obligations under the Asset Transfer Agreement. On March 28, 2008, Loral, Loral Skynet, PSP, Red Isle and Telesat Holdings entered into a letter agreement (the “March Letter Agreement”) pursuant to which, among other things, the parties agreed to the final post-closing adjustment amounts to be paid under the Asset Transfer Agreement between Loral and PSP.

On October 31, 2007, pursuant to the terms of the Asset Purchase Agreement, following the acquisition of SSC by Telesat Holdings, SSC purchased certain Loral Skynet assets, including real property, FCC licenses and rights to certain vendor and customer contracts and assumed certain liabilities of Loral Skynet for a purchase price of approximately US$25.5 million, paid in marketable securities.

Ancillary Agreement

In connection with the Skynet Transaction, Loral, Loral Skynet, PSP, Telesat Holdings and 4363230 Canada Inc. (which was amalgamated into Telesat Canada on the closing date to form “Amalco”) entered into an ancillary agreement, dated as of August 7, 2007 (the “Ancillary Agreement”). The Ancillary Agreement provided for certain payments among Loral, PSP and Telesat Holdings, which we refer to as “ancillary payments”, including the reimbursement by Telesat Holdings of insurance premiums paid and other transaction expenses incurred by Loral and/or PSP.

The Ancillary Agreement also (i) contemplates tax distributions to Telesat Holdings shareholders out of available cash resources to cover taxes on the income of Telesat Holdings that US shareholders are required to include as their own taxable income under Section 951 of the US Internal Revenue Code (the amounts of which are capped by the provisions of the notes), (ii) prohibits the authorization or issuance of capital shares of Telesat Holdings ranking pari passu or senior to the senior preferred shares so long as PSP or Red Isle, or their permitted transferees, owns 10% of the PSP Preferred and (iii) provides that Telesat Holdings and Amalco will indemnify Loral and its affiliates for Loral Skynet obligations to third parties assumed in connection with the Skynet Transaction that remain guaranteed by Loral and its affiliates.

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Consulting Services Agreement

On October 31, 2007, Loral and Telesat Canada entered into a consulting services agreement (the “Consulting Agreement”). Pursuant to the terms of the Consulting Agreement, Loral provides certain non-exclusive consulting services in relation to the business of Loral Skynet which was transferred to Telesat Canada as part of the Skynet Transaction, as well as with respect to certain aspects of our satellite communications business. The Consulting Agreement has a term of seven years with an automatic renewal for an additional seven year term if certain conditions are met. In exchange for Loral’s services under the Consulting Agreement, we pay Loral an annual fee of US$5 million, payable quarterly in arrears on the last day of March, June, September and December of each year during the term of the Consulting Agreement. If the terms of our senior secured credit facilities or certain other debt obligations prevent us from paying such fees in cash, we can issue junior subordinated promissory notes to Loral in the amount of such payment, with interest on such promissory notes at the rate of 7% per annum, compounded quarterly, from the date of issue of such promissory note to the maturity date thereof.

The services provided by Loral include providing advice as to business objectives, strategies, implementation of a synergy plan after the Skynet Transaction, the transferred assets, satellite orbital locations outside of Canada, capital structure and financing, satellite expert personnel and general personnel matters. Furthermore, for additional fees, we may request assistance from Loral with respect to certain areas, including benefits administration, insurance and risk management, auditing, human resources, treasury operations, and, in the United States, public relations, regulatory, tax and legal compliance if the provision of such organizational services at the agreed price is approved by a majority of our directors, excluding Loral nominees. The amounts of such additional payments are limited by the provisions of the notes.

Under the terms of the Consulting Agreement, we indemnify Loral from certain liabilities arising out of the Consulting Agreement, provided that Loral (or its representative, employee or affiliate, if applicable) has not committed fraud or misconduct in relation to the matters giving rise to the indemnification claim.

Shareholders Agreement

On October 31, 2007, in connection with the Telesat Canada acquisition, PSP, Red Isle, Loral, LSC Holdings, Loral Holdings Corporation, a Delaware corporation (“Loral Holdings”), Loral Skynet, John P. Cashman, Colin D. Watson, Telesat Interco, Telesat Holdings, Telesat Canada and MHR entered into a shareholders agreement (the “Shareholders Agreement”).

The Shareholders Agreement provides for, among other things, the manner in which the affairs of Telesat Holdings and its subsidiaries will be conducted and the relationships among the parties and future shareholders of Telesat Holdings. Specifically, with respect to Telesat Holdings, the Shareholders Agreement provides for its capital structure, the number and election of members of the board of directors, the meetings of directors, the required vote of the board of directors to take certain actions, the approval of the Skynet Transaction, the officers, and the rights of certain shareholders to appoint observers to the board of directors. The Shareholders Agreement also approves an initial business plan, provides for the preparation and approval of annual budgets and business plan updates and procedures for the purchase of equipment, products and services from Loral and its affiliates, an agreement by Loral not to engage in a competing satellite communications business and agreements by the shareholders not to solicit employees of Telesat Holdings or any of its subsidiaries. Additionally, the Shareholders Agreement details the matters requiring shareholder approval or the approval of a shareholder, provides for preemptive rights for certain shareholders upon the issuance of certain shares of capital stock of Telesat Holdings and provides for either PSP or Loral to cause Telesat Holdings to conduct an initial public offering of its equity shares if an initial public offering is not completed by the fourth anniversary of the closing of the Telesat Canada acquisition. The Shareholders Agreement also restricts the ability of holders of certain shares to transfer them unless certain conditions are met or approval of the transfer is approved by directors, provides for a right of first offer to equity shareholders if a holder of equity shares wishes to sell them to a third party, provides for, in certain circumstances, tag-along rights in favor of non-Loral shareholders if Loral sells equity shares, drag-along rights in favor of Loral in case Loral enters into an agreement to sell all of its Telesat Holdings equity securities and drag-along rights in favor of PSP for the sale

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of Telesat Holdings if Loral undergoes a change of control. Also, the Shareholders Agreement provides for PSP and Loral to have the right to require the other party to sell all of its equity shares or voting shares to PSP or to a designee of Loral, as applicable, under certain circumstances.

The Shareholders Agreement provides for a board of directors of Telesat Holdings consisting of 10 directors, three nominated by Loral, three nominated by PSP and four independent directors selected by a nominating committee comprised of one PSP nominee, one Loral nominee and one of the independent directors then in office. Each shareholder is obligated to vote all shares for the election of the directors nominated by the nominating process. Each shareholder of Telesat Holdings made certain representations, including but not limited to representations with respect to due incorporation and valid existence, corporate power, ownership of shares of Telesat Holdings, due authorization and execution of the Shareholders Agreement, absence of any violations of material provisions of existing indentures or agreements of each party, and, with respect to each of Cashman and Watson, that they each qualified as an independent director and as a “resident Canadian” as that term is defined under Canadian law. Telesat Holdings made certain representations, including but not limited to representations that it owned all of the issued and outstanding shares in Telesat Interco. Telesat Interco made certain representations, including but not limited to representations that it owned all of the issued and outstanding shares in Telesat Canada.

Each shareholder of Telesat Holdings agreed to certain covenants, particularly with respect to: voting of shares in certain circumstances, compliance by such party’s subsidiaries with the Shareholders Agreement and keeping certain information confidential. Telesat Holdings subsequently entered into a Unanimous Shareholder Declaration with Telesat Interco, and Telesat Interco entered into a Unanimous Shareholder Declaration with Telesat Canada the effect of which is to compel each of Telesat Interco and Telesat Canada to comply with the relevant shareholder approval matters as set out in the Shareholders Agreement.

Our Shareholders Agreement provides to Loral the right of approval over many large capital expenditures, a first right of acceptance of an offer by us to procure equipment, products and services, and a first right to negotiate in those areas where Loral and its affiliates carry on business, subject to approval of any such contract by a majority of our directors, excluding Loral nominees, but not an exclusive obligation to deal with, or purchase from, Loral or its affiliates. Under certain circumstances, Loral can withhold its approval of purchases and/or financing of new satellites by us.

PSP Subscription Agreement

PSP, Red Isle and Telesat Holdings entered into a subscription agreement for shares, pursuant to which Red Isle subscribed for and purchased, on the date of closing of the Telesat Canada acquisition, at an aggregate subscription price equal to US$525 million (a) 145,320 shares of Holding PIK Preferred Stock, issued at $1,000 per share, (b) 35,172,218 common shares of Telesat Holdings, issuable at a price of $10 per share, and (c) 7,034,444 voting participating preferred shares, which in the aggregate equaled 36% of the aggregate of the common shares, voting participating preferred shares and non-voting participating preferred shares outstanding after the closing of the purchase of shares by Red Isle and the closing of the Skynet Transaction. In a related transaction, Red Isle transferred to Telesat Holdings on the closing date $55,163,172, representing the market value of certain foreign exchange contracts entered into by Red Isle, in exchange for the issuance to Red Isle of a portion of the 36% equity shareholding acquired by Red Isle, in the form of voting participating preferred shares of Telesat Holdings. Pursuant to the March Letter Agreement, the number of shares of Holding PIK Preferred Stock issued to Red Isle on the closing date was reduced from 145,320 to 141,435 to reflect a true-up for the actual closing date exchange rates.

Other Related Party Arrangements

Transfer Orbit Services and In-Orbit Testing Agreements

Telesat Canada and SS/L entered into contracts in June 2009 for the provision by Telesat Canada of transfer orbit services as a subcontractor to SS/L for both the Nimiq 5 Satellite and for a non-Telesat satellite being constructed by SS/L scheduled for launch in July 2009. Telesat Canada also entered into a contract to provide in-orbit testing support as a subcontractor to SS/L for the Nimiq 5 Satellite. These contracts were

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entered into by Telesat Canada in the normal course of its operations and contain terms and conditions that are customary for these types of services.

Nimiq 5 Agreement

SS/L and Telesat Canada entered into a contract, dated December 22, 2006, for the procurement of the Nimiq 5 Satellite (the “Nimiq 5 Agreement”). Pursuant to the terms of the Nimiq 5 Agreement, SS/L will provide to Telesat Canada a communications satellite equipped with a 32 Ku-band transponder broadcast satellite service payload and auxiliary services. This contract was entered into by Telesat Canada in the normal course of its operations and contains terms, conditions, representations, warranties and covenants that are customary for the procurement of a satellite. As part of the contract, Loral, as parent of SS/L, was required to guarantee to Telesat Canada the due and punctual payment and performance of SS/L’s obligations under the Nimiq 5 Agreement. During the year ended December 31, 2008 Telesat Canada paid SS/L approximately US$36.0 million pursuant to this contract.

Non-Disclosure and Technical Assistance Agreements

SS/L and Telesat Canada have entered into various non-disclosure and technical assistance agreements. These agreements relate to Telesat Canada’s consulting activities for third parties. As part of its consulting activities, Telesat Canada is retained to provide advice to a customer on its satellite procurement program or in connection with satellite insurance underwriting and as a result enters into agreements with the applicable satellite manufacturer or insurance underwriter to allow it to receive the satellite manufacturer’s information relating to the customer’s satellite program. The non-disclosure and technical assistance agreements that SS/L and Telesat Canada have entered into permit Telesat Canada to receive SS/L information related to Telesat Canada’s consulting for customer satellite programs.

XTAR Agreements

XTAR and Loral Skynet entered into agreements whereby Loral Skynet provided to XTAR the following services:

(i) certain telemetry, tracking, and control and software maintenance services for the XTAR-EUR satellite through the end of life of the XTAR-EUR satellite (anticipated to be on or about December 31, 2019);

(ii) customer monitoring and access management services through the end of life of the XTAR-EUR satellite; and

(iii) ongoing regulatory support services, including support for satellite coordination agreements and regulatory filings; transponder management services, such as performing link budgets and providing customer and sales support; and ground station hardware and software support services.

Those agreements were subsequently assigned to Telesat Canada. XTAR and Telesat Canada have agreed to defer payment of certain amounts due for services provided under the foregoing agreements for the period through and including March 31, 2008. As of January 31, 2009, the amount due to Telesat Canada was approximately US$2.6 million. Until such time as XTAR shall have the financial ability to meet its obligations under these agreements consistent with its other financial obligations, the deferred amount shall be paid by XTAR to Telesat Canada from a portion of XTAR’s excess cash balance, according to an agreed allocation formula.

Telstar 11N Agreement

Loral Skynet and SS/L entered into a satellite construction agreement whereby SS/L constructed for Loral Skynet a commercial communications satellite, known as Telstar 11N, and procured launch services for the satellite. This agreement was subsequently assigned to Telesat Satellite LP, a US subsidiary of Telesat Canada. During the year ended December 31, 2008 Telesat Canada paid SS/L approximately US$43 million pursuant to this agreement.

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Other Satellite Construction Contracts and the Apstar V Agreement

The Telstar 10, Telstar 12 and Telstar 14/Estrela do Sul satellites were constructed pursuant to satellite construction contracts entered into with SS/L. Subject to the terms of the applicable construction contract, SS/L may be required to refund certain payments to us if a satellite experiences losses or anomalies, or we may be required to make additional payments to SS/L if a satellite exceeds specified performance objectives.

In connection with the transactions between Loral Skynet and APT Satellite Company Limited relating to Telstar 18, Loral Skynet and SS/L entered into the Apstar V Agreement dated as of June 30, 2003. This agreement has been substantially performed by the parties. However, to the extent that Telstar 18 were to experience certain losses or anomalies in the future, Loral Skynet would be entitled to receive a refund of certain orbital incentive payments previously made by it to SS/L thereunder. These agreements have been assigned to Telesat Canada.

ChinaSat

In 1999, Loral Skynet entered into an agreement to provide ChinaSat with certain free transponder capacity in connection with a settlement of certain matters in dispute between SS/L and ChinaSat. SS/L agreed to make monthly payments to Loral Skynet as compensation for the transponder capacity Loral Skynet was providing to ChinaSat at no charge. In 2001, Loral Skynet restructured its contractual obligations to ChinaSat and, as a result, entered into an agreement on November 21, 2005 to restructure SS/L’s related payment obligations to Loral Skynet to provide for a payment by SS/L to Loral Skynet for the use of three transponders. The agreement was subsequently assigned to Telesat Canada. During the year ended December 31, 2008, we received payments of approximately US$2.7 million pursuant to the agreement.

ViaSat-1

In connection with an agreement entered into between SS/L, a subsidiary of Loral, and ViaSat, Inc. (“ViaSat”) for the construction by SS/L for ViaSat of a high capacity broadband satellite called ViaSat-1 (the “Satellite”), Loral and Telesat Canada entered into certain agreements, described below, pursuant to which Loral has invested in the Canadian coverage portion of the Satellite and has granted to Telesat Canada an option to acquire its rights to the Canadian payload.

On January 11, 2008, Loral and ViaSat entered into a Beam Sharing Agreement (the “Beam Sharing Agreement”) that provides for, among other things, (i) the purchase by Loral of a portion of the Satellite payload providing coverage into Canada (the “Loral Payload”) and (ii) payment by Loral of 15% of the actual costs of launch and associated services, launch insurance and telemetry, tracking and control services for the Satellite. The aggregate price to be paid by Loral for the foregoing is estimated to be approximately US$60 million.

On January 11, 2008, Loral and Telesat Canada entered into an Option Agreement (the “Option Agreement”). The Option Agreement gives Telesat Canada the option to cause Loral to assign to Telesat Canada its rights and obligations with respect to the Loral Payload and all of Loral’s rights and obligations under the Beam Sharing Agreement upon payment by Telesat Canada to Loral of (i) all amounts paid by Loral with respect to the Loral Payload and pursuant to the Beam Sharing Agreement on or prior to the date Telesat Canada exercises its option plus (ii) an option premium of between US$6 million and US$13 million depending on the date of exercise. Telesat Canada’s option under the Option Agreement expires on October 31, 2009 (the “Expiration Date”). In consideration for the grant of the option, Telesat Canada (i) agreed in a Cooperation Agreement, dated as of January 11, 2008, with Loral and ViaSat (the “Cooperation Agreement”), to relinquish certain rights it has to the 115 degree W.L. orbital position (the “Orbital Slot”) so as to make those rights available to ViaSat pursuant to a license (the “ViaSat License”) to be granted by Mansat Limited (“Mansat”) to ViaSat; and (ii) agreed to provide tracking, telemetry and control services to ViaSat for the Satellite and to pay to Loral all of the recurring fees it receives for providing such services.

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If Telesat Canada does not exercise its option on or prior to the Expiration Date, then it shall, at Loral’s request, transfer to Loral its remaining rights from Mansat with respect to the Orbital Slot, and assign to Loral its related rights and obligations under the Cooperation Agreement.

Loral Nominee Director

McCarthy Tétrault LLP has acted as Canadian counsel to Loral, Telesat Interco and Telesat Holdings in connection with the Telesat Canada acquisition, and as Canadian counsel to Telesat Canada in respect of the offering of the notes and other matters, and may act for Telesat Canada, Telesat Interco and Telesat Holdings on other matters in the future. Mr. Hank Intven, a partner of McCarthy Tétrault LLP, is a director of Telesat Canada. See “Management.”

BCE

Telesat Canada was formerly a wholly-owned subsidiary of BCE Inc. Telesat Canada has entered into various commercial arrangements with entities affiliated with BCE, including Bell TV, Bell Canada, NorthwesTel and Bell Aliant Regional Communications, Limited Partnership. These arrangements primarily relate to the sale or use of satellite transponder capacity and are entered into in the form of either service agreements or transponder purchase and operating service agreements. Additionally, we provide Bell Canada with earth station, maintenance and installation services. Telesat Canada is no longer an affiliate of BCE. See “Related Party Transactions” for additional discussion regarding Telesat Canada’s related party transactions and see “Risk Factors — Risks Related to Our Business — We derive a substantial amount of our revenues from only a few of our customers. A loss of one or more of these major customers, or a material adverse change in any such customer’s business, could materially reduce our future revenues and contracted backlog and result in our discontinuing service offerings that we consider to be no longer sufficiently profitable.”

Goldberg, Godles, Wiener & Wright

Henry Goldberg, the father of Daniel Goldberg, the President and Chief Executive Officer of Telesat Canada, is a partner in the law firm Goldberg, Godles, Wiener & Wright, which handles certain matters for Telesat Canada and its subsidiaries. The aggregate amount of fees paid by Telesat Canada and its subsidiaries to the firm for services rendered in 2008 was approximately US$307,000.

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DESCRIPTION OF OTHER INDEBTEDNESS AND PREFERRED STOCK

Senior Secured Credit Facilities

In connection with the Telesat Canada acquisition, Telesat Interco entered into senior secured credit facilities under which Morgan Stanley & Co. Incorporated, UBS Securities LLC and J.P. Morgan Securities Inc. acted as joint lead arrangers and joint book running managers, Morgan Stanley Senior Funding, Inc. acted as administrative agent and Morgan Stanley & Co. Incorporated acted as collateral agent, UBS Securities LLC acted as syndication agent and JPMorgan Chase Bank, N.A., the Bank of Nova Scotia and Citibank, N.A., Canadian Branch acted as co-documentation agents. Telesat Canada assumed Telesat Interco’s obligations under the senior secured credit facilities, at which point Telesat Canada became the borrower thereunder. The Co-Issuer is a co-borrower under our senior secured credit facilities.

The senior secured credit facilities consist of:


	•	$192.5 million loan Canadian Term Loan Facility with a maturity of October 31, 2012;

	•	US$1,733.1 million U.S. Term Loan Facility with a maturity of October 31, 2014. In order to hedge the currency risk for the Company both at closing and over the life of the loans, Loral Skynet Corporation entered into a currency basis swap to synthetically convert a portion (US$1,041 million) of the total facility to $1,224 million;

	•	US$148.9 million U.S. Term Loan II Facility with the same maturity and terms as the U.S. Term Loan Facility. The U.S. Term Loan II Facility was available to be drawn for a period of 12 months ending October 31, 2008 to fund satellite capital expenditures; and

	•	Multicurrency revolving credit facility of up to $153 million (a portion of which is available as letters of credit) of which $152.6 million was undrawn at March 31, 2008. The Revolving Credit facility matures October 31, 2012 and is available to be drawn at any time.

Security and Guarantees

Telesat Canada’s obligations under the senior secured credit facilities are guaranteed jointly and severally by certain of its current and future restricted subsidiaries and by Telesat Holdings and Telesat Interco. The guarantees of the secured credit facility rank equally with all existing and future senior indebtedness of the guarantors.

Telesat Canada’s obligations under the senior secured credit facilities, and the guarantees of those obligations, are secured by a pledge of the equity of Telesat Canada held by our parent holding company and, subject to limited exceptions, all present and future shares of capital stock of Telesat Canada’s subsidiaries and substantially all of its assets and substantially all of the assets of each of the subsidiary guarantors, subject to certain exceptions.

Interest Rates and Fees

Borrowings under the senior secured credit facilities bear interest or are discounted as follows:


	•	Revolving Credit Facility: Canadian Prime Rate plus an applicable margin in the case of Canadian dollar denominated borrowings, and LIBOR or Prime Rate plus an applicable margin in the case of U.S. dollar denominated borrowings. In addition, Canadian dollar denominated borrowings will be available at the Bankers’ Acceptance Discount Rate plus an applicable margin;

	•	Canadian Term Loan Facility: Canadian Prime Rate or Bankers’ Acceptance Rate plus an applicable margin; and

	•	U.S. Term Loan Facility, U.S. Term Loan II Facility: LIBOR or Alternate Base Rate plus an applicable margin.

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The senior secured facilities also provide for the payment to the lenders of a commitment fee on the unused portions of the Revolving Credit Facility at a rate of 0.50% from the date of the initial funding until January 31, 2008 and, thereafter, at a percentage per annum determined in accordance with a leverage based pricing grid. Borrowings bearing interest or discounted by reference to the Bankers’ Acceptance Rate will also be subject to a fee determined by reference to a leverage based pricing grid. Letters of credit will be subject to customary letter of credit fees.

Scheduled Amortization Payments and Mandatory Prepayments

The U.S. Term Loan and U.S. Term Loan II provide for quarterly amortization payments of 1/4 of 1% of the aggregate principal amount of such loans incurred on the initial funding. The Canadian Term Loan Facility provides for equal quarterly amortization payments commencing after one year in the amount of 5%, 5%, 10% and 80% in years two, three, four and five, respectively.

In addition, the senior secured credit facilities require Telesat Canada to prepay outstanding loans, subject to certain exceptions, in the event of certain casualty events, debt issuances, asset sales or other dispositions (including certain sale/leaseback transactions). Additionally, certain percentages of Excess Cash Flow (as defined in the senior secured credit facilities) must be applied to prepay borrowings.

During the five year period following the funding of the U.S. Term Loan and the U.S. Term Loan II, respectively, any required prepayment of such term loan, as described above, or regularly scheduled amortization payment required to be applied to such term loan, will not be required to be made if, after giving effect to such prepayment or payment, the aggregate principal amount of all repayments of the applicable term loan exceeds 25% of the aggregate initial principal amount of the applicable term loan (such excess amount, the Excess Prepayment Amount). Subsequent to the five-year period after the funding of the U.S. Term Loan and the U.S. Term Loan II, respectively, Telesat Canada will be obligated to prepay a principal amount of U.S. Term Loan or U.S. Term Loan II, as applicable, that is equal to the Excess Prepayment Amount.

Voluntary Prepayments

The senior secured credit facilities provide for voluntary prepayments of the loans without premium or penalty subject to certain conditions pertaining to minimum notice and payment/ reduction amounts, and breakage costs, if any.

Covenants

The senior secured credit facilities contain financial, affirmative and negative covenants. The negative covenants in the senior secured credit facilities include limitations (each of which is subject to significant exceptions) on Telesat Canada’s ability to:


	•	incur additional indebtedness;

	•	incur liens;

	•	enter into any merger, consolidation or amalgamation;

	•	engage in certain transactions with affiliates;

	•	convey, sell, lease, assign, transfer or otherwise dispose of its property, business or assets;

	•	make loans and investments;

	•	pay dividends;

	•	modify or cancel our satellite insurance;

	•	prepay, repurchase or redeem subordinated debt;

	•	make capital expenditures (in the case of the senior secured credit facilities); and

	•	engage in certain sale/ leaseback transactions.

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In addition, the senior secured credit agreement contains financial covenants including maximum total leverage and minimum interest coverage.

Events of Default

The senior secured credit facilities contain certain events of default, including:


	•	nonpayment of principal and interest;

	•	breach of certain covenants;

	•	material breach of the representations and warranties;

	•	cross default to certain material indebtedness;

	•	a change in control (as defined in the senior secured credit facilities);

	•	bankruptcy or insolvency;

	•	material judgments;

	•	certain ERISA violations; and

	•	actual or asserted invalidity of any Loan Document, Security Document or Guarantee (all, as defined in the senior secured credit facilities).

Telesat Holding PIK Preferred Stock

As part of the Equity Financing, Telesat Holdings issued to PSP, and PSP subscribed to and paid for, $141,435,000 in purchase price and aggregate liquidation preference of Telesat Holdings PIK Mandatorily Redeemable Preferred Stock (the “Holding PIK Preferred Stock”), at a purchase price of $1,000 per share.

The Holding PIK Preferred Stock shares rank in priority, with respect to payment of dividends and return of capital upon liquidation, dissolution or winding-up, ahead of the shares of all other classes of Telesat Holdings stock which have currently been created, as well as any other shares that may be created that by their terms rank junior to the Holding PIK Preferred Stock.

The Holding PIK Preferred Stock are entitled to receive cumulative preferential dividends at a rate of 7% per annum on the Liquidation Value, being $1,000 per share plus all accrued and unpaid dividends (8.5% per annum following a Performance Failure, being a failure to pay annual dividends in cash or in Holding PIK Preferred Stock in any year, while such failure is continuing, the failure to redeem the Holding PIK Preferred Stock when submitted for redemption on or after the twelfth anniversary of the date of issue, or the failure to redeem Holding PIK Preferred Stock for which an offer of redemption is accepted following a Change of Control). Such annual dividend may be paid in cash, subject to the requirements of the CBCA, if such payment is permitted under the terms of (i) the senior secured credit facilities and the indentures governing the notes, and (ii) any indebtedness incurred to refinance the senior secured credit facilities or the indentures governing the notes (collectively, the “Acquisition Debt”), or if such cash payment is not then permitted under the terms of the Acquisition Debt, such dividends will be paid, subject to the requirements of the CBCA, in Holding PIK Preferred Stock based on an issue price of $1,000 per share.

Under the senior secured credit facilities and the indentures governing the notes, we are prohibited, absent recourse to baskets that may be available, from paying cash dividends and redeeming the Holding PIK Preferred Stock prior to achieving and maintaining an agreed upon leverage level.

The Holding PIK Preferred Stock may be submitted by the holder for redemption on or after the twelfth anniversary of the date of issue, subject to compliance with law. Upon a Change of Control (as defined in the share conditions of the Holding PIK Preferred Stock) which occurs after the fifth anniversary of issue of the Holding PIK Preferred Stock, or on such fifth anniversary if a Change of Control occurs prior thereto, we must make an offer of redemption to all holders of Holding PIK Preferred Stock, and must redeem any Holding PIK Preferred Stock for which the offer of redemption is accepted within 25 days of such offer. The

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obligation to make such offer of redemption upon a Change of Control is subject to the terms of the Acquisition Debt and may be deferred until permitted by the terms of the Acquisition Debt, provided that no indebtedness described in clause (ii) of the definition of Acquisition Debt incurred in anticipation of a Change of Control will restrict such redemption in cash upon a Change of Control. The Holding PIK Preferred Stock is also redeemable at any time at our option. All redemptions of Holding PIK Preferred Stock are at a redemption price equal to the Liquidation Value described above.

The holders of the Holding PIK Preferred Stock are not entitled to receive notice of or to vote at any meeting of shareholders of Telesat Holdings, except for meetings of the holders of the Holding PIK Preferred Stock as a class, called to amend the terms of the Holding PIK Preferred Stock, or otherwise as required by law.

Junior Subordinated Promissory Notes

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THE EXCHANGE OFFER

Telesat Canada and Telesat LLC, the co-issuer of the outstanding notes, hereby offer to exchange a like principal amount of exchange notes representing the same underlying indebtedness as the outstanding notes for any or all outstanding notes on the terms and subject to the conditions set forth in this prospectus and accompanying letter of transmittal. We refer to the offer as the “exchange offer.” You may tender some or all of your outstanding notes pursuant to the exchange offer.

As of the date of this prospectus, US$692,825,000 aggregate principal amount of the outstanding senior notes is outstanding (CUSIP Nos. 87952V AA4, C8814P AA8 and 87952V AC0) and US$217,175,000 aggregate principal amount of the outstanding senior subordinated notes is outstanding (CUSIP Nos. 87952V AB2, C8814P AB6 and 87952V AD8).

This prospectus, together with the letter of transmittal, is first being sent to all holders of outstanding notes known to us on or about June 29, 2009. Our obligation to accept outstanding notes for exchange notes pursuant to the exchange offer is subject to certain conditions set forth under “Conditions to the Exchange Offer” below. We currently expect that each of the conditions will be satisfied and that no waivers will be necessary.

Purpose and Effect of the Exchange Offer

In connection with the private placement, we entered into registration rights agreements with Morgan Stanley & Co. Incorporated and UBS Securities LLC, as representatives of the other initial purchasers of the outstanding notes, in which we and the guarantors agreed, among other things, to use our commercially reasonable efforts to file a registration statement by June 25, 2009 and to consummate the exchange offer by September 23, 2009. The exchange notes will have terms substantially identical to the terms of the outstanding notes and represent the same underlying indebtedness as the outstanding notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreements.

Under the circumstances set forth below, we will use our commercially reasonable efforts to file and cause the SEC to declare effective a shelf registration statement with respect to the resale of the outstanding notes within the time periods specified in the registration rights agreements and to keep the shelf registration statement effective for one year or such shorter period ending when all outstanding notes or exchange notes covered by the registration statement have been sold in the manner set forth and as contemplated in the statement. These circumstances include:


	•	if applicable law or SEC policy does not permit us to effect the exchange offer;

	•	if for any other reason the exchange offer is not consummated by September 23, 2009; or

	•	if, following the consummation of the exchange offer, in the opinion of counsel to the initial purchasers of the outstanding notes, a registration statement must be filed and a prospectus must be delivered by such initial purchasers in connection with any offering or sale of the outstanding notes by such purchasers because the outstanding notes held by them were not eligible to be exchanged for exchange notes in the exchange offer.

If we fail to comply with certain obligations under the registration rights agreements, we will be required to pay additional interest to holders of the outstanding notes and the exchange notes required to be registered on a shelf registration statement. Please read the section “Exchange offer; registration rights” for more details regarding the registration rights agreements.

Each holder of outstanding notes that wishes to exchange their outstanding notes for exchange notes representing the same underlying indebtedness in the exchange offer will be required to make the following written representations:


	•	any exchange notes to be received by such holder will be acquired in the ordinary course of its business;

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	•	such holder has no arrangement or understanding with any person to participate in the distribution (within the meaning of the Securities Act) of the exchange notes in violation of the provisions of the Securities Act;

	•	such holder is not an affiliate of Telesat Canada, Telesat LLC or any of the guarantors, as defined by Rule 405 of the Securities Act, or if it is an affiliate, it will comply with the registration and prospectus delivery requirements of the Securities Act to the extent applicable; and

	•	it is not engaged in, and does not intend to engage in, a distribution of exchange notes.

Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes, where the broker-dealer acquired the outstanding notes as a result of market-making activities or other trading activities, must acknowledge that it will deliver a prospectus in connection with any resale of such exchange notes. Please see “Plan of Distribution.”

Resale of Exchange Notes

Based on interpretations by the staff of the SEC as set forth in no-action letters issued to third parties referred to below, we believe that you may resell or otherwise transfer exchange notes issued in the exchange offer without complying with the registration and prospectus delivery provisions of the Securities Act, if:


	•	you are acquiring the exchange notes in your ordinary course of business;

	•	you do not have an arrangement or understanding with any person to participate in a distribution of the exchange notes;

	•	you are not an affiliate of Telesat Canada, Telesat LLC or any of the guarantors, as defined by Rule 405 of the Securities Act; and

	•	you are not engaged in, and do not intend to engage in, a distribution of the exchange notes.

If you are an affiliate of Telesat Canada, Telesat LLC or any of the guarantors, or are engaging in, or intend to engage in, or have any arrangement or understanding with any person to participate in, a distribution of the exchange notes, or are not acquiring the exchange notes in the ordinary course of your business, then:


	•	you cannot rely on the position of the staff of the SEC enunciated in Morgan Stanley & Co., Inc. (available June 5, 1991), Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the SEC’s letter to Shearman & Sterling dated July 2, 1993, or similar no-action letters; and

	•	in the absence of an exception from the position stated immediately above, you must comply with the registration and prospectus delivery requirements of the Securities Act in connection with any resale of the exchange notes.

This prospectus may be used for an offer to resell, for the resale or for other retransfer of exchange notes only as specifically set forth in this prospectus. With regard to broker-dealers, only broker-dealers that acquired the outstanding notes as a result of market-making activities or other trading activities may participate in the exchange offer. Each broker-dealer that receives exchange notes for its own account in exchange for outstanding notes where such outstanding notes were acquired by such broker-dealer as a result of market-making activities or other trading activities must acknowledge that it will deliver a prospectus in connection with any resale of the exchange notes. Please read “Plan of Distribution” for more details regarding the transfer of exchange notes.

Terms of the Exchange Offer

On the terms and subject to the conditions set forth in this prospectus and in the accompanying letter of transmittal, we will accept for exchange in the exchange offer outstanding notes that are validly tendered and not validly withdrawn prior to the expiration date. We will issue exchange notes in exchange for a corresponding principal amount of outstanding notes surrendered in the exchange offer.

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The form and terms of the exchange notes will be substantially identical to the form and terms of the outstanding notes, except that the exchange notes will not contain terms with respect to transfer restrictions or additional interest upon a failure to fulfill certain of our obligations under the registration rights agreements. The exchange notes will evidence the same debt as the outstanding notes. The exchange notes will be issued under and entitled to the benefits of the same indentures under which the outstanding notes were issued, and the exchange notes and the outstanding notes will constitute a single class and series of notes for all purposes under the indentures. For a description of the indentures, please see “Description of the Senior Notes” and “Description of the Senior Subordinated Notes.”

The exchange offer is not conditioned upon any minimum aggregate principal amount of outstanding notes being tendered for exchange.

There will be no fixed record date for determining registered holders of outstanding notes entitled to participate in the exchange offer.

We intend to conduct the exchange offer in accordance with the provisions of the registration rights agreements, the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the SEC. Outstanding notes that are not tendered for exchange in the exchange offer will remain outstanding and continue to accrue interest and will be entitled to the rights and benefits that such holders have under the indenture relating to such holders’ outstanding notes, except for any rights under the registration rights agreements that by their terms terminate upon the consummation of the exchange offer.

We will be deemed to have accepted for exchange properly tendered outstanding notes when we have given oral or written notice of the acceptance to the exchange agent. The exchange agent will act as agent for the tendering holders for the purposes of receiving the exchange notes from us and delivering exchange notes to holders. Subject to the terms of the registration rights agreements, we expressly reserve the right to amend or terminate the exchange offer and to refuse to accept the occurrence of any of the conditions specified below under “Conditions to the exchange offer”.

Holders who tender outstanding notes in the exchange offer will not be required to pay brokerage commissions or fees or, subject to the instructions in the letter of transmittal, transfer taxes with respect to the exchange of outstanding notes. We will pay all charges and expenses, other than certain applicable taxes described below, in connection with the exchange offer. It is important that you read “— Fees and expenses” below for more details regarding fees and expenses incurred in the exchange offer.

Expiration Date; Extensions, Amendments

As used in this prospectus, the term “expiration date” means 12:00 midnight, New York City time, on July 28, 2009, which is the 20th business day after the date of this prospectus. However, if we, in our sole discretion, extend the period of time for which the exchange offer is open, the term “expiration date” will mean the latest time and date to which we shall have extended the expiration of the exchange offer.

To extend the period of time during which the exchange offer is open, we will notify the exchange agent of any extension by oral or written notice, followed by notification to the registered holders of the outstanding notes no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date.

We reserve the right, in our sole discretion:


	•	to delay accepting for exchange any outstanding notes (only if we amend or extend the applicable exchange offer);

	•	to extend the exchange offer or to terminate the exchange offer and to refuse to accept outstanding notes not previously accepted if any of the conditions set forth below under “Conditions to the exchange offer” have not been satisfied, by giving oral or written notice of such delay, extension or termination to the exchange agent; and

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	•	subject to the terms of the registration rights agreements, to amend the terms of the exchange offer in any manner.

Any delay in acceptance, extension, termination or amendment will be followed promptly by oral or written notice to the registered holders of the outstanding notes, and, to the extent the exchange offer is terminated, any outstanding notes accepted will be promptly returned after the termination of the exchange offer. If we amend the exchange offer in a manner that we determine to constitute a material change, including the waiver of a material condition or if we terminate the offer, we will notify the exchange agent by oral or written notice, followed by notification to the registered holders of the outstanding notes no later than 9:00 a.m., New York City time, on the business day after the amendment or termination has been determined and will extend the offer period if necessary so that at least five business days remain in the offer following notice of the material change.

Conditions to the Exchange Offer

Despite any other term of the exchange offer, we will not be required to accept for exchange, or to issue exchange notes in exchange for, any outstanding notes, and we may terminate or amend the exchange offer as provided in this prospectus before accepting any outstanding notes for exchange, if:


	•	the exchange offer, or the making of any exchange by a holder of outstanding notes, violates any applicable law or interpretation of the staff of the SEC;

	•	any action or proceeding shall have been instituted or threatened in any court or by any governmental agency that might materially impair our ability to proceed with the exchange offer, and any material adverse development shall have occurred in any existing action or proceeding with respect to us; or

	•	all governmental approvals shall not have been obtained, which approvals we deem necessary for the consummation of the exchange offer.

If the exchange offer is terminated, outstanding notes will be returned to their registered holders.

In addition, we will not be obligated to accept for exchange the outstanding notes of any holder that has not made to us:


	•	the representations described under “— Purpose and effect of the exchange offer” and “— Procedures for tendering outstanding notes”; and

	•	any other representations as may be reasonably necessary under applicable SEC rules, regulations, or interpretations to make available to us an appropriate form for registration of the exchange notes under the Securities Act.

All conditions to the exchange offer must be satisfied or waived prior to the expiration of the exchange offer.

We expressly reserve the right at any time or at various times to extend the period of time during which the exchange offer is open. Consequently, we may delay acceptance of any outstanding notes due to our extension of the exchange offer by notice by press release or other public announcement as required by Rule 14e-1(d) of the Securities Act of such extension to their holders. During any such extensions, all outstanding notes previously tendered will remain subject to the exchange offer, and we may accept them for exchange. We will return any outstanding notes that we do not accept for exchange for any reason without expense to their tendering holder promptly after the expiration or termination of the exchange offer. We will issue new notes promptly after the expiration of the exchange offer.

We expressly reserve the right to amend or terminate the exchange offer and to reject for exchange any outstanding notes not previously accepted for exchange upon the occurrence of any of the conditions of the exchange offer specified above. We will give notice by press release or other public announcement of any extension, amendment, non-acceptance or termination to the holders of the outstanding notes no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date.

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These conditions are for our sole benefit, and we may assert them regardless of the circumstances that may give rise to them so long as such circumstances do not arise due to our action or inaction or waive them in whole or in part at any or at various times in our sole discretion. If we fail at any time to exercise any of the foregoing rights, this failure will not constitute a waiver of such right. Each such right will be deemed an ongoing right that we may assert at any time or at various times.

Procedures for Tendering Outstanding Notes

Only a holder of outstanding notes may tender their outstanding notes in the exchange offer. To tender in the exchange offer, a holder must comply with either of the following:


	•	complete, sign and date the letter of transmittal or a facsimile of the letter of transmittal, have the signature on the letter of transmittal guaranteed if required by the letter of transmittal and mail or deliver such letter of transmittal or facsimile to the exchange agent prior to the expiration date; or

	•	comply with DTC’s Automated Tender Offer Program procedures described below.

In addition, either:


	•	the exchange agent must receive outstanding notes along with the letter of transmittal; or

	•	prior to the expiration date, the exchange agent must receive a timely confirmation of book-entry transfer of outstanding notes into the exchange agent’s account at DTC according to the procedure for book-entry transfer described below or a properly transmitted agent’s message; or

	•	the holder must comply with the guaranteed delivery procedures described

To be tendered effectively, the exchange agent must receive any physical delivery of the letter of transmittal and other required documents at the address set forth below under “— Exchange agent” prior to the expiration date.

A tender to us that is not withdrawn prior to the expiration date constitutes an agreement between us and the tendering holder upon the terms and subject to the conditions described in this prospectus and in the letter of transmittal.

The method of delivery of outstanding notes, letter of transmittal and all other required documents to the exchange agent is at the holder’s election and risk. Rather than mail these items, we recommend that holders use an overnight or hand delivery service. In all cases, holders should allow sufficient time to assure timely delivery to the exchange agent before the expiration date. Holders should not send letters of transmittal or certificates representing outstanding notes to us. Holders may request that their respective brokers, dealers, commercial banks, trust companies or other nominees effect the above transactions for them.

If you are a beneficial owner whose outstanding notes are held in the name of a broker, dealer, commercial bank, trust company, or other nominee who wishes to participate in the exchange offer, you should promptly contact such party and instruct such person to tender outstanding notes on your behalf.

You must make these arrangements or follow these procedures before completing and executing the letter of transmittal and delivering the outstanding notes.

Signatures on the letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed by a member firm of a registered national securities exchange or of the National Association of Securities Dealers, Inc., a commercial bank or trust company having an office or correspondent in the U.S. or another “Eligible Guarantor Institution” within the meaning of Rule 17A(d) -15 under the Exchange Act unless the outstanding notes surrendered for exchange are tendered:


	•	by a registered holder of the outstanding notes who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal; or

	•	for the account of an Eligible Guarantor Institution.

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If the letter of transmittal is signed by a person other than the registered holder of any outstanding notes listed on the outstanding notes, such outstanding notes must be endorsed or accompanied by a properly completed bond power. The bond power must be signed by the registered holder as the registered holder’s name appears on the outstanding notes and an Eligible Guarantor Institution must guarantee the signature on the bond power.

If the letter of transmittal or any certificates representing outstanding notes or bond powers are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers of corporations, or others acting in a fiduciary or representative capacity, those persons should also indicate when signing and, unless waived by us, they should also submit evidence satisfactory to us of their authority to so act.

The exchange agent and DTC have confirmed that any financial institution that is a participant in DTC’s system may use DTC’s Automated Tender Offer Program to tender. Participants in the program may, instead of physically completing and signing the letter of transmittal and delivering it to the exchange, electronically transmit their acceptance of the exchange by causing DTC to transfer the outstanding notes to the exchange agent in accordance with DTC’s Automated Tender Offer Program procedures for transfer. DTC will then send an agent’s message to the exchange agent. The term “agent’s message” means a message transmitted by DTC, received by the exchange agent and forming part of the book-entry confirmation, that states that:


	•	DTC has received an express acknowledgment from a participant in its Automated Tender Offer Program that is tendering outstanding notes that are the subject of the book-entry confirmation;

	•	the participant has received and agrees to be bound by the terms of the letter of transmittal or, in the case of an agent’s message relating to guaranteed delivery, such participant has received and agrees to be bound by the applicable notice of guaranteed delivery; and

	•	we may enforce that agreement against such participant.

Book-entry Delivery Procedures

Promptly after the date of this prospectus, the exchange agent will establish an account with respect to the outstanding notes at DTC as the book-entry transfer facility, for purposes of the exchange offer. Any financial institution that is a participant in the book-entry transfer facility’s system may make book-entry delivery of the outstanding notes by causing the book-entry transfer facility to transfer those outstanding notes into the exchange agent’s account at the facility in accordance with the facility’s procedures for such transfer. To be timely, book-entry delivery of outstanding notes requires receipt of a confirmation of a book-entry transfer, a “book-entry confirmation,” prior to the expiration date. In addition, although delivery of outstanding notes may be effected through book-entry transfer into the exchange agent’s account at the applicable book-entry transfer facility, the applicable letter of transmittal or a manually signed facsimile thereof, together with any required signature guarantees and any other required documents, or an “agent’s message,” as defined above, in connection with a book-entry transfer, must, in any case, be delivered or transmitted to and received by the exchange agent at its address set forth on the cover page of the applicable letter of transmittal prior to the expiration date to receive exchange notes for tendered outstanding notes, or the guaranteed delivery procedure described below must be complied with. Tender will not be deemed made until such documents are received by the exchange agent. Delivery of documents to the applicable book-entry transfer facility does not constitute delivery to the exchange agent.

Guaranteed Delivery Procedures

If you wish to tender your outstanding notes but your outstanding notes are not immediately available or you cannot deliver your outstanding notes, the letter of transmittal or any other required documents to the exchange agent or comply with the applicable procedures under DTC’s Automatic Tender Offer Program prior to the expiration date, you may still tender if:


	•	the tender is made through an Eligible Guarantor Institution;

	•	prior to the expiration date, the exchange agent receives from such Eligible Guarantor Institution either: (i) a properly completed and duly executed notice of guaranteed delivery, by facsimile transmission,

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		mail, or hand delivery or (ii) a properly transmitted agent’s message and notice of guaranteed delivery, that (a) sets forth your name and address, the certificate number(s) of such outstanding notes and the principal amount of outstanding notes tendered; (b) states that the tender is being made by that notice of guaranteed delivery; and (c) guarantees that, within three New York Stock Exchange trading days after the expiration date, the letter of transmittal, or facsimile thereof, together with the outstanding notes or a book-entry confirmation, and any other documents required by the letter of transmittal, will be deposited by the Eligible Guarantor Institution with the exchange agent; and


	•	the exchange agent receives the properly completed and executed letter of transmittal or facsimile thereof, as well as certificate(s) representing all tendered outstanding notes in proper form for transfer or a book-entry confirmation of transfer of the outstanding notes into the exchange agent’s account at DTC, and all other documents required by the letter of transmittal within three New York Stock Exchange trading days after the expiration date.

Upon request, the exchange agent will send to you a notice of guaranteed delivery if you wish to tender your notes according to the guaranteed delivery procedures.

Withdrawal Rights

Except as otherwise provided in this prospectus, you may withdraw your tender of outstanding notes at any time prior to 12:00 a.m. midnight, New York City time, on the expiration date.

For a withdrawal to be effective:


	•	the exchange agent must receive a written notice, which may be by telegram, telex, facsimile or letter, of withdrawal at its address set forth below under “— Exchange Agent”; or

	•	you must comply with the appropriate procedures of DTC’s Automated Tender Offer Program system.

Any notice of withdrawal must:


	•	specify the name of the person who tendered the outstanding notes to be withdrawn;

	•	identify the outstanding notes to be withdrawn, including the certificate numbers and principal amount of the outstanding notes; and

	•	where certificates for outstanding notes have been transmitted, specify the name in which such outstanding notes were registered, if different from that of the withdrawing holder.

If certificates for outstanding notes have been delivered or otherwise identified to the exchange agent, then, prior to the release of such certificates, you must also submit:


	•	the serial numbers of the particular certificates to be withdrawn; and

	•	a signed notice of withdrawal with signatures guaranteed by an eligible institution unless your are an Eligible Guarantor Institution.

If outstanding notes have been tendered pursuant to the procedures for book-entry transfer described above, any notice of withdrawal must specify the name and number of the account at the book-entry transfer facility to be credited with the withdrawn outstanding notes and otherwise comply with the procedures of the facility. We will determine all questions as to the validity, form, and eligibility, including time of receipt of notices of withdrawal and our determination will be final and binding on all parties. Any outstanding notes so withdrawn will be deemed not to have been validly tendered for exchange for purposes of the exchange offer. Any outstanding notes that have been tendered for exchange but that are not exchanged for any reason will be returned to their holder, without cost to the holder, or, in the case of book-entry transfer, the outstanding notes will be credited to an account at the book-entry transfer facility, promptly after withdrawal, rejection of tender or termination of the applicable exchange offer. Properly withdrawn outstanding notes may be retendered by following the procedures described under “— Procedures for Tendering Outstanding Notes” above at any time on or prior to the expiration date.

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Exchange Agent

The Bank of New York Mellon has been appointed as the exchange agent for the exchange offer. The Bank of New York Mellon also acts as trustee under the indentures governing the notes. You should direct all executed letters of transmittal and all questions and requests for assistance, requests for additional copies of this prospectus or of the letters of transmittal, and requests for notices of guaranteed delivery to the exchange agent addressed as follows:


		By Overnight Courier or
By Registered or Certified Mail:	By Facsimile Transmission:	Hand Delivery:

The Bank of New York Mellon 101 Barclay Street	212-298-1915	The Bank of New York Mellon 101 Barclay Street
Reorganization Unit — Floor 7E New York, NY 10286 Telephone: 212-815-3738 Attention: Evangeline R. Gonzales	To Confirm by Telephone: 212-815-3738	Reorganization Unit — Floor 7E New York, NY 10286 Telephone: 212-815-3738 Attention: Evangeline R. Gonzales

If you deliver the letter of transmittal to an address other than the one set forth above or transmit instructions via facsimile other than the one set forth above, that delivery or those instructions will not be effective.

Fees and Expenses

The registration rights agreements provide that we will bear all expenses in connection with the performance of our obligations relating to the registration of the exchange notes and the conduct of the exchange offer. These expenses include registration and filing fees, accounting and legal fees and printing costs, among others. We will pay the exchange agent reasonable and customary fees for its services and reasonable out-of-pocket expenses. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for customary mailing and handling expenses incurred by them in forwarding this prospectus and related documents to their clients that are holders of outstanding notes and for handling or tendering for such clients.

We have not retained any dealer-manager in connection with the exchange offer and will not pay any fee or commission to any broker, dealer, nominee or other person, other than the exchange agent, for soliciting tenders of outstanding notes pursuant to the exchange offer.

Accounting Treatment

We will record the exchange notes in our accounting records at the same carrying value as the outstanding notes, which is the aggregate principal amount as reflected in our accounting records on the date of exchanges. Accordingly, we will not recognize any gain or loss for accounting purposes upon the consummation of the exchange offer. We will record the expenses of the exchange offer as incurred.

Transfer Taxes

We will pay all transfer taxes, if any, applicable to the exchanges of outstanding notes under the exchange offer. The tendering holder, however, will be required to pay any transfer taxes, whether imposed on the registered holder or any other person, if:


	•	certificates representing outstanding notes for principal amounts not tendered or accepted for exchange are to be delivered to, or are to be issued in the name of, any person other than the registered holder of outstanding notes tendered;

	•	tendered outstanding notes are registered in the name of any person other than the person signing the letter of transmittal; or

	•	a transfer tax is imposed for any reason other than the exchange of outstanding notes under the exchange offer.

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If satisfactory evidence of payment of such taxes is not submitted with the letter of transmittal, the amount of such transfer taxes will be billed to that tendering holder.

Holders who tender their outstanding notes for exchange will not be required to pay any transfer taxes. However, holders who instruct us to register exchange notes in the name of, or request that outstanding notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder will be required to pay any applicable transfer tax.

Consequences of Failure to Exchange

If you do not exchange your outstanding notes for exchange notes under the exchange offer, your outstanding notes will remain subject to the restrictions on transfer of such outstanding notes as set forth in the legend printed on the outstanding notes as a consequence of the issuance of the outstanding notes pursuant to the exemptions from, or in transactions not subject to, the registration requirements of the Securities Act and applicable state securities laws.

In general, you may not offer or sell your outstanding notes unless they are registered under the Securities Act or if the offer or sale is exempt from registration under the Securities Act and applicable state securities laws. Except as required by the registration rights agreements, we do not intend to register resales of the outstanding notes under the Securities Act.

Other

Participating in the exchange offer is voluntary, and you should carefully consider whether to accept. You are urged to consult your financial and tax advisors in making your own decision on what action to take.

We may in the future seek to acquire untendered outstanding notes in open market or privately negotiated transactions, through subsequent exchange offers or otherwise. We have no present plans to acquire any outstanding notes that are not tendered in the exchange offer or to file a registration statement to permit resales of any untendered outstanding notes.

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DESCRIPTION OF THE SENIOR NOTES

General

The outstanding senior notes were and the senior exchange notes will be (collectively, the “notes” or the “senior notes”) issued under an indenture (the “Indenture”), dated as of June 30, 2008, among Telesat Holdings Inc. (“Telesat Holdings”), Telesat Interco Inc. (“Intermediate Holdco”), Telesat Canada (the “Issuer”), Telesat LLC , a Delaware limited liability company and a Wholly-Owned Subsidiary of the Issuer (the “Co-Issuer”), and certain of Telesat Holdings’ direct and indirect Subsidiaries, as Guarantors, and The Bank of New York Mellon, as trustee (the “Trustee”).

The definitions of certain terms used in the following description are set forth below under “— Certain Definitions.” For purposes of this “Description of the Senior Notes”


	•	the terms “Issuer,” “we” and “our” refer only to Telesat Canada, and not to any of its Subsidiaries or parent companies,

	•	the term “Co-Issuers” refers only to the Issuer and the Co-Issuer, collectively, and not any of their respective Subsidiaries or parent companies,

	•	the term “Guarantor” refers to Telesat Holdings, Intermediate Holdco and each Restricted Subsidiary that Guarantees the notes on the Issue Date and each other Restricted Subsidiary that the Issuer shall otherwise cause to become a Guarantor pursuant to the terms of the Indenture, and

	•	references to “US$” are to U.S. dollars and references to “$” and “CAD” are to Canadian dollars.

The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.

The following summary of the material provisions of the Indenture does not purport to be complete and is qualified in its entirety by reference to the provisions of the Indenture, including the definitions therein of certain terms used below. We urge you to read the Indenture because it, not this description, defines your rights as holders of the notes. Copies of the form of the Indenture may be obtained from the Issuer upon request.

Brief Description of the Notes

The notes:


	•	are unsecured senior obligations of the Co-Issuers ranking pari passu in right of payment to all existing and future unsubordinated Indebtedness of the Co-Issuers;

	•	are senior in right of payment to any future Subordinated Indebtedness of the Co-Issuers; and

	•	are guaranteed by each Guarantor.

Guarantees

The Guarantors, as primary obligors and not merely as sureties, will jointly and severally irrevocably and unconditionally guarantee, on a senior basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of the Co-Issuers under the Indenture and the notes, whether for payment of principal of or interest on or Special Interest in respect of the notes, expenses, indemnification or otherwise, on the terms set forth in the Indenture. Each of the Guarantees will be general unsecured obligations of the relevant Guarantors and will rank pari passu in right of payment to all existing and future unsecured Indebtedness of such Guarantor, other than any Subordinated Indebtedness. The notes are effectively subordinated to any secured Indebtedness of the Guarantors to the extent of such security and are structurally subordinated to Indebtedness of Subsidiaries of the Co-Issuers who do not Guarantee the notes.

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Not all of our Subsidiaries will be Guarantors. The Indenture provides that Telesat Holdings and each existing and future Restricted Subsidiary that guarantees obligations or is a borrower or co-borrower under any of our Credit Facilities (including the Senior Credit Facilities) will be Guarantors of the notes. With respect to Subsidiaries that are not Guarantors, in the event of a bankruptcy, liquidation or reorganization of any of these non-guarantor Subsidiaries, these non-guarantor Subsidiaries will pay the holders of their debts and their trade creditors before they will be able to distribute any of their assets to us.

Due to certain regulatory and other local law considerations, our Hong Kong Subsidiary, Telesat Asia Pacific Satellite (HK) Limited (TAPS), is currently not a guarantor under our Senior Credit Facilities and will not be required to guarantee the notes on the Issue Date, but we will, subject to the provisions of the Senior Credit Facilities, be required under the Senior Credit Facilities to use commercially reasonable efforts to cause TAPS to become a guarantor thereunder. However, we cannot assure you that we will be successful in causing TAPS to become a guarantor under the Senior Credit Facilities and therefore we cannot assure you that it will become a Guarantor of the notes. For the three months ended March 31, 2009, TAPS had revenues of approximately $9.2 million and at that date, it had total assets of approximately $111.0 million and $4.0 million of liabilities (excluding trade payables).

In addition, as of the Issue Date, all of Telesat Holdings’ Subsidiaries will be Restricted Subsidiaries, other than The Access Centre LLC and The SpaceConnection, Inc., which will be Unrestricted Subsidiaries as of the Issue Date and will not guarantee the notes or our Senior Credit Facilities. As of March 31, 2009, The Access Centre LLC had assets of less than US$11,000, revenue of less than US$48,000 and liabilities of less than US$31,000, and The SpaceConnection, Inc. had assets of less than US$20 million, revenue of less than US$7 million and liabilities of less than US$31 million. Furthermore, we have other non-Material Subsidiaries that as of March 31, 2009, had de minimis assets, revenue and liabilities and will not guarantee the notes or our Senior Secured Credit Facilities.

The obligations of each Guarantor under its Guarantee will be limited as necessary to prevent that Guarantee from constituting a fraudulent conveyance under applicable law. See “Risk Factors — Risks Related to the Notes — Federal and state statutes allow courts, under specific circumstances, to void the notes and the guarantees, subordinate claims in respect of the notes and the guarantees and require note holders to return payments received from us or the guarantors.”

Each Guarantor that makes a payment under its Guarantee will be entitled upon payment in full of all guaranteed obligations under the Indenture to a contribution from each other Guarantor in an amount equal to such other Guarantor’s pro rata portion of such payment based on the respective net assets of all the Guarantors at the time of such payment determined in accordance with GAAP.

If a Guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) of the applicable Guarantor, and, depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be reduced to zero. See “Risk Factors — Risks Related to the Notes.”

Any Guarantee by a Restricted Subsidiary of the notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon:

(i) (a) any sale, exchange or transfer (by merger, amalgamation or otherwise) of all of the Issuer’s and/or any Restricted Subsidiary’s Capital Stock in such Guarantor (including any sale, exchange or transfer following which the applicable Guarantor is no longer a Restricted Subsidiary) or all or substantially all the assets of such Guarantor (other than any sale, exchange or transfer to the Issuer, any Guarantor and/or any Restricted Subsidiary), which sale, exchange or transfer is made in compliance with the applicable provisions of the Indenture,

(b) the release or discharge of the guarantee by such Restricted Subsidiary of the Senior Credit Facilities or the other guarantee which resulted in the creation of such Guarantee, except a discharge or release by or as a result of payment under such guarantee,

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(c) if Telesat Holdings properly designates any Restricted Subsidiary that is a Guarantor as an Unrestricted Subsidiary, the effectiveness of such designation or when it first ceases to be a Restricted Subsidiary, respectively, or

(d) exercise of the legal defeasance option or covenant defeasance option as described under “Legal Defeasance and Covenant Defeasance” or if our obligations under the Indenture are discharged in accordance with the terms of the Indenture; and

(ii) the delivery by such Guarantor to the Trustee of an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the release and discharge of the Guarantee have been complied with.

Bankruptcy Limitations Relating to Telesat Canada and Other Regulatory Matters

Under the Telesat Canada Reorganization and Divestiture Act, or the Telesat Divestiture Act, Telesat Canada (as a corporate entity) is subject to certain special conditions and restrictions. The Telesat Divestiture Act provides that no legislation relating to the solvency or winding-up of a corporation applies to Telesat Canada and in no case shall the affairs of Telesat Canada be wound up unless authorized by an Act of the Parliament of Canada. As a result of such legislative provisions, Telesat Canada and its creditors, including holders of the notes and secured creditors under the Senior Credit Facilities, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws in respect of claims against Telesat Canada, including the imposition of a stay of proceedings, or a regulated and orderly process to settle or compromise claims and make distributions to creditors, or recourse to fraudulent conveyance laws. The effect of the Telesat Divestiture Act upon an insolvency of Telesat Canada has not been considered by a Canadian court and, accordingly, the application of Canadian federal bankruptcy and insolvency laws and provincial receivership and assignment and preference laws, and the exercise by a Canadian court of any judicial discretion which could affect the enforcement of rights and remedies or other equitable relief against Telesat Canada in the context of an insolvency, is uncertain. To the extent bankruptcy and insolvency laws do not apply to Telesat Canada, its creditors may individually seek to pursue any available rights or remedies as secured or unsecured creditors, as the case may be, against Telesat Canada and its assets. The assets of Telesat Canada only (including its shares in its subsidiaries) are subject to the Telesat Divestiture Act but the assets of the Guarantors, including the subsidiary Guarantors, are not. In addition, to date, Industry Canada and the CRTC have taken the position that we are subject to certain Canadian foreign ownership and control restrictions which are set out in the Telecommunications Act, the Radiocommunication Act and the regulations under each, and in Industry Canada policies. These limitations on ownership may have a material impact on the sale of Telesat Canada or its assets in any bankruptcy or reorganization scenario. See “Risk Factors — Risks Related to the Notes — Because of the Telesat Canada Reorganization and Divestiture Act, a Canadian act uniquely applicable to Telesat Canada (but not to the guarantors, other subsidiaries or the Co-Issuer), Telesat Canada may not have access to the usual protections from creditors and other rights available to insolvent persons, and creditors, including holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws generally available to creditors of insolvent persons.” The rights of Holders may further be limited by the provisions of the Indenture described under “— Regulatory Matters” below.

Ranking

The indebtedness evidenced by the notes and the Guarantees will be unsecured and will rank pari passu in right of payment to all unsubordinated Indebtedness of the Co-Issuers and the Guarantors, as the case may be. The notes are effectively subordinated in right of payment to all of the Co-Issuers’ and each Guarantor’s existing and future secured Indebtedness to the extent of the value of the assets securing such Indebtedness.

At March 31, 2009, we had outstanding secured indebtedness of US$1,953 million (excluding capital lease obligations of US$31 million) assuming an exchange rate of US$1.00/$1.2602 (total secured debt by currency consisting of $193 million (excluding capitalized lease obligations of $39 million) and US$1,800 million (including US$1,041 million converted to $1,209 million on October 31, 2007 as part of an amortizing

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basis swap at US$1.00/$1.1615; $1,209 million was the equivalent of US$959 million as at March 31, 2009)) and $153 million of unused available revolving capacity under our Senior Credit Facilities (not giving effect to outstanding letters of credit).

Principal, Maturity and Interest

The Co-Issuers issued US$692,825,000 of outstanding senior notes in the private placement and will issue up to US$692,825,000 of senior exchange notes in the exchange offer. The senior notes will mature on November 1, 2015. The Co-Issuers may issue additional notes from time to time after this offering under the Indenture (“Additional Notes”). Any offering of Additional Notes is subject to the covenant described below under the caption “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock.” The notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including waivers, amendments, redemptions and offers to purchase. Unless the context requires otherwise, references to “notes” or “senior notes” for all purposes of the Indenture and this “Description of the Senior Notes” include any Additional Notes that are actually issued.

Interest on the senior notes will accrue at the rate of 11.0% per annum and will be payable semi-annually in arrears on May 1 and November 1, commencing on November 1, 2008, to Holders of record on the immediately preceding April 15 and October 15. Interest on the notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance of the notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Principal of, premium, if any, and interest on the notes will be payable at the office or agency of the Issuer maintained for such purpose within the City and State of New York or, at the option of the Issuer, payment of interest may be made by check mailed to the Holders of the notes at their respective addresses set forth in the register of Holders; provided that all payments of principal, premium, if any, and interest with respect to notes represented by one or more permanent global notes registered in the name of or held by DTC or its nominee will be made by wire transfer of immediately available funds to the accounts specified by the Holder or Holders thereof. Until otherwise designated by the Issuer, the Issuer’s office or agency in New York will be the office of the trustee maintained for such purpose. The notes will be issued in denominations of US$2,000 and integral multiples of US$1,000 thereof.

Additional Amounts

All payments made by the Co-Issuers or a Guarantor under or with respect to the notes or the Guarantees will be made free and clear of and without withholding or deduction for or on account of any present or future Taxes imposed or levied by or on behalf of any Taxing Authority in any jurisdiction in which a Co-Issuer or Guarantor is organized or is otherwise resident or deemed resident for tax purposes or any jurisdiction from or through which payment is made (each a “Relevant Taxing Jurisdiction”), unless a Co-Issuer or Guarantor is required to withhold or deduct Taxes by law or by the interpretation or administration thereof. If a Co-Issuer or Guarantor is required to withhold or deduct any amount for or on account of Taxes imposed by a Relevant Taxing Jurisdiction from any payment made under or with respect to the notes or the Guarantees, such Co-Issuer or Guarantor will (a) make such withholding or deduction and (b) remit the full amount deducted or withheld to the relevant authority in accordance with and in the time required under applicable law and (c) pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by each Holder of notes (including Additional Amounts) after such withholding or deduction will equal the amount the Holder would have received if such Taxes had not been withheld or deducted; provided, however, that no Additional Amounts will be payable with respect to any estate, inheritance, gift, sales, capital gains, excise or personal property tax or any similar Tax or governmental charge or any Tax that would not have been imposed, payable or due:

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a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) other than the mere acquisition, ownership, holding or disposition of the notes or enforcement of rights thereunder or the receipt of payments in respect thereof;

(2) but for the failure to satisfy any certification, identification or other reporting requirements whether imposed by statute, treaty, regulation or administrative practice; provided, however, that the Issuer has delivered a request to the Holder or beneficial owner to comply with such requirements at least 30 days prior to the date by which such compliance is required and such Holder or beneficial owner can legally comply with such requirements;

(3) if the presentation of notes (where presentation is required) for payment had occurred within 30 days after the date such payment was due and payable or was duly provided for, whichever is later, but only to the extent such Additional Amounts would not have been required had the note been presented on the last day of the applicable 30 day period;

(4) but for the fact that the Holder does not deal at arm’s length (within the meaning of the Income Tax Act (Canada)) with the Issuer, the Co-Issuer or a Guarantor; or

(5) but for any combination of the items listed above.

Each of the Co-Issuers and the Guarantors will indemnify and hold harmless each Holder and beneficial owner from and against (x) any Taxes (other than Taxes excluded by clauses (1) through (5) above) levied or imposed on a Holder or owner as a result of payments made under or with respect to the notes (including any such Tax imposed under Part XIII of the Income Tax Act (Canada) and arising on an assignment (other than an assignment that is not effected in accordance with the provisions of the Indenture) of a note to a person resident of or deemed resident of Canada that is withheld from or levied or imposed on a Holder or beneficial owner), and (y) any Taxes (other than Taxes excluded by clauses (1) through (5) above) so levied or imposed with respect to any indemnification payments under the foregoing clause (x) or this clause (y) such that the net amount received by such Holder or beneficial owner after such indemnification payments will not be less than the net amount the Holder or beneficial owner would have received if the Taxes described in clauses (x) and (y) above had not been imposed.

Whenever in the Indenture or in this “Description of the Senior Notes” there is mentioned, in any context, the payment of amounts based upon the principal amount of the notes or of principal, interest or of any other amount payable under or with respect to any of the notes, such mention shall be deemed to include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Upon request, the Issuer will provide the Trustee with documentation evidencing the payment of the Taxes giving rise to the Additional Amounts.

The Co-Issuers will pay any present or future stamp, registration, court or documentary taxes, or any other excise, property or similar taxes, charges or levies (including any interest and penalties related thereto) which arise in any jurisdiction from the execution, delivery or registration of the notes or Guarantees or any other document or instrument referred to therein, or the receipt of any payments with respect to the notes or Guarantees (“Documentary Taxes”).

The obligation to pay Additional Amounts and Documentary Taxes under the terms and conditions described above will survive any termination, defeasance or discharge of the Indenture.

Redemption; Offers to Repurchase; Open Market Purchases

We are not required to make any mandatory redemption or sinking fund payments with respect to the notes. However, under certain circumstances, we may be required to offer to purchase notes as described under the caption “— Repurchase at the Option of Holders.” We may at any time and from time to time purchase notes in the open market or otherwise.

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Redemption for Changes in Withholding Taxes

In addition, the Co-Issuers may, at their option, redeem all (but not less than all) of the notes then outstanding, in each case at 100% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption, if any Co-Issuer or a Guarantor has become or would become obligated to pay, on the next date on which any amount would be payable with respect to such notes, any Additional Amounts (or make indemnity payments) as a result of any change in law of a Relevant Taxing Jurisdiction (including any regulations promulgated thereunder) or in the official interpretation or administration of law or relevant position or policy of any applicable taxing authority of a Relevant Taxing Jurisdiction, if such change is announced and becomes effective on or after the Issue Date; provided that the Issuer determines, in its business judgment, that the obligation to pay such Additional Amounts or indemnification payments cannot be avoided by the use of reasonable measures available to it. Notice of any such redemption must be given not less than 30 nor more than 60 days prior to the date fixed for redemption pursuant to this paragraph and no later than 270 days after such Co-Issuer or Guarantor first becomes liable to pay such Additional Amounts (or indemnity payments); provided that no such notice will be given earlier than 90 days prior to the earliest date on which such Co-Issuer or Guarantor would be obliged to pay such Additional Amounts.

Prior to giving any notice of redemption of the notes pursuant to this section, the Issuer will deliver to the Trustee:

(1) an Officers’ Certificate stating that the Co-Issuers are entitled to effect such redemption and setting forth a statement of facts showing that the conditions precedent to the right of the Co-Issuers so to redeem have occurred; and

(2) a written tax opinion of recognized counsel in the Relevant Taxing Jurisdiction acceptable to the Trustee, that the Issuer, Co-Issuer or any Guarantor, as the case may be, has or will become obliged to pay Additional Amounts as a result of such amendment or change as described above.

Such certificate and opinion will be made available for inspection by the Holders.

Optional Redemption

At any time prior to May 1, 2012, the Co-Issuers may redeem the notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail, postage prepaid, with a copy to the Trustee, to each Holder of the notes to the address of such Holder appearing in the security register, at a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Special Interest, if any, and Additional Amounts, if any, to the date of redemption (the “Redemption Date”), subject to the rights of Holders of notes on the relevant record date to receive interest due on the relevant interest payment date.

On and after May 1, 2012 (the “First Call Date”), the Co-Issuers may redeem the notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice by first-class mail, postage prepaid, with a copy to the Trustee, to each Holder of notes to the address of such Holder appearing in the security register, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon and Special Interest, if any, and Additional Amounts, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on May 1 of each of the years indicated below:


Year	Percentage

2012		105.50	%
2013		102.75	%
2014 and thereafter		100.00	%

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Amounts, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings of Telesat Holdings or any direct or indirect parent of the Issuer to the extent such net cash proceeds are contributed to Telesat Holdings; provided that at least 65% of the sum of the aggregate principal amount of notes originally issued under the Indenture and any Additional Notes issued under the Indenture after the Issue Date remains outstanding immediately after the occurrence of each such redemption; provided further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering.

The Trustee shall select the notes to be purchased in the manner described under “— Repurchase at the Option of Holders — Selection and Notice”.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, the Co-Issuers will make an offer to repurchase all of the notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Special Interest, if any, and Additional Amounts, if any, to the date of repurchase, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date. Within 30 days following any Change of Control, the Issuer will send notice of such Change of Control Offer by first class mail, with a copy to the Trustee, to each Holder of notes to the address of such Holder appearing in the security register, with the following information:

(1) a Change of Control Offer is being made pursuant to the covenant entitled “Change of Control”, and that all notes properly tendered pursuant to such Change of Control Offer will be accepted for payment;

(2) the repurchase price and the repurchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”);

(3) any note not properly tendered will remain outstanding and continue to accrue interest;

(4) unless the Co-Issuers default in the payment of the Change of Control Payment, all notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest on the Change of Control Payment Date;

(5) Holders electing to have any notes repurchased pursuant to a Change of Control Offer will be required to surrender the notes, with the form entitled “Option of Holder to Elect Repurchase” on the reverse of the notes completed, to the Paying Agent specified in the notice at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6) Holders will be entitled to withdraw their tendered notes and their election to require the Issuer to repurchase such notes, provided that the Paying Agent receives, not later than the close of business on the second Business Day prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the Holder of the notes, the principal amount of notes tendered for repurchase, and a statement that such Holder is withdrawing his tendered notes and his election to have such notes repurchased; and

(7) that Holders whose notes are being repurchased only in part will be issued new notes equal in principal amount to the unrepurchased portion of the notes surrendered, which unrepurchased portion must be equal to US$2,000 or a US$1,000 integral multiple thereof.

While the notes are in global form and the Co-Issuers make an offer to repurchase all of the notes pursuant to the Change of Control Offer, a Holder may exercise its option to elect for the repurchase of the notes through the facilities of DTC, subject to its rules and regulations.

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The Co-Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the notes pursuant to a Change of Control Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Co-Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations described in the Indenture by virtue thereof.

On the Change of Control Payment Date, the Co-Issuers will, to the extent permitted by law,

(1) accept for payment all notes or portions thereof properly tendered pursuant to the Change of Control Offer,

(2) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all notes or portions thereof so tendered and

(3) deliver, or cause to be delivered, to the Trustee for cancellation the notes so accepted together with an Officers’ Certificate stating that such notes or portions thereof have been tendered to and repurchased by the Co-Issuers.

The Paying Agent will promptly mail to each Holder of the notes the Change of Control Payment for such notes, and the Trustee will promptly authenticate and mail to each Holder a new note equal in principal amount to any unrepurchased portion of the notes surrendered, if any, provided, that each such new note will be in a principal amount of US$2,000 or a US$1,000 integral multiple thereof. The Issuer will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

The Co-Issuers will not be required to make a Change of Control Offer if a third party makes such Change of Control Offer contemporaneously with or upon a Change of Control in the manner, at the times and otherwise in compliance with the requirements of the Indenture and purchases all notes validly tendered and not withdrawn under such Change of Control Offer.

The Change of Control repurchase feature of the notes may in certain circumstances make more difficult or discourage a sale or takeover of Telesat Holdings or the Issuer and, thus, the removal of incumbent management. We have no present intention to engage in a transaction involving a Change of Control, although it is possible that we could decide to do so in the future. Subject to the limitations discussed below, we could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the Indenture, but that could increase the amount of indebtedness outstanding at such time or otherwise affect our capital structure or credit ratings. Restrictions on our ability to incur additional Indebtedness are contained in the covenants described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”, “— Certain Covenants — Limitation on Liens” and “— Certain Covenants — Limitation on Sale and Lease-Back Transactions.” Such restrictions can only be waived with the consent of the holders of a majority in principal amount of the notes then outstanding. Except for the limitations contained in such covenants, however, the Indenture does not contain any covenants or provisions that may afford holders of the notes protection in the event of a highly leveraged transaction.

The Senior Credit Facilities contain, and existing and future indebtedness of the Co-Issuers and their Subsidiaries may contain, prohibitions on the occurrence of certain events that would constitute a Change of Control or require such indebtedness to be repaid or purchased upon a Change of Control. There can be no assurance that sufficient funds will be available when necessary to make any required purchases. The Senior Credit Facilities provide that a Change of Control is an event of default and therefore would not, and other future Indebtedness may not, permit the Co-Issuers to repurchase notes in the event of a Change of Control. Even if sufficient funds were otherwise available, the terms of certain of the Co-Issuers’ Indebtedness and other future Indebtedness could prohibit the prepayment of notes prior to their scheduled maturity. Consequently, if the Co-Issuers are not able to prepay such Indebtedness or obtain a waiver from the relevant lenders, they will be unable to fulfill their repurchase obligations if holders of notes exercise their repurchase rights following a Change of Control. The failure to make or consummate the Change of Control Offer or pay

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the repurchase price when due will give the Trustee and the Holders the rights described under “Events of Default.” In the event that we are required to repurchase outstanding notes pursuant to a Change of Control Offer, we expect to seek third party financing to the extent we lack available funds to meet our repurchase obligations. However, there can be no assurance that we would be able to obtain such financing.

The existence of a Holder’s right to require the Co-Issuers to repurchase such Holder’s notes upon the occurrence of a Change of Control may deter a third party from seeking to acquire the Issuer or Telesat Holdings in a transaction that would constitute a Change of Control.

The definition of “Change of Control” includes a disposition of all or substantially all of the assets of Telesat Holdings and its Subsidiaries to any Person. Although there is a limited body of case law interpreting the phrase “substantially all”, there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of the assets of Telesat Holdings and its Subsidiaries. As a result, it may be unclear as to whether a Change of Control has occurred and whether a holder of notes may require the Issuer to make an offer to repurchase the notes as described above.

The provisions under the Indenture relative to our obligation to make an offer to repurchase the notes as a result of a Change of Control may be waived or modified with the written consent of the holders of a majority in principal amount of the notes.

Asset Sales

The Indenture provides that Telesat Holdings will not, and will not permit any Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless

(1) Telesat Holdings or such Restricted Subsidiary, as the case may be, receives consideration at the time of such Asset Sale at least equal to the fair market value (as determined in good faith by the Board of Directors of Telesat Holdings) of the assets sold or otherwise disposed of, and

(2) except in the case of a Permitted Asset Swap, at least 75% of the consideration therefor received by Telesat Holdings or such Restricted Subsidiary, as the case may be, is in the form of Cash Equivalents; provided that the amount of

(a) any liabilities (as shown on Telesat Holdings’, or such Restricted Subsidiary’s, most recent balance sheet or in the footnotes thereto) of Telesat Holdings or any Restricted Subsidiary, other than liabilities that are by their terms subordinated to the notes, that are assumed by the transferee of any such assets and for which Telesat Holdings and all Restricted Subsidiaries have been unconditionally released by all creditors in writing,

(b) any securities received by Telesat Holdings or such Restricted Subsidiary from such transferee that are converted by Telesat Holdings or such Restricted Subsidiary into cash (to the extent of the cash received) within 180 days following the closing of such Asset Sale, and

(c) any Designated Noncash Consideration received by Telesat Holdings or any Restricted Subsidiary in such Asset Sale having an aggregate fair market value (as determined in good faith by the Issuer), taken together with all other Designated Noncash Consideration received pursuant to this clause (c) that is at that time outstanding, not to exceed an amount equal to 2.0% of Total Assets at the time of the receipt of such Designated Noncash Consideration, with the fair market value of each item of Designated Noncash Consideration being measured at the time received and without giving effect to subsequent changes in value,

shall be deemed to be Cash Equivalents for purposes of this provision and for no other purpose.

Within 395 days after Telesat Holdings’ or any Restricted Subsidiary’s receipt of the Net Proceeds of any Asset Sale (or Event of Loss Proceeds) (such 395 day period, the “Reinvestment Period”), Telesat Holdings or such Restricted Subsidiary, at its option, may apply the Net Proceeds from such Asset Sale (together with any Event of Loss Proceeds required to be applied as provided in “— Certain Covenants — Maintenance of Insurance” below)

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(1) to permanently reduce Obligations under the Senior Credit Facilities and any other Pari Passu Indebtedness (other than Disqualified Stock and other than Obligations owed to Telesat Holdings or a Restricted Subsidiary or Affiliate of Telesat Holdings) and to correspondingly reduce commitments with respect thereto, provided that if the Issuer shall so reduce Obligations under any Pari Passu Indebtedness (other than Obligations under any Pari Passu Indebtedness secured by a Lien on the assets of Telesat Holdings or any Restricted Subsidiary), it will equally and ratably reduce Obligations under the notes if the notes are then prepayable or, if the notes may not then be prepaid, the Issuer shall make an offer (in accordance with the procedures set forth below for an Asset Sale Offer) to all Holders to purchase their notes at 100% of the principal amount thereof, plus the amount of accrued but unpaid interest, if any, on the amount of notes that would otherwise be prepaid,

(2) to an investment in (a) any one or more businesses, provided that such investment in any business is in the form of the acquisition of Capital Stock and results in Telesat Holdings or a Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) capital expenditures or (c) acquisitions of other assets, in each of (a), (b) and (c), used or useful in a Similar Business, or

(3) to an investment in (a) any one or more businesses engaged in a Similar Business, provided that such investment in any business is in the form of the acquisition of Capital Stock and results in Telesat Holdings or a Restricted Subsidiary, as the case may be, owning an amount of the Capital Stock of such business such that it constitutes a Restricted Subsidiary, (b) properties used or useful in a Similar Business or (c) other assets used or useful in a Similar Business that, in each of (a), (b) and (c), replace the businesses, properties and assets that are the subject of such Asset Sale;

provided that, in the case of clauses (2) and (3) above, a binding commitment entered into prior to the end of the Reinvestment Period shall be treated as a permitted application of the Net Proceeds (or Event of Loss Proceeds, as applicable) from the date of such commitment so long as Telesat Holdings or such Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds (or Event of Loss Proceeds, as applicable) will be applied to satisfy such commitment (an “Acceptable Commitment”) and, in the event any Acceptable Commitment is later canceled or terminated for any reason before such Net Proceeds (or Event of Loss Proceeds, as applicable) are so applied, Telesat Holdings or such Restricted Subsidiary enters into another Acceptable Commitment (a “Replacement Commitment”) within six months of such cancellation or termination; provided further that if any Replacement Commitment is later cancelled or terminated for any reason before such Net Proceeds (or Event of Loss Proceeds, as applicable) are applied, then such Net Proceeds shall constitute Excess Proceeds.

Any Net Proceeds from the Asset Sale (and Event of Loss Proceeds) that are not invested or applied as provided and within the Reinvestment Period will be deemed to constitute “Excess Proceeds.” When the aggregate amount of Excess Proceeds exceeds US$25.0 million, the Co-Issuers shall make an offer to all Holders of the notes, and, if required by the terms of any Pari Passu Indebtedness, to the holders of such Pari Passu Indebtedness (an “Asset Sale Offer”), to purchase the maximum principal amount of notes and such Pari Passu Indebtedness that may be purchased out of the Excess Proceeds at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest and Special Interest, if any, to the date fixed for the closing of such offer, in accordance with the procedures set forth in the Indenture. The Co-Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceed US$25.0 million by mailing the notice required pursuant to the terms of the Indenture, with a copy to the Trustee.

To the extent that the aggregate amount of notes and such Pari Passu Indebtedness tendered pursuant to an Asset Sale Offer is less than the Excess Proceeds, the Issuer may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Indenture. If the aggregate principal amount of notes or the Pari Passu Indebtedness surrendered by such holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the notes and such Pari Passu Indebtedness to be purchased on a pro rata basis based on the accreted value or principal amount of the notes or such Pari Passu Indebtedness tendered. Upon completion of any such Asset Sale Offer, the amount of Excess Proceeds shall be reset at zero.

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Pending the final application of any Net Proceeds (or Event of Loss Proceeds) pursuant to this covenant, Telesat Holdings or the applicable Restricted Subsidiary may apply such Net Proceeds (or Event of Loss Proceeds) temporarily to reduce Indebtedness outstanding under a revolving credit facility or otherwise invest such Net Proceeds (or Event of Loss Proceeds) in any manner not prohibited by the Indenture.

The Co-Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Co-Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in the Indenture by virtue thereof.

The Senior Credit Facilities prohibit (subject to limited exceptions), and future credit agreements or other agreements relating to Pari Passu Indebtedness to which any Co-Issuer becomes a party may prohibit, the Co-Issuers from purchasing any notes pursuant to this Asset Sales covenant. In the event such Co-Issuer is prohibited from purchasing the notes, such Co-Issuer could seek the consent of its lenders to the purchase of the notes or could attempt to refinance the borrowings that contain such prohibition. If such Co-Issuer does not obtain such consent or repay such borrowings, it will remain prohibited from purchasing the notes. In such case, the Issuer’s failure to purchase tendered notes would constitute an Event of Default under the Indenture.

The provisions under the Indenture relative to our obligation to apply the Net Proceeds of any Asset Sale (or Event of Loss Proceeds) in accordance therewith may be waived or modified with the written consent of the holders of a majority in principal amount of the notes.

Selection and Notice

If less than all of the notes or such Pari Passu Indebtedness is to be redeemed at any time, selection of such notes for redemption, will be made by the Trustee on a pro rata basis to the extent practicable; provided that no notes of US$2,000 or less shall be purchased or redeemed in part.

Notices of purchase or redemption shall be mailed by first class mail, postage prepaid, at least 30 but not more than 60 days before the purchase or redemption date to each Holder of notes to be purchased or redeemed at such Holder’s registered address, with a copy to the Trustee. If any note is to be purchased or redeemed in part only, any notice of purchase or redemption that relates to such note shall state the portion of the principal amount thereof that has been or is to be purchased or redeemed.

A new note in principal amount equal to the unpurchased or unredeemed portion of any note purchased or redeemed in part will be issued in the name of the Holder thereof upon cancellation of the original note. On and after the purchase or redemption date, unless the Co-Issuers default in payment of the purchase or redemption price, interest shall cease to accrue on notes or portions thereof purchased or called for redemption.

Certain Covenants

Set forth below are summaries of certain covenants contained in the Indenture. During any period of time that (i) the notes have Investment Grade Ratings from both Rating Agencies, and (ii) no Default or Event of Default has occurred and is continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), Telesat Holdings and the Restricted Subsidiaries will not be subject to the following provisions of the Indenture:

(1) “Limitation on Restricted Payments;”

(2) “Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock;”

(3) “Transactions with Affiliates;;

(4) “Limitation on Guarantees of Indebtedness by Restricted Subsidiaries;”

(5) “Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;”

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(6) clauses (b), (c) and (d) of the first paragraph of “Limitation on Sale and Lease-Back Transactions;”

(7) “Repurchase at the Option of Holders — Asset Sales;”

(8) clause (4) of the first paragraph of “Merger, Consolidation or Sale of All or Substantially All Assets;”

(9) “Maintenance of Insurance;” and

(10) “Conduct of Business”

(collectively, the “Suspended Covenants”). Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Net Proceeds (and Event of Loss Proceeds) shall be set at zero. In addition, the Guarantees of the Guarantors will also be suspended as of such date (the “Suspension Date”). In the event that Telesat Holdings and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) one or both of the Rating Agencies withdraws its Investment Grade Rating or downgrades the rating assigned to the notes below an Investment Grade Rating or a Default or Event of Default occurs and is continuing, then Telesat Holdings and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants with respect to future events and the Guarantees will be reinstated. The period of time between the Suspension Date and the Reversion Date is referred to in this description as the “Suspension Period.” Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period (or upon termination of the Suspension Period or after that time based solely on events that occurred during the Suspension Period). For purposes of determining compliance with the “— Limitation on Liens” covenant and the “— Limitation on Sale and Lease-Back Transactions” covenant during the Suspension Period, it shall be assumed that the provisions of “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” are applicable during such period as if the applicable Covenant Suspension Event had not occurred.

On the Reversion Date, all Indebtedness incurred, or Disqualified Stock issued, during the Suspension Period will be classified to have been incurred or issued pursuant to the first paragraph of “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” below. To the extent such Indebtedness or Disqualified Stock would not be so permitted to be incurred or issued pursuant to the first paragraph of “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”, such indebtedness or Disqualified Stock will be deemed to have been outstanding on the Issue Date, so that it is classified as permitted under clause (c) of the second paragraph of “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”. Calculations made after the Reversion Date of the amount available to be made as Restricted Payments under “— Limitation on Restricted Payments” will be made as though the covenant described under “— Limitation on Restricted Payments” had been in effect since the Issue Date and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under the first paragraph of “— Limitation on Restricted Payments”. Notwithstanding anything contained in the definition of “Unrestricted Subsidiary,” during a Suspension Period, Telesat Holdings may not designate any Subsidiary as an Unrestricted Subsidiary.

There can be no assurance that the notes will ever achieve or maintain Investment Grade Ratings.

Limitation on Restricted Payments

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

(1) declare or pay any dividend or make any distribution on account of Telesat Holdings’ or any Restricted Subsidiary’s Equity Interests, including any dividend or distribution payable on account of Telesat Holdings’ or any Restricted Subsidiary’s Equity Interests in connection with any merger or consolidation, other than

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(A) dividends or distributions by Telesat Holdings payable in Equity Interests (other than Disqualified Stock) of Telesat Holdings or in options, warrants or other rights to purchase such Equity Interests, or

(B) dividends or distributions by a Restricted Subsidiary so long as, in the case of any dividend or distribution payable on or in respect of any class or series of securities issued by a Subsidiary other than a Wholly-Owned Subsidiary, Telesat Holdings or a Restricted Subsidiary receives at least its pro rata share of such dividend or distribution in accordance with its Equity Interests in such class or series of securities;

(2) purchase, redeem, defease or otherwise acquire or retire for value any Equity Interests of Telesat Holdings or any direct or indirect parent of Telesat Holdings, including any dividend or distribution payable in connection with any merger, amalgamation or consolidation;

(3) make any principal payment on, or redeem, repurchase, defease or otherwise acquire or retire for value in each case, prior to any scheduled repayment, sinking fund payment or maturity, any Subordinated Indebtedness, other than the purchase, repurchase or other acquisition of Subordinated Indebtedness purchased in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase or acquisition; or

(4) make any Restricted Investment

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(b) Telesat Holdings can incur at least US$1.00 of additional Indebtedness pursuant to the provisions of the first paragraph of “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Capital Stock”; and

(c) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by Telesat Holdings and its Restricted Subsidiaries after the Acquisition Closing Date (including Restricted Payments permitted by clauses (1) and (5) of the next succeeding paragraph, but excluding all other Restricted Payments permitted by the next succeeding paragraph), is less than the amount, if any, by which (1) the Cumulative Credit exceeds (2) 1.4 times Cumulative Interest Expense (the “Restricted Payments Basket”).

The foregoing provisions will not prohibit:

(1) the payment of any dividend or distribution within 60 days after the date of declaration thereof, if at the date of declaration such payment would have complied with the provisions of the Indenture;

(2) the redemption, repurchase, retirement or other acquisition of any Equity Interests (“Retired Capital Stock”) or Subordinated Indebtedness of the Issuer, Telesat Holdings or Intermediate Holdco, in exchange for, or out of the proceeds of the substantially concurrent sale (other than to a Restricted Subsidiary) of, Equity Interests of Telesat Holdings (in each case, other than any Disqualified Stock) (“Refunding Capital Stock”);

(3) the redemption, repurchase, defeasance, exchange or other acquisition or retirement of Subordinated Indebtedness of Telesat Holdings or any Restricted Subsidiary made by exchange for, or out of the proceeds of the substantially concurrent sale of, new Indebtedness of Telesat Holdings or any Restricted Subsidiary which is incurred in compliance with “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” so long as

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value, plus the amount of any reasonable fees, expenses and premium incurred or paid in connection with such redemption, repurchase, acquisition or retirement and the incurrence of such new Indebtedness;

(B) such new Indebtedness is subordinated to Pari Passu Indebtedness at least to the same extent as such Subordinated Indebtedness so purchased, exchanged, redeemed, repurchased, defeased, exchanged, acquired or retired for value;

(C) such new Indebtedness has a final scheduled maturity date equal to or later than the final scheduled maturity date of the Subordinated Indebtedness being so redeemed, repurchased, defeased, exchanged, acquired or retired;

(D) such new Indebtedness has a Weighted Average Life to Maturity equal to or greater than the remaining Weighted Average Life to Maturity of the Subordinated Indebtedness being so redeemed, repurchased, defeased, exchanged, acquired or retired; and

(E) the obligor of such Indebtedness does not include any Person (other than the Co-Issuers or any Guarantor) that is not an obligor of the Indebtedness being so redeemed, repurchased, acquired or retired;

(4) a Restricted Payment to pay for the repurchase, retirement or other acquisition or retirement for value of common Equity Interests of Telesat Holdings or any of its direct or indirect parent companies held by any future, present or former employee, director or consultant of Telesat Holdings, any of its Subsidiaries or any of its direct or indirect parent companies pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or agreement; provided, however, that the aggregate Restricted Payments made under this clause (4) do not exceed US$15.0 million in the aggregate since the Acquisition Closing Date; provided further that such amount may be increased by an amount not to exceed

(A) the cash proceeds from the sale of Equity Interests of Telesat Holdings and, to the extent contributed to Telesat Holdings, Equity Interests of any of Telesat Holdings’ direct or indirect parent companies, in each case to members of management, directors or consultants of Telesat Holdings, any of its Subsidiaries or any of its direct or indirect parent companies that occurs or occurred after the Acquisition Closing Date, to the extent the cash proceeds from the sale of such Equity Interests have not otherwise been applied to the payment of Restricted Payments by virtue of clause (1) of the definition of the term “Cumulative Credit”; plus

(B) the cash proceeds of key man life insurance policies received by Telesat Holdings and its Restricted Subsidiaries after the Acquisition Closing Date; less

(C) the amount of any Restricted Payments previously made since the Acquisition Closing Date pursuant to clauses (A) and (B) of this clause (4);

and provided further that cancellation of Indebtedness owing to the Issuer or any Guarantor from members of management of Telesat Holdings, any of its direct or indirect parent companies or any Restricted Subsidiary in connection with a repurchase of Equity Interests of Telesat Holdings or any of its direct or indirect parent companies will not be deemed to constitute a Restricted Payment for purposes of this covenant or any other provision of the Indenture;

(5) the declaration and payment of dividends or distributions to holders of any class or series of Disqualified Stock of Telesat Holdings or any other Restricted Subsidiary issued in accordance with the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” to the extent such dividends are included in the definition of Cumulative Interest Expense;

(6) repurchases of Equity Interests deemed to occur upon exercise of stock options or warrants if such Equity Interests represent a portion of the exercise price or taxes payable in respect of such options or warrants;

(7) Investments that are made with Excluded Contributions;

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(8) any Restricted Payment used to fund the Transactions and the fees and expenses related thereto, including, without limitation, any amounts to be paid pursuant to the Ancillary Agreement, in each case to the extent permitted by the covenant described under “— Transactions with Affiliates”;

(9) the repurchase, redemption or other acquisition or retirement for value of any Subordinated Indebtedness pursuant to the provisions similar to those described under the captions “— Repurchase at the Option of Holders — Change of Control” and “— Repurchase at the Option of Holders — Asset Sales”; provided that all notes tendered by holders of the notes in connection with a Change of Control Offer or Asset Sale Offer, as applicable, have been repurchased, redeemed or acquired for value;

(10) the declaration and payment of dividends by Telesat Holdings to, or the making of loans to, any direct or indirect parent in amounts required for any direct or indirect parent companies to pay

(A) franchise taxes and other fees, taxes and expenses required to maintain their corporate or other legal existence, and

(B) customary salary, bonus and other benefits payable to officers and employees of any direct or indirect parent company of the Issuer to the extent such salaries, bonuses and other benefits are attributable to the ownership or operation of the Co-Issuers and the Restricted Subsidiaries;

(11) Restricted Payments made to fund payments made in accordance with clause (7) or (12) of the second paragraph of the “— Transactions with Affiliates” covenant; and

(12) other Restricted Payments in an aggregate amount not to exceed US$100.0 million since the Acquisition Closing Date;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clause (12), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof.

As of the Issue Date, all of Telesat Holdings’ Subsidiaries will be Restricted Subsidiaries, other than The Access Centre LLC and The SpaceConnection, Inc., which will be Unrestricted Subsidiaries as of the Issue Date. The Issuer will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the last sentence of the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by Telesat Holdings and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investment.” Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time, whether pursuant to the first paragraph of this covenant or under clauses (7) or (12), or pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Indenture.

Unless otherwise permitted by the foregoing, Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

(i) make any Restricted Payment in respect of Holding PIK Preferred Stock (including any payment upon the occurrence of a change of control within the meaning of the Holding PIK Preferred Stock), except that, regardless of whether or not such Restricted Payment would be permitted by the provisions of the first three paragraphs of this covenant:

(a) Telesat Holdings may make distributions of pay-in-kind dividends on Holding PIK Preferred Stock in accordance with the terms of the Holding PIK Preferred Stock as in effect on the Acquisition Closing Date;

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effect to such dividend payment, Telesat Holdings would have a Debt to Consolidated EBITDA Ratio of less than 5.5 to 1.0 (provided that such amounts shall constitute Restricted Payments for purposes of the Restricted Payments Basket and shall reduce availability thereunder unless made pursuant to another basket or exclusion referred to in the second paragraph of this covenant above (it being understand that so long as such ratio is satisfied such cash dividend on the Holding PIK Preferred Stock may be made regardless of whether there is then availability under Restricted Payments Basket or any other basket or exclusion referred to in the second paragraph of this covenant above)); and

(c) Telesat Holdings may purchase, redeem, defease or refinance (collectively, “refinance”) all or a portion of the Holding PIK Preferred Stock prior to maturity thereof if such Holding PIK Preferred Stock is refinanced exclusively with proceeds of, and/or exchanged for, Capital Stock (other than Disqualified Stock) of Telesat Holdings (collectively, “replacement equity”); provided that in each case (x) such replacement equity shall constitute Excluded Contributions and shall not count toward the Cumulative Credit, (y) any net proceeds from the issuance of such replacement equity shall be contributed to the equity of the Issuer and (z) such replacement equity shall have been issued to a Person other than Telesat Holdings and its Restricted Subsidiaries, or

(ii) amend the terms of the Holding PIK Preferred Stock in a manner, when taken as a whole, materially adverse to the Holders of notes.

For the avoidance of doubt, the repayment, repurchase, redemption or retirement of Holding PIK Preferred Stock with cash or other assets (other than through the issuance of Capital Stock of Telesat Holdings (other than Disqualified Stock) in lieu thereof in accordance with clause (i)(c) above) shall be deemed to be a Restricted Payment subject to the first three paragraphs of this covenant.

Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise (collectively, “incur” and collectively, an “incurrence”) with respect to any Indebtedness (including Acquired Indebtedness) and Telesat Holdings will not issue any shares of Disqualified Stock and will not permit any Restricted Subsidiary to issue any shares of Disqualified Stock or preferred stock; provided, however, that Telesat Holdings may incur Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified Stock, and any Guarantor may incur Indebtedness (including Acquired Indebtedness), issue shares of Disqualified Stock and issue shares of preferred stock, if Telesat Holdings’ Debt to Consolidated EBITDA Ratio would be less than or equal to 6.5 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, or the Disqualified Stock or preferred stock had been issued, as the case may be, and the application of proceeds therefrom had occurred at the beginning of such four-quarter period.

The foregoing limitations will not apply to (“Permitted Debt”):

(a) the incurrence of Indebtedness under Credit Facilities by Telesat Holdings or any of the Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), up to an aggregate principal amount of US$2,550.0 million outstanding at any one time, less the aggregate of all principal prepayments made in respect of the Credit Facilities pursuant to clause (1) of the second paragraph under “— Repurchase at the Option of Holders — Asset Sales”; provided that the amount available under this clause (a) shall reduce on the date that is the twelve month anniversary of the Acquisition Closing Date by the amount, if any, of the US$150.0 million U.S. Term Loan II Facility which is undrawn as of such date (but only to the extent of such undrawn amount);

(b) (x) the incurrence by the Issuer and any Guarantor of Indebtedness represented by the notes (including any Guarantee) (other than any Additional Notes) and

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(y) the incurrence by the Issuer and any Guarantor of Indebtedness represented by the Senior Subordinated Notes (and the guarantees thereof under the Senior Subordinated Indenture) in an aggregate principal amount, when taken together with Indebtedness outstanding under the Senior Subordinated Bridge Loan Agreement, not to exceed US$217,175,000 at any time outstanding;

(d) Indebtedness (including Capitalized Lease Obligations and Indebtedness related to Sale and Lease-Back Transactions), Disqualified Stock and preferred stock incurred by Telesat Holdings or any of its Restricted Subsidiaries, to finance the purchase, lease or improvement of property (real or personal) or equipment that is used or useful in a Similar Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such assets, in an aggregate principal amount which, when aggregated with the principal amount of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (d) and including all Refinancing Indebtedness incurred to refund, refinance or replace any other Indebtedness, Disqualified Stock and preferred stock incurred pursuant to this clause (d), does not exceed the greater of (x) US$125.0 million and (y) 2.50% of Total Assets;

(e) Indebtedness incurred by Telesat Holdings or any Restricted Subsidiary constituting reimbursement obligations with respect to letters of credit issued in the ordinary course of business, including letters of credit in respect of workers’ compensation claims, or other Indebtedness with respect to reimbursement type obligations regarding workers’ compensation claims; provided, however, that upon the drawing of such letters of credit or the incurrence of such Indebtedness, such obligations are reimbursed within 30 days following such drawing or incurrence;

(f) Indebtedness arising from agreements of Telesat Holdings or a Restricted Subsidiary providing for indemnification, adjustment of purchase price or similar obligations, in each case, incurred or assumed in connection with the acquisition or disposition of any business, assets or a Subsidiary, other than guarantees of Indebtedness incurred by any Person acquiring or disposing all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that

(1) such Indebtedness is not to be reflected on the balance sheet of Telesat Holdings or any Restricted Subsidiary prepared in accordance with GAAP (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 clause (f)(1)) and

(2) the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds including noncash proceeds (the fair market value of such noncash proceeds being measured at the time received and without giving effect to any subsequent changes in value) actually received by Telesat Holdings and the Restricted Subsidiaries in connection with such disposition;

(g) Indebtedness (including Indebtedness related to Sale and Lease-Back Transactions), Disqualified Stock or preferred stock of the Issuer, Telesat Holdings or Intermediate Holdco to a Restricted Subsidiary; provided that any such Indebtedness owing to a Restricted Subsidiary that is not a Guarantor is subordinated in right of payment to the notes; provided further that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such Indebtedness (except to Telesat Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness;

(h) Indebtedness (including Indebtedness related to Sale and Lease-Back Transactions) Disqualified Stock or preferred stock of a Restricted Subsidiary to Telesat Holdings or another Restricted Subsidiary; provided that

(1) any such Indebtedness is made pursuant to an intercompany note and

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that any subsequent transfer of any such Indebtedness (except to Telesat Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness;

(i) shares of preferred stock of a Restricted Subsidiary issued to Telesat Holdings or another Wholly-Owned Restricted Subsidiary; provided that any subsequent issuance or transfer of any Capital Stock or any other event which results in any such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any other subsequent transfer of any such shares of preferred stock (except to Telesat Holdings or another Restricted Subsidiary) shall be deemed in each case to be an issuance of such shares of preferred stock;

(j)(x) Hedging Obligations entered into for bona fide (non-speculative) business purposes, provided that to the extent such Hedging Obligations are in respect of interest rate or exchange rate risk with respect to any Indebtedness, such Hedging Obligations relate to payment obligations on Indebtedness permitted to be incurred pursuant to “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” and (y) Indebtedness in respect of Cash Management Services entered into in the ordinary course of business consistent with past practice;

(k) obligations in respect of performance, bid, appeal and surety bonds and completion guarantees provided by Telesat Holdings or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of Telesat Holdings or any Restricted Subsidiary with respect to letters of credit supporting such performance, bid, appeal or surety obligations (in each case other than for an obligation for money borrowed);

(l) Indebtedness, Disqualified Stock and preferred stock of the Issuer or any Guarantor not otherwise permitted hereunder in an aggregate principal amount or liquidation preference, which when aggregated with the principal amount and liquidation preference of all other Indebtedness, Disqualified Stock and preferred stock then outstanding and incurred pursuant to this clause (l), does not at any one time outstanding exceed US$200.0 million (it being understood that any Indebtedness, Disqualified Stock or preferred stock incurred pursuant to this clause (l) shall cease to be deemed incurred or outstanding for purposes of this clause (l) but shall be deemed incurred for the purposes of the first paragraph of this covenant from and after the first date on which the Issuer or such Guarantor could have incurred such Indebtedness, Disqualified Stock or preferred stock under the first paragraph of this covenant without reliance on this clause (l));

(m) Indebtedness, Disqualified Stock and preferred stock incurred to finance Satellite Construction and Acquisition in an aggregate amount not to exceed US$600.0 million outstanding at any time;

(n) the incurrence by Telesat Holdings or any Restricted Subsidiary of Indebtedness, Disqualified Stock or preferred stock which serves to refund or refinance any Indebtedness, Disqualified Stock or preferred stock incurred as permitted under the first paragraph of this covenant and clauses (b), (c) and (m) above, this clause (n) and clause (o) below or any Indebtedness, Disqualified Stock or preferred stock issued to so refund or refinance such Indebtedness, Disqualified Stock or preferred stock including additional Indebtedness, Disqualified Stock or preferred stock incurred to pay premiums and fees in connection therewith (the “Refinancing Indebtedness”) prior to its respective maturity; provided, however, that such Refinancing Indebtedness

(1) has a Weighted Average Life to Maturity at the time such Refinancing Indebtedness is incurred which is not less than the remaining Weighted Average Life to Maturity of the Indebtedness, Disqualified Stock or preferred stock being refunded or refinanced,

(2) to the extent such Refinancing Indebtedness refinances (i) Indebtedness subordinated or pari passu to the notes or any Guarantee of the notes, such Refinancing Indebtedness is subordinated or pari passu to the notes or such Guarantee at least to the same extent as the Indebtedness being refinanced or refunded or (ii) Disqualified Stock or preferred stock, such Refinancing Indebtedness must be Disqualified Stock or preferred stock, respectively, and

(3) shall not include

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(x) Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that refinances Indebtedness, Disqualified Stock or preferred stock of the Issuer,

(y) Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or preferred stock of a Guarantor or

(z) Indebtedness, Disqualified Stock or preferred stock of Telesat Holdings or a Restricted Subsidiary that refinances Indebtedness, Disqualified Stock or preferred stock of an Unrestricted Subsidiary;

(o) (x) Indebtedness, Disqualified Stock and preferred stock of Persons that are acquired by Telesat Holdings or any Restricted Subsidiary or merged into or amalgamated with a Restricted Subsidiary in accordance with the terms of the Indenture, provided that in the case of this clause (x) immediately after giving effect to such acquisition, amalgamation or merger, either (1) the Issuer would be permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Debt to Consolidated EBITDA Ratio test set forth in the first paragraph of this covenant or (2) Telesat Holdings’ Debt to Consolidated EBITDA Ratio is less than or equal to the amount thereof immediately prior to such acquisition, amalgamation or merger;

(y) Indebtedness incurred in connection with or in contemplation of the acquisition of Persons that are acquired by Telesat Holdings or any Restricted Subsidiary or merged into or amalgamated with a Restricted Subsidiary in accordance with the terms of the Indenture, provided that in the case of this clause (y) immediately after giving effect to such acquisition, amalgamation or merger, either (1) the Issuer would be permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Debt to Consolidated EBITDA Ratio test set forth in the first paragraph of this covenant or (2) Telesat Holdings’ Debt to Consolidated EBITDA Ratio is less than or equal to the amount thereof immediately prior to such acquisition, amalgamation or merger;

(p) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary course of business, provided that such Indebtedness is extinguished within two Business Days of its incurrence;

(q) Indebtedness of Telesat Holdings or any Restricted Subsidiary supported by a letter of credit issued pursuant to the Senior Credit Facilities, in a principal amount not in excess of the stated amount of such letter of credit;

(r) (1) any guarantee by the Issuer or a Guarantor of Indebtedness or other obligations of any Restricted Subsidiary so long as the incurrence of such Indebtedness incurred by such Restricted Subsidiary is permitted under the terms of the Indenture, or

(2) any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer or any Guarantor, provided that such guarantee is incurred in accordance with the covenant described below under ‘‘— Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”; and

(s) Mezzanine Securities issued pursuant to clause (12)(a) of the second paragraph of the ‘‘— Transactions with Affiliates” covenant, including pay-in-kind interest payments issued thereon, in each case in accordance with the terms of the Mezzanine Securities as in effect on the Acquisition Closing Date.

For purposes of determining compliance with this covenant:

(a) in the event that an item of Indebtedness, Disqualified Stock or preferred stock meets the criteria of more than one of the categories of permitted Indebtedness, Disqualified Stock or preferred stock described in clauses (a) through (s) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer, in its sole discretion, will classify or reclassify such item of Indebtedness, Disqualified Stock or preferred stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or preferred stock in one of the above clauses; provided, that all Indebtedness outstanding under the Senior Credit Facilities (and for such purposes assuming that the revolving portions of the Senior Credit Facilities and the U.S. Term Loan II Facility

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were fully drawn on the Issue Date) will be treated as incurred on the Issue Date under clause (a) of the preceding paragraph and the Issuer shall not be permitted to reclassify all or any portion of such Indebtedness outstanding on the Issue Date; and

(b) at the time of incurrence, the Issuer will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above.

Accrual of interest, the accretion of accreted value and the payment of interest in the form of additional Indebtedness, Disqualified Stock or preferred stock will not be deemed to be an incurrence of Indebtedness, Disqualified Stock or preferred stock for purposes of this covenant.

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 respective Indebtedness is denominated that is in effect on the date of such refinancing.

The Indenture provides that Telesat Holdings and the Restricted Subsidiaries will not, directly or indirectly, incur any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) subordinated to any other Indebtedness of Telesat Holdings or any Restricted Subsidiary, unless such Indebtedness is also by its terms (or by the terms of any agreement governing such Indebtedness) made expressly subordinate to the notes, to the same extent and in the same manner as such Indebtedness is subordinated to such other Indebtedness of Telesat Holdings and/or its Restricted Subsidiaries, as applicable. For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of Telesat Holdings and/or a Restricted Subsidiary solely by virtue of being unsecured or secured by a junior priority lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them.

Limitation on Liens

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures any Obligations under any Indebtedness of Telesat Holdings or a Restricted Subsidiary against or on any asset or property now owned or hereafter acquired by Telesat Holdings or any such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:

(1) in the case of Liens securing Indebtedness that is Subordinated Indebtedness, the notes or such Guarantee of such Guarantor are secured by a Lien on such property or assets that is senior in priority to such Liens; and

(2) in all other cases, the notes or such Guarantee of such Guarantor are equally and ratably secured;

provided that any Lien which is granted to secure the notes under this covenant shall be discharged at the same time as the discharge of the Lien that gave rise to the obligation to so secure the notes.

Merger, Consolidation or Sale of All or Substantially All Assets

The Issuer may not consolidate, amalgamate or merge with or into or wind up into (whether or not the Issuer is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless

(1) the Issuer is the surviving or continuing corporation or the Person formed by, continuing from or surviving any such consolidation, amalgamation or merger (if other than the Issuer) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of Canada, any province or territory thereof, the United States, any state thereof or the District of Columbia (such Person, as the case may be, being herein called the “Successor Company”);

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(2) the Successor Company, if other than the Issuer, expressly assumes all the obligations of the Issuer under the Indenture, the notes and the Registration Rights Agreement pursuant to supplemental indentures in form reasonably satisfactory to the Trustee;

(3) immediately after such transaction no Default or Event of Default exists;

(4) immediately after giving pro forma effect to such transaction, as if such transaction had occurred at the beginning of the applicable four-quarter period, (A) the Successor Company would be permitted to incur at least US$1.00 of additional Indebtedness pursuant to the Debt to Consolidated EBITDA Ratio test set forth in the first sentence of the covenant described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” or (B) the Debt to Consolidated EBITDA Ratio for the Successor Company and the Restricted Subsidiaries would be less than such Ratio for Telesat Holdings and the Restricted Subsidiaries immediately prior to such transaction;

(5) each Guarantor, unless it is the other party to the transactions described above, in which case clause (2) of the second to last paragraph of this covenant shall apply, shall have by supplemental indenture confirmed that its Guarantee shall apply to such Person’s obligations under the Indenture and the notes; and

(6) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indentures, if any, comply with the Indenture.

For purposes of this covenant, any Indebtedness of the Successor Company which was not Indebtedness of the Issuer immediately prior to the transaction shall be deemed to have been incurred in connection with such transaction.

The Successor Company will succeed to, and be substituted for, the Issuer under the Indenture and the notes. Neither Telesat Holdings nor Intermediate Holdco may consolidate, amalgamate or merge with or into or wind up into (whether or not Telesat Holdings or Intermediate Holdco, as applicable, is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions, to any Person unless:

(1) Telesat Holdings or Intermediate Holdco, as applicable, is the surviving or continuing corporation or the Person formed by or surviving any such consolidation, amalgamation or merger (if other than Telesat Holdings or Intermediate Holdco, as applicable) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of Canada, any province or territory thereof, the United States, any state thereof, the District of Columbia, or any territory thereof (such Person, as the case may be, being herein called the “Successor Parent”);

(2) the Successor Parent, if other than Telesat Holdings or Intermediate Holdco, as applicable, expressly assumes all the obligations of Telesat Holdings and Intermediate Holdco, as applicable, under the Indenture, the Registration Rights Agreement and the Guarantees pursuant to supplemental indentures in form reasonably satisfactory to the Trustee;

(3) immediately after such transaction no Default or Event of Default exists; and

(4) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, merger or transfer and such supplemental indentures, if any, comply with the Indenture.

The Successor Parent will succeed to, and be substituted for Telesat Holdings or Intermediate Holdco, as applicable, under the Indenture and the Guarantees.

For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of transactions) of all or substantially all of the properties or assets of one or more Restricted Subsidiaries, the Equity Interests of which constitute all or substantially all of the properties and assets of Telesat Holdings or Intermediate Holdco will be deemed to be the transfer of all or substantially all of the properties and assets of Telesat Holdings or Intermediate Holdco, as applicable.

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Notwithstanding the foregoing:

(a) any Restricted Subsidiary (other than the Issuer) may consolidate, amalgamate with, merge into or transfer all or part of its properties and assets to the Issuer or any Guarantor; and

(b) the Issuer or any Guarantor may merge or amalgamate with an Affiliate of the Issuer solely for the purpose of reincorporating the Issuer or such Guarantor in another jurisdiction of the United States or Canada so long as the amount of Indebtedness of Telesat Holdings and the Restricted Subsidiaries is not increased thereby.

Subject to certain limitations described in the Indenture governing release of a Subsidiary Guarantee upon the sale, disposition or transfer of a Subsidiary Guarantor, no Subsidiary Guarantor nor the Co-Issuer will, and Telesat Holdings will not permit any Subsidiary Guarantor or the Co-Issuer to, consolidate, amalgamate or merge with or into or wind up into (whether or not such Subsidiary Guarantor or the Co-Issuer is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to, any Person unless

(A) (1) (x) such Subsidiary Guarantor or the Co-Issuer, as applicable, is the surviving or continuing corporation or (y) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Subsidiary Guarantor or the Co-Issuer, as applicable) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of Canada, any province or territory thereof (except that in the case of the Co-Issuer, such surviving Person shall be organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof), (such Subsidiary Guarantor or such Person, as the case may be, being herein called the “Successor Person”) (provided that, in the case of clause (y), if the Subsidiary Guarantor or Co-Issuer, as applicable, that is not the Successor Person of such transaction (a “Non-Successor Person”) had, immediately prior to such transaction, been formed, organized or existing under the laws of a jurisdiction other than those referenced immediately above and/or existed in or was organized as a legal entity other than a corporation, then the Successor Person of such transaction may be formed, organized or existing under the laws of the same jurisdiction as such Non-Successor Person had then been and may be of the same corporate or other organizational type as such Non-Successor Person had then been);

(2) the Successor Person, if other than such Subsidiary Guarantor or the Co-Issuer, as applicable, expressly assumes all the obligations of such Subsidiary Guarantor or the Co-Issuer, as applicable, under the Indenture and, in the case of a Subsidiary Guarantor, such Subsidiary Guarantor’s Subsidiary Guarantee, pursuant to supplemental indentures in form reasonably satisfactory to the Trustee;

(3) immediately after such transaction no Default or Event of Default exists; and

(4) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer and such supplemental indentures, if any, comply with the Indenture; or

(B) in the case of a Subsidiary Guarantor, the transaction is made in compliance with the covenant described under “— Repurchase at the Option of Holders — Asset Sales.”

Subject to certain limitations described in the Indenture, the Successor Person will succeed to, and be substituted for, such Subsidiary Guarantor or the Co-Issuer, as applicable, under the Indenture and such Subsidiary Guarantor’s Guarantee, as applicable. Notwithstanding the foregoing, any Subsidiary Guarantor may merge into, amalgamate with or transfer all or part of its properties and assets to another Subsidiary Guarantor or the Issuer.

Transactions with Affiliates

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, 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 Telesat Holdings (each of the foregoing, an “Affiliate

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Transaction”) in any one or series of related transactions involving aggregate payments or consideration in excess of US$5.0 million, unless

(a) such Affiliate Transaction is on terms that are not materially less favorable to Telesat Holdings or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by Telesat Holdings or such Restricted Subsidiary with an unrelated Person (or, in the event that there are no comparable transactions involving Persons who are not Affiliates of Telesat Holdings or the relevant Restricted Subsidiary to apply for comparative purposes, is otherwise on terms that, taken as a whole, Telesat Holdings has determined to be fair to Telesat Holdings or the relevant Restricted Subsidiary), and

(b) Telesat Holdings or the Issuer delivers to the Trustee (x) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of US$10.0 million, a resolution adopted by the majority of the Board of Directors of Telesat Holdings (and a majority of the Independent Directors) approving such Affiliate Transaction and set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with clause (a) above and (y) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate payments or consideration in excess of US$15.0 million, a written opinion of a Nationally Recognized Independent Financial Advisor stating that such Affiliate Transaction meets the requirements of clause (a).

The foregoing provisions will not apply to the following:

(1) transactions between or among Telesat Holdings or any of the Restricted Subsidiaries; provided that in the case of non-Wholly-Owned Restricted Subsidiaries, no Affiliate of Telesat Holdings (other than another Restricted Subsidiary) owns more than 10% of the Equity Interests in such Restricted Subsidiary;

(2)(x) Restricted Payments permitted by the provisions of the Indenture described above under the covenant “— Limitation on Restricted Payments” and (y) Permitted Investments;

(3) the payment of reasonable and customary fees paid to, and indemnities provided on behalf of, officers, directors, employees or consultants of the Issuer, any of its direct or indirect parent companies or any Restricted Subsidiary;

(4) transactions in which Telesat Holdings, the Issuer or any Restricted Subsidiary, as the case may be, delivers to the Trustee a letter from a Nationally Recognized Independent Financial Advisor stating that such transaction is fair to the Issuer or such Restricted Subsidiary from a financial point of view or meets the requirements of clause (a) of the preceding paragraph;

(5) other than in respect of the Transaction Documents or the Consulting Services Agreement (which are addressed in clauses (7) and (12) below), any agreement as in effect as of the Acquisition Closing Date, or any amendment thereto (so long as any such amendment is not materially disadvantageous to the Holders);

(6) the existence of, or the performance by Telesat Holdings or any of its Restricted Subsidiaries of its obligations under the terms of, any stockholders agreement (including any registration rights agreement or purchase agreement related thereto) to which it is a party as of the Acquisition Closing Date and any similar agreements which it may enter into thereafter; provided, however, that the existence of, or the performance by Telesat Holdings or any Restricted Subsidiary of obligations under any future amendment to any such existing agreement or under any similar agreement entered into after the Acquisition Closing Date shall only be permitted by this clause (6) to the extent that the terms of any such amendment or new agreement are not otherwise disadvantageous to the Holders or Telesat Holdings and its Restricted Subsidiaries in any material respect;

(7) the Transactions and the payment of fees and expenses relating to the Transactions pursuant to the Transaction Documents (other than as set forth in clause (12) below) and amounts under the Ancillary Agreement; provided that (a) any payments pursuant to Sections 1.1, 1.2, and 3.1 through 3.6 of the Ancillary Agreement shall not exceed since the Acquisition Closing Date US$50.0 million in the

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aggregate and (b) any payments of tax distributions in accordance with Section 3.7 of the Ancillary Agreement shall not exceed US$2.0 million per calendar year;

(8) any transaction with a joint venture or similar entity which would constitute an Affiliate Transaction solely because Telesat Holdings or a Restricted Subsidiary owns an equity interest in or otherwise controls such joint venture or similar entity; provided that no Affiliate of Telesat Holdings or any of its Subsidiaries other than Telesat Holdings or a Restricted Subsidiary shall have a beneficial interest in such joint venture or similar entity;

(9) the issuance of Equity Interests (other than Disqualified Stock) of Telesat Holdings to any Permitted Holder or to any director, officer, employee or consultant;

(10) payments or loans (or cancellation of loans) to employees or consultants of Telesat Holdings, any of its direct or indirect parent companies or any Restricted Subsidiary which are approved by a majority of the Board of Directors of Telesat Holdings in good faith;

(11) purchases of satellites from SSL; provided that the Issuer or Telesat Holdings delivers to the Trustee a letter from its Board of Directors stating that the Board of Directors (including a majority of the Independent Directors) has determined in good faith that such purchase (A) is on terms that are not (when taken as a whole) materially less favorable to Telesat Holdings or such Restricted Subsidiary, as applicable, than would be obtained in a comparable arm’s-length transaction with a Person that is not an Affiliate and (B) has been approved by a majority of the directors (including a majority of the Independent Directors) of Telesat Holdings; and

(12)(a) the annual fee of US$5.0 million to be paid to Loral Space & Communications Inc. pursuant to the Consulting Services Agreement as in effect on the Acquisition Closing Date, which fee shall (x) be payable in the form of Mezzanine Securities (provided that cash interest thereon shall only be payable if the provisions of clause (y) below are satisfied) or (y) if, for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of payment of such amount, after giving pro forma effect thereto, Telesat Holdings and the Restricted Subsidiaries would have a Debt to Consolidated EBITDA Ratio of less than 5.0 to 1.0, be payable in cash or Cash Equivalents or Mezzanine Securities, (b) reimbursements for payments to non-affiliated third parties made by any Permitted Holders on behalf of Telesat Holdings and/or its Restricted Subsidiaries pursuant to the Consulting Services Agreement not to exceed US$1.0 million in the aggregate in any calendar year, and (c) payment for corporate and administrative services (such as accounting, financial, treasury and other similar services, of the type that would have had to have been preformed by Telesat Holdings or its Restricted Subsidiaries or contracted out to third parties) rendered under the Consulting Services Agreement as in effect on the Acquisition Closing Date not to exceed US$4.0 million per calendar year to the extent such payments are approved by the Independent Directors in accordance with the provisions of the Consulting Services Agreement as in effect on the Acquisition Closing Date.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any consensual encumbrance or consensual restriction on the ability of any such Restricted Subsidiary to:

(a) (1) pay dividends or make any other distributions to Telesat Holdings or any Restricted Subsidiary:


	•	on its Capital Stock or

	•	with respect to any other interest or participation in, or measured by, its profits or

(2) pay any Indebtedness owed to Telesat Holdings or any Restricted Subsidiary;

(b) make loans or advances to Telesat Holdings or any Restricted Subsidiary; or

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except (in each case) for such encumbrances or restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Senior Credit Facilities and related documentation and the Senior Subordinated Indenture and the related documentation, in each case as in effect on the Issue Date;

(2) the Indenture and the notes;

(3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired;

(4) applicable law or any applicable rule, regulation or order;

(5) any agreement or other instrument of a Person acquired by Telesat Holdings or any Restricted Subsidiary in existence at the time of such acquisition (but not created in contemplation thereof), 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;

(6) contracts for the sale of assets, including customary restrictions with respect to a Subsidiary pursuant to an agreement that has been entered into for the sale or disposition of all or substantially all of the Capital Stock or assets of such Subsidiary;

(7) secured Indebtedness otherwise permitted to be incurred pursuant to the covenants described under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” and “— Limitation on Liens” that limit the right of the debtor to dispose of the assets securing such Indebtedness;

(8) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(9) customary provisions in joint venture agreements and other similar agreements;

(10) customary provisions contained in leases and other agreements entered into in the ordinary course of business; and

(11) any encumbrances or restrictions of the type referred to in clauses (a), (b) and (c) above imposed by any amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings of the contracts, instruments or obligations referred to in clauses (1) through (10) above, provided that such amendments, modifications, restatements, renewals, increases, supplements, refundings, replacements or refinancings are, in the good faith judgment of Telesat Holdings’ Board of Directors, not materially more restrictive with respect to such encumbrance and other restrictions than those prior to such amendment, modification, restatement, renewal, increase, supplement, refunding, replacement or refinancing.

Limitation on Sale and Lease-Back Transactions

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction; provided that Telesat Holdings or any Restricted Subsidiary may enter into a Sale and Lease-Back Transaction if:

(a) Telesat Holdings or such Restricted Subsidiary could have:

(1) incurred any Indebtedness relating to such Sale and Lease-Back Transaction under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” above; and

(2) incurred a Lien to secure such Indebtedness pursuant to “— Limitation on Liens” above without equally and ratably securing the notes pursuant to the provision described under such covenant;

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(b) the consideration received by Telesat Holdings or such Restricted Subsidiary in that Sale and Lease-Back Transaction is at least equal to the fair market value of the property sold and otherwise complies with “— Repurchase at the Option of Holders — Asset Sales” above;

(c) the transfer of assets in that Sale and Lease-Back Transaction is permitted by, and the Issuer applies the proceeds of such transaction in compliance with “— Repurchase at the Option of Holders— Asset Sales” above; and

(d) in the aggregate not more than US$325.0 million in fair market value of assets are subject to a Sale and Lease-Back Transaction at any one time;

provided, however, that (x) clauses (b) and (c) shall not apply to any Sale and Lease-Back Transaction between the Issuer and any Guarantor or between Guarantors and (y) this covenant shall not apply to the T10R Sale Leaseback or the Telesat Headquarters Sale.

Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

Telesat Holdings will not permit any Restricted Subsidiary, other than a Guarantor, to guarantee the payment of any Indebtedness of any Issuer or any Guarantor (including without limitation becoming a borrower or co-borrower under the Senior Credit Facilities), unless:

(a) such Restricted Subsidiary simultaneously executes and delivers a supplemental indenture to the Indenture providing for a Guarantee by such Restricted Subsidiary, except that with respect to a guarantee of Indebtedness of the Issuer or any Guarantor if such Indebtedness is by its express terms subordinated in right of payment to the notes or such Guarantor’s Guarantee of the notes, any such guarantee of such Restricted Subsidiary with respect to such Indebtedness shall be subordinated in right of payment to such Restricted Subsidiary’s Guarantee with respect to the notes substantially to the same extent as such Indebtedness is subordinated to the notes;

(b) such Restricted Subsidiary waives and will not in any manner whatsoever claim or take the benefit or advantage of, any rights of reimbursement, indemnity or subrogation or any other rights against Telesat Holdings or any other Restricted Subsidiary as a result of any payment by such Restricted Subsidiary under its Guarantee; and

(1) such Guarantee has been duly executed and authorized and

(2) such Guarantee constitutes a valid, binding and enforceable obligation of such Restricted Subsidiary, except insofar as enforcement thereof may be limited by bankruptcy, insolvency or similar laws (including, without limitation, all laws relating to fraudulent transfers) and except insofar as enforcement thereof is subject to general principles of equity.

Maintenance of Insurance

(a) Generally. Telesat Holdings will, and will cause each of the Restricted Subsidiaries to, at all times maintain in full force and effect, with insurance companies that the Issuer believes (in the good faith judgment of the management of the Issuer) are financially sound and responsible at the time the relevant coverage is placed or renewed, insurance in at least such amounts and against at least such risks (and with such risk retentions) as are usually insured against in the same general area by companies engaged in the same or a similar business.

(b) Covered Satellites. Telesat Holdings will, and will cause each of its Restricted Subsidiaries to, maintain insurance with respect to Satellites as follows:

All Risks Insurance. Telesat Holdings will procure or will cause each Satellite Manufacturer to procure at its own expense and maintain in full force and effect, at all times prior to the Launch of any satellite purchased by Telesat Holdings or any of its Restricted Subsidiaries pursuant to the terms of a Satellite Purchase Agreement, All Risks Insurance with such terms as are reasonably commercially

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available and customary in the industry with respect to such satellite, it being understood that if a Satellite Manufacturer procures All Risks Insurance for satellites in accordance with the requirements of the applicable Satellite Purchase Agreement, Telesat Holdings’ obligations under this clause (i) with respect to such satellites shall be satisfied. In no event shall Telesat Holdings be required to, or be required to cause any Satellite Manufacturer to, procure or maintain All Risks Insurance to insure risks that may be required to be insured by, or that covers the same risks or the same period of coverage as, Launch Insurance.

Launch Insurance. Telesat Holdings will, or will cause the relevant Satellite Manufacturer to, obtain, maintain and keep in full force and effect with respect to each Covered Satellite that is to be launched, Launch Insurance (it being understood that if a Satellite Manufacturer procures Launch Insurance for Covered Satellites in accordance with the terms of this clause (ii), Telesat Holdings’ obligations under this clause (ii) with respect to such Covered Satellites shall be satisfied), to be procured prior to the launch of such Covered Satellite, which insurance shall attach not later than at Launch and continue in full force and effect until no sooner than the completion of initial in-orbit testing, provided that Telesat Holdings shall have no obligation to obtain or maintain Launch Insurance for any satellite for which there is neither risk of loss to Telesat Holdings or its Restricted Subsidiaries nor an obligation by Telesat Holdings or its Restricted Subsidiaries to make any payments to the Satellite Manufacturer that exceed US$5.0 million in the aggregate prior to risk of loss passing to Telesat Holdings or its Restricted Subsidiaries. The Launch Insurance for each Covered Satellite:

(A) shall provide coverage for all of the risks of loss of and damage to such Covered Satellite (other than any risks borne by the relevant Launch Services Provider pursuant to any launch risk guarantee in accordance with the terms of the applicable Launch Services Agreement or by the relevant Satellite Manufacturer in accordance with the terms of the applicable Satellite Purchase Agreement), including for partial loss, constructive total loss and total loss, subject to (x) Acceptable Exclusions and (y) such other exclusions, deductibles or limitations of coverage as are then customary in the satellite insurance market and as are prudent, as reasonably determined by the Issuer;

(B) shall be in an amount not less than the aggregate of the purchase price of such Covered Satellite, the purchase price of launch services therefor (other than for risks borne by the relevant Launch Services Provider pursuant to any launch risk guarantee in accordance with the terms of the applicable Launch Services Agreement or by the relevant Satellite Manufacturer in accordance with the terms of the applicable Satellite Purchase Agreement) and the premium payable for such insurance;

(D) shall provide that it will not be cancelled or reduced, amended or allowed to lapse without renewal, except after not less than 15 days’ prior notice to the Trustee; provided that if such policy notice provisions are not available on commercially reasonable terms such notice shall be provided to the Trustee by the Issuer not less than 15 days in advance, if such cancellation, reduction, amendment or lapse without renewal is initiated by the Issuer and otherwise at such time as the Issuer becomes aware of, or receives notice of any cancellation, reduction, amendment, or lapse without renewal; and

(E) shall, in the case of a Satellite a portion of which is owned by Telesat Holdings or any of its Restricted Subsidiaries and the balance of which is owned by any Person that is not an Affiliate of Telesat Holdings or any of its Restricted Subsidiaries (other than solely by reason of Telesat Holdings or any Restricted Subsidiary holding a non-controlling equity interest in such Person), only be required with respect to that portion of such Satellite that is owned by Telesat Holdings or any of its Restricted Subsidiaries or for which Telesat Holdings or any of its Restricted Subsidiaries otherwise retains the risk of loss.

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In-Orbit Risk Management. Other than with respect to (A) Excluded Satellites and (B) the C-band payload of any Covered Satellite that is not a Named Satellite protected by In-Orbit Spare Capacity, Telesat Holdings will, and will cause its Restricted Subsidiaries to, obtain, maintain and keep in full force and effect, with respect to each Covered Satellite, In-Orbit Insurance with respect to each Covered Satellite.

(A) Attachment of In-Orbit Insurance. Any In-Orbit Insurance procured with respect to such Covered Satellite shall attach (A) upon the expiration of the Launch Insurance or any In-Orbit Insurance then in effect, as the case may be or (B) upon the withdrawal of the protection provided by In-Orbit Spare Capacity to such Covered Satellite, and in each such case shall continue in full force and effect until all obligations under the Indenture and in respect of the notes have been paid in full or until such Covered Satellite is again protected by In-Orbit Spare Capacity.

(B) Terms of In-Orbit Insurance. Any In-Orbit Insurance procured with respect to such Covered Satellite:

(1) shall provide coverage for all of the risks of loss of and damage to such Covered Satellite (other than the risks borne by the relevant Launch Services Provider pursuant to any launch risk guarantee in accordance with the terms of the applicable Launch Services Agreement or by the relevant Satellite Manufacturer pursuant to the terms of the applicable Satellite Purchase Agreement), including for partial loss, constructive total loss and total loss, subject to (x) Acceptable Exclusions and (y) such other exclusions, deductibles or limitations of coverage with respect to Covered Satellites that would otherwise be Excluded Satellites under paragraph (e) of the definition of “Excluded Satellites” but for the commercially reasonable efforts by Telesat Holdings and its Restricted Subsidiaries to minimize the exclusions and insurance deductibles;

(2) with respect to Covered Satellites, In-Orbit Insurance shall be in an amount not less than 50% of the Aggregate In-Orbit Insurance Amount (with the allocation of such insurance among such Covered Satellites being in Telesat Holdings’ discretion; provided that, with respect to each Named Satellite, In-Orbit Insurance shall be in an amount not less than 50% of such Named Satellite’s net book value), it being understood that (i) any Covered Satellite protected by In-Orbit Spare Capacity shall be deemed to be insured for 100% of the net book value of the C-band payload portion of such Covered Satellite, (ii) any Excluded Satellite with one year or less of in-orbit life remaining shall be deemed to be insured for 100% of its net book value (it being understood and agreed that such Excluded Satellite shall be deemed to have “in-orbit life” only for so long as it is maintained in station kept orbit) and (iii) any Excluded Satellite for which Telesat Holdings and its Restricted Subsidiaries have procured and maintain In-Orbit Insurance in accordance with clause (1) immediately above shall be deemed to be insured for the amount of such insurance procured and maintained; in the event any loss, damage or failure affecting a Covered Satellite or the expiration and non-renewal of an insurance policy for a Covered Satellite resulting from a claim of loss under such policy that causes a failure to comply with this clause (2), Telesat Holdings and its Restricted Subsidiaries shall be deemed to be in compliance with this clause (2) for the 120 days immediately following such loss, damage or failure or policy expiration, provided that Telesat Holdings procures such insurance or provides In-Orbit Spare Capacity as necessary to comply with this clause (2) within such 120 day period;

(3) shall name the applicable Satellite Purchaser as the named insured;

(4) shall provide that it will not be cancelled or reduced, amended or allowed to lapse without renewal, except after not less than 15 days’ prior notice to the Trustee, provided that if such policy notice provisions are not available on commercially reasonable terms such notice shall be provided to the Trustee by the Issuer not less than 15 days in advance, if such cancellation, reduction, amendment or lapse without renewal is initiated by the Issuer and otherwise at such time as the Issuer becomes aware of, or receives notice of any cancellation, reduction, amendment, or lapse without renewal; and

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(5) shall, in the case of a Satellite a portion of which is owned by Telesat Holdings or any of its Restricted Subsidiaries and the balance of which is owned by any Person that is not an Affiliate of either Telesat Holdings or any of its Restricted Subsidiaries (other than solely by reason of Telesat Holdings or any Restricted Subsidiary holding a non-controlling equity interest in such Person), only be required with respect to that portion of the Satellite that is owned by Telesat Holdings or any of its Restricted Subsidiaries or for which Telesat Holdings or any of its Restricted Subsidiaries otherwise retains the risk of loss.

(iv) Third Party Launch Liability Insurance. The Issuer will cause each Launch Services Provider to procure and maintain Third Party Launch Liability Insurance in full force and effect for the period required under the relevant Launch Services Agreement and to name the Trustee and the Holders as additional insureds thereunder.

(v) Delivery of Insurance Policies. With respect to any scheduled launch of any Covered Satellite and, with respect to In-Orbit Insurance procured, not later than ten (10) Business Days after the date on which such insurance is required to be procured as provided in clause (ii) or clause (iii) above, as the case may be, the Issuer shall deliver to the Trustee the final agreed form of such policy together with certificates of insurance with respect thereto, confirming (A) that such insurance is in full force and effect as of such date, (B) the names and percentages of the relevant insurance companies, (C) the amount and expiration dates of such policy, (D) that all premiums and other amounts currently due for such insurance have been paid in full, and (E) in the case of Third Party Launch Liability Insurance policies, that the Trustee and the Holders are named as additional insureds to the extent required hereby.

(c) Procurement of Insurance by Trustee. Without limiting the obligations of Telesat Holdings or any Restricted Subsidiary hereunder, in the event Telesat Holdings or any Restricted Subsidiary shall fail to maintain in full force and effect insurance as required by this covenant, then the Trustee, acting pursuant to instructions of Holders holding not less than 25% of the aggregate principal amount of notes, may, but shall have no obligation to, upon reasonable prior notice to the Issuer of its intention to do so, procure insurance covering the interests of the Holders in such amounts and against such risks as are required hereby, and the Issuer shall reimburse the Trustee in respect of any premiums or other fees or expenses paid by the Trustee in respect thereof.

(d) In the event of the unavailability of In-Orbit Spare Capacity for any reason, Telesat Holdings shall, within 120 days of such loss or unavailability, be required to have in effect In-Orbit Insurance complying with clauses (b)(ii) or (b)(iii) of this covenant, as applicable, with respect to all Satellites that the In-Orbit Spare Capacity was intended to protect so long as In-Orbit Spare Capacity is unavailable, provided that the Issuer and its Restricted Subsidiaries shall be considered in compliance with this covenant for the 120 days immediately following such loss or unavailability as the case may be.

(e) In the event that Telesat Holdings or its Restricted Subsidiaries receive proceeds from any Satellite insurance covering any Satellite owned by Telesat Holdings or any of its Restricted Subsidiaries, or in the event that Telesat Holdings or any of its Restricted Subsidiaries receives proceeds from any insurance maintained for it by a Satellite Manufacturer or any Launch Services Provider covering any of such Satellites (the event resulting in the payment of such proceeds, an “Event of Loss”), all Event of Loss Proceeds in respect of such Event of Loss shall be applied in the manner provided for in the second paragraph under “— Repurchase at the Option of Holders — Asset Sales.”

(f) Telesat Holdings will, and will cause each of the Restricted Subsidiaries to, notify the Trustee promptly whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this covenant is taken out by Telesat Holdings or any of the Restricted Subsidiaries; and promptly deliver to the Trustee a duplicate original copy of such policy or policies, or an insurance certificate with respect thereto.

(g) In connection with the covenants set forth in this Maintenance of Insurance covenant, it is understood and agreed that

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(i) neither the Trustee nor any Holder nor any of their respective agents or employees shall be liable for any loss or damage insured by the insurance policies required to be maintained under this Maintenance of Insurance covenant, it being understood that (A) Telesat Holdings and its Restricted Subsidiaries shall look solely to their insurance companies or any other parties other than the aforesaid parties for the recovery of such loss or damage and (B) such insurance companies shall have no rights of subrogation against the Trustee or any Holder or any of their respective agents or employees (it being understood and agreed that the Issuer shall only be required to use commercially reasonable efforts to seek such waiver of subrogation rights against such parties, but in no event shall such efforts require the making of payments or material concessions in exchange for such consent). If, however, the insurance policies do not provide waiver of subrogation rights against such parties, then each of Telesat Holdings and the Issuer hereby agree, to the extent permitted by law, to waive, and to cause each of their Subsidiaries to waive, its right of recovery, if any, against the Trustee, the Holders and their respective agents and employees;

(ii) the designation of any form, type or amount of insurance coverage under this covenant shall in no event be deemed a representation, warranty or advice by the Trustee or the Holders that such insurance is adequate for the purposes of the business of Telesat Holdings and its Subsidiaries or the protection of their properties; and

(iii) all references to book value set forth herein shall be measured with respect to the entity which owns or leases the applicable Satellite, provided that if the entity leases the applicable Satellite from an Affiliate then such references shall be measured with respect to the book value of such Affiliate.

Reports and Other Information

Notwithstanding that the Issuer may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Indenture requires the Issuer to file with the SEC (and make available to the Trustee and Holders of the notes (without exhibits), without cost to each Holder, within 15 days after it files them with the SEC),

(a) within 90 days after the end of each fiscal year (beginning with the fiscal year ending December 31, 2008), annual reports containing substantially the same information relating to Telesat Holdings and its subsidiaries that would be required to be contained in an Annual Report on Form 10-K, or any successor or comparable form;

(b) within 60 days after the end of each of the first three fiscal quarters of each fiscal year (beginning with the fiscal quarter ending March 31, 2008), quarterly reports containing substantially the same information relating to Telesat Holdings and its subsidiaries that would be required to be contained in a Quarterly Report on Form 10-Q, or any successor or comparable form; provided that with respect to quarterly reports delivered in respect of any fiscal quarter ending prior to December 31, 2008, the management discussion and analyses of financial condition and results of operation of Telesat Holdings and its consolidated subsidiaries (or any similarly titled sections) contained therein shall not be required to contain an analysis of any quarterly periods of 2008 as compared to the corresponding periods in 2007;

(c) promptly from time to time after the occurrence of an event that would be required to be therein reported, substantially the same information relating to Telesat Holdings and its subsidiaries that would be required to be contained in a Current Report on Form 8-K, or any successor or comparable form; and

(d) any other information, documents and other reports which Telesat Holdings would be required to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

provided that the Issuer shall not be so obligated to file such reports with the SEC if the SEC does not permit such filing, in which event the Issuer will make available such information to prospective purchasers of notes, in addition to providing such information to the Trustee and the Holders of the notes, in each case within 15 days after the time the Issuer would be required to file such information with the SEC, if it were subject to Sections 13 or 15(d) of the Exchange Act; and provided further that such reports may be filed on Form 20-F, 40-F or Form 6-K (or any successor form), as applicable, provided that the substance of such reports shall be

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as required above. Notwithstanding the foregoing, with respect to financial statements required to be delivered in respect of the fiscal quarters ending March 31, June 30, and September 30, 2008, such financial statements shall not be required to contain consolidating financial data with respect to Guarantor and non-Guarantor Subsidiaries of the type contemplated by Rule 3-10 of Regulation S-X of the Securities Act.

In the event that any direct or indirect parent company of Telesat Holdings becomes a Guarantor of the notes, the Indenture will permit the Issuer to satisfy its obligations in this covenant with respect to financial information relating to the Issuer by furnishing financial information relating to such parent; provided that the same is accompanied by consolidating information that explains in reasonable detail the differences between the information relating to such parent, on the one hand, and the information relating to Telesat Holdings and the Restricted Subsidiaries on a standalone basis, on the other hand.

Notwithstanding the foregoing, the Issuer will be deemed to have furnished such reports referred to above to the Holders if it or any parent company has filed such reports with the SEC via the EDGAR filing system and such reports are publicly available. In addition, such requirements shall be deemed satisfied prior to the commencement of the exchange offer or the effectiveness of the shelf registration statement by the filing with the SEC of the exchange offer registration statement or shelf registration statement within the time periods specified in the Registration Rights Agreement entered into on the Issue Date, and any amendments thereto, with such financial information that satisfies Regulation S-X of the Securities Act.

Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including compliance with any of the covenants under the Indenture (as to which the Trustee is entitled to rely exclusively on Officers’ Certificates).

In addition, the Issuer will furnish to the Holders and prospective investors upon their request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as the notes are not freely transferable under the Securities Act.

Payments for Consent

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any holder of notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of the indenture or the notes unless such consideration is offered to be paid or is paid to all holders of the notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Conduct of Business

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, engage in any business other than the Permitted Business.

Limitation on Activities of the Co-Issuer

The Co-Issuer may not hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than (1) the issuance of its Equity Interests to the Issuer or any Wholly-Owned Restricted Subsidiary of the Issuer, (2) the incurrence of Indebtedness as a co-obligor or guarantor, as the case may be, of the notes, the Senior Credit Facilities and any other Indebtedness that is permitted to be incurred by the Issuer under the covenant described under “— Limitations on Additional Indebtedness;” provided that the net proceeds of such Indebtedness are not retained by the Co-Issuer, and (3) activities incidental thereto. Neither Telesat Holdings nor any Restricted Subsidiary shall engage in any transactions with the Co-Issuer in violation of the immediately preceding sentence.

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Events of Default and Remedies

The following events constitute Events of Default under the Indenture:

(1) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the notes issued under the Indenture;

(2) default for 30 days or more in the payment when due of interest (including Special Interest) or Additional Amounts on or with respect to the notes issued under the Indenture;

(3) failure by the Issuer to comply with its obligations under the first paragraph of “— Certain Covenants — Merger, Consolidation or Sale of All or Substantially All Assets;”

(4) failure by the Issuer, the Co-Issuer or any Guarantor for 45 days after receipt of written notice given by the Trustee or the Holders of not less than 25% in principal amount of the notes then outstanding and issued under the Indenture to comply with any of its obligations, covenants or other agreements (other than a default referred to in clauses (1), (2) or (3) above) contained in the Indenture or the notes;

(5) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness by Telesat Holdings or any Restricted Subsidiary or the payment of which is guaranteed by Telesat Holdings or any Restricted Subsidiary, other than Indebtedness owed to Telesat Holdings or a Restricted Subsidiary, whether such Indebtedness or guarantee now exists or is created after the issuance of the notes, if

(A) such default either

(i) results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or

(ii) relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity;

(B) the principal amount of such Indebtedness, together with the principal amount of any other such Indebtedness in default for failure to pay principal at stated final maturity (after giving effect to any applicable grace periods), or the maturity of which has been so accelerated, aggregate US$50.0 million or more at any one time outstanding; and

(C) in the case of the occurrence of a default described in (A)(ii) above, such default results in (x) the acceleration of such Indebtedness prior to the final maturity thereof or (y) the commencement of judicial proceedings to foreclose upon, or to exercise remedies under applicable law or applicable security documents to take ownership of, the assets securing such Indebtedness;

(6) failure by Telesat Holdings or any Significant Subsidiary to pay final judgments aggregating in excess of US$50.0 million, which final judgments remain unpaid, undischarged and unstayed for a period of more than 60 days after such judgment becomes final, and in the event such judgment is covered by insurance, an enforcement proceeding has been commenced by any creditor upon such judgment or decree which is not promptly stayed;

(7) certain events of bankruptcy or insolvency with respect to Telesat Holdings or any Significant Subsidiary; or

(8) the Guarantee of Telesat Holdings or any Significant Subsidiary shall for any reason cease to be in full force and effect or be declared null and void or any responsible officer of Telesat Holdings or any Guarantor that is a Significant Subsidiary, as the case may be, denies that it has any further liability under its Guarantee or gives notice to such effect, other than by reason of the termination of the related Indenture or the release of any such Guarantee in accordance with the Indenture.

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Upon the effectiveness of such declaration, such principal and interest will be due and payable immediately. Notwithstanding the foregoing, in the case of an Event of Default arising under clause (7) of the first paragraph of this section, all outstanding notes will become due and payable without further action or notice. The Indenture provides that the Trustee may withhold from Holders notice of any continuing Default or Event of Default, except a Default or Event of Default relating to the payment of principal, premium, if any, or interest, if it determines that withholding notice is in their interest. In addition, the Trustee shall have no obligation to accelerate the notes if in the best judgment of the Trustee acceleration is not in the best interest of the Holders of such notes.

The Indenture provides that the Holders of a majority in aggregate principal amount of the then outstanding notes issued thereunder by notice to the Trustee may on behalf of the Holders of all of such notes waive any existing Default or Event of Default and its consequences under the Indenture except a continuing Default or Event of Default in the payment of interest on, premium, if any, or the principal of any such note held by a non-consenting Holder.

Subject to the provisions of the Indenture relating to the duties of the Trustee, in case an Event of Default occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Indenture at the request or direction of any of the holders of the notes unless such holders have offered to the Trustee reasonable indemnity or security against any loss, liability or expense. Except to enforce the right to receive payment of principal, premium (if any) or interest when due, no holder of a note may pursue any remedy with respect to the Indenture or the notes unless:

(1) such holder has previously given the Trustee notice that an Event of Default is continuing;

(2) holders of at least 25% in principal amount of the outstanding notes have requested the Trustee to pursue the remedy;

(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

(5) holders of a majority in principal amount of the outstanding notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

Subject to certain restrictions, the holders of a majority in principal amount of the outstanding notes are given the right to 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. The Trustee, however, may refuse to follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of a note or that would involve the Trustee in personal liability.

The Indenture provides that the Issuer is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Issuer is required, within five Business Days, upon becoming aware of any Default or Event of Default or any default under any document, instrument or agreement representing Indebtedness of the Issuer or any Guarantor, to deliver to the Trustee a statement specifying such Default or Event of Default.

Regulatory Matters

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Issuer agrees in the Indenture to take any action which any Holder or the Trustee may reasonably request in order to obtain from the FCC, U.S. Department of Justice, Industry Canada, CRTC or any other relevant Governmental Authority such approval as may be necessary to enable the Holders and the Trustee to exercise the full rights and benefits granted to them pursuant to the Indenture.

Notwithstanding anything in the Indenture or the notes to the contrary, prior to the occurrence of an Event of Default and the consent of the FCC, U.S. Department of Justice, Industry Canada, CRTC and of any other applicable Governmental Authority to the assignment or transfer of control of FCC Licenses, Industry Canada Authorizations, CRTC approvals or other governmental permits, licenses, or other authorizations, the Indenture, and the transactions contemplated thereby, do not and will not constitute, create, or have the effect of constituting or creating directly or indirectly, actual or practical ownership of any FCC Licenses, Industry Canada Authorizations, CRTC approvals or other governmental permits, licenses or other authorizations by the Holders or the Trustee or control, affirmative or negative, direct or indirect, by Holders or the Trustee over the management or any other aspect of the operation of any FCC Licenses, Industry Canada Authorizations, CRTC approvals or other governmental permits, licenses, or other authorizations.

No Personal Liability of Directors, Officers, Employees and Stockholders

No director, officer, employee, incorporator or stockholder of the Issuer, the Co-Issuer or any Guarantor or any of their parent companies (other than the Issuer and the Guarantors) shall have any liability for any obligations of the Issuer or the Guarantors under the notes, the Guarantees or the Indenture or for any claim based on, in respect of, or by reason of such obligations or their creation to the extent permitted by applicable law. Each Holder by accepting a note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the SEC that such a waiver is against public policy.

Legal Defeasance and Covenant Defeasance

The obligations of the Issuer and the Guarantors under the Indenture will terminate (other than certain obligations) and will be released upon payment in full of all of the notes issued under the Indenture. The Issuer may, at its option and at any time, elect to have all of its obligations discharged with respect to the notes issued under the Indenture and have each Guarantor’s obligation discharged with respect to its Guarantee (“Legal Defeasance”) and cure all then existing Events of Default except for

(1) the rights of Holders of notes issued under the Indenture to receive payments in respect of the principal of, premium, if any, and interest on such notes when such payments are due solely out of the trust created pursuant to the Indenture,

(2) the Issuer’s obligations with respect to notes issued under the Indenture concerning issuing temporary notes, registration of such notes, mutilated, destroyed, lost or stolen notes and the maintenance of an office or agency for payment and money for security payments held in trust,

(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith, and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the Issuer may, at its option and at any time, elect to have its obligations and those of each Guarantor released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including bankruptcy, receivership, rehabilitation and insolvency events pertaining to the Issuer) described under “— Events of Default” will no longer constitute an Event of Default with respect to the notes.

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In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the notes issued under the Indenture:

(1) the Issuer must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof (without consideration of any reinvestment of interest), in such amounts as will be sufficient, in the opinion of a nationally recognized firm of independent public accountants, to pay the principal of, premium, if any, and interest due on the notes issued under the Indenture on the stated maturity date or on the redemption date, as the case may be, of such principal, premium, if any, or interest on the notes;

(2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that, subject to customary assumptions and exclusions,

(A) the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling or

(B) since the issuance of the notes, there has been a change in the applicable U.S. federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel in the United States shall confirm that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Legal Defeasance and will be subject to U.S. federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3)(x) in the case of Covenant Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that, subject to customary assumptions and exclusions, the Holders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such Covenant Defeasance and will be subject to such tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred and (y) in the case of Covenant Defeasance or Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in Canada confirming that the Holders will not recognize income, gain or loss for Canadian federal tax purposes as a result of such Covenant Defeasance or Legal Defeasance and will be subject to Canadian federal tax on the same amounts and in the same manner and at the same times as would have been the case if such Covenant Defeasance or Legal Defeasance had not occurred;

(4) no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit) shall have occurred and be continuing on the date of such deposit;

(5) such Legal Defeasance or Covenant Defeasance shall not result in a breach or violation of, or constitute a default under the Senior Credit Facilities or any other material agreement or instrument (other than the Indenture) to which, the Issuer or any Guarantor is a party or by which the Issuer or any Guarantor is bound;

(6) the Issuer shall have delivered to the Trustee an Opinion of Counsel to the effect that, as of the date of such opinion and subject to customary assumptions and exclusions following the deposit, the trust funds will not be subject to the effect of any applicable bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally under any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders;

(7) the Issuer shall have delivered to the Trustee an Officers’ Certificate stating that the deposit was not made by the Issuer with the intent of preferring the Holders over any of its other creditors defeating, hindering, delaying or defrauding any creditors of the Issuer or any Guarantor or others; and

(8) the Issuer shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel in the United States (which Opinion of Counsel may be subject to customary assumptions and exclusions) each stating that all conditions precedent provided for or relating to the Legal Defeasance or the Covenant Defeasance, as the case may be, have been complied with.

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Satisfaction and Discharge

The Indenture will be discharged and will cease to be of further effect (except as to rights of registration of transfer or exchange of notes which shall survive until all notes have been cancelled) as to all notes issued thereunder, when either

(a) all such notes theretofore authenticated and delivered, except lost, stolen or destroyed notes which have been replaced or paid and notes for whose payment money has theretofore been deposited in trust, have been delivered to the Trustee for cancellation; or

(b)(1) all such notes not theretofore delivered to such Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;

(2) no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit) with respect to the Indenture or the notes issued thereunder shall have occurred and be continuing on the date of such deposit or shall occur as a result of such deposit and such deposit will not result in a breach or violation of, or constitute a default under the Senior Credit Facilities or any other material agreement or instrument (other than the Indenture) to which the Issuer, the Co-Issuer or any Guarantor is a party or by which the Issuer, the Co-Issuer or any Guarantor is bound;

(3) the Co-Issuers have paid or caused to be paid all sums payable by them under the Indenture; and

(4) the Issuer has delivered irrevocable instructions to the Trustee under the Indenture to apply the deposited money toward the payment of such notes at maturity or the redemption date, as the case may be.

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Paying Agent and Registrar for the Notes

The Co-Issuers shall maintain an office or agency where notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where notes may be presented for payment (“Paying Agent”). The Co-Issuers initially appointed the Trustee to act as Registrar and Paying Agent until such time as the Trustee has resigned or a successor has been appointed, each in accordance with the Indenture.

Transfer and Exchange

A Holder may transfer or exchange notes in accordance with the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer is not required to transfer or exchange any note selected for redemption. Also, the Issuer is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

The registered Holder of a note will be treated as the owner of the note for all purposes.

Amendment, Supplement and Waiver

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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 the Indenture or the notes issued thereunder may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes issued under the Indenture, other than notes beneficially owned by the Issuer or its Affiliates (including consents obtained in connection with a purchase of or tender offer or exchange offer for notes).

The Indenture provides that, without the consent of each Holder affected, an amendment or waiver may not, with respect to any notes issued under the Indenture and held by a non-consenting Holder:

(1) reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any such note or alter or waive the provisions with respect to the redemption of the notes (other than provisions relating to the covenants described above under the caption “— Repurchase at the Option of Holders”);

(3) reduce the rate of or change the time for payment of interest on any note;

(4) waive a Default or Event of Default in the payment of principal of or premium, if any, or interest on the notes issued under the Indenture, except a rescission of acceleration of the notes by the Holders of at least a majority in aggregate principal amount of the notes and a waiver of the payment default that resulted from such acceleration, or in respect of a covenant or provision contained in the Indenture or any guarantee which cannot be amended or modified without the consent of all Holders;

(5) make any note payable in money other than that stated in the notes;

(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the notes;

(7) make any change in these amendment and waiver provisions;

(8) release Telesat Holdings, Intermediate Holdco or any Guarantor that is a Significant Subsidiary from any of its obligations under its Guarantee or the Indenture, except as permitted by the Indenture;

(9) modify or change any provision of the Indenture or the related definitions to affect the ranking of the notes or any Guarantee in a manner that adversely affects the Holders; or

(10) impair the right of any Holder to receive payment of principal of, or interest on such Holder’s notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s notes.

Notwithstanding the foregoing, without the consent of any Holder, the Co-Issuers, any Guarantor (with respect to a Guarantee or the Indenture to which it is a party) and the Trustee may amend or supplement the Indenture, any Guarantee or the notes:

(1) to cure any ambiguity, mistake, defect or inconsistency;

(2) to provide for uncertificated notes in addition to or in place of certificated notes;

(3) to comply with the covenant relating to mergers, amalgamations, consolidations and sales of assets;

(4) to provide the assumption of the Issuer’s or any Guarantor’s obligations to Holders;

(5) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder;

(6) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer or any Guarantor;

(7) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

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(8) to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements thereof;

(9) to provide for the issuance of exchange notes or private exchange notes, which are identical to exchange notes except that they are not freely transferable;

(10) to add a Guarantor under the Indenture;

(11) to conform the text of the Indenture, Guarantees or the notes to any provision of this “Description of the Senior Notes” to the extent that such provision in this “Description of the Senior Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Guarantees or the notes; or

(12) making any amendment to the provisions of the Indenture relating to the transfer and legending of notes; provided, however, that (i) compliance with the Indenture as so amended would not result in notes being transferred in violation of the Securities Act or any applicable securities law and (ii) such amendment does not materially and adversely affect the rights of Holders to transfer notes.

The consent of the Holders is not necessary under the Indenture to approve the particular form of any proposed amendment. It is sufficient if such consent approves the substance of the proposed amendment.

Notices

Notices given by publication will be deemed given on the first date on which publication is made and notices given by first-class mail, postage prepaid, will be deemed given five calendar days after mailing.

Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest, it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

The Indenture provides that the Holders of a majority in principal amount of the outstanding notes issued thereunder will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee, subject to certain exceptions. The Indenture provides that in case an Event of Default shall occur (which shall not be cured), the Trustee will be required, in the exercise of its power, to use the degree of care of a prudent person in the conduct of his own affairs. Subject to such provisions, the Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Holder of the notes, unless such Holder shall have offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Governing Law

The Indenture is, and the notes and any Guarantee will be, governed by and construed in accordance with the laws of the State of New York.

Certain Definitions

Set forth below are certain defined terms used in the Indenture. For purposes of the Indenture, unless otherwise specifically indicated, the term “consolidated” with respect to any Person refers to such Person consolidated with its Restricted Subsidiaries, and excludes from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person.

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by: (a) any government or sovereign power (de jure or de facto); or (b) any authority maintaining or using a military, navy or air force; or (c) a military, navy, or air force; or (d) any agent of any such government, power, authority or force, (ii) any anti-satellite device, or device employing atomic or nuclear fission and/or fusion, or device employing laser or directed energy beams, (iii) insurrection, strikes, labor disturbances, riots, civil commotion, rebellion, revolution, civil war, usurpation, or action taken by a government authority in hindering, combating or defending against such an occurrence, whether there be declaration of war or not, (iv) confiscation, nationalization, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any government or governmental authority or agent (whether secret or otherwise and/or whether civil, military or de facto) or public or local authority or agency, (v) nuclear reaction, nuclear radiation, or radioactive contamination of any nature, whether such loss or damage be direct or indirect, except for radiation naturally occurring in the space environment, (vi) electromagnetic or radio frequency interference, except for physical damage to a Satellite directly resulting from such interference, (vii) willful or intentional acts of the directors or officers of the named insured, acting within the scope of their duties, designed to cause loss or failure of a Satellite, (viii) an act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss, damage or failure resulting therefrom is accidental or intentional, (ix) any unlawful seizure or wrongful exercise of control of a Satellite made by any person or persons acting for political or terrorist purposes, (x) loss of revenue, incidental damages and/or consequential loss, (xi) extra expenses, other than the expenses insured under a policy, (xii) third party liability, (xiii) loss of a redundant component(s) that does not cause a transponder failure, and (xiv) such other similar exclusions as may be customary for policies of such type as of the date of issuance or renewal of such coverage.

“Acquired Indebtedness” means, 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 Restricted Subsidiary of such specified Person, including Indebtedness incurred in connection with, or in contemplation of, such other Person merging with or into or becoming a Restricted Subsidiary of such specified Person, and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Acquisition Agreement” means the Share Purchase Agreement, dated as of December 16, 2006, among Telesat Interco Inc., BCE Inc. and Telesat Canada, as in effect on the Acquisition Closing Date.

“Acquisition Closing Date” means October 31, 2007.

“Acquisition Documents” means the Acquisition Agreement and all other material agreements and documents related to the acquisition of Telesat Canada and its Safe Income Notes pursuant to the Acquisition Agreement and as described in this offering memorandum under “The Transactions,” each as in effect on the Acquisition Closing Date.

“Actual Nimiq 4 Revenue Contract Amount” means the amount of contracted revenue attributable to Nimiq 4 to be paid to Telesat Holdings and its Restricted Subsidiaries in accordance with GAAP in respect of the portion of the applicable four-quarter period in which the in-service date of Nimiq 4 occurs from and after such in-service date.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”), as used with respect to any Person, shall mean 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.

“Aggregate In-Orbit Insurance Amount” shall mean (a) 100% of the aggregate net book value of all Covered Satellites other than any Excluded Satellite and (b) 50% of the aggregate net book value of any Excluded Satellite that is a Named Satellite. For the purposes of this definition, aggregate net book value with respect to a Satellite shall exclude any liability of a Satellite Purchaser to pay the Satellite Manufacturer any

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satellite performance incentive payments and any liability of a Satellite Manufacturer to pay the Satellite Purchaser any satellite performance warranty paybacks.

“All Risks Insurance” shall mean, with respect to any Satellite, insurance for risks of loss of and damage to such Satellite and the related Associated Equipment, including all components thereof, at all times during the manufacture, testing, storage, payload processing and transport of such Satellite and such Associated Equipment, if any, up to the time of Launch, in the case of such Satellite, and until delivery to the applicable Satellite Purchaser, in the case of such Associated Equipment.

“Ancillary Agreement” shall mean the Ancillary Agreement, dated as of August 7, 2007, among Loral Space & Communications Inc., Skynet, PSP, Telesat Holdings and Telesat Canada, as in effect on the Acquisition Closing Date.

“Annualized Nimiq 4 Revenue Contract Amount” means the amount of contracted revenue attributable to Nimiq 4 that would have been realized by Telesat Holdings and its Restricted Subsidiaries during the applicable four-quarter period prior to the in-service date of Nimiq 4 had such in-service date occurred on the first day of such four-quarter period. Such amount shall be calculated by taking the Actual Nimiq 4 Revenue Contract Amount and applying such amount on a pro rata basis to the portion of such four-quarter period prior to such in-service date as if Nimiq 4 had been in service from the first day of such four-quarter period.

“Applicable Premium” means, with respect to any note on any Redemption Date, the greater of:

(1) 1.0% of the principal amount of the note; and

(2) the excess of:

(a) the present value at such redemption date of (i) the redemption price of the note at the First Call Date(such redemption price being set forth in the table appearing above under the caption “— Optional Redemption”), plus (ii) all required interest payments due on the note through the First Call Date (excluding accrued but unpaid interest to the Redemption Date), computed using a discount rate equal to the Treasury Rate as of such Redemption Date plus 50 basis points; over

(b) the principal amount of the note.

“APT Security Agreement” means the Security Agreement by and among APT Satellite Company Limited, Loral Orion Inc. and Bank of China (HK) Limited, dated as of October 8, 2004, as in effect on the Acquisition Closing Date.

“Asset Purchase Agreement” shall mean that certain Asset Purchase Agreement, dated August 7, 2007, by and among Skynet, Skynet Satellite Corporation and Loral Space & Communications Inc., as in effect on the Acquisition Closing Date.

“Asset Sale” means

(1) the sale, conveyance, transfer or other disposition, whether in a single transaction or a series of related transactions, of property or assets (including by way of a Sale and Lease-Back Transaction) of Telesat Holdings or any Restricted Subsidiary (each referred to in this definition as a “disposition”) or

(2) the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a single transaction or a series of related transactions, in each case, other than:

(a) a disposition of Cash Equivalents, obsolete or worn out property or equipment, inventory or other assets that in the reasonable judgment of the Issuer are no longer useful in the conduct of the business of Telesat Holdings and its Restricted Subsidiaries and that in each case are disposed of in the ordinary course of business;

(b) the disposition of all or substantially all of the assets of Telesat Holdings or any of the Restricted Subsidiaries in a manner permitted pursuant to the provisions described above under “— Certain Covenants — Merger, Consolidation or Sale of All or Substantially All Assets” or any disposition that constitutes a Change of Control pursuant to the Indenture;

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(c) the making of any Restricted Payment or Permitted Investment that is permitted to be made, and is made, under the covenant described above under “— Certain Covenants — Limitation on Restricted Payments”;

(d) any disposition of assets or issuance or sale of Equity Interests of any Restricted Subsidiary in any transaction or series of transactions with an aggregate fair market value of less than US$10.0 million;

(e) any disposition of property or assets or issuance of securities by a Restricted Subsidiary to Telesat Holdings or by Telesat Holdings or a Restricted Subsidiary to the Issuer or a Guarantor;

(f) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(g) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business;

(h) any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(i) foreclosures on or expropriations of assets;

(j) any financing transaction with respect to property built, repaired, improved or acquired by Telesat Holdings or any Restricted Subsidiary after the Issue Date, including Sale and Lease-Back Transactions and asset securitizations, permitted by the Indenture;

(k) any Event of Loss;

(l) dispositions of accounts receivable in connection with the collection or compromise thereof in the ordinary course of business and consistent with past practice;

(m) the T10R Sale Leaseback;

(n) any transfer of transponders or the corresponding interest in common elements on the Telstar 18 Satellite to APT Satellite Company Limited or its affiliates effected pursuant to that certain letter agreement dated August 26, 2003, as amended on November 16, 2003 by and between Skynet and APT Satellite Company Limited in connection with the receipt of “export control approval” for such transfer, or any foreclosure pursuant to the APT Security Agreement;

(o) the granting of a Lien permitted under the “— Limitation on Liens” covenant;

(p) the Telesat Headquarters Sale; and

(q) additional dispositions of assets (taken together with all such dispositions made pursuant to this clause (q)) since the Acquisition Closing Date with an aggregate fair market value not exceeding US$50.0 million.

“Asset Transfer Agreement” shall mean that certain Asset Transfer Agreement, dated August 7, 2007, by and among Telesat Holdings, Skynet and Loral Space & Communications Inc., as in effect on the Acquisition Closing Date.

“Associated Equipment” shall mean, with respect to any Satellite, the equipment to be delivered by the Satellite Manufacturer with respect thereto pursuant to the terms of the applicable Satellite Purchase Agreement.

“Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing or, in each case, other than for purposes of the definitions of “Change of Control” and “Continuing Directors,” any duly authorized committee of such body.

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“Board Resolution” means, with respect to Telesat Holdings, a duly adopted resolution of the Board of Directors of Telesat Holdings or any committee thereof.

“Business Day” means each day which is not a Legal Holiday.

“Capital Stock” means

(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.

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that the following leases shall be treated as operating leases and not as capital leases: (a) Satellite Relocation and Lease Agreement, dated as of November 22, 2006, between Telesat Canada and DirectTV Enterprises, LLC and (b) Amendment No. 1 entered into as of the 22nd day of November 2006 to the Memorandum of Agreement entered into by Telesat Canada and DirectTV Enterprises, LLC on December 23, 2003, subsequently amended and restated on March 10, 2005 and further amended and restated on October 6, 2005; provided that such leases shall not be treated as capital leases only so long as they are not amended in a manner materially adverse to the holders of the notes since or after the Acquisition Closing Date. For purposes of the covenant described under “— Certain Covenants— Limitation on Liens”, a Capitalized Lease Obligation will be deemed to be secured by a Lien on the property being leased.

“Cash Equivalents” means

(1) United States dollars and Canadian dollars,

(2) pounds sterling,

(3)(a) euro, or any national currency of any participating member state in the European Union or (b) 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,

(4) securities issued or directly and fully and unconditionally guaranteed or insured by the United States government or any agency or instrumentality thereof the securities of which are unconditionally guaranteed as a full faith and credit obligation of such government with maturities of 12 months or less from the date of acquisition,

(5) certificates of deposit, time deposits and eurodollar time deposits with maturities of one year or less from the date of acquisition, bankers’ acceptances with maturities not exceeding one year and overnight bank deposits, in each case with any commercial bank having capital and surplus of not less than US$250.0 million in the case of domestic banks and US$100.0 million (or the U.S. dollar equivalent as of the date of determination) in the case of foreign banks,

(6) repurchase obligations for underlying securities of the types described in clauses (4) and (5) entered into with any financial institution meeting the qualifications specified in clause (5) above,

(7) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 6 months after the date of creation thereof,

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at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency),

(9) auction rate securities rated at least Aa3 by Moody’s and AA- by S&P (or, if at any time either S&P or Moody’s shall be cease to rate such obligations, an equivalent rating from another nationally recognized rating service),

(10) investment funds investing 95% or more of their assets in securities of the types described in clauses (1) through (9) above,

(11) readily marketable direct obligations issued by any state of the United States of America or any political subdivision thereof having one of the two highest rating categories obtainable from either Moody’s or S&P with maturities of 12 months or less from the date of acquisition,

(12) with respect to the Issuer, Telesat Holdings and any Restricted Subsidiary organized in Canada or any political subdivision thereof, instruments and investments correlative in type, maturity and rating to those referred to in clauses (1) to (11) above denominated in United States or Canadian dollars.

Notwithstanding the foregoing, Cash Equivalents shall include amounts denominated in currencies other than those set forth in clauses (1) through (3) above, provided that such amounts are converted into any currency listed in clauses (1) through (3) as promptly as practicable and in any event within ten Business Days following the receipt of such amounts.

“Cash Management Services” means any of the following to the extent not constituting a line of credit (other than overdraft facilities): ACH transactions, treasury and/or cash management services, including, without limitation, controlled disbursement services, overdraft facilities, foreign exchange facilities, deposit and other accounts and merchant services.

“Change of Control” means the occurrence of any of the following:

(1) the sale, lease or transfer, in one or a series of related transactions, of all or substantially all of the assets of Telesat Holdings and its Subsidiaries, taken as a whole, to any Person other than a Permitted Holder; or

(2) the Issuer becomes aware of (by way of a report or any other filing pursuant to Section 13(d) of the Exchange Act, proxy, vote, written notice or otherwise) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than the Permitted Holders, in a single transaction or in a related series of transactions, by way of merger, consolidation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision) of more than 50% of the total voting power of the Voting Stock of Telesat Holdings or any company that holds directly or indirectly more than 50% of the total voting power of the Voting Stock of Telesat Holdings; or

(3) following the initial public offering of the common stock of Telesat Holdings, Continuing Directors shall not constitute at least a majority of the Board of Directors of Telesat Holdings; or

(4) the Issuer ceases to be a Wholly-Owned Subsidiary of Telesat Holdings.

“Consolidated Depreciation and Amortization Expense” means, with respect to any Person for any period, the total amount of depreciation and amortization expense, including the amortization of deferred financing fees and other related noncash charges, excluding any noncash item that represents an accrual or reserve for a cash expenditure for a future period, of such Person and its Restricted Subsidiaries for such period on a consolidated basis and otherwise determined in accordance with GAAP.

“Consolidated EBITDA” means, with respect to Telesat Holdings and the Restricted Subsidiaries on a consolidated basis, for any period, an amount equal to Consolidated Net Income for such period

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(1) increased (without duplication) by:

(a) Consolidated Income Tax Expense accrued for such period to the extent deducted in determining Consolidated Net Income for such period; plus

(b) Consolidated Interest Expense for such period to the extent deducted in determining Consolidated Net Income for such period; plus

(c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income; plus

(d) collections on investments in sales-type leases during such period, to the extent not otherwise included in Consolidated Net Income for such period; plus

(e) to the extent deducted in arriving at Consolidated Net Income, foreign withholding taxes paid or accrued in such period; plus

(f) any expenses or charges related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or Indebtedness permitted to be incurred by the Indenture including a refinancing thereof (whether or not successful), including (i) such fees, expenses or charges related to the notes offered hereby and the Senior Subordinated Notes, the Credit Facilities and the financings that occurred in connection with the Transactions on the Acquisition Closing Date and (ii) any amendment or other modification of such notes, loans or the Credit Facilities, and, in each case, deducted in computing Consolidated Net Income; plus

(g) the amount of any restructuring charge deducted in such period in computing Consolidated Net Income, including any one-time costs incurred in connection with acquisitions after the Issue Date and costs related to closure of facilities; plus

(h) any other non-cash charges reducing Consolidated Net Income for such period, excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period; plus

(i) the amount of any minority interest expense deducted in calculating Consolidated Net Income (less the amount of any cash dividends paid to the holders of such minority interests); plus

(j) to the extent deducted in arriving at Consolidated Net Income and to the extent paid in Mezzanine Securities pursuant to clause (12)(a) of the second paragraph of the “— Transactions with Affiliates” covenant, the annual consulting fee payable pursuant to the Consulting Services Agreement as in effect on the Acquisition Closing Date; plus

(k) in the case of any period ending prior to or during the fiscal year ending December 31, 2007, Transaction Expenses; plus

(l) solely for purposes of clause (i)(b) of the fourth paragraph of the “— Limitation on Restricted Payments” covenant, the first paragraph of the “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” covenant and clause (12) of the “— Transactions with Affiliates” covenant, to the extent the in-service date of Nimiq 4 occurs during the period of four consecutive fiscal quarters of Telesat Holdings then most recently ended (taken as one accounting period) (each, a “Test Period”), an amount equal to 90% of the Annualized Nimiq 4 Revenue Contract Amount, provided that the Issuer in good faith reasonably believes that Telesat Holdings and its Restricted Subsidiaries will realize revenue in accordance with GAAP in respect of Nimiq 4 during the next Test Period in an amount not less than the Annualized Nimiq 4 Revenue Contract Amount plus the Actual Nimiq 4 Revenue Contract Amount in respect of Nimiq 4 realized during such prior Test Period; plus

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such period after such event of loss) so long as insurance for such satellite required to be maintained under the Indenture is maintained in accordance with the Indenture and Telesat Holdings or a Restricted Subsidiary has filed a notice of loss with the applicable insurers and believes in good faith that the insurers will pay funds (and the applicable insurer(s) have not indicated that they will not pay such funds) in amounts that the Issuer reasonably believes will be sufficient to replace such Satellite with a replacement Satellite that generates annual revenues for Telesat Holdings and its Restricted Subsidiaries not less than the revenue generated by such replaced Satellite during the four-quarter period ended immediately prior to such event of loss; but such amounts may only be added to Consolidated EBITDA so long as Telesat Holdings or the applicable Restricted Subsidiary intends promptly to replace such Satellite and is working reasonably to do so (provided that the amount added to Consolidated EBITDA under this clause (m) shall not exceed US$55,000,000 for any Test Period); plus

(n) solely for purposes of clause (i)(b) of the fourth paragraph of the “— Limitation on Restricted Payments” covenant and clause (12) of the “— Transactions with Affiliates” covenant, the amount of net cost savings projected by the Issuer in good faith to be realized as a result of specified actions taken during such period (calculated on a pro forma basis as though such cost savings had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that such net amount shall not exceed US$58.9 million;

(2) decreased by (without duplication):

(a) any gross profit on sales-type leases included in Consolidated Net Income for such period, except for collections on investments in sales-type leases during such period, to the extent included in Consolidated Net Income for such period; and

(b) non-cash items increasing Consolidated Net Income of Telesat Holdings and the Restricted Subsidiaries for such period, excluding any items which represent the reversal of any accrual of, or cash reserve for, anticipated cash charges in any prior period; and

(3) increased or decreased by any net loss or gain resulting from Hedging Obligations.

“Consolidated Income Tax Expense” means, with respect to Telesat Holdings and the Restricted Subsidiaries for any period, the provision for federal, state, local and foreign taxes based on income or profits (including franchise taxes) payable by Telesat Holdings and the Restricted Subsidiaries for such period as determined on a consolidated basis in accordance with GAAP.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

(a) consolidated interest expense of such Person and its Restricted Subsidiaries for such period, to the extent such expense was deducted in computing Consolidated Net Income (including amortization of original issue discount resulting from the issuance of Indebtedness at less than par, non-cash interest payments (but excluding any non-cash interest expense attributable to the movement in the mark to market valuation of Hedging Obligations or other derivative instruments pursuant to Financial Accounting Standards Board Statement No. 133 — “Accounting for Derivative Instruments and Hedging Activities”), the interest component of Capitalized Lease Obligations and net payments, if any, pursuant to interest rate Hedging Obligations, and excluding amortization of deferred financing fees, any expensing of bridge or other financing fees and any interest under Satellite Purchase Agreements),

(b)(i) all cash dividend payments (excluding items eliminated in consolidation) on any series of preferred stock or any Refunding Capital Stock of such Person made during such period and (ii) all cash dividend payments (excluding items eliminated in consolidation) on any series of Disqualified Stock made during such period, and

(c) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, less

(d) interest income for such period.

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For purposes of this definition, interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by such Person to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP.

“Consolidated Net Income” means, 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, and otherwise determined in accordance with GAAP; provided, however, that

(1) any net after-tax extraordinary, non-recurring or unusual gains or losses (less all fees and expenses relating thereto) or expenses (including relating to severance, relocation costs, new product introductions, one-time compensation charges and the Transactions) shall be excluded,

(2) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period,

(3) any net after-tax income (loss) from disposed or discontinued operations and any net after-tax gains or losses on disposal of disposed or discontinued operations shall be excluded,

(4) any net after-tax gains or losses (less all fees and expenses relating thereto) attributable to asset dispositions other than in the ordinary course of business, as determined in good faith by the Board of Directors of Telesat Holdings, shall be excluded,

(5) the Net Income for such period of any Person that is not a Subsidiary, or is an Unrestricted Subsidiary, or that is accounted for by the equity method of accounting, shall be excluded; provided that Consolidated Net Income of Telesat Holdings shall be increased by the amount of dividends or distributions or other payments that are actually paid in cash (or to the extent converted into cash) to the referent Person or a Restricted Subsidiary thereof in respect of such period,

(6) solely for the purpose of determining the amount of Cumulative Credit, the Net Income for such period of any Restricted Subsidiary (other than any Guarantor) shall be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of its Net Income is not at the date of determination wholly permitted without any prior governmental approval (which has not been obtained) or, directly or indirectly, by the 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 stockholders, unless such restriction with respect to the payment of dividends or in similar distributions has been legally waived, provided that Consolidated Net Income of Telesat Holdings will be increased by the amount of dividends or other distributions or other payments actually paid in cash (or to the extent converted into cash) to Telesat Holdings or a Restricted Subsidiary thereof in respect of such period, to the extent not already included therein,

(7) effects of adjustments in any line item in such Person’s consolidated financial statements required or permitted by the Financial Accounting Standards Board Statement Nos. 141 and 142 resulting from the application of purchase accounting in relation to the Transactions or any acquisition that is consummated after the Acquisition Closing Date, net of taxes, shall be excluded,

(8) any net after-tax income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments shall be excluded,

(9) any impairment charge or asset write-off pursuant to Financial Accounting Standards Board Statements No. 142 and No. 144 and the amortization of intangibles arising pursuant to No. 141 shall be excluded, and

(10) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options or other rights to officers, directors or employees shall be excluded.

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the Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by Telesat Holdings or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to the definition of the term Cumulative Credit.

“Consolidated Total Indebtedness” means, as at any date of determination, an amount equal to the sum of (1) the aggregate amount of all outstanding Indebtedness of Telesat Holdings and the Restricted Subsidiaries and (2) the aggregate amount of all outstanding Disqualified Stock of Telesat Holdings and all preferred stock of the Restricted Subsidiaries, with the amount of such Disqualified Stock and preferred stock equal to the greater of their respective voluntary or involuntary liquidation preferences and maximum fixed repurchase prices, in each case determined on a consolidated basis in accordance with GAAP.

For purposes hereof, the “maximum fixed repurchase price” of any Disqualified Stock or preferred stock that does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock or preferred stock as if such Disqualified Stock or preferred stock were purchased on any date on which Consolidated Total Indebtedness shall be required to be determined pursuant to the Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock or preferred stock, such fair market value shall be determined reasonably and in good faith by the Board of Directors of Telesat Holdings.

“Consulting Services Agreement” means the Consulting Services Agreement between Loral Space & Communications Inc. and the Issuer as in effect on the Acquisition Closing Date.

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases (other than any lease or leases entered into in connection with any Sale Lease-Back Transaction), dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent,

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds

(A) for the purchase or payment of any such primary obligation or

(B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or

(3) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect thereof.

“Continuing Director” shall mean, at any date, an individual (a) who is a member of the Board of Directors of Telesat Holdings on the Issue Date, (b) who, as at such date, has been a member of such Board of Directors for at least the 12 preceding months, (c) who has been nominated to be a member of such Board of Directors, directly or indirectly, by a Permitted Holder or Persons nominated by a Permitted Holder or (d) who has been nominated to be a member of such Board of Directors by a majority of the other Continuing Directors then in office or a nominating committee in which directors nominated by Permitted Holders form the majority of the members thereof.

“Covered Satellite” means any Satellite that is owned or leased by Telesat Holdings or any of its Restricted Subsidiaries or for which Telesat Holdings or any of its Restricted Subsidiaries otherwise retains the risk of loss.

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financing, including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against receivables, letters of credit or other long-term indebtedness, including any notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”).

“CRTC” shall mean the Canadian Radio-Television and Telecommunications Commission or any successor authority of the Government of Canada substituted therefor.

“Cumulative Credit” means the sum of (without duplication):

(1) the aggregate net cash proceeds, and the fair market value of marketable securities or other property other than cash (as determined in good faith by the Board of Directors of Telesat Holdings), received by Telesat Holdings from the issue or sale (other than to a Restricted Subsidiary) of any class of Equity Interests, including Retired Capital Stock, in Telesat Holdings after the Acquisition Closing Date, other than (A) Disqualified Stock, (B) Equity Interests to the extent the net cash proceeds therefrom are applied as provided for in clause (4) of the second paragraph under “— Certain Covenants — Limitation on Restricted Payments,” (C) Refunding Capital Stock and (D) Excluded Contributions; plus

(2) 100% of any cash and the fair market value of marketable securities or other property other than cash (as determined in good faith by the Board of Directors of Telesat Holdings) received by Telesat Holdings as a capital contribution from its shareholders subsequent to the Acquisition Closing Date other than any Excluded Contributions; plus

(3) the principal amount (or accreted amount (determined in accordance with GAAP), if less) of any Indebtedness, or the liquidation preference or maximum fixed repurchase price, as the case may be, of any Disqualified Stock, of Telesat Holdings or any Restricted Subsidiary issued after the Acquisition Closing Date (other than any such Indebtedness or Disqualified Stock to the extent issued to a Restricted Subsidiary), which has been converted into or exchanged for Equity Interests in Telesat Holdings (other than Disqualified Stock); plus

(4) cumulative Consolidated EBITDA from and after the first day of the fiscal quarter during which the Acquisition Closing Date occurs, to the end of the fiscal quarter immediately preceding the date of the proposed Restricted Payment, or, if cumulative Consolidated EBITDA for such period is negative, minus the amount by which cumulative Consolidated EBITDA is less than zero; plus

(5) to the extent not already included in Consolidated EBITDA, 100% of the aggregate net cash proceeds received by Telesat Holdings or a Restricted Subsidiary since the Acquisition Closing Date from (A) Investments (other than Permitted Investments or Investments made pursuant to clause (12) of the second paragraph of “— Certain Covenants — Limitation on Restricted Payments”), whether through interest payments, principal payments, dividends or other distributions and payments, or the sale or other disposition (other than to Telesat Holdings or a Restricted Subsidiary) thereof made by Telesat Holdings and its Restricted Subsidiaries and (B) cash dividends from, or the sale (other than to Telesat Holdings or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary (other than in respect of Unrestricted Subsidiaries designated as such pursuant to clause (12) of the second paragraph of “— Certain Covenants — Limitation on Restricted Payments”); plus

(6) if any Unrestricted Subsidiary (other than in respect of Unrestricted Subsidiaries designated as such pursuant to clause (12) of the second paragraph of “— Certain Covenants — Limitation on Restricted Payments”) is redesignated as a Restricted Subsidiary, the fair market value of all Investments by Telesat Holdings and its Restricted Subsidiaries in such Subsidiary, as determined in good faith by the Board of Directors of Telesat Holdings.

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“Cumulative Interest Expense” means, in respect of any Restricted Payment, the sum of the aggregate amount of Consolidated Interest Expense of Telesat Holdings and the Restricted Subsidiaries for the period from and after the first day of the fiscal quarter during which the Acquisition Closing Date occurs, to the end of the fiscal quarter immediately preceding the proposed Restricted Payment.

“Debt to Consolidated EBITDA Ratio” means, with respect to any Person for any period, such Person’s ratio of (1) Consolidated Total Indebtedness as of the date of calculation (the “Determination Date”) to (2) the Consolidated EBITDA for the four full consecutive fiscal quarters immediately preceding such Determination Date for which financial information is available (the “Measurement Period”). In the event that Telesat Holdings or any Restricted Subsidiary incurs, assumes, guarantees or redeems any Indebtedness or issues or redeems Disqualified Stock or preferred stock subsequent to the commencement of the Measurement Period for which the Debt to Consolidated EBITDA Ratio is being calculated but prior to the Determination Date, then the Debt to Consolidated EBITDA Ratio shall be calculated giving pro forma effect to such incurrence, assumption, guarantee or redemption of Indebtedness, or such issuance or redemption of Disqualified Stock or preferred stock and the application of the net proceeds thereof, as if the same had occurred at the beginning of the applicable four-quarter period.

For purposes of making the computation referred to above, Investments, acquisitions, dispositions, mergers, consolidations and disposed operations (as determined in accordance with GAAP) that have been made by Telesat Holdings or any Restricted Subsidiary during the four-quarter reference period or subsequent to such reference period and on or prior to or simultaneously with the Determination Date shall be calculated on a pro forma basis assuming that all such Investments, acquisitions, dispositions, mergers, consolidations and disposed operations (and the change in any associated obligations and the change in Consolidated EBITDA resulting therefrom) had occurred on the first day of the four-quarter reference period. If since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into Telesat Holdings or any Restricted Subsidiary since the beginning of such period) shall have made any Investment, acquisition, disposition, merger, consolidation or disposed operation that would have required adjustment pursuant to this definition, then the Debt to Consolidated EBITDA Ratio shall be calculated giving pro forma effect thereto for such period as if such Investment, acquisition, disposition, merger, consolidation or disposed operation had occurred at the beginning of the applicable four-quarter period.

For purposes of this definition, whenever pro forma effect is to be given to a transaction, the pro forma calculations shall be made in good faith by a responsible financial or accounting officer of the Issuer or Telesat Holdings. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest on such Indebtedness shall be calculated as if the rate in effect on the Determination Date had been the applicable rate for the entire period (taking into account any Hedging Obligations applicable to such Indebtedness). Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably determined by a responsible financial or accounting officer of the Issuer or Telesat Holdings to be the rate of interest implicit in such Capitalized Lease Obligation in accordance with GAAP. For purposes of making the computation referred to above, interest on any Indebtedness under a revolving credit facility computed on a pro forma basis shall be computed based upon the average daily balance of such Indebtedness during the applicable period. Interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer or Telesat Holdings may designate.

“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.

“Designated Noncash Consideration” means the fair market value of noncash consideration received by Telesat Holdings or a Restricted Subsidiary in connection with an Asset Sale that is so designated as Designated Noncash Consideration pursuant to an Officers’ Certificate, setting forth the basis of such valuation, executed by an executive vice president and the principal financial officer of the Issuer or Telesat Holdings, less the amount of cash or Cash Equivalents received in connection with a subsequent sale of such Designated Noncash Consideration.

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“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which, by its terms, or by the terms of any security into which it is convertible or for which it is putable or exchangeable, or upon the happening of any event, matures or is mandatorily redeemable, other than as a result of a change of control or asset sale, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, other than as a result of a change of control or asset sale, in whole or in part, in each case prior to the date 91 days after the earlier of the maturity date of the notes or the date the notes are no longer outstanding; provided, however, that if such Capital Stock is issued to any plan for the benefit of employees of Telesat Holdings or its Subsidiaries or by any such plan to such employees, such Capital Stock shall not constitute Disqualified Stock solely because it may be required to be repurchased by Telesat Holdings or its Subsidiaries in order to satisfy applicable statutory or regulatory obligations.

“DTC” means the Depositary Trust Company.

“EMU” means economic and monetary union as contemplated in the Treaty on European Union.

“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.

“Equity Offering” means any public or private sale of common stock or preferred stock of Telesat Holdings or any of its direct or indirect parent companies (excluding Disqualified Stock), other than (1) public offerings with respect to Telesat Holdings’ or any direct or indirect parent company’s common stock registered on Form S-8 (or the equivalent thereof) and (2) any public or private sale that constitutes an Excluded Contribution.

“euro” means the single currency of participating member states of the EMU.

“Event of Loss” is defined under “— Certain Covenants — Maintenance of Insurance.”

“Event of Loss Proceeds” means, with respect to any Event of Loss, all Satellite insurance proceeds received by Telesat Holdings or any of the Restricted Subsidiaries in connection with such Event of Loss, after

(1) provision for all income or other taxes measured by or resulting from such Event of Loss,

(2) payment of all reasonable legal, accounting and other reasonable fees and expenses related to such Event of Loss,

(3) payment of amounts required to be applied to the repayment of Indebtedness secured by a Lien on the Satellite that is the subject of such Event of Loss,

(4) provision for payments to Persons who own an interest in the Satellite (including any transponder thereon) in accordance with terms of the agreement(s) governing the ownership of such interest by such Person (other than payments to insurance carriers required to be made based on the future revenues generated from such Satellite), and

(5) deduction of appropriate amounts to be provided by Telesat Holdings or such Restricted Subsidiary as a reserve, in accordance with GAAP, against any liabilities associated with the Satellite that was the subject of the Event of Loss.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Excluded Contribution” means net cash proceeds, marketable securities or Qualified Proceeds received by Telesat Holdings from

(a) contributions to its common equity capital, and

(b) the sale (other than to a Subsidiary of Telesat Holdings or to any management equity plan or stock option plan or any other management or employee benefit plan or agreement of Telesat Holdings) of Capital Stock (other than Disqualified Stock) of Telesat Holdings,

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in each case designated as Excluded Contributions pursuant to an Officers’ Certificate executed by an executive vice president and the principal financial officer of the Issuer or Telesat Holdings on the date such capital contributions are made or the date such Equity Interests are sold, as the case may be, which are excluded from the calculation set forth in the definition of the term “Cumulative Credit”.

“Excluded Satellites” shall mean (a) the Satellites owned by Telesat Holdings and its Restricted Subsidiaries commonly referred to as Skynet EDS, Telesat Anik F1, Nimiq 2 and the transponders for which Telesat Holdings or its Restricted Subsidiaries have a right to use on Satmex 5, (b) the Satellites leased by Telesat Holdings and its Subsidiaries commonly referred to as Nimiq 3 and Nimiq 4iR, (c) any other Satellite other than a Named Satellite that (i) is not expected or intended, in the good faith determination of the Board of Directors of the Issuer and/or Telesat Holdings and evidenced by a board resolution delivered to the Trustee, to earn future revenues from the operation of such Satellite in excess of US$25.0 million in any fiscal year and (ii) has a book value of less than US$50.0 million, (d) any other Satellite, other than a Named Satellite, with one year or less of in-orbit life remaining (it being understood and agreed that such Satellite shall be deemed to have “in-orbit life” only for so long as it is maintained in station kept orbit) and (e) any other Satellite designated as an Excluded Satellite by the Board of Directors of the Issuer and/or Telesat Holdings and evidenced by a Board Resolution delivered to the Trustee if the Board of Directors of the Issuer and/or Telesat Holdings determines in good faith that (i)(A) such Satellite’s performance and/or operating status has been adversely affected by anomalies or component exclusions and Telesat Holdings and its Restricted Subsidiaries are unlikely to receive insurance proceeds from a future failure thereof or (B) there are systemic failures or anomalies applicable to Satellites of the same model and (ii) Telesat Holdings and its Restricted Subsidiaries are unlikely to obtain usual and customary coverage in the satellite insurance market for the Satellite at a premium amount that is, and on other terms and conditions that are, commercially reasonable despite commercially reasonable efforts to obtain such coverage (including efforts to minimize the exclusions and insurance deductibles, subject to usual and customary exclusions consistent with the anomalies and/or operating status of the Satellite).

“Existing Indebtedness” means Indebtedness of Telesat Holdings or the Restricted Subsidiaries in existence on the Issue Date, plus interest accruing thereon.

“FCC” means the Federal Communications Commission or any governmental authority in the United States substituted therefor.

“FCC Licenses” shall mean all authorizations, orders, licenses and permits issued by the FCC to Telesat Holdings or any of its Subsidiaries, under which Telesat Holdings or any of its Subsidiaries is authorized to launch and operate any of its Satellites or to operate any of its transmit only, receive only or transmit and receive earth stations.

“Foreign Subsidiary” means, with respect to any Person, any Restricted Subsidiary of such Person that is not organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof, or the laws of Canada or any province or territory thereof.

“GAAP” means generally accepted accounting principles in Canada which are in effect on the Issue Date.

“Governmental Authority” shall mean any federal, state, provincial, local or foreign court or tribunal or governmental agency, authority, instrumentality or regulatory or legislative body.

“Government Securities” means securities that are

(a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

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holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.

“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 letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“Guarantee” means the guarantee by any Guarantor of the Co-Issuers’ obligations under the notes and the Indenture.

“Guarantor” means Telesat Holdings and each Subsidiary that executes a Guarantee.

“Hedging Obligations” means, with respect to any Person, the obligations of such Person under any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, foreign exchange contract, currency swap agreement or similar agreement providing for the transfer or mitigation of interest rate or currency risks either generally or under specific contingencies.

“Holder” means, at any time, a Person in whose name a note is at such time registered on the Registrar’s books.

“Holding PIK Preferred Stock” means preferred equity securities of Telesat Holdings issued on the Acquisition Closing Date to fund a portion of the Transactions, on the terms described under the caption “Description of Other Indebtedness and Preferred Stock — Holding PIK Preferred Stock” of this offering memorandum, and additional preferred equity of the same class and series issued as pay-in-kind dividends thereon in accordance with the terms thereof as in effect on the Acquisition Closing Date and preferred equity issued to refinance any of the same in accordance with clause (i)(c) of the last paragraph of the “— Limitation of Restricted Payments” covenant.

“Indebtedness” means, with respect to any Person,

(1) any indebtedness (including principal and premium) of such Person, whether or not contingent

(a) in respect of borrowed money,

(b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without double counting, reimbursement agreements in respect thereof),

(c) representing the balance deferred and unpaid of the purchase price of any property (including Capitalized Lease Obligations and the present value (discounted at the interest rate borne by the notes, compounded annually) of total obligations of the lessee for rental payments during the remaining term of the lease included in any Sale and Lease-Back Transaction (including any period for which such lease has been extended)), except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business, or

(d) representing any Hedging Obligations,

if and to the extent that any of the foregoing Indebtedness (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet (excluding the footnotes thereto) of such Person prepared in accordance with GAAP;

(2) to the extent not otherwise included, any obligation by such Person to be liable for, or to pay, as obligor, guarantor or otherwise, on the obligations of the type referred to in clause (1) of another Person (whether or not such items would appear upon the balance sheet of the such obligor or guarantor), other than by endorsement of negotiable instruments for collection in the ordinary course of business; and

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such Person; provided that the Lien granted on certain transponders pursuant to the APT Security Agreement shall not be deemed to result in any Indebtedness of Telesat Holdings or any Restricted Subsidiary;

provided, however, that notwithstanding the foregoing, Indebtedness shall be deemed not to include (A) Contingent Obligations incurred in the ordinary course of business; (B) deferred or prepaid revenues; (C) purchase price holdbacks in respect of a portion of the purchase price of an asset to satisfy warranty or other unperformed obligations of the respective seller; (D) any obligations to make progress or incentive payments under Satellite Purchase Agreements and Launch Services Agreements, in each case, to the extent not overdue by more than 90 days; and (E) any obligations in respect of the T10R Sale Leaseback.

“Independent Director” means, with respect to the Board of Directors of Telesat Holdings, a member of such board who is not an officer, director, employee or appointee of Loral Space & Communications Inc. or its Affiliates (other than Telesat Holdings and its Subsidiaries).

“Industry Canada” shall mean Industry Canada or any successor department of the Government of Canada substituted therefor.

“Industry Canada Authorizations” shall mean all authorizations, orders, licenses and exemptions issued by Industry Canada to Telesat Holdings or any of its Subsidiaries, pursuant to authority under the Radiocommunication Act or the Telecommunications Act, as amended, under which Telesat Holdings or any of its Subsidiaries is authorized to launch and operate any of its Satellites or to operate any of its transmit only, receive only or transmit and receive earth stations or any ancillary terrestrial communications facilities.

“Initial Purchasers” means the initial purchasers party to the Purchase Agreement for the notes referred to in the “Private Placement” section of this offering memorandum.

“In-Orbit Insurance” shall mean, with respect to any Satellite, insurance for risks of loss of and damage to such Satellite attaching upon the expiration of the Launch Insurance therefor and renewing, during the commercial in-orbit service of such Satellite, prior to the expiration of the immediately preceding corresponding In-Orbit Insurance policy, subject to the terms and conditions set forth herein.

“In-Orbit Spare Capacity” shall mean the C-band payload of a satellite with in-orbit replacement capacity that:

(a) is available in the event of a Covered Satellite loss or failure in order to restore C-band service on the Covered Satellite;

(b) meets or exceeds the contractual performance specifications for the C-band payload being protected; and

(c) may be provided directly by Telesat Holdings or a Restricted Subsidiary or by another satellite operator pursuant to a contractual arrangement;

provided that no Satellite or satellite being used to provide “In-Orbit Spare Capacity” with respect to a Covered Satellite may itself qualify as In-Orbit Spare Capacity.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

“Investments” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of loans (including guarantees), advances or capital contributions (excluding accounts receivable, trade credit, advances to customers, commission, travel and similar advances to officers and employees, in each case made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities issued by any other Person and investments that are required by GAAP to be classified on the balance sheet (excluding the footnotes) of Telesat Holdings in the same manner as the other investments included in this definition to the extent such transactions involve the transfer of cash or other property. For purposes of the definition of “Unrestricted Subsidiary” and the covenant described under “— Certain Covenants — Limitation on Restricted Payments,”

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(1) “Investments” shall include the portion (proportionate to Telesat Holdings’ equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of Telesat Holdings at the time that such Subsidiary is designated an Unrestricted Subsidiary (other than the deemed designation of The Access Centre LLC and The SpaceConnection, Inc. as Unrestricted Subsidiaries as of the Issue Date in accordance with the last sentence of the definition of “Unrestricted Subsidiary”); provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, Telesat Holdings shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to

(x) Telesat Holdings’ “Investment” in such Subsidiary at the time of such redesignation less

(y) the portion (proportionate to Telesat Holdings’ equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and

(2) any property transferred to or from an Unrestricted Subsidiary shall be valued at its fair market value at the time of such transfer, in each case as determined in good faith by the Board of Directors of Telesat Holdings.

“Issue Date” means the date notes are first issued under the Indenture.

“Launch” shall mean, with respect to any Satellite, the point in time before lift-off of such Satellite at which risk of loss of such Satellite passes to the applicable Satellite Purchaser under the terms of the applicable Satellite Purchase Agreement, unless risk of loss thereunder is to pass to such Satellite Purchaser after lift-off, in which case “Launch” shall mean the intentional ignition of the first stage engines of the launch vehicle that has been integrated with such Satellite.

“Launch Insurance” shall mean, with respect to any Satellite, insurance for risks of loss of and damage to such Satellite attaching not later than the time of Launch and continuing at least until the successful or unsuccessful attempt to achieve physical separation of such Satellite from the launch vehicle that had been integrated with such Satellite.

“Launch Services Agreement” shall mean, with respect to any Satellite, the agreement between the applicable Satellite Purchaser and the applicable Launch Services Provider relating to the launch of such Satellite.

“Launch Services Provider” shall mean, with respect to any Satellite, the provider of launch services for such Satellite pursuant to the terms of the Launch Services Agreement related thereto.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in New York City or Toronto are authorized or required by law to remain closed.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, hypothec, 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, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code or Personal Property Security Act (or equivalent statutes) of any jurisdiction; provided that in no event shall any lease (other than a Capitalized Lease Obligation) entered into in the ordinary course of business be deemed to constitute a Lien.

“Material Subsidiary” means, at any date of determination, any Restricted Subsidiary (a) whose total assets at the last day for which financial statements are available were equal to or greater than 2.5% of the consolidated total assets of Telesat Holdings and its consolidated subsidiaries at such date or (b) whose gross revenues for the most recently ended four quarter period for which financial statements are available were equal to or greater than 2.5% of the consolidated gross revenues of Telesat Holdings and its consolidated subsidiaries for such period.

“Mezzanine Securities” shall mean junior subordinated promissory notes in the form attached to the Senior Credit Facilities as in effect on the Acquisition Closing Date as described in this offering memorandum under “Related Party Transactions — Transaction Agreements — Consulting Services Agreement.”

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“Minority Investment” shall mean any Person (other than a Subsidiary) in which Telesat Holdings or any Restricted Subsidiary owns capital stock or other equity interests.

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

“Named Satellites” shall mean the Satellites commonly referred to as Nimiq 1, Anik F1R, Anik F2, Anik F3, Telstar 11N (following its successful launch and the expiry of its applicable Launch Insurance), Telstar 12, Nimiq 4 (following its successful launch and the expiry of its applicable Launch Insurance) and Nimiq 5 (following its successful launch and the expiry of its applicable Launch Insurance).

“Nationally Recognized Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant of nationally recognized standing that is, in the good faith judgment of the Issuer, qualified to perform the task for which it has been engaged.

“Net Income” means, with respect to any Person, the net income (loss) of such Person, determined in accordance with GAAP.

“Net Proceeds” means the aggregate cash proceeds received by Telesat Holdings or any Restricted Subsidiary in respect of any Asset Sale, including any cash received upon the sale or other disposition of any Designated Noncash Consideration received in any Asset Sale, net of the direct costs relating to such Asset Sale and the sale or disposition of such Designated Noncash Consideration, including legal, accounting and investment banking fees, and brokerage and sales commissions, any relocation expenses incurred as a result thereof, taxes paid or payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements), amounts required to be applied to the repayment of principal, premium, if any, and interest on Pari Passu Indebtedness required (other than required by clause (1) of the second paragraph of “— Repurchase at the Option of Holders — Asset Sales”) to be paid as a result of such transaction and any deduction of appropriate amounts to be provided by Telesat Holdings as a reserve in accordance with GAAP against any liabilities associated with the asset disposed of in such transaction and retained by Telesat Holdings after such sale or other disposition thereof, including pension and other post-employment benefit liabilities and liabilities related to environmental matters or against any indemnification obligations associated with such transaction.

“Nimiq 1” shall mean the A2100 AX (Lockheed Martin) Satellite with an expected end of commercial service life of 2024.

“Nimiq 2” shall mean the A2100 AX (Lockheed Martin) Satellite with an expected end of commercial service life of 2023.

“Nimiq 3” shall mean the BSS601 (Boeing) Satellite with an expected end of commercial service life of 2010.

“Nimiq 4” shall mean the E-3000 (EADS Astrium) Satellite currently under construction.

“Nimiq 4iR” shall mean the BSS601 (Boeing) Satellite with an expected end of commercial service life of 2009.

“Nimiq 5” shall mean the SS/L 1300 Satellite currently under construction.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.

“Officer” means the Chairman of the Board, the President, any Executive Vice President, Senior Vice President or Vice President, the Treasurer or the Secretary of the Issuer or Telesat Holdings.

“Officers’ Certificate” means a certificate signed by two Officers of the Issuer, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Issuer or Telesat Holdings, that meets the requirements set forth in the Indenture and is delivered to the Trustee.

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“Opinion of Counsel” means a written opinion from legal counsel, who may be an employee of or counsel to the Issuer or Telesat Holdings.

“Pari Passu Indebtedness” means with respect to any Person:

(1) Indebtedness of such Person, whether outstanding on the Issue Date or thereafter incurred; and

(2) all other Obligations of such Person (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Person whether or not post-filing interest is allowed in such proceeding) in respect of Indebtedness described in clause (1) above

unless, in the case of clauses (1) and (2), in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such Indebtedness or other Obligations are subordinate in right of payment to the notes or the Guarantee of such Person, as the case may be; provided, however, that Pari Passu Indebtedness shall not include:

(A) any obligation of such Person to Telesat Holdings or any Subsidiary;

(B) any liability for Federal, state, local or other taxes owed or owing by such Person;

(D) any Indebtedness or other Obligation of such Person which is subordinate or junior in any respect to any other Indebtedness or other Obligation of such Person.

“Permitted Asset Swap” means the concurrent purchase and sale or exchange of Related Business Assets or a combination of Related Business Assets and cash or Cash Equivalents between Telesat Holdings or any of its Restricted Subsidiaries and another Person.

“Permitted Business” means the business engaged in by Telesat Holdings and its Subsidiaries on the Issue Date and businesses that are reasonably related thereto or reasonable extensions thereof.

“Permitted Debt” has the meaning set forth under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock.”

“Permitted Holders” means (i) each of Loral Space & Communications Inc., the Public Sector Pension Investment Board, a Canadian Federal Special Act corporation, and MHR Fund Management LLC and their respective Affiliates (other than portfolio companies of any of the same) and members of management of Telesat Holdings who are shareholders of Telesat Holdings on the Issue Date and (ii) any Specified FSS Operator; provided, that a Rating Decline shall not have occurred in connection with the transaction (including any incurrence of indebtedness used to finance the acquisition thereof) involving such Specified FSS Operator that would have resulted in a Change of Control (but for this clause (ii)) and provided, further, that the notice referred to in the definition of Rating Decline has been given to each of the Rating Agencies.

“Permitted Investments” means

(a) any Investment in (x) Telesat Holdings or any Guarantor or (y) in a Restricted Subsidiary that is not a Guarantor, in the case of this clause (y) in an aggregate amount since the Acquisition Closing Date not to exceed the greater of US$175.0 million and 3.0% of Total Assets;

(b) any Investment in cash and Cash Equivalents;

(c) any Investment by Telesat Holdings or any Restricted Subsidiary of Telesat Holdings in a Person that is engaged in a Similar Business if as a result of such Investment

(1) such Person becomes a Restricted Subsidiary or

(2) such Person, in one transaction or a series of related transactions, is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, Telesat Holdings or a Restricted Subsidiary;

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(d) any Investment in securities or other assets not constituting cash or Cash Equivalents and received in connection with an Asset Sale made pursuant to the provisions of “— Repurchase at the Option of Holders — Asset Sales” or any other disposition of assets not constituting an Asset Sale;

(e) any Investment existing on the Issue Date;

(f) any Investment acquired by Telesat Holdings or any Restricted Subsidiary

(1) in exchange for any other Investment or accounts receivable held by Telesat Holdings or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of Telesat Holdings or such Restricted Subsidiary of such other Investment or accounts receivable or

(2) as a result of a foreclosure by Telesat Holdings or any Restricted Subsidiary with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(g) Hedging Obligations permitted under clause (j) of the covenant described in “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” covenant;

(h) Investments the payment for which consists of Equity Interests of Telesat Holdings, or any of its direct or indirect parent companies (exclusive of Disqualified Stock); provided, however, that such Equity Interests will not increase the amount available for Restricted Payments under the calculation set forth in the definition of the term “Cumulative Credit”;

(i) guarantees of Indebtedness permitted under the covenant described in “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”;

(j) any transaction to the extent it constitutes an investment that is permitted and made in accordance with the provisions of the second paragraph of the covenant described under “— Certain Covenants — Transactions with Affiliates” (except transactions described in clauses (2) and (4) of such paragraph);

(k) Investments consisting of purchases and acquisitions of inventory, supplies, material or equipment;

(l) if no Default or Event of Default has occurred and is continuing, additional Investments having an aggregate fair market value, taken together with all other Investments made pursuant to this clause (l) (without giving effect to the sale of an Unrestricted Subsidiary to the extent the proceeds of such sale do not consist of cash or marketable securities), not to exceed since the Acquisition Closing Date the greater of US$125.0 million and 2.50% of Total Assets (with the fair market value of each Investment being measured at the time made and without giving effect to subsequent changes in value);

(m) advances to employees not in excess of US$10.0 million outstanding at any one time, in the aggregate;

(n) loans and advances to officers, directors and employees for business-related travel expenses, moving expenses and other similar expenses, in each case incurred in the ordinary course of business;

(o) amounts owed by XTAR for which Telesat Holdings or its Restricted Subsidiaries has agreed to defer receipt of payment in an aggregate amount since the Acquisition Closing Date not to exceed US$5.0 million; and

(p) Investments in Subsidiaries of Telesat Holdings in Hong Kong not to exceed since the Acquisition Closing Date US$275.0 million plus any Third Party Indemnity Payment in the aggregate at any time outstanding for the purpose of enabling such Subsidiaries to acquire, construct, launch and insure the replacement satellite to the satellite known as Telstar 10, to operate Telstar 10 and such replacement satellite and to pay taxes, provided that while such Investments are outstanding, such Subsidiaries shall not incur or permit to exist any Indebtedness other than the T10R Sale Leaseback and any Capitalized Lease Obligations relating to such replacement satellite.

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“Permitted Liens” means, with respect to any Person:

(1) pledges or deposits by such Person under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or U.S. government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case incurred in the ordinary course of business;

(2) Liens imposed by law, such as carriers’, warehousemen’s and mechanics’ Liens, in each case for sums not yet due or being contested in good faith by appropriate proceedings or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be proceeding with an appeal or other proceedings for review;

(3) Liens for taxes, assessments or other governmental charges not yet due or payable or which are being contested in good faith by appropriate proceedings;

(4) Liens in favor of issuers of performance and surety bonds or bid bonds or with respect to other regulatory requirements or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(5) minor survey exceptions, minor encumbrances, easements or reservations of, or rights of others for, licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning or other restrictions as to the use of real properties or Liens incidental, to the conduct of the business of such Person or to the ownership of its properties which were not incurred in connection with Indebtedness and which do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(6) Liens securing Indebtedness permitted to be incurred pursuant to clause (a), (d) or (m) of the definition of Permitted Debt; provided that in the case of such clause (d) or (m) such Liens shall not extend to any assets other than the specified asset being financed (and insurance proceeds related thereto) and additions and improvements thereon;

(7) Liens existing on the Issue Date;

(8) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, such Liens are not created or incurred in connection with, or in contemplation of, such other Person becoming such a subsidiary; provided, further, however, that such Liens may not extend to any other property owned by Telesat Holdings or any Restricted Subsidiary;

(9) Liens on property at the time Telesat Holdings or a Restricted Subsidiary acquired the property, including any acquisition by means of a merger, amalgamation or consolidation with or into Telesat Holdings or any Restricted Subsidiary; provided, however, that such Liens are not created or incurred in connection with, or in contemplation of, such acquisition; provided, further, however, that the Liens may not extend to any other property owned by Telesat Holdings or any Restricted Subsidiary;

(10) Liens placed upon the capital stock of any Restricted Subsidiary acquired in an acquisition or similar transaction permitted by the Indenture to secure Indebtedness incurred pursuant to clause (o)(y) of the definition of “Permitted Debt” and/or Liens placed upon the assets of any such Restricted Subsidiary so acquired to secure a guarantee by such Restricted Subsidiary of any such Indebtedness of Telesat Holdings or any other Restricted Subsidiary;

(11) Liens securing Indebtedness or other obligations of a Restricted Subsidiary owing to Telesat Holdings or another Restricted Subsidiary permitted to be incurred in accordance with the covenant described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”;

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(12) Liens securing Hedging Obligations (including Liens in favor of a counterparty to a swap or similar agreement on Telesat Holdings’ or any Restricted Subsidiary’s rights under such agreement) and Cash Management Services, in each case so long as the related Indebtedness is permitted to be incurred under the Indenture;

(13) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(14) leases and subleases of real property which do not materially interfere with the ordinary conduct of the business of Telesat Holdings or any of the Restricted Subsidiaries;

(15) Liens arising from Uniform Commercial Code or Personal Property Security Act financing statement filings regarding operating leases entered into by Telesat Holdings and its Restricted Subsidiaries in the ordinary course of business;

(16) Liens (including Liens in connection with Sale and Lease-Back Transactions) in favor of the Issuer or any Guarantor;

(17) Liens on equipment of Telesat Holdings or any Restricted Subsidiary granted in the ordinary course of business to a client of Telesat Holdings or a Restricted Subsidiary at which such equipment is located;

(18) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancing, refunding, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (6), (7), (8), (9), (10), (11), (12) and (16); provided, however, that (x) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property), and (y) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (A) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (6), (7), (8), (9), (10), (11), (12) and (16) at the time the original Lien became a Permitted Lien under the Indenture, and (B) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement;

(19) deposits made in the ordinary course of business to secure liability to insurance carriers;

(20) reservations, limitations, provisos and conditions expressed in any original grant from the Canadian Crown or other grants of real or immovable property, or interests therein;

(21) the right reserved to or vested in any governmental authority by the terms of any lease, license, franchise, grant or permit acquired by Telesat Holdings or any of its Restricted Subsidiaries or by any statutory provision to terminate any such lease, license, franchise, grant or permit, or to require annual or other payments as a condition to the continuance thereof;

(22) security given to a public utility or any governmental authority when required by such utility or authority in connection with the operations of Telesat Holdings or any of its Restricted Subsidiaries in the ordinary course of its business;

(23) subdivision agreements, site plan control agreements, development agreements, servicing agreements, cost sharing, reciprocal and other similar agreements with municipal and other governmental authorities affecting the development, servicing or use of a property, provided the same are complied with in all material respects;

(24) facility cost sharing, servicing, reciprocal or other similar agreements related to the use and/or operation of a property in the ordinary course of business, provided the same are complied with in all material respects;

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such Satellites or portions thereof are being constructed or acquired at the request of one or more customers to secure repayment of such deposits and related amounts;

(26) restrictions in condosat agreements relating to transponders that restrict sales, dispositions, leases or security interests on satellites to any third party purchaser, lessee or secured party unless such purchaser or lessee of such satellite agrees to (or, in the case of a security interest in such satellite, the secured party agrees pursuant to a non-disturbance agreement that in connection with the enforcement of any such security interest or the realization upon any such security interest, such secured party agrees that, prior to or concurrently with the transfer becoming effective, the person to whom the satellite bus shall be transferred shall agree that such transferee shall) be subject to the terms of the applicable condosat agreement and provided that Telesat Holdings and/or the applicable Restricted Subsidiaries shall have used their commercially reasonable efforts in negotiating such condosat agreements so that such agreements do not contain such restrictions;

(27) deemed trusts created by operation of law in respect of amounts which are (i) not yet due and payable, (ii) immaterial, (iii) being contested in good faith and by appropriate proceedings for which appropriate reserves have been established in accordance with GAAP or (iv) have not been paid due to inadvertence after exercising due diligence;

(28) Liens in respect of Sale and Lease-Back Transactions permitted by the “— Limitation on Sale and Lease-Back Transactions” covenant with respect to assets with a fair market value of not more than US$325.0 million in the aggregate; and

(29) other Liens so long as the aggregate principal amount of the obligations so secured does not exceed US$75.0 million at any one time outstanding.

For purposes of this definition, the term “Indebtedness” shall be deemed to include interest on such Indebtedness.

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Personal Property Security Act” means the Personal Property Security Act (Ontario) and any successor or replacement legislation thereto.

“Preferred Stock” means any Equity Interest with preferential rights of payment of dividends or upon liquidation, dissolution, or winding up.

“Qualified Proceeds” means assets that are used or useful in, or Capital Stock of any Person engaged in, a Similar Business; provided that the fair market value of any such assets or Capital Stock shall be determined by the Board of Directors of Telesat Holdings in good faith.

“Rating Agency” means Moody’s and S&P or if Moody’s or S&P or both shall not make a rating on the notes (or the applicable security) publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Issuer (in the case of the notes, as certified by a Board Resolution) which shall be substituted for Moody’s or S&P or both, as the case may be.

“Rating Decline” means the occurrence on any date from and after the date of the public notice by Telesat Holdings, the Issuer or another Person seeking to effect a transaction that would be a Change of Control (but for clause (ii) of the definition of Permitted Holders) or an arrangement that, in the good faith judgment of the Issuer, would be expected to result in a Change of Control (but for clause (ii) of the definition of Permitted Holders) until the end of the 30-day period following such public notice or the abandonment of the proposed transaction (which period shall be extended so long as the rating of the Notes is under publicly announced consideration for possible downgrade by any Rating Agency) of: (1) a decline in the rating of the notes by any Rating Agency by at least one notch in the gradation of the rating scale (e.g., + or — for S&P or

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1, 2 and 3 for Moody’s) or of the credit outlook with respect thereto from such Rating Agency’s rating of the Notes; or (2) withdrawal by any Rating Agency of such Rating Agency’s rating of the Notes.

“Registration Rights Agreement” means (i) the Registration Rights Agreement related to the notes, dated as of June 30, 2008, among the Co-Issuers, the Guarantors and the Initial Purchasers and (ii) any other registration rights agreement entered into in connection with the issuance of Additional Notes in a private offering by the Co-Issuers after the Issue Date.

“Related Business Assets” means assets (other than cash or Cash Equivalents) used or useful in a Similar Business, provided that any assets received by Telesat Holdings or a Restricted Subsidiary in exchange for assets transferred by Telesat Holdings or a Restricted Subsidiary shall not be deemed to be Related Business Assets if they consist of securities of a Person, unless upon receipt of the securities of such Person, such Person would become a Restricted Subsidiary.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Subsidiary” means, at any time, any direct or indirect Subsidiary of Telesat Holdings (including any Foreign Subsidiary) that is not then an Unrestricted Subsidiary; provided, however, that upon the occurrence of an Unrestricted Subsidiary ceasing to be an Unrestricted Subsidiary, such Subsidiary shall be included in the definition of “Restricted Subsidiary.”

“S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc., and any successor to its rating agency business.

“Sale and Lease-Back Transaction” means any arrangement with any Person providing for the leasing by Telesat Holdings or any Restricted Subsidiary of any real or tangible personal property, which property has been or is to be sold or transferred by Telesat Holdings or such Restricted Subsidiary to such Person in contemplation of such leasing.

“Satellite” means any satellite owned by, leased to or for which a contract to purchase has been entered into by, Telesat Holdings or any of its Subsidiaries, whether such satellite is in the process of manufacture, has been delivered for launch or is in orbit (whether or not in operational service).

“Satellite Construction and Acquisition” means the construction, acquisition and installation with respect to up to four new Satellites since the Acquisition Closing Date (including replacements of existing Satellites), which, without limitation, may include Satellites acquired pursuant to “condosat” transactions.

“Satellite Manufacturer” means, with respect to any Satellite, the prime contractor and manufacturer of such Satellite.

“Satellite Purchase Agreement” means, with respect to any Satellite, the agreement between the applicable Satellite Purchaser and either (i) the applicable Satellite Manufacturer relating to the manufacture, testing and delivery of such Satellite or (ii) the applicable seller relating to the purchase and sale of such Satellite.

“Satellite Purchaser” means Telesat Holdings or Restricted Subsidiary that is a party to a Satellite Purchase Agreement or Launch Services Agreement, as the case may be.

“Satmex 5” shall mean the BSS601 HP (Boeing Satellite Systems) known as Satmex 5 on which Telesat Holdings or its Restricted Subsidiaries have a right to use transponders.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933 and the rules and regulations of the SEC promulgated thereunder.

“Senior Credit Facilities” means the Credit Agreement, dated as of the Acquisition Closing Date, by and among Telesat Holdings, the Restricted Subsidiaries, the lenders party thereto in their capacities as lenders thereunder, Morgan Stanley Senior Funding, Inc., as Administrative Agent, UBS Securities LLC, as Syndication Agent, JPMorgan Chase Bank, N.A., The Bank of Nova Scotia and Citibank, N.A., Canadian Branch, as

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Co-Documentation Agents, and the other arrangers and agents set forth therein, including any guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” above).

“Senior Subordinated Bridge Loan Agreement” means that Senior Subordinated Bridge Loan Agreement, dated as of the Acquisition Closing Date, among Telesat Holdings, the Issuer, the guarantors named therein, the lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as administrative agent, UBS Securities LLC, as syndication agent, the other agents and arrangers party thereto, including the guarantees, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements thereof.

“Senior Subordinated Indenture” means the indenture dated as of the Issue Date as described in this offering memorandum under “Description of the Senior Subordinated Notes,” and any amendments or supplements thereto.

“Senior Subordinated Notes” means the senior subordinated notes issued on the Issue Date under the Senior Subordinated Indenture.

“Significant Subsidiary” means 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 date hereof.

“Similar Business” means any business conducted or proposed to be conducted by Telesat Holdings and its Restricted Subsidiaries on the Issue Date or any business that is similar, reasonably related, incidental or ancillary thereto.

“Skynet” means Loral Skynet Corporation, a Delaware corporation.

“Skynet Contribution Documents” shall mean the Asset Transfer Agreement, Asset Purchase Agreement and the Ancillary Agreement, collectively.

“Special Interest” means additional interest or other similar liquidated damages (however designated) due under a Registration Rights Agreement.

“Specified FSS Operators” means each of Intelsat, Ltd., SES Global and Eutelsat Communications and any successor entities to all or substantially all of such business of each of the foregoing.

“SSL” means Space Systems/Loral, Inc., a Delaware corporation, and any of its successors.

“Subordinated Indebtedness” means

(a) with respect to any Co-Issuer, any Indebtedness of such Co-Issuer which is by its terms subordinated in right of payment to the notes, and

(b) with respect to any Guarantor, any Indebtedness of such Guarantor which is by its terms subordinated in right of payment to the guarantee of such Guarantor.

“Subsidiary” means, with respect to any Person,

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managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof and

(2) any partnership, joint venture, limited liability company or similar entity of which (x) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof whether in the form of membership, general, special or limited partnership or otherwise, and (y) such Person or any Restricted Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

“Tax” shall mean any tax, duty, levy, impost, assessment or other governmental charge (including penalties, interest and any other liabilities related thereto).

“Taxing Authority” shall mean any government or political subdivision or territory or possession of any government or any authority or agency therein or thereof having power to tax.

“Telesat Anik F1” shall mean the BSS702 (Boeing) Satellite with an expected end of commercial service life of 2013.

“Telesat Headquarters Sale” means the sale by Telesat Holdings or a Restricted Subsidiary, and the lease by Telesat Holdings or a Restricted Subsidiary, each on terms that are fair to Telesat Holdings and its Restricted Subsidiaries, of the corporate headquarters building of the Issuer located at 1601 Telesat Court, Gloucester, Ontario K1B 5P4.

“The Access Centre LLC” means The Access Centre LLC, a limited liability company organized under the laws of Florida, and its successors.

“The SpaceConnection, Inc.” means The SpaceConnection, Inc., a Nevada corporation, and its successors.

“Third Party Indemnity Payment” means indemnity payments to Telesat Holdings or any of its Restricted Subsidiaries by third parties in relation to taxes of Subsidiaries of Telesat Holdings in Hong Kong.

“Third Party Launch Liability Insurance” means insurance for legal liability for property loss or damage and bodily injury caused by any Satellite or the launch vehicle used to launch such Satellite and procured by the Launch Services Provider with respect to such Satellite in accordance with the terms of the related Launch Services Agreement.

“Total Assets” means the total assets of Telesat Holdings and the Restricted Subsidiaries, as shown on the most recent balance sheet of Telesat Holdings and its Restricted Subsidiaries provided to the Trustee and Holders.

“Transaction Documents” means the Acquisition Documents and the Skynet Contribution Documents.

“Transaction Expenses” means any fees and expenses incurred or paid by Telesat Holdings or its Subsidiaries in connection with the Transactions (it being understood that the “true-up payments” contemplated by the Ancillary Agreement are not included in such amounts).

“Transactions” means the transactions contemplated by the Transaction Documents and the financing transactions in connection therewith as described in this offering memorandum under the heading “The Transactions.”

“Treasury Rate” means, as of any redemption date, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to the redemption date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to the First Call Date; provided, however, that if the period from the redemption date to the First Call Date, is less than one

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year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used.

“Trustee” means The Bank of New York Mellon until a successor replaces it and, thereafter, means the successor.

“T10R Sale Leaseback” shall mean a Sale and Lease-back Transaction relating to the replacement satellite to Telstar 10 pursuant to Sections 9.9 and 9.10 of that certain Lease Agreement, dated August 18, 1999, by and between LAPS(HK) and APT Satellite Company Limited as described in this offering memorandum under “Our Business — In-Orbit Satellites — In-Orbit Owned Satellites — Telstar 10.”

“U.S. Term Loan II Facility” means the US$150 million Delayed Draw Senior Secured Term Loan B Facility portion of the Senior Credit Facilities.

“Unrestricted Subsidiary” means

(1) any Subsidiary of Telesat Holdings (other than any Co-Issuer and Intermediate Holdco) which at the time of determination is an Unrestricted Subsidiary (as designated by the Board of Directors of Telesat Holdings, as provided below) and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of Telesat Holdings may designate any Subsidiary of Telesat Holdings (including any existing Subsidiary and any newly acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns any Equity Interests or Indebtedness of, or owns or holds any Lien on, any property of, Telesat Holdings, the Issuer or any of their Subsidiaries (other than any Subsidiary of the Subsidiary to be so designated), provided that

(a) any Unrestricted Subsidiary must be an entity of which shares of the capital stock or other equity interests (including partnership interests) entitled to cast at least a majority of the votes that may be cast by all shares or equity interests having ordinary voting power for the election of directors or other governing body are owned, directly or indirectly, by Telesat Holdings,

(b) such designation complies with the covenants described under “— Certain Covenants — Limitation on Restricted Payments” and

(1) the Subsidiary to be so designated and

(2) its Subsidiaries

has not at the time of designation, and does not thereafter, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable with respect to any Indebtedness pursuant to which the lender has recourse to any of the assets of Telesat Holdings or any Restricted Subsidiary.

The Board of Directors of Telesat Holdings may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided that (1) immediately after giving effect to such designation no Default or Event of Default shall have occurred and be continuing and (2) Telesat Holdings could incur at least US$1.00 of additional Indebtedness pursuant to the Debt to Consolidated EBITDA Ratio test described in the first sentence under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”.

Any such designation by the Board of Directors of Telesat Holdings shall be notified by the Issuer to the Trustee by promptly filing with the Trustee a copy of the Board Resolution giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the foregoing provisions.

Telesat Holdings shall be deemed to have designated, in compliance with this definition, The Access Centre LLC and The SpaceConnection, Inc. as Unrestricted Subsidiaries as of the Issue Date.

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to Telesat Holdings, the term “Voting Stock” shall not include preferred shares of Telesat Holdings which have a nominal dividend and return of capital and vote only for the election of directors, for so long as such shares are held and voted by directors nominated by a committee consisting of Continuing Directors or by Public Sector Pension Investment Board or by Loral Space & Communications Inc.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness, Disqualified Stock or preferred stock, as the case may be, at any date, the quotient obtained by dividing

(1) the sum of the products of the number of years from the date of determination to the date of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Disqualified Stock or preferred stock multiplied by the amount of such payment, by

(2) the sum of all such payments.

“Wholly-Owned Restricted Subsidiary” means a Restricted Subsidiary that is a direct or indirect Wholly-Owned Subsidiary of Telesat Holdings.

“Wholly-Owned Subsidiary” of any Person means a Subsidiary of such Person, 100% of the outstanding Capital Stock or other ownership interests of which (other than directors’ qualifying shares) shall at the time be owned by such Person or by one or more Wholly-Owned Subsidiaries of such Person.

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DESCRIPTION OF THE SENIOR SUBORDINATED NOTES

General

The outstanding senior subordinated notes were and the senior subordinated exchange notes will be (collectively, the “notes” or the “senior subordinated notes”) issued under an indenture (the “Indenture”), dated as of June 30, 2008, among Telesat Holdings Inc. (“Telesat Holdings”), Telesat Interco Inc. (“Intermediate Holdco”), Telesat Canada (the “Issuer”), Telesat LLC , a Delaware limited liability company and a Wholly-Owned Subsidiary of the Issuer (the “Co-Issuer”), and certain of Telesat Holdings’ direct and indirect Subsidiaries, as Guarantors, and The Bank of New York Mellon, as trustee (the “Trustee”).

The definitions of certain terms used in the following description are set forth below under “ — Certain Definitions.” For purposes of this “Description of the Senior Subordinated Notes”


	•	the terms “Issuer,” “we” and “our” refer only to Telesat Canada, and not to any of its Subsidiaries or parent companies,

	•	the term “Co-Issuers” refers only to the Issuer and the Co-Issuer, collectively, and not any of their respective Subsidiaries or parent companies,

	•	the term “Guarantor” refers to Telesat Holdings, Intermediate Holdco and each Restricted Subsidiary that Guarantees the notes on the Issue Date and each other Restricted Subsidiary that the Issuer shall otherwise cause to become a Guarantor pursuant to the terms of the Indenture, and

	•	references to “US$” are to U.S. dollars and references to “$” and “CAD” are to Canadian dollars.

The terms of the notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act.

Brief Description of the Notes

The notes:


	•	are unsecured obligations of the Co-Issuers ranking subordinate in right of payment to all existing and future Senior Indebtedness of the Co-Issuers and pari passu in right of payment to all existing and future Senior Subordinated Indebtedness of the Co-Issuers;

	•	are senior in right of payment to any future Subordinated Indebtedness of the Co-Issuers; and

	•	are guaranteed by each Guarantor.

Guarantees

The Guarantors, as primary obligors and not merely as sureties, will jointly and severally irrevocably and unconditionally guarantee, on a senior subordinated basis, the performance and full and punctual payment when due, whether at maturity, by acceleration or otherwise, of all obligations of the Co-Issuers under the Indenture and the notes, whether for payment of principal of or interest on or Special Interest in respect of the notes, expenses, indemnification or otherwise, on the terms set forth in the Indenture. Each of the Guarantees will be general unsecured obligations of the relevant Guarantors and will rank subordinate in right of payment with all existing and future Guarantor Senior Indebtedness and pari passu in right of payment to all existing and future Guarantor Senior Subordinated Indebtedness and senior in right of payment to all existing and future Subordinated Indebtedness of such Guarantor. The notes are also effectively subordinated to any secured Indebtedness of the Guarantors to the extent of such security and are structurally subordinated to Indebtedness of Subsidiaries of the Co-Issuers who do not Guarantee the notes.

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Due to certain regulatory and other local law considerations, our Hong Kong Subsidiary, Telesat Asia Pacific Satellite (HK) Limited (“TAPS”), is currently not a guarantor under our Senior Credit Facilities and will not be required to guarantee the notes on the Issue Date, but we will, subject to the provisions of the Senior Credit Facilities, be required under the Senior Credit Facilities to use commercially reasonable efforts to cause TAPS to become a guarantor thereunder. However, we cannot assure you that we will be successful in causing TAPS to become a guarantor under the Senior Credit Facilities and therefore we cannot assure you that it will become a Guarantor of the notes. For the three months ended March 31, 2009, TAPS had revenues of approximately $9.2 million and at that date, it had had total assets of approximately $111.0 million and $4.0 million of liabilities (excluding trade payables).

In addition, as of the Issue Date, all of Telesat Holdings’ Subsidiaries will be Restricted Subsidiaries, other than The Access Centre LLC and The SpaceConnection, Inc., which will be Unrestricted Subsidiaries as of the Issue Date and will not guarantee the notes or our Senior Credit Facilities. As of March 31, 2009, The Access Centre LLC had assets of less than US$11,000, revenue of less than US$48,000 and liabilities of less than US$31,000, and The SpaceConnection, Inc. had assets of less than US$20 million, revenue of less than US$7 million and liabilities of less than US$31 million. Furthermore, we have other non-Material Subsidiaries that as of March 31, 2009 had de minimis assets, revenue and liabilities and will not guarantee the notes or our Senior Secured Credit Facilities.

If a Guarantee were rendered voidable, it could be subordinated by a court to all other indebtedness (including guarantees and other contingent liabilities) (and further subordinated to Guarantor Senior Indebtedness) of the applicable Guarantor, and, depending on the amount of such indebtedness, a Guarantor’s liability on its Guarantee could be reduced to zero. See “Risk Factors — Risks Related to the Notes”.

Any Guarantee by a Restricted Subsidiary of the notes shall provide by its terms that it shall be automatically and unconditionally released and discharged upon:

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(ii) the delivery by such Guarantor to the Trustee of an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the release and discharge of the Guarantee have been complied with.

Bankruptcy Limitations Relating to Telesat Canada and Other Regulatory Matters

Under the Telesat Canada Reorganization and Divestiture Act, or the Telesat Divestiture Act, Telesat Canada, as a corporate entity, is subject to certain special conditions and restrictions. The Telesat Divestiture Act provides that no legislation relating to the solvency or winding-up of a corporation applies to Telesat Canada and in no case shall the affairs of Telesat Canada be wound up unless authorized by an Act of the Parliament of Canada. As a result of such legislative provisions, Telesat Canada and its creditors, including holders of the notes and secured creditors under the Senior Credit Facilities, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws in respect of claims against Telesat Canada, including the imposition of a stay of proceedings, or a regulated and orderly process to settle or compromise claims and make distributions to creditors, or recourse to fraudulent conveyance laws. The effect of the Telesat Divestiture Act upon an insolvency of Telesat Canada has not been considered by a Canadian court and, accordingly, the application of Canadian federal bankruptcy and insolvency laws and provincial receivership and assignment and preference laws, and the exercise by a Canadian court of any judicial discretion which could affect the enforcement of rights and remedies or other equitable relief against Telesat Canada in the context of an insolvency, is uncertain. To the extent bankruptcy and insolvency laws do not apply to Telesat Canada, its creditors may individually seek to pursue any available rights or remedies, as secured or unsecured creditors as the case may be, against Telesat Canada and its assets. The assets of Telesat Canada only (including its shares in its subsidiaries) are subject to the Telesat Divestiture Act but the assets of the Guarantors, including the subsidiary Guarantors, are not. In addition, to date, Industry Canada and the CRTC have taken the position that we are subject to certain Canadian foreign ownership and control restrictions which are set out in the Telecommunications Act, the Radiocommunication Act and the regulations under each, and in Industry Canada policies. These limitations on ownership may have a material impact on the sale of Telesat Canada or its assets in any bankruptcy or reorganization scenario. See “Risk Factors — Risks Related to the Notes — Because of the Telesat Canada Reorganization and Divestiture Act, a Canadian act uniquely applicable to Telesat Canada, (but not to the guarantors, other subsidiaries or the Co-Issuer), Telesat Canada may not have access to the usual protections from creditors and other rights available to insolvent persons, and creditors, including holders of the notes, may not have recourse to the usual rights, remedies and protections under applicable bankruptcy and insolvency laws generally available to creditors of insolvent persons.” The rights of Holders may further be limited by the provisions of the Indenture described under “— Regulatory Matters” below.

Subordination

The Indenture provides that the payment of principal of, premium, if any and interest on, and other amounts with respect to the notes will be subordinated in right of payment to the prior payment in full in cash or cash equivalents of all Senior Obligations, including all Senior Obligations with respect to the Senior Credit Facilities and the Senior Notes, whether outstanding on the Issue Date or incurred after that date. Nothing in this section shall apply in respect of the fees, expenses or indemnities owed to the Trustee, in its capacity as Trustee under the Indenture.

The holders of Senior Indebtedness will be entitled to receive payment in full in cash or cash equivalents of all Senior Obligations before the Holders of notes will be entitled to receive any payment or distribution of

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any kind or character with respect to any Obligations on or relating to the notes (other than in Permitted Junior Securities) in the event of any distribution to creditors of any Co-Issuer:


	•	in a total or partial liquidation, dissolution or winding up of such Co-Issuer,

	•	in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to such Co-Issuer or its assets,

	•	in an assignment for the benefit of creditors, or

	•	in any marshalling of such Co-Issuer’s assets and liabilities.

In addition, no Co-Issuer may make any payment or distribution of any kind or character with respect to any Obligations on or relating to the notes or acquire any notes for cash or assets or otherwise (other than, in either case, in Permitted Junior Securities), if:


	•	a payment default on any Senior Indebtedness occurs and is continuing, or

	•	any other default occurs and is continuing on any Designated Senior Indebtedness that permits holders of such Designated Senior Indebtedness to accelerate its maturity and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Representative of such Designated Senior Indebtedness.

Payments on and distributions with respect to any Obligations on or with respect to the notes may and shall be resumed:


	•	in the case of a payment default, upon the date on which all payment defaults are cured or waived, and

	•	in case of a nonpayment default, the earliest of (1) the date on which all such nonpayment defaults are cured or waived, (2) 179 days after the date on which the applicable Payment Blockage Notice is received or (3) the date on which the Trustee receives notice from the Representative for such Designated Senior Indebtedness rescinding the Payment Blockage Notice, unless the maturity of any Designated Senior Indebtedness has been accelerated.

Notwithstanding anything in the subordination provisions of the Indenture or the notes to the contrary, there shall be a period of at least 181 consecutive days in each 360-day period when no Payment Blockage Notice is in effect.

No nonpayment default that existed or was continuing on the date of delivery of any Payment Blockage Notice to the Trustee shall be, or be made, the basis for a subsequent Payment Blockage Notice unless such default shall have been cured or waived for a period of not less than 90 consecutive days. Any subsequent action or any breach of any financial covenants for a period ending after the date of delivery of the initial Payment Blockage Notice that in either case would give rise to a default pursuant to any provisions under which a default previously existed or was continuing will constitute a new default for this purpose.

Notwithstanding anything to the contrary, payments and distributions made with respect to notes from the trust established pursuant to the provisions described under “Legal Defeasance and Covenant Defeasance” or “Satisfaction and Discharge” will be permitted and will not be subordinated so long as the payments into the trust were made in accordance with the requirements described under “Legal Defeasance and Covenant Defeasance” or “Satisfaction and Discharge” and did not violate the subordination provisions when they were made.

The Issuer must promptly notify the Representative of the Designated Senior Indebtedness if payment of the notes is accelerated because of an Event of Default.

The Issuer shall give prompt written notice to the Trustee of any fact known to the Issuer which would prohibit the making of any payment to or by the Trustee in respect of the notes pursuant to the subordination provisions of the Indenture, although any delay or failure to give any such notice shall have no effect on the subordination provisions contained herein. Regardless of anything to the contrary contained in the Indenture, the Trustee shall not be charged with knowledge of the existence of any default or event of default with respect to any Senior Indebtedness or of any other facts which would prohibit the making of any payment to

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or by the Trustee unless and until the Trustee shall have received notice in writing from the Issuer, or from a holder of Senior Indebtedness or a Representative therefor, at least two Business Days prior to the date upon which by the terms of the Indenture such payment would become payable and, prior to the receipt of any such written notice, the Trustee shall be entitled to assume (in the absence of actual knowledge to the contrary) that no such facts exist. The Trustee shall be entitled to rely on the delivery to it of any notice pursuant to this paragraph to establish that such notice has been given by a holder of Senior Indebtedness (or a trustee thereof).

As a result of the subordination provisions described above in the event of a bankruptcy, liquidation or reorganization of any Co-Issuer, Holders of notes may recover less ratably than creditors of such Co-Issuer who are holders of Senior Indebtedness (including holders of Senior Notes, creditors under our Senior Credit Facilities and our trade creditors).

The indebtedness evidenced by the notes and the Guarantees will be unsecured and will rank subordinate in right of payment to all existing and future unsecured Guarantor Senior Indebtedness to the same extent as the notes rank subordinate in right of payment to the Senior Indebtedness of the Co-Issuers.

At March 31, 2009, we had aggregate outstanding Senior Indebtedness and Guarantor Senior Indebtedness of US$2,646 million (excluding capital lease obligations of US$31 million) assuming an exchange rate of US$1.00/$1.2602 (total secured and senior debt by currency consisting of $193 million (excluding capitalized lease obligations of $39 million) and US$2,493 million (including US$1,041 million converted to $1,209 million on October 31, 2007 as part of an amortizing basis swap at US$1.00/$1.1615; $1,209 million was the equivalent of US$959 million as at March 31, 2009)) and $153 million of unused available revolving capacity under our Senior Credit Facilities (not giving effect to outstanding letters of credit).

Principal, Maturity and Interest

The Co-Issuers issued US$217,175,000 of outstanding senior subordinated notes in the private placement and will issue up to US$217,175,000 of senior subordinated exchange notes in the exchange offer. The senior subordinated notes will mature on November 1, 2017. The Co-Issuers may issue additional notes from time to time after this offering under the Indenture (“Additional Notes”). Any offering of Additional Notes is subject to the covenant described below under the caption “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock.” The notes and any Additional Notes subsequently issued under the Indenture will be treated as a single class for all purposes under the Indenture, including waivers, amendments, redemptions and offers to purchase. Unless the context requires otherwise, references to “notes” or “senior subordinated notes” for all purposes of the Indenture and this “Description of the Senior Subordinated Notes” include any Additional Notes that are actually issued.

Interest on the senior subordinated notes will accrue at the rate of 12.5% per annum and will be payable semi-annually in arrears on May 1 and November 1, commencing on November 1, 2008, to Holders of record on the immediately preceding April 15 and October 15. Interest on the notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance of the notes. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

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Additional Amounts

(1) but for the existence of any present or former connection between the Holder (or the beneficial owner of, or person ultimately entitled to obtain an interest in, such notes) and the Relevant Taxing Jurisdiction (including being a citizen or resident or national of, or carrying on a business or maintaining a permanent establishment in, or being physically present in, the Relevant Taxing Jurisdiction) other than the mere acquisition, ownership, holding or disposition of the notes or enforcement of rights thereunder or the receipt of payments in respect thereof;

(3) if the presentation of notes (where presentation is required) for payment had occurred within 30 days after the date such payment was due and payable or was duly provided for, whichever is later, but only to the extent such Additional Amounts would not have been required had the note been presented on the last day of the applicable 30 day period;

(4) but for the fact that the Holder does not deal at arm’s length (within the meaning of the Income Tax Act (Canada)) with the Issuer, the Co-Issuer or a Guarantor; or

(5) but for any combination of the items listed above.

Whenever in the Indenture or in this “Description of the Senior Subordinated Notes” there is mentioned, in any context, the payment of amounts based upon the principal amount of the notes or of principal, interest or of any other amount payable under or with respect to any of the notes, such mention shall be deemed to

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include mention of the payment of Additional Amounts to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

Upon request, the Issuer will provide the Trustee with documentation evidencing the payment of the Taxes giving rise to the Additional Amounts.

The obligation to pay Additional Amounts and Documentary Taxes under the terms and conditions described above will survive any termination, defeasance or discharge of the Indenture.

Redemption; Offers to Repurchase; Open Market Purchases

We are not required to make any mandatory redemption or sinking fund payments with respect to the notes. However, under certain circumstances, we may be required to offer to purchase notes as described under the caption “— Repurchase at the Option of Holders”. We may at any time and from time to time purchase notes in the open market or otherwise.

Redemption for Changes in Withholding Taxes

Prior to giving any notice of redemption of the notes pursuant to this section, the Issuer will deliver to the Trustee:

Optional Redemption

At any time prior to May 1, 2013, the Co-Issuers may redeem the notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice mailed by first-class mail, postage prepaid, with a copy to the Trustee, to each Holder of the notes to the address of such Holder appearing in the security register, at a redemption price equal to 100% of the principal amount of notes redeemed plus the Applicable Premium as of, and accrued and unpaid interest and Special Interest, if any, and Additional Amounts, if any, to the date of

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redemption (the “Redemption Date”), subject to the rights of Holders of notes on the relevant record date to receive interest due on the relevant interest payment date.

On and after May 1, 2013 (the “First Call Date”), the Co-Issuers may redeem the notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice by first-class mail, postage prepaid, with a copy to the Trustee, to each Holder of notes to the address of such Holder appearing in the security register, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest thereon and Special Interest, if any, and Additional Amounts, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, if redeemed during the twelve-month period beginning on May 1 of each of the years indicated below:


Year	Percentage

2013		106.25	%
2014		103.125	%
2015		101.563	%
2016 and thereafter		100.00	%

In addition, prior to May 1, 2011, the Co-Issuers may, at their option, redeem up to 35% of the aggregate principal amount of notes issued under the Indenture at a redemption price equal to 112.5% of the aggregate principal amount thereof, plus accrued and unpaid interest thereon and Special Interest, if any, and Additional Amounts, if any, to the applicable Redemption Date, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date, with the net cash proceeds of one or more Equity Offerings of Telesat Holdings or any direct or indirect parent of the Issuer to the extent such net cash proceeds are contributed to Telesat Holdings; provided that at least 65% of the sum of the aggregate principal amount of notes originally issued under the Indenture and any Additional Notes issued under the Indenture after the Issue Date remains outstanding immediately after the occurrence of each such redemption; provided further that each such redemption occurs within 90 days of the date of closing of each such Equity Offering.

The Trustee shall select the notes to be purchased in the manner described under “— Repurchase at the Option of Holders — Selection and Notice”.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, the Co-Issuers will make an offer to repurchase all of the notes pursuant to the offer described below (the “Change of Control Offer”) at a price in cash (the “Change of Control Payment”) equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest and Special Interest, if any, and Additional Amounts, if any, to the date of repurchase, subject to the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date. Within 60 days following any Change of Control, the Issuer will send notice of such Change of Control Offer by first class mail, with a copy to the Trustee, to each Holder of notes to the address of such Holder appearing in the security register, with the following information:

(2) the repurchase price and the repurchase date, which will be no earlier than 30 days nor later than 60 days from the date such notice is mailed (the “Change of Control Payment Date”);

(3) any note not properly tendered will remain outstanding and continue to accrue interest;

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On the Change of Control Payment Date, the Co-Issuers will, to the extent permitted by law,

(1) accept for payment all notes or portions thereof properly tendered pursuant to the Change of Control Offer,

(2) deposit with the Paying Agent an amount equal to the aggregate Change of Control Payment in respect of all notes or portions thereof so tendered and

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our ability to incur additional Indebtedness are contained in the covenants described under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”, “— Certain Covenants — Limitation on Liens” and “— Certain Covenants — Limitation on Sale and Lease-Back Transactions.” Such restrictions can only be waived with the consent of the holders of a majority in principal amount of the notes then outstanding. Except for the limitations contained in such covenants, however, the Indenture does not contain any covenants or provisions that may afford holders of the notes protection in the event of a highly leveraged transaction.

Asset Sales

The Indenture provides that Telesat Holdings will not, and will not permit any Restricted Subsidiary to, cause, make or suffer to exist an Asset Sale, unless

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shall be deemed to be Cash Equivalents for purposes of this provision and for no other purpose.

Within 425 days after Telesat Holdings’ or any Restricted Subsidiary’s receipt of the Net Proceeds of any Asset Sale (or Event of Loss Proceeds) (such 425-day period, the “Reinvestment Period”), Telesat Holdings or such Restricted Subsidiary, at its option, may apply the Net Proceeds from such Asset Sale (together with any Event of Loss Proceeds required to be applied as provided in “— Certain Covenants — Maintenance of Insurance” below)

(1) to permanently reduce Obligations under the Senior Credit Facilities or any other Senior Indebtedness or Guarantor Senior Indebtedness (other than Disqualified Stock and other than Obligations owed to Telesat Holdings or a Restricted Subsidiary or Affiliate of Telesat Holdings) and to correspondingly reduce commitments with respect thereto,

provided that, in the case of clauses (2) and (3) above, a binding commitment entered into prior to the end of the Reinvestment Period shall be treated as a permitted application of the Net Proceeds (or Event of Loss Proceeds, as applicable) from the date of such commitment so long as Telesat Holdings or such Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Proceeds (or Event of Loss Proceeds, as applicable) will be applied to satisfy such commitment (an “Acceptable Commitment”) and, in the event any Acceptable Commitment is later canceled or terminated for any reason before such Net Proceeds (or Event of Loss Proceeds, as applicable) are so applied, Telesat Holdings or such Restricted Subsidiary enters into another Acceptable Commitment (a “Replacement Commitment”) within six months of such cancellation or termination; provided further that if any Replacement Commitment is later cancelled or terminated for any reason before such Net Proceeds (or Event of Loss Proceeds, as applicable) are applied, then such Net Proceeds shall constitute Excess Proceeds.

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Indenture. The Co-Issuers will commence an Asset Sale Offer with respect to Excess Proceeds within ten Business Days after the date that Excess Proceeds exceed US$25.0 million by mailing the notice required pursuant to the terms of the Indenture, with a copy to the Trustee.

The Co-Issuers will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent such laws or regulations are applicable in connection with the repurchase of the notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the Indenture, the Co-Issuers will comply with the applicable securities laws and regulations and shall not be deemed to have breached their obligations described in the Indenture by virtue thereof.

The Senior Credit Facilities prohibit (subject to limited exceptions), and future credit agreements or other agreements relating to Senior Indebtedness or Pari Passu Indebtedness to which any Co-Issuer becomes a party may prohibit, the Co-Issuers from purchasing any notes pursuant to this Asset Sales covenant. In the event such Co-Issuer is prohibited from purchasing the notes, such Co-Issuer could seek the consent of its lenders to the purchase of the notes or could attempt to refinance the borrowings that contain such prohibition. If such Co-Issuer does not obtain such consent or repay such borrowings, it will remain prohibited from purchasing the notes. In such case, the Issuer’s failure to purchase tendered notes would constitute an Event of Default under the Indenture.

Selection and Notice

Certain Covenants

Set forth below are summaries of certain covenants contained in the Indenture. During any period of time that: (i) the notes have Investment Grade Ratings from both Rating Agencies, and (ii) no Default or Event of

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Default has occurred and is continuing under the Indenture (the occurrence of the events described in the foregoing clauses (i) and (ii) being collectively referred to as a “Covenant Suspension Event”), Telesat Holdings and the Restricted Subsidiaries will not be subject to the following provisions of the Indenture:

(1) “Limitation on Restricted Payments;”

(2) “Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock;”

(3) “Transactions with Affiliates;”

(4) “Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”;

(5) “Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries;”

(6) clauses (b), (c) and (d) of the first paragraph of “Limitation on Sale and Lease-Back Transactions;”

(7) “Repurchase at the Option of Holders — Asset Sales;”

(8) clause (4) of the first paragraph of “Merger, Consolidation or Sale of All or Substantially All Assets;”

(9) “Maintenance of Insurance;” and

(10) “Conduct of Business”

(collectively, the “Suspended Covenants”). Upon the occurrence of a Covenant Suspension Event, the amount of Excess Proceeds from Net Proceeds (and Event of Loss Proceeds) shall be set at zero. In addition, the Guarantees of the Guarantors will also be suspended as of such date (the “Suspension Date”). In the event that Telesat Holdings and the Restricted Subsidiaries are not subject to the Suspended Covenants for any period of time as a result of the foregoing, and on any subsequent date (the “Reversion Date”) one or both of the Rating Agencies withdraws its Investment Grade Rating or downgrades the rating assigned to the notes below an Investment Grade Rating or a Default or Event of Default occurs and is continuing, then Telesat Holdings and the Restricted Subsidiaries will thereafter again be subject to the Suspended Covenants with respect to future events and the Guarantees will be reinstated. The period of time between the Suspension Date and the Reversion Date is referred to in this description as the “Suspension Period”. Notwithstanding that the Suspended Covenants may be reinstated, no Default or Event of Default will be deemed to have occurred as a result of a failure to comply with the Suspended Covenants during the Suspension Period (or upon termination of the Suspension Period or after that time based solely on events that occurred during the Suspension Period). For purposes of determining compliance with the “— Limitation on Liens” covenant and the “— Limitation on Sale and Lease-Back Transactions” covenant during the Suspension Period, it shall be assumed that the provisions of “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” are applicable during such period as if the applicable Covenant Suspension Event had not occurred.

There can be no assurance that the notes will ever achieve or maintain Investment Grade Ratings.

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Limitation on Restricted Payments

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

(4) make any Restricted Investment

(all such payments and other actions set forth in clauses (1) through (4) above being collectively referred to as “Restricted Payments”), unless, at the time of such Restricted Payment:

(a) no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

The foregoing provisions will not prohibit:

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Subsidiary which is incurred in compliance with “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” so long as

(A) the principal amount (or accreted value, in the case of Indebtedness issued at a discount) of such new Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Subordinated Indebtedness being so redeemed, repurchased, acquired, defeased, exchanged or retired for value, plus the amount of any reasonable fees, expenses and premium incurred or paid in connection with such redemption, repurchase, acquisition or retirement and the incurrence of such new Indebtedness,

(B) the cash proceeds of key man life insurance policies received by Telesat Holdings and its Restricted Subsidiaries after the Acquisition Closing Date; less

(C) the amount of any Restricted Payments previously made since the Acquisition Closing Date pursuant to clauses (A) and (B) of this clause (4);

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(7) Investments that are made with Excluded Contributions;

(10) the declaration and payment of dividends by Telesat Holdings to, or the making of loans to, any direct or indirect parent in amounts required for any direct or indirect parent companies to pay

(A) franchise taxes and other fees, taxes and expenses required to maintain their corporate or other legal existence, and

(11) Restricted Payments made to fund payments made in accordance with clause (7) or (12) of the second paragraph of the “— Transactions with Affiliates” covenant; and

(12) other Restricted Payments in an aggregate amount not to exceed US$100.0 million since the Acquisition Closing Date;

As of the Issue Date, all of Telesat Holdings’ Subsidiaries will be Restricted Subsidiaries, other than The Access Centre LLC and The SpaceConnection, Inc., which will be Unrestricted Subsidiaries as of the Issue Date. The Issuer will not permit any Unrestricted Subsidiary to become a Restricted Subsidiary except pursuant to the last sentence of the definition of “Unrestricted Subsidiary.” For purposes of designating any Restricted Subsidiary as an Unrestricted Subsidiary, all outstanding Investments by Telesat Holdings and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Restricted Payments in an amount determined as set forth in the last sentence of the definition of “Investment.” Such designation will be permitted only if a Restricted Payment in such amount would be permitted at such time, whether pursuant to the first paragraph of this covenant or under clauses (7) or (12), or pursuant to the definition of “Permitted Investments,” and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Indenture.

Unless otherwise permitted by the foregoing, Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly:

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(b) Telesat Holdings may pay cash dividends (including any accrued dividends) on the Holding PIK Preferred Stock in accordance with the term thereof as in effect on the Acquisition Closing Date, if for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of payment of such dividend, after giving pro forma effect to such dividend payment, Telesat Holdings would have a Debt to Consolidated EBITDA Ratio of less than 5.5 to 1.0 (provided that such amounts shall constitute Restricted Payments for purposes of the Restricted Payments Basket and shall reduce availability thereunder unless made pursuant to another basket or exclusion referred to in the second paragraph of this covenant above (it being understand that so long as such ratio is satisfied such cash dividend on the Holding PIK Preferred Stock may be made regardless of whether there is then availability under Restricted Payments Basket or any other basket or exclusion referred to in the second paragraph of this covenant above)); and

(ii) amend the terms of the Holding PIK Preferred Stock in a manner, when taken as a whole, materially adverse to the Holders of notes.

Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock

The foregoing limitations will not apply to (“Permitted Debt”):

(a) the incurrence of Indebtedness under Credit Facilities by Telesat Holdings or any of the Restricted Subsidiaries and the issuance and creation of letters of credit and bankers’ acceptances thereunder (with letters of credit and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof), up to an aggregate principal amount of US$2,550.0 million outstanding at any one time, less the aggregate of all principal prepayments made in respect of the Credit Facilities pursuant to clause (1) of the second paragraph under “— Repurchase at the Option of Holders — Asset Sales”; provided that the amount available under this clause (a) shall reduce on the date that is the twelve month anniversary of the Acquisition Closing Date by the amount, if any, of the US$150.0 million

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U.S. Term Loan II Facility which is undrawn as of such date (but only to the extent of such undrawn amount);

(b) (x) the incurrence by the Issuer and any Guarantor of Indebtedness represented by the notes (including any Guarantee) (other than any Additional Notes) and

(y) the incurrence by the Issuer and any Guarantor of Indebtedness represented by the Senior Notes (and the guarantees thereof under the Senior Indenture) in an aggregate principal amount, when taken together with Indebtedness outstanding under the Senior Bridge Loan Agreement, not to exceed US$692,825,000 at any time outstanding;

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(1) any such Indebtedness is made pursuant to an intercompany note and

(2) if a Guarantor incurs such Indebtedness to a Restricted Subsidiary that is not a Guarantor such Indebtedness is subordinated in right of payment to the Guarantee of such Guarantor; provided further that any subsequent transfer of any such Indebtedness (except to Telesat Holdings or another Restricted Subsidiary) shall be deemed, in each case to be an incurrence of such Indebtedness;

(j)(x) Hedging Obligations entered into for bona fide (non-speculative) business purposes, provided that to the extent such Hedging Obligations are in respect of interest rate or exchange rate risk with respect to any Indebtedness, such Hedging Obligations relate to payment obligations on Indebtedness permitted to be incurred pursuant to “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” and (y) Indebtedness in respect of Cash Management Services entered into in the ordinary course of business consistent with past practice;

(k) obligations in respect of performance, bid, appeal and surety bonds and completion guarantees provided by Telesat Holdings or any Restricted Subsidiary in the ordinary course of business, including guarantees or obligations of Telesat Holdings or any Restricted Subsidiary with respect to letters of credit supporting such performance, bid, appeal or surety obligations (in each case other than for an obligation for money borrowed);

(m) Indebtedness, Disqualified Stock and preferred stock incurred to finance Satellite Construction and Acquisition in an aggregate amount not to exceed US$600.0 million outstanding at any time;

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(3) shall not include

(x) Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that refinances Indebtedness, Disqualified Stock or preferred stock of the Issuer,

(y) Indebtedness, Disqualified Stock or preferred stock of a Subsidiary that is not a Guarantor that refinances Indebtedness, Disqualified Stock or preferred stock of a Guarantor or

(2) any guarantee by a Restricted Subsidiary of Indebtedness of the Issuer or any Guarantor, provided that such guarantee is incurred in accordance with the covenant described below under “— Limitation on Guarantees of Indebtedness by Restricted Subsidiaries”; and

(s) Mezzanine Securities issued pursuant to clause (12)(a) of the second paragraph of the “— Transactions with Affiliates” covenant, including pay-in-kind interest payments issued thereon, in each case in accordance with the terms of the Mezzanine Securities as in effect on the Acquisition Closing Date.

For purposes of determining compliance with this covenant:

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described in clauses (a) through (s) above or is entitled to be incurred pursuant to the first paragraph of this covenant, the Issuer, in its sole discretion, will classify or reclassify such item of Indebtedness, Disqualified Stock or preferred stock (or any portion thereof) and will only be required to include the amount and type of such Indebtedness, Disqualified Stock or preferred stock in one of the above clauses; provided, that all Indebtedness outstanding under the Senior Credit Facilities (and for such purposes assuming that the revolving portions of the Senior Credit Facilities and the U.S. Term Loan II Facility were fully drawn on the Issue Date) will be treated as incurred on the Issue Date under clause (a) of the preceding paragraph and the Issuer shall not be permitted to reclassify all or any portion of such Indebtedness outstanding on the Issue Date; and

(b) at the time of incurrence, the Issuer will be entitled to divide and classify an item of Indebtedness in more than one of the types of Indebtedness described above.

The Indenture provides that Telesat Holdings and the Restricted Subsidiaries will not, directly or indirectly, incur any Indebtedness that is or purports to be by its terms (or by the terms of any agreement governing such Indebtedness) senior in right of payment to the notes or the Guarantees and subordinated in right of payment to any other Indebtedness of Telesat Holdings or any Restricted Subsidiary. For purposes of the foregoing, no Indebtedness will be deemed to be subordinated in right of payment to any other Indebtedness of Telesat Holdings and/or a Restricted Subsidiary solely by virtue of being unsecured or secured by a junior priority lien or by virtue of the fact that the holders of such Indebtedness have entered into intercreditor agreements or other arrangements giving one or more of such holders priority over the other holders in the collateral held by them.

Limitation on Liens

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, incur, assume or suffer to exist any Lien (except Permitted Liens) that secures any Obligations under any Indebtedness of Telesat Holdings or a Restricted Subsidiary ranking pari passu or subordinate to the notes or any Guarantee against or on any asset or property now owned or hereafter acquired by Telesat Holdings or any such Restricted Subsidiary, or any income or profits therefrom, or assign or convey any right to receive income therefrom, unless:

(2) in all other cases, the notes or such Guarantee of such Guarantor are equally and ratably secured;

Merger, Consolidation or Sale of All or Substantially All Assets

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(3) immediately after such transaction no Default or Event of Default exists;

(3) immediately after such transaction no Default or Event of Default exists; and

The Successor Parent will succeed to, and be substituted for Telesat Holdings or Intermediate Holdco, as applicable, under the Indenture and the Guarantees.

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Notwithstanding the foregoing:

(a) any Restricted Subsidiary (other than the Issuer) may consolidate, amalgamate with, merge into or transfer all or part of its properties and assets to the Issuer or any Guarantor; and

(A) (1) (x) such Subsidiary Guarantor or the Co-Issuer, as applicable, is the surviving or continuing corporation or (y) the Person formed by or surviving any such consolidation, amalgamation or merger (if other than such Subsidiary Guarantor or the Co-Issuer, as applicable) or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made is a corporation organized or existing under the laws of Canada, any province or territory thereof (except that in the case of the Co-Issuer, such surviving Person shall be organized or existing under the laws of the United States, any state thereof, the District of Columbia, or any territory thereof), (such Subsidiary Guarantor or such Person, as the case may be, being herein called the “Successor Person”) (provided that, in the case of clause (y), if the Subsidiary Guarantor or Co-Issuer, as applicable that is not the Successor Person of such transaction (a “Non-Successor Person”) had, immediately prior to such transaction, been formed, organized or existing under the laws of a jurisdiction other than those referenced immediately above and/or existed in or was organized as a legal entity other than a corporation, then the Successor Person of such transaction may be formed, organized or existing under the laws of the same jurisdiction as such Non-Successor Person had then been and may be of the same corporate or other organizational type as such Non-Successor Person had then been);

(3) immediately after such transaction no Default or Event of Default exists; and

(B) in the case of a Subsidiary Guarantor, the transaction is made in compliance with the covenant described under “— Repurchase at the Option of Holders — Asset Sales.”

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Transactions with Affiliates

The foregoing provisions will not apply to the following:

(2)(x) Restricted Payments permitted by the provisions of the Indenture described above under the covenant “— Limitation on Restricted Payments” and (y) Permitted Investments;

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(9) the issuance of Equity Interests (other than Disqualified Stock) of Telesat Holdings to any Permitted Holder or to any director, officer, employee or consultant;

(12)(a) the annual fee of US$5.0 million to be paid to Loral Space & Communications Inc. pursuant to the Consulting Services Agreement as in effect on the Acquisition Closing Date, which fee shall (x) be payable in the form of Mezzanine Securities (provided that cash interest thereon shall only be payable if the provisions of clause (y) below are satisfied) or (y) if, for the most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date of payment of such amount, after giving pro forma effect thereto, Telesat Holdings and the Restricted Subsidiaries would have a Debt to Consolidated EBITDA Ratio of less than 5.0 to 1.0, be payable in cash or Cash Equivalents or Mezzanine Securities, (b) reimbursements for payments to non-affiliated third parties made by any Permitted Holders on behalf of Telesat Holdings and/or its Restricted Subsidiaries pursuant to the Consulting Services Agreement not to exceed US$1.0 million in the aggregate in any calendar year, and (c) payment for corporate and administrative services (such as accounting, financial, treasury and other similar services, of the type that would have had to have been preformed by Telesat Holdings or its Restricted Subsidiaries or contracted out to third parties) rendered under the Consulting Services Agreement as in effect on the Acquisition Closing Date not to exceed US$4.0 million per calendar year to the extent such payments are approved by the Independent Directors in accordance with the provisions of the Consulting Services Agreement as in effect on the Acquisition Closing Date.

Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries

(a) (1) pay dividends or make any other distributions to Telesat Holdings or any Restricted Subsidiary:


	•	on its Capital Stock or

	•	with respect to any other interest or participation in, or measured by, its profits or

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(2) pay any Indebtedness owed to Telesat Holdings or any Restricted Subsidiary;

(b) make loans or advances to Telesat Holdings or any Restricted Subsidiary; or

except (in each case) for such encumbrances or restrictions existing under or by reason of:

(1) contractual encumbrances or restrictions in effect on the Issue Date, including pursuant to the Senior Credit Facilities and related documentation and the Senior Indenture and the related documentation, in each case as in effect on the Issue Date;

(2) the Indenture and the notes;

(3) purchase money obligations for property acquired in the ordinary course of business that impose restrictions of the nature discussed in clause (c) above on the property so acquired;

(4) applicable law or any applicable rule, regulation or order;

(8) restrictions on cash or other deposits or net worth imposed by customers under contracts entered into in the ordinary course of business;

(9) customary provisions in joint venture agreements and other similar agreements;

(10) customary provisions contained in leases and other agreements entered into in the ordinary course of business; and

Limitation on Sale and Lease-Back Transactions

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, enter into any Sale and Lease-Back Transaction; provided that Telesat Holdings or any Restricted Subsidiary may enter into a Sale and Lease-Back Transaction if:

(a) Telesat Holdings or such Restricted Subsidiary could have:

(1) incurred any Indebtedness relating to such Sale and Lease-Back Transaction under “— Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock” above; and

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(2) incurred a Lien to secure such Indebtedness pursuant to “— Limitation on Liens” above without equally and ratably securing the notes pursuant to the provision described under such covenant;

(d) in the aggregate not more than US$325.0 million in fair market value of assets are subject to a Sale and Lease-Back Transaction at any one time;

Limitation on Guarantees of Indebtedness by Restricted Subsidiaries

(1) such Guarantee has been duly executed and authorized and

Maintenance of Insurance

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(b) Covered Satellites. Telesat Holdings will, and will cause each of its Restricted Subsidiaries to, maintain insurance with respect to Satellites as follows:

(i) All Risks Insurance. Telesat Holdings will procure or will cause each Satellite Manufacturer to procure at its own expense and maintain in full force and effect, at all times prior to the Launch of any satellite purchased by Telesat Holdings or any of its Restricted Subsidiaries pursuant to the terms of a Satellite Purchase Agreement, All Risks Insurance with such terms as are reasonably commercially available and customary in the industry with respect to such satellite, it being understood that if a Satellite Manufacturer procures All Risks Insurance for satellites in accordance with the requirements of the applicable Satellite Purchase Agreement, Telesat Holdings’ obligations under this clause (i) with respect to such satellites shall be satisfied. In no event shall Telesat Holdings be required to, or be required to cause any Satellite Manufacturer to, procure or maintain All Risks Insurance to insure risks that may be required to be insured by, or that covers the same risks or the same period of coverage as, Launch Insurance.

(ii) Launch Insurance. Telesat Holdings will, or will cause the relevant Satellite Manufacturer to, obtain, maintain and keep in full force and effect with respect to each Covered Satellite that is to be launched, Launch Insurance (it being understood that if a Satellite Manufacturer procures Launch Insurance for Covered Satellites in accordance with the terms of this clause (ii), Telesat Holdings’ obligations under this clause (ii) with respect to such Covered Satellites shall be satisfied), to be procured prior to the launch of such Covered Satellite, which insurance shall attach not later than at Launch and continue in full force and effect until no sooner than the completion of initial in-orbit testing, provided that Telesat Holdings shall have no obligation to obtain or maintain Launch Insurance for any satellite for which there is neither risk of loss to Telesat Holdings or its Restricted Subsidiaries nor an obligation by Telesat Holdings or its Restricted Subsidiaries to make any payments to the Satellite Manufacturer that exceed US$5.0 million in the aggregate prior to risk of loss passing to Telesat Holdings or its Restricted Subsidiaries. The Launch Insurance for each Covered Satellite:

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Holdings or any Restricted Subsidiary holding a non-controlling equity interest in such Person), only be required with respect to that portion of such Satellite that is owned by Telesat Holdings or any of its Restricted Subsidiaries or for which Telesat Holdings or any of its Restricted Subsidiaries otherwise retains the risk of loss.

(iii) In-Orbit Risk Management. Other than with respect to (A) Excluded Satellites and (B) the C-band payload of any Covered Satellite that is not a Named Satellite protected by In-Orbit Spare Capacity, Telesat Holdings will, and will cause its Restricted Subsidiaries to, obtain, maintain and keep in full force and effect, with respect to each Covered Satellite, In-Orbit Insurance with respect to each Covered Satellite.

(A) Attachment of In-Orbit Insurance. Any In-Orbit Insurance procured with respect to such Covered Satellite shall attach (A) upon the expiration of the Launch Insurance or any In-Orbit Insurance then in effect, as the case may be or (B) upon the withdrawal of the protection provided by In-Orbit Spare Capacity to such Covered Satellite, and in each such case shall continue in full force and effect until all obligations under the Indenture and in respect of the notes have been paid in full or until such Covered Satellite is again protected by In-Orbit Spare Capacity.

(B) Terms of In-Orbit Insurance. Any In-Orbit Insurance procured with respect to such Covered Satellite:

(3) shall name the applicable Satellite Purchaser as the named insured;

(4) shall provide that it will not be cancelled or reduced, amended or allowed to lapse without renewal, except after not less than 15 days’ prior notice to the Trustee; provided that if such policy notice provisions are not available on commercially reasonable terms such notice shall be provided to the Trustee by the Issuer not less than 15 days in advance, if such cancellation, reduction,

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amendment or lapse without renewal is initiated by the Issuer and otherwise at such time as the Issuer becomes aware of, or receives notice of any cancellation, reduction, amendment, or lapse without renewal; and

(v) Delivery of Insurance Policies. With respect to any scheduled launch of any Covered Satellite and, with respect to In-Orbit Insurance procured, not later than ten (10) Business Days after the date on which such insurance is required to be procured as provided in clause (ii) or clause (iii) above, as the case may be, the Issuer shall deliver to the Trustee the final agreed form of such policy together with certificates of insurance with respect thereto, confirming (A) that such insurance is in full force and effect as of such date, (B) the names and percentages of the relevant insurance companies, (C) the amount and expiration dates of such policy, (D) that all premiums and other amounts currently due for such insurance have been paid in full, and (E) in the case of Third Party Launch Liability Insurance policies, that the Trustee and the Holders are named as additional insureds to the extent required hereby.

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(g) In connection with the covenants set forth in this Maintenance of Insurance covenant, it is understood and agreed that

Reports and Other Information

Notwithstanding that the Issuer may not be subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or otherwise report on an annual and quarterly basis on forms provided for such annual and quarterly reporting pursuant to rules and regulations promulgated by the SEC, the Indenture requires the Issuer to file with the SEC (and make available to the Trustee and Holders of the notes (without exhibits), without cost to each Holder, within 15 days after it files them with the SEC),

(d) any other information, documents and other reports which Telesat Holdings would be required to file with the SEC if it were subject to Section 13 or 15(d) of the Exchange Act;

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Sections 13 or 15(d) of the Exchange Act; and provided further that such reports may be filed on Form 20-F, 40-F or Form 6-K (or any successor form), as applicable, provided that the substance of such reports shall be as required above. Notwithstanding the foregoing, with respect to financial statements required to be delivered in respect of the fiscal quarters ending March 31, June 30, and September 30, 2008, such financial statements shall not be required to contain consolidating financial data with respect to Guarantor and non-Guarantor Subsidiaries of the type contemplated by Rule 3-10 of Regulation S-X of the Securities Act.

Payments for Consent

Conduct of Business

Telesat Holdings will not, and will not permit any Restricted Subsidiary to, engage in any business other than the Permitted Business.

Limitation on Activities of the Co-Issuer

The Co-Issuer may not hold any material assets, become liable for any material obligations, engage in any trade or business, or conduct any business activity, other than (1) the issuance of its Equity Interests to the Issuer or any Wholly-Owned Restricted Subsidiary of the Issuer, (2) the incurrence of Indebtedness as a co-obligor or guarantor, as the case may be, of the notes, the Senior Credit Facilities and any other Indebtedness that is permitted to be incurred by the Issuer under the covenant described under “— Limitations on Additional Indebtedness”; provided that the net proceeds of such Indebtedness are not retained by the Co-Issuer, and (3) activities incidental thereto. Neither Telesat Holdings nor any Restricted Subsidiary shall engage in any transactions with the Co-Issuer in violation of the immediately preceding sentence.

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Events of Default and Remedies

The following events constitute Events of Default under the Indenture:

(1) default in payment when due and payable, upon redemption, acceleration or otherwise, of principal of, or premium, if any, on the notes issued under the Indenture (whether or not such payment is prohibited by the subordination provisions of the Indenture);

(2) default for 30 days or more in the payment when due of interest (including Special Interest) or Additional Amounts on or with respect to the notes issued under the Indenture (whether or not such payment is prohibited by the subordination provisions of the Indenture);

(3) failure by the Issuer to comply with its obligations under the first paragraph of “— Certain Covenants — Merger, Consolidation or Sale of All or Substantially All Assets”;

(A) such default either

i. results from the failure to pay any such Indebtedness at its stated final maturity (after giving effect to any applicable grace periods) or

ii. relates to an obligation other than the obligation to pay principal of any such Indebtedness at its stated final maturity and results in the holder or holders of such Indebtedness causing such Indebtedness to become due prior to its stated maturity;

(7) certain events of bankruptcy or insolvency with respect to Telesat Holdings or any Significant Subsidiary; or

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If any Event of Default (other than of a type specified in clause (7) above) occurs and is continuing under the Indenture, the Trustee or the Holders of at least 25% in principal amount of the then outstanding notes issued under the Indenture may declare (an “acceleration declaration”) the principal, premium, if any, interest and any other monetary obligations on all the then outstanding notes issued under the Indenture to be due and payable immediately; provided, however, that so long as any Designated Senior Indebtedness is outstanding, no such acceleration shall be effective until the earlier to occur of (x) five Business Days following delivery of a written notice of such acceleration to the Issuer and each Representative (to the extent designated as such in writing to the Trustee prior to the occurrence of such Event of Default) of Designated Senior Indebtedness and (y) the acceleration of all such Designated Senior Indebtedness. In the event of any such acceleration declaration of the notes because an Event of Default described in clause (5) above has occurred and is continuing, the acceleration declaration shall be automatically annulled if the payment default or other default triggering such Event of Default pursuant to clause (5) above shall be remedied or cured by Telesat Holdings or a Restricted Subsidiary or waived by the holders of the relevant Indebtedness within 60 days after the acceleration declaration with respect thereto and if (a) the annulment of the acceleration of the notes would not conflict with any judgment or decree of a court of competent jurisdiction and (b) all existing Events of Default, except nonpayment of principal, premium or interest on the notes that became due solely because of the acceleration of the notes, have been cured or waived.

(1) such holder has previously given the Trustee notice that an Event of Default is continuing;

(2) holders of at least 25% in principal amount of the outstanding notes have requested the Trustee to pursue the remedy;

(3) such holders have offered the Trustee reasonable security or indemnity against any loss, liability or expense;

(4) the Trustee has not complied with such request within 60 days after the receipt thereof and the offer of security or indemnity; and

(5) holders of a majority in principal amount of the outstanding notes have not given the Trustee a direction inconsistent with such request within such 60-day period.

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follow any direction that conflicts with law or the Indenture or that the Trustee determines is unduly prejudicial to the rights of any other holder of a note or that would involve the Trustee in personal liability.

Regulatory Matters

Under the Indenture, the Holders and the Trustee agree that they will not take any action under the Indenture or the notes which would cause the Issuer to breach the “Canadian ownership and control rules” established under Section 16 of the Telecommunications Act (Canada), as amended from time to time. The Issuer agrees in the Indenture to take any action which any Holder or the Trustee may reasonably request in order to obtain from the FCC, U.S. Department of Justice, Industry Canada, CRTC or any other relevant Governmental Authority such approval as may be necessary to enable the Holders and the Trustee to exercise the full rights and benefits granted to them pursuant to the Indenture.

Notwithstanding anything in the Indenture or the notes to the contrary, prior to the occurrence of an Event of Default and the consent of the FCC, U.S. Department of Justice, Industry Canada, CRTC and of any other applicable Governmental Authority to the assignment or transfer of control of FCC Licenses, Industry Canada Authorizations, CRTC approvals or other governmental permits, licenses, or other authorizations, the Indenture, and the transactions contemplated thereby do not and will not constitute, create, or have the effect of constituting or creating directly or indirectly, actual or practical ownership of any FCC Licenses, Industry Canada Authorizations, CRTC approvals or other governmental permits, licenses or other authorizations by the Holders or the Trustee or control, affirmative or negative, direct or indirect, by Holders or the Trustee over the management or any other aspect of the operation of any FCC Licenses, Industry Canada Authorizations, CRTC approvals or other governmental permits, licenses, or other authorizations.

No Personal Liability of Directors, Officers, Employees and Stockholders

Legal Defeasance and Covenant Defeasance

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(3) the rights, powers, trusts, duties and immunities of the Trustee, and the Issuer’s obligations in connection therewith, and

(4) the Legal Defeasance provisions of the Indenture.

In addition, the Issuer may, at its option and at any time, elect to have its obligations and those of each Guarantor released with respect to certain covenants that are described in the Indenture (“Covenant Defeasance”) and thereafter any omission to comply with such obligations shall not constitute a Default or Event of Default with respect to the notes. In the event Covenant Defeasance occurs, certain events (not including bankruptcy, receivership, rehabilitation and insolvency events pertaining to the Issuer) described under “— Events of Default” will no longer constitute an Event of Default with respect to the notes.

In order to exercise either Legal Defeasance or Covenant Defeasance with respect to the notes issued under the Indenture:

(2) in the case of Legal Defeasance, the Issuer shall have delivered to the Trustee an Opinion of Counsel in the United States confirming that, subject to customary assumptions and exclusions,

(A) the Issuer has received from, or there has been published by, the United States Internal Revenue Service a ruling or

(B) since the issuance of the notes, there has been a change in the applicable U.S. federal income tax law,

(4) no Default or Event of Default (other than that resulting from borrowing funds to be applied to make such deposit) shall have occurred and be continuing on the date of such deposit;

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laws affecting creditors’ rights generally under any applicable U.S. federal or state law, and that the Trustee has a perfected security interest in such trust funds for the ratable benefit of the Holders;

Satisfaction and Discharge

(b) (1) all such notes not theretofore delivered to such Trustee for cancellation have become due and payable by reason of the making of a notice of redemption or otherwise or will become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Issuer and the Issuer or any Guarantor has irrevocably deposited or caused to be deposited with such Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient without consideration of any reinvestment of interest to pay and discharge the entire indebtedness on such notes not theretofore delivered to the Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;

(3) the Co-Issuers have paid or caused to be paid all sums payable by them under the Indenture; and

In addition, the Issuer must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Paying Agent and Registrar for the Notes

The Co-Issuers shall maintain an office or agency where notes may be presented for registration of transfer or for exchange (“Registrar”) and an office or agency where notes may be presented for payment (“Paying Agent”). The Co-Issuers initially appointed the Trustee to act as Registrar and Paying Agent, until such time as the Trustee has resigned or a successor has been appointed, each in accordance with the Indenture.

Transfer and Exchange

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Issuer may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Issuer is not required to transfer or exchange any note selected for redemption. Also, the Issuer is not required to transfer or exchange any note for a period of 15 days before a selection of notes to be redeemed.

The registered Holder of a note will be treated as the owner of the note for all purposes.

Amendment, Supplement and Waiver

Except as provided in the next two succeeding paragraphs, the Indenture, any related guarantee and the notes issued thereunder may be amended or supplemented with the consent of the Holders of at least a majority in principal amount of the notes then outstanding and issued under the Indenture, 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 the Indenture or the notes issued thereunder may be waived with the consent of the Holders of a majority in principal amount of the then outstanding notes issued under the Indenture, other than notes beneficially owned by the Issuer or its Affiliates (including consents obtained in connection with a purchase of or tender offer or exchange offer for notes).

The Indenture provides that, without the consent of each Holder affected, an amendment or waiver may not, with respect to any notes issued under the Indenture and held by a non-consenting Holder:

(1) reduce the principal amount of notes whose Holders must consent to an amendment, supplement or waiver;

(3) reduce the rate of or change the time for payment of interest on any note;

(5) make any note payable in money other than that stated in the notes;

(6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of Holders to receive payments of principal of or premium, if any, or interest on the notes;

(7) make any change in these amendment and waiver provisions;

(8) release Telesat Holdings Intermediate Holdco or any Guarantor that is a Significant Subsidiary from any of its obligations under its Guarantee or the Indenture, except as permitted by the Indenture;

(9) modify or change any provision of the Indenture or the related definitions to affect the ranking of the notes or any Guarantee in a manner that adversely affects the Holders;

(11) change the subordination provisions of the Indenture in a manner that adversely affects the right of any Holder in any material respect.

(1) to cure any ambiguity, mistake, defect or inconsistency;

(2) to provide for uncertificated notes in addition to or in place of certificated notes;

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(3) to comply with the covenant relating to mergers, amalgamations, consolidations and sales of assets;

(4) to provide the assumption of the Issuer’s or any Guarantor’s obligations to Holders;

(5) to make any change that would provide any additional rights or benefits to the Holders or that does not adversely affect the legal rights under the Indenture of any such Holder;

(6) to add covenants for the benefit of the Holders or to surrender any right or power conferred upon the Issuer or any Guarantor;

(7) to comply with requirements of the SEC in order to effect or maintain the qualification of the Indenture under the Trust Indenture Act;

(8) to evidence and provide for the acceptance and appointment under the Indenture of a successor Trustee pursuant to the requirements thereof;

(9) to provide for the issuance of exchange notes or private exchange notes, which are identical to exchange notes except that they are not freely transferable;

(10) to add a Guarantor under the Indenture;

(11) to conform the text of the Indenture, Guarantees or the notes to any provision of this “Description of the Senior Subordinated Notes” to the extent that such provision in this “Description of the Senior Subordinated Notes” was intended to be a verbatim recitation of a provision of the Indenture, the Guarantees or the notes; or

Notices

Concerning the Trustee

The Indenture contains certain limitations on the rights of the Trustee, should it become a creditor of the Issuer, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The Trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue or resign.

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Governing Law

The Indenture is, and the notes and any Guarantee will be, governed by and construed in accordance with the laws of the State of New York.

Certain Definitions

“Acceptable Exclusions” shall mean, in the case of any insurance procured in accordance with paragraph (b) of the “— Maintenance of Insurance” covenant, (i) war, invasion, hostile or warlike action in time of peace or war, including action in hindering, combating or defending against an actual, impending or expected attack by: (a) any government or sovereign power (de jure or de facto); or (b) any authority maintaining or using a military, navy or air force; or (c) a military, navy, or air force; or (d) any agent of any such government, power, authority or force, (ii) any anti-satellite device, or device employing atomic or nuclear fission and/or fusion, or device employing laser or directed energy beams, (iii) insurrection, strikes, labor disturbances, riots, civil commotion, rebellion, revolution, civil war, usurpation, or action taken by a government authority in hindering, combating or defending against such an occurrence, whether there be declaration of war or not, (iv) confiscation, nationalization, seizure, restraint, detention, appropriation, requisition for title or use by or under the order of any government or governmental authority or agent (whether secret or otherwise and/or whether civil, military or de facto) or public or local authority or agency, (v) nuclear reaction, nuclear radiation, or radioactive contamination of any nature, whether such loss or damage be direct or indirect, except for radiation naturally occurring in the space environment, (vi) electromagnetic or radio frequency interference, except for physical damage to a Satellite directly resulting from such interference, (vii) willful or intentional acts of the directors or officers of the named insured, acting within the scope of their duties, designed to cause loss or failure of a Satellite, (viii) an act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss, damage or failure resulting therefrom is accidental or intentional, (ix) any unlawful seizure or wrongful exercise of control of a Satellite made by any person or persons acting for political or terrorist purposes, (x) loss of revenue, incidental damages and/or consequential loss, (xi) extra expenses, other than the expenses insured under a policy, (xii) third party liability, (xiii) loss of a redundant component(s) that does not cause a transponder failure, and (xiv) such other similar exclusions as may be customary for policies of such type as of the date of issuance or renewal of such coverage.

“Acquired Indebtedness” means, with respect to any specified Person,

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“Acquisition Agreement” means the Share Purchase Agreement, dated as of December 16, 2006, among Telesat Interco Inc., BCE Inc. and Telesat Canada, as in effect on the Acquisition Closing Date.

“Acquisition Closing Date” means October 31, 2007.

“Acquisition Documents” means the Acquisition Agreement and all other material agreements and documents related to the acquisition of Telesat Canada and its Safe Income Notes pursuant to the Acquisition Agreement and as described in this offering memorandum under “The Transactions,” each as in effect on the Acquisition Closing Date.

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the portion of the applicable four-quarter period in which the in-service date of Nimiq 4 occurs from and after such in-service date.

“Applicable Premium” means, with respect to any note on any Redemption Date, the greater of:

(1) 1.0% of the principal amount of the note; and

(2) the excess of:

(b) the principal amount of the note.

“Asset Purchase Agreement” shall mean that certain Asset Purchase Agreement dated August 7, 2007, by and among Skynet, Skynet Satellite Corporation and Loral Space & Communications Inc., as in effect on the Acquisition Closing Date.

“Asset Sale” means

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(2) the issuance or sale of Equity Interests of any Restricted Subsidiary, whether in a single transaction or a series of related transactions, in each case, other than:

(e) any disposition of property or assets or issuance of securities by a Restricted Subsidiary to Telesat Holdings or by Telesat Holdings or a Restricted Subsidiary to the Issuer or a Guarantor;

(f) to the extent allowable under Section 1031 of the Internal Revenue Code of 1986, any exchange of like property (excluding any boot thereon) for use in a Similar Business;

(g) the lease, assignment or sub-lease of any real or personal property in the ordinary course of business;

(h) any issuance or sale of Equity Interests in, or Indebtedness or other securities of, an Unrestricted Subsidiary;

(i) foreclosures on or expropriations of assets;

(k) any Event of Loss;

(l) dispositions of accounts receivable in connection with the collection or compromise thereof in the ordinary course of business and consistent with past practice;

(m) the T10R Sale Leaseback;

(n) any transfer of transponders or the corresponding interest in common elements on the Telstar 18 Satellite to APT Satellite Company Limited or its affiliates effected pursuant to that certain letter agreement dated August 26, 2003, as amended on November 16, 2003 by and between Skynet and APT Satellite Company Limited in connection with the receipt of “export control approval” for such transfer, or any foreclosure pursuant to the APT Security Agreement;

(o) the granting of a Lien permitted under the “— Limitation on Liens” covenant;

(p) the Telesat Headquarters Sale; and

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“Asset Transfer Agreement” shall mean that certain Asset Transfer Agreement dated August 7, 2007, by and among Telesat Holdings, Skynet and Loral Space & Communications Inc., as in effect on the Acquisition Closing Date.

“Bank Indebtedness” shall mean “Secured Obligations” as such definition is used in the Senior Credit Facilities as in effect on the Issue Date.

“Board of Directors” means, with respect to any Person, (i) in the case of any corporation, the board of directors of such Person, (ii) in the case of any limited liability company, the board of managers of such Person, (iii) in the case of any partnership, the Board of Directors of the general partner of such Person and (iv) in any other case, the functional equivalent of the foregoing or, in each case, other than for purposes of the definitions of “Change of Control” and “Continuing Directors,” any duly authorized committee of such body.

“Board Resolution” means, with respect to Telesat Holdings, a duly adopted resolution of the Board of Directors of Telesat Holdings or any committee thereof.

“Business Day” means each day which is not a Legal Holiday.

“Capital Stock” means

(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.

“Capitalized Lease Obligation” means, at the time any determination thereof is to be made, the amount of the liability in respect of a capital lease that would at such time be required to be capitalized and reflected as a liability on a balance sheet (excluding the footnotes thereto) in accordance with GAAP; provided that the following leases shall be treated as operating leases and not as capital leases: (a) Satellite Relocation and Lease Agreement dated as of November 22, 2006, between Telesat Canada and DirectTV Enterprises, LLC and (b) Amendment No. 1 entered into as of the 22nd day of November 2006 to the Memorandum of Agreement entered into by Telesat Canada and DirectTV Enterprises, LLC on December 23, 2003, subsequently amended and restated on March 10, 2005 and further amended and restated on October 6, 2005; provided that such leases shall not be treated as capital leases only so long as they are not amended in a manner materially adverse to the holders of the notes since or after the Acquisition Closing Date. For purposes of the covenant described under “— Certain Covenants — Limitation on Liens”, a Capitalized Lease Obligation will be deemed to be secured by a Lien on the property being leased.

“Cash Equivalents” means

(1) United States dollars and Canadian dollars,

(2) pounds sterling,

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a full faith and credit obligation of such government with maturities of 12 months or less from the date of acquisition,

(7) commercial paper rated at least P-1 by Moody’s or at least A-1 by S&P and in each case maturing within 6 months after the date of creation thereof,

(8) marketable short-term money market and similar funds (x) either having assets in excess of US$250.0 million or (y) having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively (or, if at any time neither Moody’s nor S&P shall be rating such obligations, an equivalent rating from another Rating Agency),

(10) investment funds investing 95% or more of their assets in securities of the types described in clauses (1) through (9) above,

“Change of Control” means the occurrence of any of the following:

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Telesat Holdings or any company that holds directly or indirectly more than 50% of the total voting power of the Voting Stock of Telesat Holdings; or

(3) following the initial public offering of the common stock of Telesat Holdings, Continuing Directors shall not constitute at least a majority of the Board of Directors of Telesat Holdings; or

(4) the Issuer ceases to be a Wholly-Owned Subsidiary of Telesat Holdings.

“Consolidated EBITDA” means, with respect to Telesat Holdings and the Restricted Subsidiaries on a consolidated basis, for any period, an amount equal to Consolidated Net Income for such period

(1) increased (without duplication) by:

(a) Consolidated Income Tax Expense accrued for such period to the extent deducted in determining Consolidated Net Income for such period; plus

(b) Consolidated Interest Expense for such period to the extent deducted in determining Consolidated Net Income for such period; plus

(c) Consolidated Depreciation and Amortization Expense of such Person for such period to the extent such depreciation and amortization were deducted in computing Consolidated Net Income; plus

(d) collections on investments in sales-type leases during such period, to the extent not otherwise included in Consolidated Net Income for such period; plus

(e) to the extent deducted in arriving at Consolidated Net Income, foreign withholding taxes paid or accrued in such period; plus

(f) any expenses or charges related to any Equity Offering, Permitted Investment, acquisition, disposition, recapitalization or Indebtedness permitted to be incurred by the Indenture including a refinancing thereof (whether or not successful), including (i) such fees, expenses or charges related to the notes offered hereby and the Senior Notes, the Credit Facilities and the financings that occurred in connection with the Transactions on the Acquisition Closing Date and (ii) any amendment or other modification of such notes, loans or the Credit Facilities, and, in each case, deducted in computing Consolidated Net Income; plus

(h) any other non-cash charges reducing Consolidated Net Income for such period, excluding any such charge that represents an accrual or reserve for a cash expenditure for a future period; plus

(i) the amount of any minority interest expense deducted in calculating Consolidated Net Income (less the amount of any cash dividends paid to the holders of such minority interests); plus

(k) in the case of any period ending prior to or during the fiscal year ending December 31, 2007, Transaction Expenses; plus

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of Disqualified Stock” covenant and clause (12) of the “Transactions with Affiliates” covenant, to the extent the in-service date of Nimiq 4 occurs during the period of four consecutive fiscal quarters of Telesat Holdings then most recently ended (taken as one accounting period) (each, a “Test Period”), an amount equal to 90% of the Annualized Nimiq 4 Revenue Contract Amount, provided that the Issuer in good faith reasonably believes that Telesat Holdings and its Restricted Subsidiaries will realize revenue in accordance with GAAP in respect of Nimiq 4 during the next Test Period in an amount not less than the Annualized Nimiq 4 Revenue Contract Amount plus the Actual Nimiq 4 Revenue Contract Amount in respect of Nimiq 4 realized during such prior Test Period; plus

(m) solely for purposes of clause (i)(b) of the fourth paragraph of the “— Limitation on Restricted Payments” covenant and clause (12) of the “— Transactions with Affiliates” covenant, in the event of any loss of any Satellite during the applicable Test Period, 90% of the contracted for revenues that would reasonably have been expected to be realized but for such loss for that portion of the period following such loss attributable to such Satellite (less revenue actually realized in respect of such Satellite during such period after such event of loss) so long as insurance for such satellite required to be maintained under the Indenture is maintained in accordance with the Indenture and Telesat Holdings or a Restricted Subsidiary has filed a notice of loss with the applicable insurers and believes in good faith that the insurers will pay funds (and the applicable insurer(s) have not indicated that they will not pay such funds) in amounts that the Issuer reasonably believes will be sufficient to replace such Satellite with a replacement Satellite that generates annual revenues for Telesat Holdings and its Restricted Subsidiaries not less than the revenue generated by such replaced Satellite during the four-quarter period ended immediately prior to such event of loss; but such amounts may only be added to Consolidated EBITDA so long as Telesat Holdings or the applicable Restricted Subsidiary intends promptly to replace such Satellite and is working reasonably to do so (provided that the amount added to Consolidated EBITDA under this clause (m) shall not exceed US$55,000,000 for any Test Period); plus

(n) solely for purposes of clause (i)(b) of the fourth paragraph of the “— Limitation on Restricted Payments” covenant and clause (12) of the “— Transactions with Affiliates” covenant, the amount of net cost savings projected by the Issuer in good faith to be realized as a result of specified actions taken during such period (calculated on a pro forma basis as though such cost savings had been realized on the first day of such period), net of the amount of actual benefits realized during such period from such actions; provided that such net amount shall not exceed US$58.9 million;

(2) decreased by (without duplication):

(3) increased or decreased by any net loss or gain resulting from Hedging Obligations.

“Consolidated Interest Expense” means, with respect to any Person for any period, the sum, without duplication, of:

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Standards Board Statement No. 133 — “Accounting for Derivative Instruments and Hedging Activities”), the interest component of Capitalized Lease Obligations and net payments, if any, pursuant to interest rate Hedging Obligations, and excluding amortization of deferred financing fees, any expensing of bridge or other financing fees and any interest under Satellite Purchase Agreements),

(c) consolidated capitalized interest of such Person and its Restricted Subsidiaries for such period, whether paid or accrued, less

(d) interest income for such period.

(2) the Net Income for such period shall not include the cumulative effect of a change in accounting principles during such period,

(3) any net after-tax income (loss) from disposed or discontinued operations and any net after-tax gains or losses on disposal of disposed or discontinued operations shall be excluded,

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(8) any net after-tax income (loss) from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments shall be excluded,

(10) any non-cash compensation expense recorded from grants of stock appreciation or similar rights, stock options or other rights to officers, directors or employees shall be excluded.

Notwithstanding the foregoing, for the purpose of the covenant described under “— Certain Covenants — Limitation on Restricted Payments” only, there shall be excluded from Consolidated Net Income any income arising from any sale or other disposition of Restricted Investments made by Telesat Holdings and the Restricted Subsidiaries, any repurchases and redemptions of Restricted Investments from Telesat Holdings and the Restricted Subsidiaries, any repayments of loans and advances which constitute Restricted Investments by Telesat Holdings or any Restricted Subsidiary, any sale of the stock of an Unrestricted Subsidiary or any distribution or dividend from an Unrestricted Subsidiary, in each case only to the extent such amounts increase the amount of Restricted Payments permitted under such covenant pursuant to the definition of the term Cumulative Credit.

“Consulting Services Agreement” means the Consulting Services Agreement between Loral Space & Communications Inc. and the Issuer as in effect on the Acquisition Closing Date.

“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing any leases (other than any lease or leases entered into in connection with any Sale Lease-Back Transaction), dividends or other obligations that do not constitute Indebtedness (“primary obligations”) of any other Person (the “primary obligor”) in any manner, whether directly or indirectly, including, without limitation, any obligation of such Person, whether or not contingent,

(1) to purchase any such primary obligation or any property constituting direct or indirect security therefor,

(2) to advance or supply funds

(A) for the purchase or payment of any such primary obligation or

(B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, or

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Directors for at least the 12 preceding months, (c) who has been nominated to be a member of such Board of Directors, directly or indirectly, by a Permitted Holder or Persons nominated by a Permitted Holder or (d) who has been nominated to be a member of such Board of Directors by a majority of the other Continuing Directors then in office or a nominating committee in which directors nominated by Permitted Holders form the majority of the members thereof.

“Credit Facilities” means, with respect to Telesat Holdings or any of its Restricted Subsidiaries, one or more debt facilities, including the Senior Credit Facilities, or commercial paper facilities with banks or other institutional lenders or investors or indentures providing for revolving credit loans, term loans, receivables financing, including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against receivables, letters of credit or other long-term indebtedness, including any notes, guarantees, collateral documents, instruments and agreements executed in connection therewith, and any amendments, supplements, modifications, extensions, renewals, restatements or refundings thereof and any indentures or credit facilities or commercial paper facilities with banks or other institutional lenders or investors that replace, refund or refinance any part of the loans, notes, other credit facilities or commitments thereunder, including any such replacement, refunding or refinancing facility or indenture that increases the amount borrowable thereunder or alters the maturity thereof (provided that such increase in borrowings is permitted under “— Certain Covenants — Limitation on Incurrence of Indebtedness and Issuance of Disqualified Stock”).

“CRTC” shall mean the Canadian Radio-Television and Telecommunications Commission or any successor authority of the Government of Canada substituted therefor.

“Cumulative Credit” means the sum of (without duplication):

(1) the aggregate net cash proceeds, and the fair market value of marketable securities or other property other than cash (as determined in good faith by the Board of Directors of Telesat Holdings), received by Telesat Holdings from the issue or sale (other than to a Restricted Subsidiary) of any class of Equity Interests, including Retired Capital Stock, in Telesat Holdings after the Acquisition Closing Date, other than (A) Disqualified Stock, (B) Equity Interests to the extent the net cash proceeds therefrom are applied as provided for in clause (4) of the second paragraph under “— Certain Covenants — Limitation on Restricted Payments,” (C) Refunding Capital Stock and (D) Excluded Contributions; plus

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interest payments, principal payments, dividends or other distributions and payments, or the sale or other disposition (other than to Telesat Holdings or a Restricted Subsidiary) thereof made by Telesat Holdings and its Restricted Subsidiaries and (B) cash dividends from, or the sale (other than to Telesat Holdings or a Restricted Subsidiary) of the stock of, an Unrestricted Subsidiary (other than in respect of Unrestricted Subsidiaries designated as such pursuant to clause (12) of the second paragraph of “— Certain Covenants — Limitation on Restricted Payments”); plus

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deemed to have been based upon the rate actually chosen, or, if none, then based upon such optional rate chosen as the Issuer or Telesat Holdings may designate.

“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.

“Designated Senior Indebtedness” shall mean (1) the Bank Indebtedness, (2) any Indebtedness in respect of the Senior Notes and (3) any other Senior Indebtedness which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, $50.0 million and is specifically designated in the instrument evidencing or governing such Senior Indebtedness as “Designated Senior Indebtedness” for purposes of the Indenture.

“DTC” means the Depositary Trust Company.

“EMU” means economic and monetary union as contemplated in the Treaty on European Union.

“euro” means the single currency of participating member states of the EMU.

“Event of Loss” is defined under “— Certain Covenants — Maintenance of Insurance.”

(1) provision for all income or other taxes measured by or resulting from such Event of Loss,

(2) payment of all reasonable legal, accounting and other reasonable fees and expenses related to such Event of Loss,

(3) payment of amounts required to be applied to the repayment of Indebtedness secured by a Lien on the Satellite that is the subject of such Event of Loss,

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(other than payments to insurance carriers required to be made based on the future revenues generated from such Satellite), and

(5) deduction of appropriate amounts to be provided by Telesat Holdings or such Restricted Subsidiary as a reserve, in accordance with GAAP, against any liabilities associated with the Satellite that was the subject of the Event of Loss.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Excluded Contribution” means net cash proceeds, marketable securities or Qualified Proceeds received by Telesat Holdings from

(a) contributions to its common equity capital, and

“Excluded Satellites” shall mean (a) the Satellites owned by Telesat Holdings and its Restricted Subsidiaries commonly referred to as Skynet EDS, Telesat Anik F1, Nimiq 2 and the transponders for which Telesat Holdings or its Restricted Subsidiaries have a right to use on Satmex 5, (b) the Satellites leased by Telesat Holdings and its Subsidiaries commonly referred to as Nimiq 3 and Nimiq 4iR, (c) any other Satellite other than a Named Satellite that (i) is not expected or intended, in the good faith determination of the Board of Directors of the Issuer and/or Telesat Holdings and evidenced by a board resolution delivered to the Trustee, to earn future revenues from the operation of such Satellite in excess of $25.0 million in any fiscal year and (ii) has a book value of less than $50.0 million, (d) any other Satellite, other than a Named Satellite, with one year or less of in-orbit life remaining (it being understood and agreed that such Satellite shall be deemed to have “in-orbit life” only for so long as it is maintained in station kept orbit) and (e) any other Satellite designated as an Excluded Satellite by the Board of Directors of the Issuer and/or Telesat Holdings and evidenced by a Board Resolution delivered to the Trustee if the Board of Directors of the Issuer and/or Telesat Holdings determines in good faith that (i)(A) such Satellite’s performance and/or operating status has been adversely affected by anomalies or component exclusions and Telesat Holdings and its Restricted Subsidiaries are unlikely to receive insurance proceeds from a future failure thereof or (B) there are systemic failures or anomalies applicable to Satellites of the same model and (ii) Telesat Holdings and its Restricted Subsidiaries are unlikely to obtain usual and customary coverage in the satellite insurance market for the Satellite at a premium amount that is, and on other terms and conditions that are, commercially reasonable despite commercially reasonable efforts to obtain such coverage (including efforts to minimize the exclusions and insurance deductibles, subject to usual and customary exclusions consistent with the anomalies and/or operating status of the Satellite).

“Existing Indebtedness” means Indebtedness of Telesat Holdings or the Restricted Subsidiaries in existence on the Issue Date, plus interest accruing thereon.

“FCC” means the Federal Communications Commission or any governmental authority in the United States substituted therefor.

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“GAAP” means generally accepted accounting principles in Canada which are in effect on the Issue Date.

“Governmental Authority” shall mean any federal, state, provincial, local or foreign court or tribunal or governmental agency, authority, instrumentality or regulatory or legislative body.

“Government Securities” means securities that are

(a) direct obligations of the United States of America for the timely payment of which its full faith and credit is pledged, or

(b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America the timely payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case, are not callable or redeemable at the option of the issuers thereof, and shall also include a depository receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian with respect to any such Government Securities or a specific payment of principal of or interest on any such Government Securities held by such custodian for the account of the holder of such depository receipt; provided that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depository receipt from any amount received by the custodian in respect of the Government Securities or the specific payment of principal of or interest on the Government Securities evidenced by such depository receipt.

“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 letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness or other obligations.

“Guarantee” means the guarantee by any Guarantor of the Co-Issuers’ obligations under the notes and the Indenture.

“Guarantor” means Telesat Holdings and each Subsidiary that executes a Guarantee.

“Guarantor Senior Indebtedness” shall mean, with respect to a Guarantor, the following obligations, whether outstanding on the Issue Date or thereafter issued or incurred, without duplication:

(1) any guarantee of the Bank Indebtedness by such Guarantor and all other guarantees by such Guarantor of Senior Indebtedness of Telesat Holdings or any Co-Issuer or Guarantor Senior Indebtedness of any other Guarantor; and

(2) all obligations consisting of principal of and premium, if any, accrued and unpaid interest on, and fees and other amounts relating to, all other Indebtedness of such Guarantor.

Guarantor Senior Indebtedness includes interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to such Guarantor regardless of whether post-filing interest is allowed in such proceeding.

Notwithstanding anything to the contrary in the preceding paragraphs of this definition, Guarantor Senior Indebtedness will not include:

(1) any Indebtedness incurred in violation of the Indenture;

(2) any obligations of such Guarantor to another Subsidiary or to Telesat Holdings or a Co-Issuer;

(3) any liability for Federal, state, local, provincial, Canadian Federal, foreign or other taxes owed or owing by such Guarantor;

(4) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including guarantees thereof or instruments evidencing such liabilities);

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(5) any Indebtedness, guarantee or obligation of such Guarantor that is expressly subordinate or junior in right of payment to any other Indebtedness, guarantee or obligation of such Guarantor, including, without limitation, any Guarantor Senior Subordinated Indebtedness and Subordinated Indebtedness of such Guarantor; or

(6) any Equity Interests (including Indebtedness represented by Disqualified Stock).

“Guarantor Senior Subordinated Indebtedness” shall mean, with respect to a Guarantor, the Obligations of such Guarantor in respect of its Guarantee of the notes and any other Indebtedness of such Guarantor (whether outstanding on the Issue Date or thereafter incurred or issued) that specifically provides that such Indebtedness is to rank equally in right of payment with the Obligations of such Guarantor in respect of its Guarantee of the notes.

“Holder” means, at any time, a Person in whose name a note is at such time registered on the Registrar’s books.

“Indebtedness” means, with respect to any Person,

(1) any indebtedness (including principal and premium) of such Person, whether or not contingent

(a) in respect of borrowed money,

(b) evidenced by bonds, notes, debentures or similar instruments or letters of credit or bankers’ acceptances (or, without double counting, reimbursement agreements in respect thereof),

(d) representing any Hedging Obligations,

(3) to the extent not otherwise included, the obligations of the type referred to in clause (1) of another Person secured by a Lien on any asset owned by such Person, whether or not such Indebtedness is assumed by such Person; provided that the Lien granted on certain transponders pursuant to the APT Security Agreement shall not be deemed to result in any Indebtedness of Telesat Holdings or any Restricted Subsidiary;

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“Industry Canada” shall mean Industry Canada or any successor department of the Government of Canada substituted therefor.

“Initial Purchasers” means the initial purchasers party to the Purchase Agreement for the notes referred to in the “Private Placement” section of this offering memorandum.

“In-Orbit Insurance” shall mean, with respect to any Satellite, insurance for risks of loss of and damage to such Satellite attaching upon the expiration of the Launch Insurance therefor and renewing, during the commercial in-orbit service of such Satellite, prior to the expiration of the immediately preceding corresponding In-Orbit Insurance policy, subject to the terms and conditions set forth herein.

“In-Orbit Spare Capacity” shall mean the C-band payload of a satellite with in-orbit replacement capacity that:

(a) is available in the event of a Covered Satellite loss or failure in order to restore C-band service on the Covered Satellite;

(b) meets or exceeds the contractual performance specifications for the C-band payload being protected; and

(c) may be provided directly by Telesat Holdings or a Restricted Subsidiary or by another satellite operator pursuant to a contractual arrangement;

provided that no Satellite or satellite being used to provide “In-Orbit Spare Capacity” with respect to a Covered Satellite may itself qualify as In-Orbit Spare Capacity.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s and BBB- (or the equivalent) by S&P, or an equivalent rating by any other Rating Agency.

(1) “Investments” shall include the portion (proportionate to Telesat Holdings’ equity interest in such Subsidiary) of the fair market value of the net assets of a Subsidiary of Telesat Holdings at the time that such Subsidiary is designated an Unrestricted Subsidiary (other than the deemed designation of The Access Centre LLC and The SpaceConnection, Inc. as Unrestricted Subsidiaries as of the Issue Date in accordance with the

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last sentence of the definition of “Unrestricted Subsidiary”); provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary, Telesat Holdings shall be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to

(x) Telesat Holdings’ “Investment” in such Subsidiary at the time of such redesignation less

(y) the portion (proportionate to Telesat Holdings’ equity interest in such Subsidiary) of the fair market value of the net assets of such Subsidiary at the time of such redesignation; and

“Issue Date” means the date notes are first issued under the Indenture.

“Launch Services Provider” shall mean, with respect to any Satellite, the provider of launch services for such Satellite pursuant to the terms of the Launch Services Agreement related thereto.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in New York City or Toronto are authorized or required by law to remain closed.

“Minority Investment” shall mean any Person (other than a Subsidiary) in which Telesat Holdings or any Restricted Subsidiary owns capital stock or other equity interests.

“Moody’s” means Moody’s Investors Service, Inc. and any successor to its rating agency business.

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