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					                                     Bid Procedures Hearing Date: [May 4,] 2011 at 10:00 a.m. (EST)
                               Bid Procedures Objection Deadline: [April 29], 2011 at 4:00 p.m. (EST)
                                               Sale Hearing Date: [June 20], 2011 at 10:00 a.m. (EST)
                                 Sale Hearing Objection Deadline: [June 16,], 2011 at 4:00 p.m. (EST)
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park
New York, New York 10036
(212) 872-1000 (Telephone)
(212) 872-1002 (Facsimile)
Ira S. Dizengoff
Arik Preis
Ashleigh L. Blaylock

Counsel to the Debtors and Debtors in Possession

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

                                                            )
In re:                                                      ) Chapter 11
                                                            )
TERRESTAR NETWORKS INC., et al.,1                           ) Case No. 10-15446 (SHL)
                                                            )
                          Debtors.                          ) Jointly Administered
                                                            )

         NOTICE OF FILING OF DEBTORS’ MOTION PURSUANT TO 11 U.S.C. §§ 105,
         363, 365, 503 AND 507 AND FED. R. BANKR. P. 2002, 4001, 6004, 6006, 9008 AND
         9014, FOR ENTRY OF (I) AN ORDER APPROVING (A) BID PROCEDURES, (B)
            NOTICE OF SALE, AUCTION, AND SALE HEARING, (C) ASSUMPTION
         PROCEDURES AND RELATED NOTICES; AND (II) AN ORDER APPROVING
            THE SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS

         PLEASE TAKE NOTICE that on April 15, 2011, the above-captioned debtors and

debtors in possession (collectively, the “Debtors”) filed the Debtors’ Motion Pursuant to 11

U.S.C. §§ 105, 363, 365, 503 and 507 and Fed. R. Bankr. P. 2002, 4001, 6004, 6006, 9008 and

9014, for Entry of (i) an Order Approving (a) Bid Procedures, (b) Notice of Sale, Auction, and

Sale Hearing, (c) Assumption Procedures and Related Notices; and (ii) an Order Approving the

Sale of Substantially All of the Debtors’ Assets (the “Motion”).

1
         The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal taxpayer
         identification number, are: TerreStar Networks Inc. (3931); TerreStar License Inc. (6537); TerreStar
         National Services Inc. (6319); TerreStar Networks Holdings (Canada) Inc. (1337); TerreStar Networks
         (Canada) Inc. (8766) and 0887729 B.C. Ltd. (1345).
       PLEASE TAKE FURTHER NOTICE that on April 15, 2011, the Debtors filed the

Debtors’ Motion to Shorten the Time for Notice of the Hearing to Consider the Motion (the

“Shorten Notice Motion”). By the Shorten Notice Motion, the Debtors’ seek entry of an order

shortening the notice period with respect to the Motion by scheduling the hearing to consider the

Motion on May 4, 2011 at 10:00 a.m. (prevailing Eastern Time).

       PLEASE TAKE FURTHER NOTICE that upon the Bankruptcy Court’s determination

of the Shorten Notice Motion, the Debtors will file on their docket and serve an additional notice

setting forth the hearing date and objection deadline of the Motion (the “Additional Notice”).

       PLEASE TAKE FURTHER NOTICE that if you would like to obtain a copy of the

Motion, any exhibits related thereto or any other pleadings filed in these chapter 11 cases, you

should contact The Garden City Group, Inc., the claims agent retained by the Debtors in these

chapter 11 cases, by: (a) calling the Debtors’ restructuring hotline at (866) 682-1770; (b) visiting

the Debtors’ restructuring website at: www.TerreStarInfo.com; (c) e-mailing the Debtors at

TerreStarInfo@gardencitygroup.com; and/or (d) writing to TerreStar Networks Inc., c/o The

Garden City Group, Inc. P.O. Box 9649, Dublin, Ohio 43017. You may also obtain copies of any

pleadings filed in these chapter 11 cases for a fee at the Court’s website at

http://www.nysb.uscourts.gov for registered users of the Public Access to Court Electronic

Records (PACER) System. Finally, you may request hard copies from the Debtors’ undersigned

counsel.

       PLEASE TAKE FURTHER NOTICE that any responses to the Motion must be in

writing, shall conform to the Federal Rules of Bankruptcy Procedure and the Local Rules of the

Bankruptcy Court, and the Bankruptcy Court’s Order Pursuant to Sections 105(a) and (d) of the

Bankruptcy Code and Bankruptcy Rules 1015(c), 2002(m) and 9007 Implementing Certain



                                                 2
Notice and Case Management Procedures [Docket No. 60] (the “Case Management Order”),

shall be filed with the Bankruptcy Court either (a) electronically in accordance with General

Order M-399 (which can be found at http://www.nysb.uscourts.gov) by registered users of the

Bankruptcy Court’s filing system, or (b) on a 3.5 inch disk, preferably in Portable Document

Format (PDF), WordPerfect, or any other Windows-based word processing format (with a hard

copy delivered directly to Chambers), in accordance with General Order M-182 (which can be

found at http://www.nysb.uscourts.gov), and shall be served in accordance with General Order

M-399 on: (a) the Office of the United States Trustee for the Southern District of New York,

Attn: Susan Golden, Trial Attorney; (b) Otterbourg, Steindler, Houston & Rosen, P.C., as counsel

to the statutory committee of unsecured creditors appointed in these chapter 11 cases; (c) Bank of

New York Mellon as agent for the Debtors’ postpetition debtor-in-possession financing; (d)

Emmet, Marvin & Martin, LLP as counsel to the agent for the Debtors’ postpetition debtor-in-

possession financing; (e) U.S. Bank National Association as Collateral Agent for the Debtors’

purchase money credit facility; (f) Weil, Gotshal & Manges LLP as counsel to Harbinger Capital

Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P.; (g)

Willkie Farr & Gallagher LLP as counsel to EchoStar Corporation in its capacity as Lender under

the Debtors’ purchase money credit facility and Initial Lender under the Debtors’ postpetition

debtor-in-possession financing; (h) U.S. Bank National Association as Indenture Trustee for the

Debtors’ 15% Senior Secured Notes and Kelley Drye & Warren LLP as counsel to the Indenture

Trustee; (i) Deutsche Bank National Trust Company as Indenture Trustee for the Debtors’ 6.5%

Senior Exchangeable Notes and Foley & Lardner LLP as counsel to the Indenture Trustee; (j)

Quinn Emanuel Urquhart & Sullivan, LLP as counsel to certain holders of the Debtors’ 6.5%

Senior Exchangeable Notes; (k) the Internal Revenue Service; (l) the Securities and Exchange



                                                3
Commission; (m) the United States Attorney for the Southern District of New York; (n) the

Federal Communications Commission; (o) Kirkland & Ellis LLP, as counsel to certain holders of

the Debtors’ 15% Senior Secured Notes; (p) K&L Gates LLP, as counsel to Sprint Nextel

Corporation; (q) Space Systems/Loral Inc.; (r) Industry Canada; and (s) parties in interest who

have filed a notice of appearance in these cases pursuant to Bankruptcy Rule 2002; in each case

so as to be received no later than a date and time to be set by the Bankruptcy Court upon

determination of the Shorten Notice Motion and that will be set forth in the Additional Notice.



New York, New York                            /s/ Ira S. Dizengoff
Dated: April 15, 2011                         AKIN GUMP STRAUSS HAUER & FELD LLP
                                              One Bryant Park
                                              New York, New York 10036
                                              (212) 872-1000 (Telephone)
                                              (212) 872-1002 (Facsimile)
                                              Ira S. Dizengoff
                                              Arik Preis
                                              Ashleigh L. Blaylock

                                              Counsel to the Debtors and Debtors in Possession




                                                4
                                      Bid Procedures Hearing Date: [May 4,] 2011 at 10:00 a.m. (EST)
                                Bid Procedures Objection Deadline: [April 29], 2011 at 4:00 p.m. (EST)
                                                Sale Hearing Date: [June 20], 2011 at 10:00 a.m. (EST)
                                  Sale Hearing Objection Deadline: [June 16,], 2011 at 4:00 p.m. (EST)
AKIN GUMP STRAUSS HAUER & FELD LLP
One Bryant Park
New York, New York 10036
(212) 872-1000 (Telephone)
(212) 872-1002 (Facsimile)
Ira S. Dizengoff
Arik Preis
Ashleigh L. Blaylock

Counsel to the Debtors and Debtors in Possession


UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

                                                            )
In re:                                                      ) Chapter 11
                                                            )
TERRESTAR NETWORKS INC., et al.,1                           ) Case No. 10-15446 (SHL)
                                                            )
                          Debtors.                          ) Jointly Administered
                                                            )

     DEBTORS’ MOTION, PURSUANT TO 11 U.S.C. §§ 105, 363, 364, 365, 503 AND 507
           AND FED. R. BANKR. P. 2002, 4001, 6004, 6006, 9008 AND 9014, FOR
            ENTRY OF (I) AN ORDER APPROVING (A) BID PROCEDURES,
      (B) NOTICE OF SALE, AUCTION, AND SALE HEARING, (C) ASSUMPTION
    PROCEDURES AND RELATED NOTICES; AND (II) AN ORDER APPROVING THE
             SALE OF SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS




1
     The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal taxpayer
     identification number, are: TerreStar Networks Inc. (3931); TerreStar License Inc. (6537); TerreStar National
     Services Inc. (6319); TerreStar Networks Holdings (Canada) Inc. (1337); TerreStar Networks (Canada) Inc.
     (8766) and 0887729 B.C. Ltd. (1345).
                                                     TABLE OF CONTENTS


PRELIMINARY STATEMENT.......................................................................................................1 
JURISDICTION ..............................................................................................................................6 
BACKGROUND .............................................................................................................................6 
    A.   The Chapter 11 Cases ..............................................................................................6 
    B.   The Marketing Process ............................................................................................9 
    C.   The Potential Purchaser and the Ad Hoc Group Restructuring Proposal ..............10 
RELIEF REQUESTED .................................................................................................................. 11 
SALE NOTICE AND RELATED DEADLINES, THE BID PROCEDURES, AND THE
     AUCTION..........................................................................................................................13 
     A.   Notice of Sale, Auction, Sale Hearing, and Related Deadlines .............................13 
     B.   The Bid Deadline and Bid Procedures ...................................................................16 
     C.   The Auction ............................................................................................................21 
     D.   Reservation of Rights to Enter Into Stalking Horse Agreement and Provide
          the Break-Up Fee in Connection Therewith ..........................................................25 
ASSUMPTION PROCEDURES ...................................................................................................26 
THE SALE IS WARRANTED AND IN THE BEST INTERESTS OF THE DEBTORS
     AND THEIR ECONOMIC STAKEHOLDERS ................................................................27 
     A.     Sale of the Assets ...................................................................................................27 
     B.     Sale Free and Clear of Liens, Claims, Encumbrances, and Interests .....................29 
     C.     Protections As a Good Faith Purchaser ..................................................................31 
     D.     Bid Procedures .......................................................................................................33 
     E.     Ability to Enter Into Stalking Horse Agreement and Break-Up Fee .....................34 
     F.     Assumption and Assignment of Designated Contracts ..........................................39 
     G.     Notice of the Auction and Sale Hearing ................................................................42 
     H.     Request for Relief Pursuant to Bankruptcy Rules 6004(h) and 6006(d) ...............42 
NOTICE .........................................................................................................................................43 




                                                                        i
                                             TABLE OF AUTHORITIES

                                                                                                                          Page(s)
CASES

Allstate Ins. Co. v. Hughes,
    174 B.R. 884 (S.D.N.Y. 1994).................................................................................................31

Carlisle Homes, Inc. v. Azzari (In re Carlisle Homes, Inc.),
   103 B.R. 524 (Bankr D.N.J. 1988) ..........................................................................................40

Cello Bag Co. Inc. v. Champion Int’l Corp. (In re Atlanta Packaging Prods., Inc.),
   99 B.R. 124 (Bankr. N.D. Ga. 1988) .......................................................................................33

Comm. of Equity Sec. Holders v. Lionel Corp.(In re Lionel Corp.),
  722 F.2d 1063 (2d Cir. 1983)...................................................................................................27

Four B. Corp. v. Food Barn Stores, Inc. (In re Food Barn Stores, Inc.),
   107 F.3d 558 (8th Cir. 1997) ...................................................................................................33

In re 995 Fifth Ave. Assocs., L.P.,
    96 B.R. 24 (Bankr. S.D.N.Y. 1989) ...................................................................................32, 34

In re Adelphia Bus. Solutions, Inc.,
    No. 02-11389 (REG) (Bankr. S.D.N.Y. Dec. 16, 2002) [Docket No. 760] ............................36

In re Angelika Films 57th, Inc.,
    Nos. 97 Civ. 2239 (MBM), 97 Civ. 2241 (MBM),
    1997 WL 283412, at *7 (S.D.N.Y. 1997) ...............................................................................31

In re Bally Total Fitness of Greater N.Y., Inc.,
    No. 07-12395 (BRL) (Bankr. S.D.N.Y. Aug. 21, 2007) [Docket No. 269].............................37

In re BearingPoint, Inc.,
    No. 09-10691 (REG) (Bankr. S.D.N.Y. Apr. 7, 2009) [Docket No. 369] ...............................36

In re Betty Owens Sch., Inc.,
    No. 96 Civ. 3576 (PKL), 1997 WL 188127 (S.D.N.Y. Apr. 17, 1997) ...................................27

In re Bon Ton Rest. & Pastry Shop, Inc.,
    53 B.R. 789 (Bankr. N.D. Ill. 1985) ........................................................................................40

In re Bygaph, Inc.,
    56 B.R. 596 (Bankr. S.D.N.Y. 1986) .......................................................................................40

In re Chrysler LLC,
    405 B.R. 84 (Bankr. S.D.N.Y. 2009),
    aff’d, 2009 U.S. App. LEXIS 17441 (2d Cir. Aug. 5, 2009) ...................................................30

                                                                 ii
In re Decora Indus., Inc.,
    No. 00-4459 (JJF), 2002 WL 32332749 (D. Del. May 20, 2002) ...........................................28

In re Del. and Hudson Ry. Co.,
    124 B.R. 169 (D. Del. 1991) ....................................................................................................28

In re Extended Stay, Inc.,
    No. 09-13764 (JMP) (Bankr. S.D.N.Y. Apr. 23, 2010) [Docket No. 975] ..............................36

In re Footstar, Inc.,
    No. 04-22350 (ASH) (Bankr. S.D.N.Y. Apr. 5, 2004) [Docket No. 316] ..............................37

In re Lehman Bros. Holdings Inc., et al.,
    No. 08-13555 (JMP) (Bankr. S.D.N.Y. Oct. 22, 2008) [Docket No. 1175] ............................36

In re Leiner Health Products Inc.,
    No. 08-10446 (Bankr. D. Del. May 14, 2008) [Docket No. 299] ............................................37

In re Marrose Corp.,
    Nos. 89 B. 12171 to 89 B. 12179, 1992 WL 33848 (Bankr. S.D.N.Y. 1992) ........................35

In re Metaldyne Corp.,
    409 B.R. 661 (Bankr. S.D.N.Y. 2009) .....................................................................................35

In re Natco Indus., Inc.,
    54 B.R. 436 (Bankr. S.D.N.Y. 1985) .......................................................................................40

In re Neff Corp.,
    No. 10-12610 (SCC) (Bankr. S.D.N.Y. July 13, 2010) [Docket No. 267] ..............................36

In re Rhythms NetConnections Inc.,
No. 01-14283 (BRL) (Bankr. S.D.NY. Aug. 8, 2001) [Docket No. 51] .......................................37

In re Stadium Mgmt. Corp.,
895 F.2d 845 (1st Cir. 1990) ..........................................................................................................31

In re Stein & Day, Inc.,
    113 B.R. 157 (Bankr. S.D.N.Y. 1990) .....................................................................................31

In re Steve & Barry’s Manhattan LLC, et al.,
    No. 08-12579 (ALG) (Bankr. S.D.N.Y. Aug. 5, 2008) [Docket No. 369] ..............................36

Kabro Assocs. of W. Islip, LLC v. Colony Hill Assocs. (In re Colony Hill Assocs.),
   111 F.3d 269 (2d Cir. 1997).....................................................................................................31

MacArthur Co. v. Johns-Manville Corp. (In re Johns-Manville Corp.),
  837 F.2d 89 (2d Cir. 1988).......................................................................................................30



                                                                   iii
Nostas Assocs. v. Costich (In re Klein Sleep Prods., Inc.),
   78 F.3d 18 (2d Cir. 1996) ........................................................................................................38

Official Comm. of Subordinated Bondholders v. Integrated Res., Inc.
    (In re Integrated Res., Inc.), 147 B.R. 650 (Bankr. S.D.N.Y. 1992)
    appeal dismissed, 3 F.3d 49 (2d. Cir. 1993) .................................................................... passim

Official Comm. of Unsecured Creditors v. LTV Corp. (In re Chateaugay Corp.),
    973 F.2d 141 (2d Cir. 1992).....................................................................................................27

Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.),
4 F.3d 1095 (2d Cir. 1993).............................................................................................................38

Reloeb Co. v. LTV Corp (In re Chateaugay Corp.),
    No. 92 Civ. 7054 (PKL), 1993 WL 159969 (S.D.N.Y. May 10, 1993)..................................31

Sprint Nextel Corp. v. U.S. Bank Assoc. (In re Terrestar Networks Inc.), No. 10-05461
   (Bankr. S.D.N.Y. Dec. 17, 2010) ............................................................................................29

STATUTES

11 U.S.C.
   § 105...............................................................................................................................6, 11, 12
   § 363 ................................................................................................................................ passim
   § 363(b) ...................................................................................................................................12
   § 363(b)(1) .............................................................................................................................. 27
   § 363(f) ........................................................................................................................12, 29, 30
   § 363(f)(3) ................................................................................................................................29
   § 363(f)(4) ................................................................................................................................29
   § 363(f)(5) ................................................................................................................................29
   § 363(m) .................................................................................................................12, 30, 31, 32
   § 363(n) ....................................................................................................................................19
   § 364.....................................................................................................................................6, 11
   § 365...............................................................................................................................6, 11, 12
   § 365(a) ....................................................................................................................................38
   § 365(b)(1) ...............................................................................................................................39
   § 365(b)(1)(c) ...........................................................................................................................41
   § 365(f).....................................................................................................................................41
   § 365(f)(1) ................................................................................................................................41

     § 365(f)(2)(B) ..........................................................................................................................40
     § 365(f)(3) ................................................................................................................................41
     § 365(k) ....................................................................................................................................39
     § 503.....................................................................................................................................6, 11
     § 503(b) ....................................................................................................................................25
     § 507.....................................................................................................................................6, 11


                                                                        iv
     § 507(a)(2) ...............................................................................................................................25
     § 1107(a) ....................................................................................................................................7
     § 1108.........................................................................................................................................7

28 U.S.C.
   § 157(b)(2) .................................................................................................................................6
   § 1334.........................................................................................................................................6
   § 1408.........................................................................................................................................6
   § 1409.........................................................................................................................................6

RULES

Fed. R. Bankr. P.
   2002..........................................................................................................................6, 11, 14, 43
   4001......................................................................................................................................6, 11

     6004 ...............................................................................................................................6, 11, 12
     6004(h) ...............................................................................................................................41, 42
     6006................................................................................................................................6, 11, 12
     6006(d) .....................................................................................................................................42
     9008................................................................................................................................6, 11, 12
     9014................................................................................................................................6, 11, 12

Local Rules of the Bankruptcy Court for the Southern District of New York
   6004-1 ..................................................................................................................................6, 11
   6006-1 ..................................................................................................................................6, 11
   9006-1 ..................................................................................................................................6, 11

OTHER AUTHORITIES

General Orders of the Bankruptcy Court of the Southern District of New York
   General Order M-383 ...........................................................................................................6, 11




                                                                         v
        The above-captioned debtors and debtors in possession (collectively, the “Debtors”)

submit this motion and state as follows:

                                      PRELIMINARY STATEMENT2

        1.       At various times in these cases, virtually all of the Debtors’ primary creditor

constituencies have encouraged the Debtors to pursue a sale (or lease or similar transaction) of

substantially all of their assets pursuant to Bankruptcy Code section 363:

                          The Creditors’ Committee:
                           The Court: “[T]his may be the first time in this courthouse recently that
                           someone has said we should be proceeding by a sale rather than a plan.”
                           Mr. Hazan: “And I appreciate that because I often stand up and say a sales
                           process is deficient... But each case is different…This case is different.”
                           Transcript of Hearing at 145:15-20, Nov. 16, 2010.

                          The Ad Hoc Group:
                           Mr. Nash: “We heard Mr. Zelin, Your Honor, talk about how he absolutely
                           intends to shop the company. We intend to hold Mr. Zelin to the benefit of
                           that bargain, Your Honor. We, Your Honor, the ad hoc committee of 15%
                           holders are the party that suggested and provided the language that's being
                           discussed at paragraph 16 [of the Final DIP Order]. 3 We are very
                           interested, Your Honor, in a competing process. We are very interested in
                           a strategic sale process.” Id. at 189:8-15.




2
    Capitalized terms used in the preliminary statement and not otherwise defined therein shall have the meanings
    ascribed to such terms below.
3
    The relevant language of paragraph 16 of the Final DIP Order, see infra note 9, states as follows (emphasis
    provided):
    (b) It shall constitute an Event of Default under the DIP Agreement and a termination of the right to use Cash
        Collateral (i) if any of the Debtors seeks, or if there is entered, any modification of this Final Order without
        the prior written consent of the DIP Agent and the Prepetition Agent, and no such consent shall be implied
        by any other action, inaction or acquiescence by the DIP Agent or the Prepetition Agent, provided,
        however, that if an alternative proposal for postpetition financing is presented to the Debtors then the
        Debtors may consider the proposal and the Debtors’ right to use Cash Collateral shall not terminate solely
        because the Debtors have been presented with an alternative proposal for postpetition financing, (ii) if any
        Debtor seeks, or if there is entered, an order converting or dismissing any of the Cases, or (iii) an order is
        entered appointing a trustee or examiner with expanded powers with respect to any of the Debtors. For the
        avoidance of doubt, nothing herein shall affect the right of any party other than the Debtors to file a motion
        authorizing the Debtors to use Cash Collateral on a nonconsensual basis.
                        Solus Alternative Asset Management L.P.:
                         “As a large holder of the 6.5% Notes, Solus is particularly motivated to
                         see a sale process that generates a bid for the assets that pays holders of
                         15% Notes in full and delivers a recovery to general unsecured creditors,
                         including holders of the 6.5% Notes. That result can only be achieved
                         through a marketing process that is run as a traditional “Section 363 Sale
                         Process,” where the bidders – strategic purchasers unfamiliar with
                         bankruptcy – will know the rules and timelines…. If the sale process fails
                         to yield one or more bids sufficient to pay through the 15% Notes and
                         deliver value to unsecured creditors, the assets will have been market
                         tested, curtailing valuation fights at confirmation.” Solus Alternative Asset
                         Management L.P.’s (A) Supplemental Objection to Disclosure Statement
                         for the Joint Chapter 11 Plan of TSN Debtors and (B) Joinder to
                         Supplemental Objection of the Ad Hoc Group of Holders of 15% Senior
                         Secured Notes to the Motion of TSN Debtors for Entry of an Order (I)
                         Approving TSN’s Entry Into the Backstop Commitment Agreement and (II)
                         Authorizing TSN’s Payment of Related Fees, Expenses and
                         Indemnification to the Backstop Party, ¶6-7 (Dec. 20, 2010) [Docket No.
                         301].

Similarly, EchoStar Corporation (“EchoStar”) - the Debtors’ DIP financing lender, largest

secured creditor, holder of one-half of the Debtors’ Purchase Money Credit Agreement4 debt, and

holder of one-third of the Debtors’ 6.5% Senior Exchangeable Notes5 - has not informed the

Debtors that they would oppose an auction for the sale of the Debtors’ assets. Pursuant to this

motion, the Debtors now seek this Court’s authority to conduct such a sale.

        2.       As they have made clear since the outset of these cases, the Debtors have

sought— and continue to seek— the path that maximizes value for the Debtors’ estates and

creditors. Before February 16, 2011, the Debtors believed that the Joint Chapter 11 Plan of

TerreStar Networks Inc., TerreStar National Services, Inc., 0887729 B.C. Ltd., TerreStar License

Inc., TerreStar Networks Holdings (Canada) Inc., and TerreStar Networks (Canada) Inc. [Docket
4
    “Purchase Money Credit Agreement” means that certain Purchase Money Credit Agreement, dated as of
    February 5, 2008, among TSN, as borrower, each of the guarantors named therein, the lenders party thereto and
    the U.S. Bank National Association as Collateral Agent.
5
    “6.5% Senior Exchangeable Notes” means the 6.5% senior exchangeable payment-in-kind notes issued pursuant
    to the Indenture, dated as of February 7, 2008, between TSN, as issuer, each of the guarantors named therein
    and Deutsche Bank National Trust Company and/or its predecessor and duly appointed successors, in its
    capacity as indenture trustee.

                                                       2
No. 82] (as amended from time to time, the “Plan”) sponsored by EchoStar, would yield the

most value for their estates.

        3.       As all parties are aware, however, the Debtors withdrew the Plan when it became

apparent that there were not sufficient votes for its approval. Since that time, the Debtors have

held discussions with every major creditor constituency in this case in an attempt to both resolve

the numerous inter-creditor disputes that have arisen and to explore alternative paths for an exit

from chapter 11. As they have from the commencement of these chapter 11 cases, the Debtors

pursued these discussions on two parallel paths: a potential sale transaction and an alternative

plan transaction.

        4.       In mid-February, a third party (the “Potential Purchaser”) approached the

Debtors with a proposal whereby the Potential Purchaser would serve as a stalking horse bidder

in connection with the sale of substantially all of the Debtors’ assets. Over the course of the next

month, the Debtors negotiated the terms of the Potential Purchaser’s proposal and the bid

procedures for an auction, and discussed the Potential Purchaser’s bid with various stakeholders

of the Debtors’ estates. Despite making meaningful progress on the contours of a deal, the

Debtors ultimately concluded that the purchase price offered by the Potential Purchaser did not

justify the incurrence of a break-up fee/expense reimbursement obligation to the Potential

Purchaser or the various limitations that the Potential Purchaser sought to impose on the Debtors’

ability to run a full and robust auction process.6

        5.       Concurrently with their negotiations with the Potential Purchaser on the terms of a

stalking horse bid, the Debtors also began discussions with an ad hoc group (the “Ad Hoc



6
    In light of the confidential nature of the Potential Purchaser’s bid and the sale process for which the Debtors are
    currently seeking authority, the Debtors are not in a position to provide any additional public information
    regarding these events. Additional details will be provided to the Court upon request.

                                                          3
Group”) 7 of holders of the 15% senior secured payment-in-kind notes, issued by TSN (the

“Senior Secured Notes”) on the terms of both (i) a junior DIP facility that would replace the

Debtors’ current DIP Facility from EchoStar and that would provide the Debtors six months of

additional committed DIP financing, as well as (ii) a consensual comprehensive restructuring.

The Debtors and the Ad Hoc Group negotiated the terms of the comprehensive restructuring with

representatives of certain of the Debtors’ largest unsecured creditors and the statutory committee

of unsecured creditors appointed in these chapter 11 cases (the “Creditors’ Committee”) in an

attempt to build consensus among their stakeholders. In doing so, the Debtors and all of these

parties have attempted to bridge past the substantial litigation and inter-creditor issues weighing

on these cases, while the Debtors continue to stress the need to push these cases forward on an

expedited basis in light of the Debtors’ liquidity. To date, however, although the Debtors and

these parties have made significant progress on multiple fronts, the Debtors, the Ad Hoc Group

and the Debtors’ other major stakeholders have not reached an agreement on the terms of a

comprehensive restructuring.

        6.      As such, the Debtors’ business judgment is that pursuing the plan currently

proposed by the Ad Hoc Group (i) contains risks with regard to the exit financing commitments

contemplated in such a plan, and (ii) will place, through the incurrence of additional DIP

financing and the continued accrual of postpetition interest on the Senior Secured Notes, a

meaningful hurdle in front of any recovery for unsecured creditors should such a plan not

materialize. Instead, by pursuing a sale process that still allows the Debtors to continue to

consider alternative paths in the exercise of their fiduciary duties, the Debtors believe that they


7
    According to the most recent Rule 2019 Statement filed by counsel to the Ad Hoc Group, members of the Ad
    Hoc Group collectively hold, in the aggregate, $383 million of the outstanding amount of the Senior Secured
    Notes. See Third Amended Verified Statement of Kirkland & Ellis LLP Pursuant to Federal Rule of Bankruptcy
    Procedure 2019 [Docket No. 419].

                                                      4
can test the market for their assets while at the same time potentially spurring creditors that have

been locked in battle since the Petition Date to resolve their differences and present the Debtors

with a viable alternative to a sale.

         7.        Finally, the Debtors have also been monitoring the chapter 11 proceedings of In re

DBSD N. Am., Inc., et al. No. 09-13061 (REG) (Bankr. S.D.N.Y. 2009), a debtor with similar

assets to the Debtors in these cases. On March 15, 2011, the Bankruptcy Court for the Southern

District of New York (the “Bankruptcy Court”) approved an investment agreement8 pursuant to

which DISH Networks Inc. (“DISH”)9 agreed to effectively purchase DBSD for a committed

purchase price10 of $1.49 billion.11 According to the debtors in DBSD, the final DISH bid was

the product of a highly competitive auction process that increased the purchase price by

approximately $380 million from DISH’s original bid (and by more than $500 million from the

plan of reorganization originally prosecuted by the debtors there). The Debtors believe that the

DBSD sale is an important data point in determining the market value of the Debtors’ assets.

         8.        Accordingly, all signs indicate that an open sale process is the most value-

maximizing alternative here:

                  the Debtors’ creditor constituencies have continually voiced their support for a
                   sale process;

                  the Plan has been withdrawn and no consensual plan appears likely within the
                   timetable dictated by the Debtors’ current liquidity constraints;

                  the incurrence of replacement DIP financing will increase the Debtors’
                   administrative expenses and lead to the further accrual of postpetition interest on
                   the Senior Secured Notes, decreasing unsecured creditors’ recoveries;

8
     The transaction is structured as a purchase of claims rather than a sale of assets.
9
     DISH is an affiliate of EchoStar.
10
     The committed amount and the ultimate purchase price may differ by $100 million to the extent certain claims
     are reduced.
11
     See Debtors’ Statement Regarding Status and Results of Marketing Process, No. 09-13091 (REG) (March 15,
     2011).

                                                            5
                an acceptable stalking horse bid has not emerged; and

                a similarly situated debtor’s assets have recently been sold for a high value in an
                 auction.

The Debtors believe that conducting a fair and robust auction at this time will provide these

estates with the best opportunity to maximize the value of their assets. At the same time, the

Debtors will retain the right to exercise their fiduciary duties should a value-maximizing

alternative materialize.

                                         JURISDICTION

       9.        This Court has subject matter jurisdiction to consider and determine this matter

pursuant to 28 U.S.C. § 1334. This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2).

Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

       10.       The bases for the relief requested herein are sections 105, 363, 364, 365, 503 and

507 of title 11 of the United States Code (the “Bankruptcy Code”), Rules 2002, 4001, 6004,

6006, 9008, and 9014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”),

Rules 6004-1, 6006-1 and 9006-1 of the Local Rules of the Bankruptcy Court for the Southern

District of New York (the “Local Rules”), and General Order M-383 of the Bankruptcy Court for

the Southern District of New York (“General Order M-383”).

                                         BACKGROUND

       A.        The Chapter 11 Cases

       11.       On October 19, 2010 (the “Petition Date”), each of the Debtors filed a petition

with this Court under chapter 11 of the Bankruptcy Code. The Debtors are operating their

businesses and managing their property as debtors in possession pursuant to Bankruptcy Code

sections 1107(a) and 1108. No request for the appointment of a trustee or examiner has been

made in these chapter 11 cases.


                                                  6
       12.     Also on October 19, 2010, TerreStar New York Inc., Motient Communications

Inc., Motient Holdings Inc., Motient License Inc., Motient Services Inc., Motient Ventures

Holding Inc., and MVH Holdings Inc. (collectively, the “Non-TSN Debtors”) each filed a

petition for relief under chapter 11 of the Bankruptcy Code. On October 20, 2010, the Court

entered an order providing for joint administration, for procedural purposes, of the Debtors’ cases

(the “Joint Administration Order”), which at that time included the Non-TSN Debtors.

       13.     On February 16, 2011, TerreStar Corporation and TerreStar Holdings Inc. each

filed a petition for relief in this Court under chapter 11 of the Bankruptcy Code (the “February

Debtors”). On February 23, 2011, the Court entered an order amending the Joint Administration

Order to remove the Non-TSN Debtors from administration under the TerreStar Networks Inc.

(“TSN”) case number. Contemporaneously therewith, the Court entered an order providing for

the joint administration of the cases of the February Debtors and the Non-TSN Debtors.

       14.     A detailed description of the Debtors’ businesses and the reasons for filing these

chapter 11 cases is set forth in the Declaration of Jeffrey W. Epstein, Chief Executive Officer of

TerreStar Networks Inc., in Support of First Day Pleadings (the “First Day Declaration”), which

was filed contemporaneously with the Debtors’ voluntary petitions for relief under chapter 11 of

the Bankruptcy Code.

       15.     As set forth in the First Day Declaration, the commencement of these chapter 11

cases was the result of negotiations between the Debtors and EchoStar, the largest holder of the

Senior Secured Notes. Specifically, immediately before the Petition Date, EchoStar agreed to

support a restructuring that contemplated the substantial deleveraging of the Debtors by, among

other things, converting all of the Senior Secured Notes into equity of the reorganized Debtors.




                                                7
         16.      EchoStar also agreed to provide $75 million in junior debtor-in-possession

financing (the “DIP Facility”) to the Debtors to ensure that the Debtors’ business had sufficient

liquidity for ordinary course operations during the restructuring, which financing was approved

by the Court on a final basis on November 18, 2010.12 Thus, the Debtors commenced these

chapter 11 cases with the reasonable expectation of consummating the Plan given the liquidity

runway of the DIP Facility. On November 5, 2010, the Debtors filed the Plan and the Disclosure

Statement for the Joint Chapter 11 Plan of TerreStar Networks Inc., TerreStar National Services,

Inc., 0887729 B.C. Ltd., TerreStar License Inc., TerreStar Networks Holdings (Canada) Inc., and

TerreStar Networks (Canada) Inc [Docket No. 83] (as amended from time to time, the

“Disclosure Statement”). On December 22, 2010, this Court entered the Order Approving (A)

Adequacy of the Disclosure Statement and (B) Notice of the Hearing to Approve the Disclosure

Statement [Docket No. 312].

         17.      On February 16, 2011, in light of the inability of the Debtors’ secured creditors to

reach agreement on a number of issues, the Debtors withdrew the Plan, terminated the agreement

pursuant to which EchoStar had agreed to backstop a $125 million rights offering to fund the

Debtors’ exit from chapter 11, and determined to explore alternative methods of maximizing the

value of their estates. See Notice of Withdrawal of the Chapter 11 Plan Filed by the TSN

Debtors [Docket No. 424]. Additionally, on February 16, 2011, the Debtors filed the Fifth

Amendment to their DIP Facility with EchoStar, removing the milestone dates and the

requirement that the Debtors pursue an “acceptable plan” as defined therein. See Notice of Filing


12
     The DIP Facility was approved pursuant to the Final Order Under Sections 105, 361, 362, 363(c), 364(c)(1),
     364(c)(2), 364(c)(3), 364(d)(1) and 364(e) and 507 of the Bankruptcy Code and Bankruptcy Rules 2002, 4001
     and 9014: (I) Authorizing Debtors to Obtain Postpetition Financing; (II) Authorizing Debtors to Use Cash
     Collateral; and (III) Granting Adequate Protection to Prepetition Secured Parties [Docket No. 181] (the “Final
     DIP Order”). At the time of the final DIP hearing on November 16, 2010 and, indeed, until very recently, the
     only bona fide proposal the Debtors had received for junior DIP financing was from EchoStar.

                                                         8
of Fifth Amendment to Debtor-in-Possession Credit, Security & Guaranty Agreement [Docket

No. 423].

       B.      The Marketing Process

       18.     As all parties in interest in these cases are aware, concurrently with the Debtors’

prosecution of the Plan, and in the full exercise of their fiduciary duties, the Debtors sought

alternative transactions (any such transaction, an “Alternative Transaction”) for the sale or lease

of any or all of the Debtors’ assets (or any other transaction) which could result in greater value

for the Debtors’ stakeholders and estates than contemplated by the Plan.

       19.     Indeed, beginning in early October the Debtors, together with their advisors,

actively marketed their assets in an effort to maximize value for all of their stakeholders. This

marketing process — which extended into the post-petition period — included calling various

parties that the Debtors and their advisors believed could be potential purchasers and discussing

a potential sale with them as well as explaining to them the Debtors’ proposed chapter 11

restructuring process sponsored by EchoStar. In addition, on November 29, 2010, the Debtors

filed with the Court a Notice of Marketing of Assets and Potential Sale Thereof [Docket No. 210]

and published that notice in The Washington Post, USA Today and The Globe and Mail (national

editiosn) on December 6, 2010.

       20.     On December 22, 2010, in connection with the approval of the Disclosure

Statement, the Debtors filed the Sales and Marketing Process Letter [Docket No. 320] (the Sales

Process Letter”) with this Court (which was also filed as Exhibit K to the Disclosure Statement)

and published the Sales Process Letter in The Wall Street Journal (national edition) on December

29, 2010. The Sales Process Letter was drafted with the support of Solus Alternative Asset

Management LP, a substantial holder of both the Debtors’ 6.5% Senior Exchangeable Notes and

Senior Secured Notes; the Ad Hoc Group; and the Creditors’ Committee — the same three
                                                9
parties that this motion quotes at the outset as encouraging the Debtors toward a sale. The Sale

Process Letter outlined key dates to provide guidance to parties interested in pursuing an

Alternative Transaction, including delivery of full documentation regarding the proposed

Alternative Transaction by February 7, 2011.

       21.     Before February 7, 2011, the Debtors or their advisors: (1) contacted 85 potential

bidders; (2) sent form non-disclosure agreements (“NDAs”) to 80 parties; and (3) entered into

seven NDAs. Upon withdrawal of the Plan on February 16, 2011, The Blackstone Group, the

Debtors’ financial advisor, sent a revised Sales Process Letter to parties potentially interested in

an Alternative Transaction informing them of the withdrawal of the Plan and the amendments

made to the DIP Facility pursuant to the Fifth Amendment thereto (see supra for discussion

thereof).

       C.      The Potential Purchaser and the Ad Hoc Group Restructuring Proposal

       22.     In mid-February, the Potential Purchaser provided the Debtors with a term sheet

setting forth the material terms of a proposed sale transaction.          The Debtors and their

professionals immediately began negotiations with the Potential Purchaser, attempting to

negotiate the highest or otherwise best terms that would serve as a stalking horse bid in a

Bankruptcy Code section 363 sale process. Unfortunately, despite negotiating with the Potential

Purchaser for approximately one month, the Debtors were unable to come to an agreement with

the Potential Purchaser on mutually satisfactory terms of a stalking horse bid. Specifically, and

among other things, the Debtors, in their business judgment, ultimately concluded that the offer

from the Potential Purchaser did not justify the incurrence of a break-up fee / expense

reimbursement obligation, or the significant limitations that the Potential Purchaser sought to

impose on the Debtors’ ability to run a robust auction process.



                                                10
       23.     As noted above, in the last four to six weeks, the Debtors have also been

negotiating with the Ad Hoc Group and various of their unsecured creditor constituencies —

including the Creditors’ Committee — on the terms of (i) a replacement debtor-in-possession

credit facility and (ii) a consensual plan of reorganization that will resolve the various litigation

disputes in these cases (the “Ad Hoc Proposal”). Although these negotiations made progress on

a number of fronts, the Debtors ultimately determined that, in light of certain risks associated

with the exit financing contemplated by the Ad Hoc Proposal, such a proposal would not provide

the best platform to move these cases forward, and instead carried the risk of putting the Debtors’

unsecured creditors in jeopardy of losing any meaningful recovery. After thoroughly evaluating

all issues (including the competitive sale process sought by this motion), the Debtors elected to

proceed with the Auction while continuing their discussions with the Ad Hoc Group and the

Debtors’ other constituents on the contours of their plan proposal.

       24.     In light of all of the above, the Debtors believe that the Bid Procedures (as defined

below) and the Auction will afford the Debtors the best opportunity to test the market and

maximize value.

                                     RELIEF REQUESTED

       25.     Pursuant to Bankruptcy Code sections 105, 363, 364, 365, 503 and 507 and

Bankruptcy Rules 2002, 4001, 6004, 6006, 9008 and 9014, Local Rules 6004-1, 6006-1 and

9006-1 and General Order M-383, the Debtors respectfully request that the Court grant the

following relief in connection with the sale (the “Sale Transaction”) of substantially all of the

Debtors’ assets (the “Assets”) and related transactions to the bidder who submits the highest or

otherwise best offer at the conclusion of the Auction, which bidder may be selected by the

Debtors as the winning bidder (the “Successful Bidder”).



                                                 11
       26.     First, the Debtors request entry of a “Bid Procedures Order,” substantially in the

form attached hereto as Exhibit 1, which will authorize and approve, among other things: (i) the

procedures (the “Bid Procedures”) for the conduct of the auction (the “Auction”) of the Assets,

substantially in the form attached as Exhibit A to the Bid Procedures Order; (ii) the procedures

for the assumption and assignment of certain contracts and leases (the “Assumption

Procedures”) to the Successful Bidder and the resolution of any objections thereto and related

notices; (iii) the scheduling of a hearing to approve any such Sale Transaction with respect to any

bid accepted by the Debtors (the “Sale Hearing”); and (iv) the form and manner of notice with

respect to the proposed sale of the Assets, the Auction, and the Sale Hearing (the “Sale Notice”).

       27.     Second, the Debtors request entry of an order (the “Sale Order”) substantially in

the form to be filed with the Court on or prior to the Sale Hearing, that will, inter alia, approve

(i) the sale of the Assets pursuant to Bankruptcy Code sections 105, 363(b), (f), and (m), and 365

and Bankruptcy Rules 6004, 6006, 9008, and 9014 in accordance with the terms of a purchase

agreement executed by the Successful Bidder, which purchase agreement (the “Purchase

Agreement”) shall be substantially in the form attached hereto as Schedule 1 to the Bid

Procedures (or as may otherwise be sought by the Successful Bidder as a result of the Auction),

free and clear of all liens, claims, encumbrances, and other interests (other than certain expressly

specified permitted encumbrances and assumed liabilities, all as more specifically set forth in the

applicable Purchase Agreement); and (ii) the assumption and assignment of certain executory

contracts and unexpired leases related to the Assets and the Sale Transaction pursuant to

Bankruptcy Code sections 363 and 365.




                                                12
                           SALE NOTICE AND RELATED DEADLINES,
                          THE BID PROCEDURES, AND THE AUCTION13

         D.       Notice of Sale, Auction, Sale Hearing, and Related Deadlines

         28.      The Debtors propose the following notice and other procedures to be

implemented in connection with the sale process:

                  a.       Notice of Sale, Auction, and Sale Hearing: Within five (5) business days
                           after entry of the Bid Procedures Order, the Debtors (or their agents) shall:

                                    i.       Provide the Sale Notice, in substantially the form attached
                                             as Exhibit B to the proposed Bid Procedures Order, and the
                                             Bid Procedures Order by email, mail, facsimile, or
                                             overnight delivery service, upon: (a) the Office of the
                                             United States Trustee for the Southern District of New
                                             York; (b) Otterbourg, Steindler, Houston & Rosen, P.C., as
                                             counsel to the statutory committee of unsecured creditors
                                             appointed in these chapter 11 cases; (c) Bank of New York
                                             Mellon as agent for the Debtors’ postpetition debtor-in-
                                             possession financing; (d) Emmet, Marvin & Martin, LLP as
                                             counsel to the agent for the Debtors’ postpetition debtor-in-
                                             possession financing; (e) U.S. Bank National Association
                                             as Collateral Agent for the Debtors’ purchase money credit
                                             facility; (f) Weil, Gotshal & Manges LLP as counsel to
                                             Harbinger Capital Partners Master Fund I, Ltd. and
                                             Harbinger Capital Partners Special Situations Fund, L.P.;
                                             (g) Willkie Farr & Gallagher LLP as counsel to EchoStar
                                             Corporation in its capacity as Lender under the Debtors’
                                             purchase money credit facility and Initial Lender under the
                                             Debtors’ postpetition debtor-in-possession financing;
                                             (h) U.S. Bank National Association as Indenture Trustee
                                             for the Senior Secured Notes and Kelley Drye & Warren
                                             LLP as counsel to the Indenture Trustee; (i) Deutsche Bank
                                             National Trust Company as Indenture Trustee for the
                                             Debtors’ 6.5% Senior Exchangeable Notes and Foley &
                                             Lardner LLP as counsel to the Indenture Trustee; (j) Quinn
                                             Emanuel Urquhart & Sullivan, LLP as counsel to certain
                                             holders of the Debtors’ 6.5% Senior Exchangeable Notes;
                                             (k) the Internal Revenue Service; (l) the Securities and
                                             Exchange Commission; (m) the United States Attorney for
                                             the Southern District of New York; (n) the Federal
                                             Communications Commission; (o) Kirkland & Ellis LLP,

13
     Capitalized terms used but not defined in this section of the motion shall have the meanings ascribed to them in
     the Bid Procedures. The terms herein, however, are subject in all respects to the actual Bid Procedures.

                                                         13
                                              as counsel to the Ad Hoc Group; (p) Industry Canada; (q)
                                              parties in interest who have filed a notice of appearance in
                                              these cases pursuant to Bankruptcy Rule 2002; and (r) all
                                              known entities that have previously expressed a bona fide
                                              interest in purchasing the Assets in the twelve (12) months
                                              preceding the date of the motion (collectively, the “Sale
                                              Notice Parties”);

                                     ii.      Publish the Sale Notice on one occasion each in The Wall
                                              Street Journal, The New York Times, national editions and
                                              The Globe and Mail (National Edition); and

                                     iii.     Cause the Sale Notice to be                           published       on
                                              www.terrestarinfo.com (the “Website”).

                  b.       Date, Time, and Place of Auction: The Debtors propose that the Auction
                           be conducted at the offices of Akin Gump Strauss Hauer & Feld LLP, One
                           Bryant Park, New York, New York 10036 on a date approved by the
                           Court commencing approximately forty-two (42) days after entry of
                           the Bid Procedures Order at 9:00 a.m. (prevailing Eastern Time).

                  c.       Date, Time, and Place of Sale Hearing: The Sale Hearing shall be
                           conducted by the Bankruptcy Court on June 20, 2011 at 10:00 a.m.
                           (prevailing Eastern Time) 14 and may be adjourned or rescheduled
                           without notice. At the Sale Hearing, the Debtors will seek Bankruptcy
                           Court approval of the Successful Bid and the Back-Up Bid. Unless the
                           Bankruptcy Court orders otherwise, the Sale Hearing shall be an
                           evidentiary hearing on matters relating to the Proposed Sale and there will
                           be no further bidding at the Sale Hearing. In the event that the Successful
                           Bidder cannot or refuses to consummate the sale because of the breach or
                           failure on the part of the Successful Bidder, the Back-Up Bidder will be
                           deemed the new Successful Bidder and the Debtors shall be authorized,
                           but not required, to close with the Back-Up Bidder on the Back-Up Bid
                           without further order of the Bankruptcy Court.

                  d.       Notice of Successful Bidder: As soon as immediately practicable after the
                           Auction, but no later than one (1) business day after conclusion of the
                           Auction, the Debtors will provide electronic notice of the results of the
                           Auction on the Court’s docket.

                  e.       Objection Deadline to Sale Order: Objections to the relief sought in the
                           Sale Order shall be in writing, filed and served so as to be actually
14
     The Sale Hearing date, subject to the Court’s availability, to be the earlier of (a) four (4) days from the date of
     conclusion of the Auction and (b) 46 days from entry of the Bid Procedures Order. The dates proposed for the
     (i) Bid Procedures Hearing, (ii) Bid Procedures Objection Deadline, (iii) Bid Deadline, (iv) Auction, (v) Sale
     Hearing and (vi) Sale Hearing Objection Deadline, are subject to the Court’s availability and to approval of the
     Debtors’ requested relief to shorten notice of hearing on this motion.

                                                          14
     received by the parties included in the Order Pursuant to Sections 105(a)
     and (d) of the Bankruptcy Code and Bankruptcy Rules 1015(c), 2002(m)
     and 9007 Implementing Certain Notice and Case Management Procedures
     [Docket No. 60] (the “Case Management Order”) no later than two (2)
     business days before the Sale Hearing, at 4:00 p.m. (prevailing Eastern
     Time).

f.   Data Room: Any person or entity that wishes to conduct due diligence
     with respect to the Assets must first deliver to the Debtors and the
     Creditors’ Committee an executed confidentiality agreement in form and
     substance reasonably satisfactory to the Debtors (a form of which is
     attached as Schedule 2 to the Bid Procedures) (it being understood that
     any person or entity who previously signed a confidentiality agreement in
     a form satisfactory to the Debtors shall not be required to execute a new
     confidentiality agreement). The executed confidentiality agreement must
     signed and be transmitted by the person or entity wishing to become a
     Potential Bidder so as to be received by each of the following parties (the
     “Notice Parties”) prior to any dissemination of confidential information:
     (i) The Blackstone Group, 345 Park Avenue, New York, NY 10154 (Attn:
     Tom Middleton; middleton@blackstone.com and Daniel Chang;
     changd@blackstone.com), financial advisors to the Debtors; (ii) Akin
     Gump Strauss Hauer & Feld LLP, One Bryant Park, New York, NY
     10036-6745 (Attn: Ira S. Dizengoff, Esq.; idizengoff@akingump.com and
     Arik Y. Preis, Esq.; apreis@akingump.com), counsel to the Debtors;
     (iii) FTI Consulting, Inc. 3 Times Square # 9, New York, NY 10036 (Attn:
     Andrew Scruton; Andrew.scruton@fticonsulting.com), financial advisors
     to the Creditors’ Committee; (iv) Otterbourg, Steindler, Houston & Rosen,
     P.C., 230 Park Avenue, New York, NY 10169-0075 (Attn: Scott L. Hazan,
     Esq.; shazan@oshr.com and David M. Posner, Esq.; dposner@oshr.com),
     counsel to the Creditors’ Committee; and (v) counsel to the Ad Hoc
     Group, Kirkland & Ellis LLP, 601 Lexington Avenue, New York, NY
     10022 (Attn: Jonathan S. Henes, Esq.; jonathan.henes@kirkland.com and
     Patrick J. Nash, Esq.; patrick.nash@kirkland.com) (which information in
     all instances in these Bid Procedures shall not be disseminated to any
     members of such Ad Hoc Group unless such members (a) execute
     appropriate confidentiality agreements in form and substance satisfactory
     to the Debtors and (b) provide a verified writing to the Debtors, in form
     and substance satisfactory to the Debtors, that such member will not be
     submitting a bid in the Auction).




                             15
          E.      The Bid Deadline and Bid Procedures

          29.     The deadline for a Potential Bidder to submit bids shall be June 8, 2011 at 5:00

p.m. (prevailing Eastern Time) (the “Bid Deadline”).15 Any Potential Bidder who fails to

submit a bid so as to be received by the Notice Parties (as defined below) in advance of the Bid

Deadline shall not be permitted to participate in the Bidding Process and will not be a Qualified

Bidder.

          30.     Before the Bid Deadline, a Potential Bidder that desires to make a bid shall

deliver copies of its bid in writing and executed by an individual or individuals authorized to

bind the Potential Bidder. Each bid shall be served by courier, facsimile, e-mail or as otherwise

specified by the Debtors to each of the Notice Parties.

          31.     The Debtors believe that the Bid Procedures, substantially in the form annexed as

Exhibit A to the Bid Procedures Order, are appropriate and provide the Debtors with the best

opportunity to maximize the recovery for the Debtors and their estates in connection with the

sale of the Assets. The Bid Procedures provide an appropriate framework for selling the Assets

in an orderly fashion and will enable the Debtors to review, analyze and compare all bids

received to determine which bid(s) are in the best interests of the Debtors and their stakeholders.

Furthermore, the Debtors believe that the Bid Procedures are designed to ensure that the Debtors

do not discourage any Potential Bidder from participating in the Auction and, thus, to maximize

the value of the Assets.

          32.     The salient provisions of the Bid Procedures are:

                  a.       Assets to be Sold: The Auction shall consist of substantially all of the
                           Assets used in the Debtors’ business operations.




15
     The Bid Deadline is proposed to be 35 days from date of entry of the Bid Procedures Order.

                                                        16
                  b.       Potential Bidder: A “Potential Bidder” is a person or entity that the
                           Debtors determine, in consultation with the Creditors’ Committee, is
                           reasonably likely (based on relevant considerations as determined in good
                           faith by the Debtors in consultation with the Creditors’ Committee) to: (a)
                           submit a bona fide offer; and (b) be able to consummate the proposed sale
                           of the Assets (the “Proposed Sale”) if selected as a Successful Bidder or
                           Back-Up Bidder (as defined below).

                  c.       Due Diligence: The Debtors may afford each Potential Bidder the time
                           and opportunity to conduct reasonable due diligence; provided, however,
                           that neither the Debtors nor any of their representatives shall be obligated
                           to furnish any due diligence information: (i) at any time to any person or
                           entity other than a Potential Bidder; or (ii) after the Bid Deadline (as
                           hereinafter defined) to any Potential Bidder. The Debtors may, in the
                           exercise of their business judgment, extend a Qualified Bidder’s time to
                           conduct due diligence after the Bid Deadline until the Auction; provided,
                           however, that the Successful Bidder and Back-Up Bidder shall be
                           permitted to continue to conduct due diligence until closing of the sale
                           (subject to the terms of the Purchase Agreement); provided, further,
                           however, that a Qualified Bid shall not be subject to further due diligence
                           after the Bid Deadline.

                  d.       Required Bid Materials: To participate in the Auction, a bidder must be a
                           Potential Bidder and must deliver a written offer, which includes, at a
                           minimum, the following items (the “Required Bid Materials”) prior to the
                           Bid Deadline:16

                                   i.       Two executed originals of the purchase agreement and
                                            other documents by which the Potential Bidder offers to
                                            purchase the Assets that are the subject of the bid from the
                                            Debtors at the purchase price and upon the terms and
                                            conditions as the Potential Bidder sets forth therein, which
                                            documents should be in substantially the form of the
                                            Purchase Agreement, and any ancillary agreements,
                                            together with a marked copy showing any proposed
                                            changes, amendments or modifications to the Purchase
                                            Agreement (and exhibits) attached as Schedule 1 to the Bid
                                            Procedures.

                                   ii.      A written acknowledgment that the bid is not subject to any
                                            due diligence or financing contingency, is not conditioned
                                            on the payment in any circumstances of a break-up fee,
                                            expense reimbursement or similar type of payment to the
                                            bidder, is irrevocable until entry by the Bankruptcy Court
                                            of the order approving the Proposed Sale (the “Sale

16
     The Bid Deadline is proposed to be 35 days from date of entry of the Bid Procedures Order.

                                                        17
                                             Order”) (unless it is chosen as the Successful Bid or Back-
                                             Up Bid (each as defined below)) and is not subject to any
                                             approvals, consents or conditions except as specified
                                             therein.

                                    iii.     A written acknowledgement by the bidder that it agrees to
                                             all of the terms for sale set forth in these Bid Procedures.

                                    iv.      Specification of the proposed purchase price and of the
                                             Assets that are the subject of the bid.17

                                    v.       Delivery by certified check or wire transfer of a good faith
                                             deposit in immediately available funds equal to 5% of the
                                             proposed purchase price (the “Deposit”) for the Assets that
                                             are the subject of the bid. The Deposit shall be held in
                                             escrow and will be refunded on the terms set forth below.

                                    vi.      Evidence or a statement indicating that the bidder has
                                             obtained authorization and approval from its Board of
                                             Directors (or comparable governing body) with respect to
                                             the submission and consummation of its bid and acceptance
                                             of the terms of sale in these Bid Procedures, or a
                                             representation that no such authorization or approval is
                                             required and that any and all initial consents required in
                                             connection with the submission and consummation of the
                                             bid have been obtained and that no other initial consents are
                                             required.

                                    vii.     Evidence of sufficient cash or other acceptable forms of
                                             currency on hand or written evidence of a commitment for
                                             financing or other evidence of the ability to consummate
                                             the sale satisfactory to the Debtors with appropriate contact
                                             (and any other necessary) information for such financing
                                             sources.

                                    viii.    A list of the Debtors’ executory contracts and unexpired
                                             leases with respect to which the bidder seeks assignment
                                             from the Debtors and a specification of what the bidder
                                             believes to be the appropriate cure amounts and which cure
                                             amounts will be the bidder’s responsibility and which will
                                             be the Debtors’ responsibility. For the avoidance of doubt,

17
     The Debtors have no assurance that their current DIP Lender will continue to provide its DIP Facility after the
     maturity of the current DIP Facility. As such, and to the extent that the current DIP Lender does not extend
     both additional financing as well as the maturity of the Debtors’ current DIP Facility, any Potential Bidder will
     need to provide the Debtors with (or otherwise include in its Required Bid Materials) DIP financing necessary
     to fund the Debtors’ chapter 11 cases and operations through and until the funding date of any sale
     contemplated by the sale process.

                                                         18
                   this information will be included on the notice sent to all
                   assumed contract counterparties (without discussing the
                   name of the bidder) prior to the Auction, as set forth in
                   more detail herein.

            ix.    A written disclosure of the identity of each person or entity
                   that is bidding for the Assets or otherwise participating in
                   connection with such bid and whether such person or entity
                   holds an interest in another mobile satellite service provider
                   and, if so, the name of the mobile satellite service provider
                   and the nature and size of the interest, provided, that the
                   Debtors will keep such information confidential and will
                   not disclose such information without the written consent
                   of the Potential Bidder. Further, each bid must provide
                   sufficient information regarding both the bidder and any
                   participants (and each of their ultimate controlling persons
                   if any), to satisfy the Debtors with respect to the
                   requirements enumerated in section 363(n) of the
                   Bankruptcy Code and to permit the Debtors to ascertain
                   whether a petition for declaratory ruling to permit indirect
                   foreign ownership of TerreStar License, Inc. in excess of
                   25% must be filed with the FCC.

            x.     Such other information as may be reasonably requested in
                   writing by the Debtors at least two calendar days prior to
                   the Bid Deadline.

e.   Qualified Bid: To be a Qualified Bid, a bid (including all Required Bid
     Materials) must:

            i.     be received by the Bid Deadline;

            ii.    not be subject to any due diligence or financing
                   contingency; and

            iii.   not request or entitle the bidder to any break-up fee,
                   expense reimbursement or similar type of payment,
                   provided, however, that the Debtors, in their discretion (and
                   with the reasonable consent of the Creditors’ Committee)
                   may decide to grant break-up fee and expense
                   reimbursement protections to any bidder the Debtors
                   denote as a “Stalking Horse” bidder at any time at least five
                   (5) days prior to the Auction, in accordance with the Bid
                   Procedures.

f.   A bid received from a Potential Bidder that includes all of the Required
     Bid Materials and meets all of the above requirements is a “Qualified Bid”

                             19
     if the Debtors, in consultation with the Creditors’ Committee, determine
     that such bid evidences a bona fide interest and ability to purchase the
     Assets or any material portion thereof. A Potential Bidder that submits a
     Qualified Bid (a “Qualified Bidder”) shall be entitled to participate in the
     Auction. The Debtors reserve the right to contact bidders before or after
     the Bid Deadline to discuss or clarify the terms of their bid and to indicate
     any terms which may need to be modified in order to conform the bid to a
     Qualified Bid or otherwise evaluate the bid.

g.   The Debtors, in consultation with the Creditors’ Committee, may accept a
     single Qualified Bid or multiple bids for non-overlapping material
     portions of the Assets such that, if taken together in the aggregate, would
     otherwise meet the standards for a single Qualified Bid. The Debtors, in
     consultation with the Creditors’ Committee, may also permit otherwise
     Qualified Bidders who submitted bids by the Bid Deadline for a material
     portion of the Assets but who were not identified as a component of a
     single Qualified Bid consisting of multiple bids, to participate in the
     Auction and to submit higher or otherwise better bids that in subsequent
     rounds of bidding may be considered, together with other bids for non-
     overlapping material portions of the Assets, as part of such a single
     Qualifying Bid.

h.   The Qualified Bid selected by the Debtors, in consultation with the
     Creditors’ Committee, as the highest or otherwise best bid following the
     Bid Deadline and prior to the start of the Auction shall be provided to all
     other Qualified Bidders at least 24 hours prior to the start of the Auction
     (the “Opening Bid”).

i.   As set forth in the Bid Procedures Order, at any time at least five (5) days
     prior to the Auction, the Debtors, with the reasonable consent of the
     Creditors’ Committee, may enter into a purchase agreement (the “Stalking
     Horse Agreement”), subject to higher and better offers at the Auction,
     with any bidder that submits a bid (the “Stalking Horse Bidder”) to
     establish a minimum Qualified Bid at the Auction. The Stalking Horse
     Agreement may contain certain customary terms and conditions, including
     expense reimbursement and a break-up fee in an amount to be determined
     by the Debtors, with the reasonable consent of the Creditors’ Committee,
     but in no event shall such break-up fee exceed 2% of the purchase price
     set forth in the Stalking Horse Agreement. At least five (5) days prior to
     the Auction, the Debtors will distribute the Stalking Horse Agreement, if
     any, to the parties submitting other Qualified Bids. To the extent the
     Debtors enter into any such Stalking Horse Agreement, the agreement
     shall be placed on the Bankruptcy Court docket and notice thereof shall be
     given to all parties on the Debtors’ Rule 2002 Notice list.

j.   Reservation of Rights: The Debtors reserve the right to modify the Bid
     Procedures at or prior to the Auction if such modification will better

                              20
                           promote the goals of the Auction, is not materially inconsistent with any
                           prior order of the Bankruptcy Court and the Debtors, in consultation with
                           the Creditors’ Committee, deem such modifications consistent with the
                           performance of their fiduciary obligations.

         F.       The Auction

         33.      If, but only if, more than one Qualified Bid is received by the Debtors before the

Bid Deadline, the Auction shall take place at the offices of Akin Gump Strauss Hauer & Feld

LLP, One Bryant Park, New York, NY 10036-6745 and shall commence on June 15, 2011 at

9:00 a.m. (prevailing Eastern time);18 provided, however, that the Debtors shall have the right,

in consultation with the Creditors’ Committee and counsel to the Ad Hoc Group to adjourn or

cancel the Auction at any time by delivering notice of such adjournment or cancellation to all

Qualified Bidders; provided, further, that the Debtors shall have the right to conduct any number

of Auctions on such date to accommodate Qualified Bids for certain, but less than all, of the

Assets if the Debtors determine, in consultation with the Creditors’ Committee and counsel to the

Ad Hoc Group, that such process would be in the best interest of the Debtors’ estates. The

Debtors shall confirm to all Qualified Bidders the time and place of the Auction.

         34.      Only a Qualified Bidder who is designated as such by the Debtors, in consultation

with the Creditors’ Committee, is eligible to participate at the Auction. During the Auction,

bidding shall begin initially with the Opening Bid, and subsequently continue with minimum

increments of at least $10 million.

         35.      The Auction shall be governed by the following procedures, which procedures

shall be subject to modification by the Debtors as the Debtors, in consultation with the Creditors’

Committee and counsel to the Ad Hoc Group, deem necessary to better promote the goals of the

Auction and to comply with their fiduciary obligations:

18
     The Auction date is proposed to be 42 days from date of entry of the Bid Procedures Order.

                                                        21
a.   The Qualified Bidders shall appear in person at the Auction, or through a
     duly authorized representative.

b.   Only representatives of (i) the Debtors, (ii) persons or entities making
     Qualified Bids, (iii) the administrative agent for the Debtors’ currently
     outstanding DIP Facility (to the extent such representative has executed a
     confidentiality agreement in form and substance satisfactory to the
     Debtors), (iv) the indenture trustee for, any holder of, or any representative
     of the Ad Hoc Group (in the case of any such trustee, holder or
     representative, to the extent such trustee, holder, or representative has
     executed a confidentiality agreement in form and substance satisfactory to
     the Debtors), and (v) the Creditors’ Committee shall be permitted to be
     present at the Auction. For the avoidance of doubt, although these parties
     shall be permitted to be present at the Auction, only Qualified Bidders
     may bid at the Auction.

c.   The terms of each Qualified Bid selected from time to time by the
     Debtors, in consultation with the Creditors’ Committee, as being the
     highest or otherwise best offer at any such time (each such Qualified Bid
     selected at any time, the “Leading Bid” at such time) shall be fully
     disclosed to all other Qualified Bidders. For the avoidance of doubt, each
     Leading Bid and each bid identified as being the highest or otherwise best
     offer for any or all of the Assets at any time shall have no conditions other
     than those disclosed.

d.   The Auction shall commence with the Debtors confirming the particulars
     of the Opening Bid and asking for higher and better offers. The Auction
     shall continue with subsequent rounds of bidding and, after each round,
     the Debtors shall announce the Leading Bid.

e.   The Debtors shall provide for a court reporter to be present at and prepare
     a transcript of the Auction. The Debtors may determine, in their
     discretion, to make all or any part of the transcript subject to
     confidentiality requirements and seal.

f.   Each Qualified Bidder shall be required to confirm that it has not engaged
     in any collusion with respect to the bidding or the proposed sale.

g.   The Debtors, acting in good faith and in the exercise of their fiduciary
     duties to maximize value to the Debtors’ estates, may accept Qualified
     Bids as Leading Bids or as the Successful Bid if such Qualified Bid(s),
     taken together, constitute a sale of all or substantially all of the Assets
     without overlap.

h.   Bidding shall commence at the amount of the Opening Bid. Qualified
     Bidders may then submit successive bids higher than the previous bid in
     increments of no less than $10 million. The Debtors reserve the right, in

                              22
                         consultation with the Creditors’ Committee and counsel to the Ad Hoc
                         Group, to announce reductions or increases in minimum incremental bids
                         (or in valuing such bids) at any time during the Auction.

                 i.      All Qualified Bidders shall have the right to submit additional bids and
                         make additional modifications to the Purchase Agreement or their
                         respective modified purchase agreements, as applicable, at the Auction to
                         improve such bids.

                 j.      The Auction may include individual negotiations with the Qualified
                         Bidders and/or open bidding in the presence of all other Qualified Bidders.

                 k.      The Debtors reserve the right, in consultation with the Creditors
                         Committee and counsel to the Ad Hoc Group to (i) determine, in their
                         reasonable discretion which bid is the highest or otherwise best, and (ii)
                         reject at any time, without liability, any offer that the Debtors, in their
                         reasonable discretion deem to be (1) inadequate or insufficient, (2) not in
                         conformity with the requirements of the Bankruptcy Code, the Bankruptcy
                         Rules, the Local Rules or procedures set forth therein or in the Bid
                         Procedures Order, or (3) contrary to the best interests of the Debtors and
                         their estates.

                 l.      The Auction shall continue until there is only one bid (or more than one
                         bid for non-overlapping portions of the Assets that collectively constitute
                         substantially all of the Assets) that the Debtors determine, in consultation
                         with the Creditors’ Committee, and subject to Bankruptcy Court approval,
                         is the highest or otherwise best offer or offers that together constitute the
                         highest or otherwise best offer or offers for the Assets from among the
                         Qualified Bidders submitted at the Auction (the “Successful Bid”). In
                         determining the Successful Bid, the Debtors, in consultation with the
                         Creditors’ Committee and counsel to the Ad Hoc Group and in the
                         exercise of the Debtors’ business judgment, shall consider, without
                         limitation, the amount of the purchase price, the form of consideration
                         being offered (i.e. although the Debtors will consider all forms of
                         consideration, the Debtors prefer cash to all other types of consideration),
                         the Qualified Bidders’ ability to complete the transaction constituting the
                         Successful Bid (including without limitation, the ability to obtain any
                         required regulatory approvals or consents or the lack thereof), the
                         proposed timing thereof, the contracts being assumed by the bidder19, the
                         rights of such Qualified Bidder and the Debtors with respect to the
                         termination thereof, the number, type and nature of any changes reflected
                         in the purchase agreement requested by each Qualified Bidder, and the net
                         benefit to the Debtors’ estates. The Qualified Bidder(s) submitting such
                         Successful Bid(s) for the Assets shall become the “Successful Bidder(s),”

19
     The form of Purchase Agreement contains a closing condition with respect to the assumption of certain
     specified contracts.

                                                    23
                           and shall have such rights and responsibilities of a purchaser, as set forth
                           in the Purchase Agreement, or modified definitive purchase agreement, as
                           applicable. The next highest or otherwise best bid will be the “Back-Up
                           Bid” and the maker of the bid will be the “Back-Up Bidder.” Within two
                           (2) days after conclusion of the Auction, the Successful Bidder, the Back-
                           Up Bidder and the Debtors shall complete and execute all agreements,
                           contracts, instruments or other documents evidencing and containing the
                           terms and conditions upon which the Successful Bid and the Back-Up Bid
                           were made (subject, in the case of the Debtors, to the qualifications set
                           forth in “Acceptance and Termination of Qualified Bids” below).

         36.      The Successful Bid(s) submitted at the Auction shall constitute an irrevocable

offer and be binding on the Successful Bidder and the Back-Up Bidder from the time the bid is

submitted until the earliest of (1) [       , 2011]20 or (2) entry of the Sale Order. If the Successful

Bid and Back-Up Bid are approved pursuant to the Sale Order, the Successful Bid shall be

binding in accordance with the terms of the Purchase Agreement, and the Back-Up Bid shall be

binding until 20 days after entry of the Sale Order. Each Qualified Bid that is not the Successful

Bid or the Back-Up Bid as approved by the Bankruptcy Court at the Sale Hearing shall be

deemed withdrawn and terminated at the conclusion of the Sale Hearing. Each bid (including the

Successful Bid) shall be deemed withdrawn if the Auction is canceled or does not take place

prior to 75 days after Bankruptcy Court approval of the Bid Procedures unless extended by

mutual agreement of the Debtors and the bidder in question.

         37.      The Debtors intend to sell the Assets to the Successful Bidder upon the approval

of the Successful Bid and the Back-Up Bid(s) by the Bankruptcy Court after the Sale Hearing.

The Debtors’ presentation of a particular Successful Bid and Back-Up Bid to the Bankruptcy

Court for approval does not constitute the Debtors’ acceptance of the bid. The Debtors will be

deemed to have accepted a bid only when the bid has been approved by the Bankruptcy Court at

the Sale Hearing.

20
     Proposed to be 75 days from date of entry of the Bid Procedures Order.

                                                        24
          38.   Each Deposit submitted pursuant to the Bid Procedures will be held in escrow by

the Escrow Agent and will not become property of the Debtors’ estates absent further order of the

Bankruptcy Court. Within two Business Days following the approval by the Bankruptcy Court

of the Successful Bidder and Back-Up Bidder, the Escrow Agent shall return the Deposits made

by any other Qualified Bidders and the Escrow Agent shall return the Back-Up Bidder’s Deposit

within two business days after the Back-Up Bid is terminated in accordance with the provisions

herein.

          39.   If the Successful Bidder or the Back-Up Bidder shall fail to consummate an

approved sale because of a breach or failure to perform on the part of such Successful Bidder (or

Back-Up Bidder, as the case may be), the Debtors shall be entitled to retain such Successful

Bidder’s (or Back-Up Bidder’s, as the case may be) Deposit, in addition to other additional

remedies available to the Debtors under applicable law. The Debtors shall credit the Deposit of

the Successful Bidder or the Back-Up Bidder towards the purchase price at the time of funding

pursuant to the terms of the Purchase Agreement.

          G.    Reservation of Rights to Enter Into Stalking Horse Agreement and Provide
                the Break-Up Fee in Connection Therewith

          40.   Pursuant to the motion, the Debtors have determined, in their reasonable business

judgment, that seeking the relief requested herein without entering into a Stalking Horse

Agreement is warranted and necessary. The Debtors are, however, continuing their discussions

with potential purchasers, and reserve the right to enter into a Stalking Horse Agreement if the

Debtors believe that such an agreement will further the purposes of the Auction, by among other

things, enticing value maximizing bids.

          41.   Accordingly, the Debtors request authority, in the exercise of their business

judgment, to offer any Stalking Horse Bidder: (i) a break-up fee (the “Break-Up Fee”) in an


                                               25
amount to be determined by the Debtors, with the reasonable consent of the Creditors’

Committee, not to exceed 2% of the total purchase price guaranteed by such Stalking Horse

Bidder (the “Guaranteed Price”) and/or reimbursement of the Stalking Horse Bidder’s

reasonable fees and expenses (the “Expense Reimbursement”); and/or (ii) initial overbid

protection in an amount to be determined by the Debtors, with the reasonable consent of the

Creditors’ Committee, to be announced prior to the Auction (the “Initial Overbid” and, together

with the Break-Up Fee and the Expense Reimbursement, the “Bidding Protections”). The

Debtors also request that, to the extent they enter into any Stalking Horse Agreement, any Break-

Up Fee and/or Expense Reimbursement be granted administrative expense priority under

Bankruptcy Code sections 503(b) and 507(a)(2).

                               ASSUMPTION PROCEDURES

       42.     Within two (2) business days after receiving the schedule from each Qualified

Bidder of those executory contracts and unexpired leases it wishes to assume (the “Designated

Contracts”) and no later than nine (9) days before the Sale Hearing (subject to adjustment as

provided below), the Debtors shall file with the Court and serve on each counterparty to an

executory contract or unexpired lease set forth on such schedule a notice of assumption,

assignment, and cure (the “Cure Notice”), substantially in the form attached as Exhibit C to the

proposed Bid Procedures Order.       The Cure Notice shall include the proposed purchasers’

calculation of the cure amount (the “Cure Amount”) for each such Designated Contract. A list of

the Designated Contracts and Cure Amounts shall be posted on the Website by two (2) days after

the Bid Deadline and updated as modified by each bidder.

       43.     Any counterparty to a Designated Contract shall file and serve any objections to

(i) the proposed assumption and assignment set forth in the Cure Notice and (ii) if applicable, the

proposed Cure Amount, no later than two (2) days before the Sale Hearing. If any executory
                                                26
contract or unexpired lease is added to the schedule of Designated Contracts, a copy of the

applicable Cure Notice shall be served on the counterparty by overnight courier service within

one (1) business day of such addition (and in no event less than one (1) business day before the

Sale Hearing) and any counterparty may file an objection as aforesaid at any time that is two

hours prior to the Sale Hearing.

       44.     At the Sale Hearing, only those contracts (and the corresponding Cure Amounts)

listed on the Cure Notice that have been selected to be assumed by the Successful Bidder at the

Auction (the “Selected Contracts”) shall be subject to approval by the Bankruptcy Court, and the

Debtors shall reserve their rights for all other contracts. If no objection to the Cure Notice with

respect to the Selected Contracts is timely received, (i) the counterparty to a Selected Contract

shall be deemed to have consented to the assumption and assignment of the Selected Contract to

the Successful Bidder and shall be forever barred from asserting any objection with regard to

such assumption and assignment, and (ii) the Cure Amount set forth in the Cure Notice shall be

controlling, notwithstanding anything to the contrary in any Selected Contract, or any other

document, and the counterparty to a Selected Contract shall be deemed to have consented to the

Cure Amount and shall be forever barred from asserting any other claims related to such Selected

Contract against the Debtors or the Successful Bidder, or the property of any of them.

              THE SALE IS WARRANTED AND IN THE BEST INTERESTS
             OF THE DEBTORS AND THEIR ECONOMIC STAKEHOLDERS

       A.      Sale of the Assets

       45.     Ample authority exists for approval of the proposed sale. Bankruptcy Code

section 363 provides, in relevant part, that “[t]he trustee, after notice and a hearing, may use, sell,

or lease, other than in the ordinary course of business, property of the estate.” 11 U.S.C. §

363(b)(1). Courts in the Second Circuit and others, in applying this section, have required that


                                                  27
the sale of a debtor’s assets be based upon the sound business judgment of the debtor. See, e.g.,

Official Comm. of Unsecured Creditors v. LTV Corp. (In re Chateaugay Corp.), 973 F.2d 141,

143 (2d Cir. 1992) (holding that a judge reviewing a section 363(b) application must find from

the evidence presented a good business reason to grant such application); Comm. of Equity Sec.

Holders v. Lionel Corp. (In re Lionel Corp.), 722 F.2d 1063, 1071 (2d Cir. 1983) (same). Once a

court is satisfied that there is a sound business justification for the proposed sale, the court must

then determine whether (i) the debtor has provided the interested parties with adequate and

reasonable notice, (ii) the sale price is fair and reasonable, and (iii) the purchaser is proceeding in

good faith. In re Betty Owens Sch., Inc., No. 96 Civ. 3576 (PKL), 1997 WL 188127, at *4

(S.D.N.Y. Apr. 17, 1997); In re Del. and Hudson Ry. Co., 124 B.R. 169, 176 (D. Del. 1991); In re

Decora Indus., Inc., No. 00-4459 (JJF), 2002 WL 32332749, at *2 (D. Del. May 20, 2002).

       46.     As described above, the Debtors have attempted to maximize value in these cases

through a chapter 11 plan, an alternative path, and a stalking horse bidder. Currently, however, it

is the Debtors’ business judgment that a Sale Transaction without a stalking horse bidder

provides the Debtors with the best alternative to maximize the value of their estates.             By

proceeding with the Sale Transaction, the Debtors will encourage competitive bidding to obtain

the best recovery for their creditors on assets in which the market has demonstrated significant

interest while still maintaining sufficient flexibility for other parties to propose alternative plan

structures that yield more value for the Debtors’ stakeholders. Given the clear interest in the

satellite and telecommunications space at the current time, the Debtors believe that the Sale

Transaction presents the best path to unlock the value of their Assets. Through the Auction

process, at the Sale Hearing, and after the Auction is concluded, the Court will be assured that




                                                  28
the Debtors have selected the party or parties with the highest or otherwise best offer for the

Assets.

          47.   The proposed Sale Notice and the proposed Bid Procedures are appropriate,

reasonable and designed to ensure the most robust bidding and auction process possible for the

Assets. As stated, the Sale Notice will be promptly served on the Sale Notice Parties and will be

timely published in newspapers of general circulation. In addition, before the Bid Deadline, the

Debtors’ financial advisors will continue to contact various parties who have previously

expressed an interest in acquiring assets of the Debtors to determine whether such parties are

interested in submitting a bid.      The Debtors believe that this process provides more than

sufficient notice and a reasonable period in which to attract bids, particularly in view of the

extensive marketing activities engaged in by the Debtors and their financial advisors prior to and

since the Petition Date with respect to any potential alternative transaction. Indeed, by the

proposed date of the Auction, the Debtors will have been actively marketing their assets for

three-quarters of a year.

          B.    Sale Free and Clear of Liens, Claims, Encumbrances, and Interests

          48.   Pursuant to Bankruptcy Code section 363(f), a debtor in possession may sell

property of the estate:

                free and clear of any interest in such property of an entity other
                than the estate if (1) applicable nonbankruptcy law permits the sale
                of such property free and clear of such interest, (2) such entity
                consents, (3) such interest is a lien and the price at which such
                property is to be sold is greater than the aggregate value of all liens
                on such property, (4) such interest is in bona fide dispute, or (5)
                such entity could be compelled, in a legal or equitable proceeding,
                to accept a money satisfaction of such interest.

11 U.S.C. § 363(f).




                                                  29
         49.      The Debtors believe that, pursuant to the Purchase Agreement corresponding to

any Successful Bid, one or more of the tests of Bankruptcy Code section 363(f) are satisfied with

respect to the transfer of the Assets.21 In particular, the Debtors believe that they meet, among

others, the test set forth in section 363(f)(5).22 Any parties in interest that assert liens, claims,

encumbrances or other interests in, to or against the Acquired Assets will be adequately protected

by having their liens, if any, attach to the proceeds of the Sale Transaction, in the same order of

priority, with the same validity, force and effect that such parties had prior to the Sale

Transaction, subject to any claims and defenses that the Debtors and their estates may possess

with respect thereto. Accordingly, section 363(f) authorizes the transfer and conveyance of the

Assets free and clear of all liens, claims, encumbrances and all other interests.

         50.      The Debtors also submit that it is appropriate to sell the Assets free and clear of

successor liability relating to the Debtors’ businesses.                  Such a provision ensures that the

Successful Bidder is protected from any claims or lawsuits premised on the theory that the

Successful Bidder is a successor in interest to one or more of the Debtors.                             Courts have

consistently held that a buyer of a debtor’s assets pursuant to a section 363 sale takes free from

successor liability relating to the debtor’s business. See, e.g., MacArthur Co. v. Johns-Manville

Corp. (In re Johns-Manville Corp.), 837 F.2d 89, 93-94 (2d Cir. 1988) (holding that channeling

of claims to proceeds is consistent with intent of sale free and clear under section 363(f) of the

Bankruptcy Code); In re Chrysler LLC, 405 B.R. 84, 111 (Bankr. S.D.N.Y. 2009) (“[S]uccessor

or transferee liability claims against [the purchaser] are encompassed by section 363(f) and are

21
     In addition to meeting the tests set forth in Bankruptcy Code sections 363(f)(3) and 363(f)(5), the Debtors
     believe that, in light of the current adversary proceeding regarding the validity of the Senior Secured Notes’
     liens, see Sprint Nextel Corp. v. U.S. Bank Assoc. (In re TerreStar Networks Inc.), No. 10-05461 (Bankr.
     S.D.N.Y. Dec. 17, 2010), section 363(f)(4) may also be satisfied with respect to the transfer of the Assets.
22
     Although the Debtors are not relying on section 363(f)(3) at this point because they have not chosen a “stalking
     horse bidder,” the Debtors believe that based on market indications, it is possible that a sale will be for a price
     greater than the aggregate value of all liens on the assets being sold.

                                                          30
therefore extinguished by the Sale Transaction.”), aff’d, 2009 U.S. App. LEXIS 17441 (2d Cir.

Aug. 5, 2009). The purpose of an order purporting to authorize the transfer of assets free and

clear of all liens, claims, encumbrances and all other interests would be frustrated if claimants

could thereafter use the transfer as a basis to assert claims against a purchaser arising from a

seller’s pre-sale conduct. Moreover, without such assurances, the Debtors would run the risk that

potential bidders may not enter the Auction or, if they did, would do so with reduced bid

amounts. To that end, the Successful Bidder should not be liable under any theory of successor

liability relating to the Debtors’ businesses, but should hold the purchased Assets free and clear.

        C.     Protections As a Good Faith Purchaser

        51.    Bankruptcy Code section 363(m) protects a good-faith purchaser’s interest in

property purchased from a debtor notwithstanding that the sale conducted under Bankruptcy

Code section 363(b) is later reversed or modified on appeal. Specifically, section 363(m) states

that:

               The reversal or modification on appeal of an authorization under
               [section 363(b)] ... does not affect the validity of a sale ... to an
               entity that purchased ... such property in good faith, whether or not
               such entity knew of the pendency of the appeal, unless such
               authorization and such sale ... were stayed pending appeal.

11 U.S.C. § 363(m). Section 363(m) “affords ‘finality to judgment by protecting good faith

purchasers, the innocent third parties who rely on the finality of bankruptcy judgments in making

their offers and bids.’” Reloeb Co. v. LTV Corp (In re Chateaugay Corp.), No. 92 Civ. 7054

(PKL), 1993 WL 159969, at *3 (S.D.N.Y. May 10, 1993) (quoting In re Stadium Mgmt. Corp.,

895 F.2d 845, 847 (1st Cir. 1990)); see also Allstate Ins. Co. v. Hughes, 174 B.R. 884, 888

(S.D.N.Y. 1994) (“Section 363(m) . . . provides that good faith transfers of property will not be

affected by the reversal or modification on appeal of an unstayed order, whether or not the

transferee knew of the pendency of the appeal”); In re Stein & Day, Inc., 113 B.R. 157, 162

                                                 31
(Bankr. S.D.N.Y. 1990) (“pursuant to 11 U.S.C. § 363(m), good faith purchasers are protected

from the reversal of a sale on appeal unless there is a stay pending appeal”).

         52.      The Second Circuit has indicated that a party would have to show fraud or

collusion between the buyer and the debtor in possession or trustee or other bidders in order to

demonstrate a lack of good faith. See Kabro Assocs. of W. Islip, LLC v. Colony Hill Assocs. (In re

Colony Hill Assocs.), 111 F.3d 269, 276 (2d Cir. 1997) (“[t]ypically, the misconduct that would

destroy a [buyer]’s good faith status at a judicial sale involves fraud, collusion between the

[buyer] and other bidders or the trustee, or an attempt to take grossly unfair advantage of other

bidders”); see also In re Angelika Films 57th, Inc., Nos. 97 Civ. 2239 (MBM), 97 Civ. 2241

(MBM), 1997 WL 283412, at *7 (S.D.N.Y. 1997) (same; holding that purchaser’s status as an

insider was not per se bad faith).

         53.      Here, the Successful Bidder will have engaged in the Auction pursuant to the

proposed Bid Procedures, and any Purchase Agreement proposed by a Successful Bidder will be

the product of arm’s-length, good-faith negotiations in a competitive bidding process. Indeed,

and to that end, the Debtors have included a form asset purchase agreement for bidders to use

that was formulated by the Debtors to ensure that all parties are beginning on a level playing

field.23 Moreover, by subjecting the Assets to a market test through the Auction, the Debtors

submit that the consideration to be received will be fair and reasonable. Based upon the record

to be made at the Sale Hearing, the Debtors will request a finding that the Successful Bidder is a

good-faith purchaser entitled to the protections of Bankruptcy Code section 363(m).




23
     The Debtors have included a cover letter to go with the form asset purchase agreement to ensure that bidders are
     aware of the fact that the Debtors are open to alternative structures.

                                                         32
       D.      Bid Procedures

       54.     Courts have made clear that a debtor’s business judgment is entitled to substantial

deference with respect to the procedures to be used in selling assets of the estate. See, e.g.,

Official Comm. of Subordinated Bondholders v. Integrated Res., Inc. (In re Integrated Res., Inc.),

147 B.R. 650, 656-57 (S.D.N.Y. 1992), appeal dismissed, 3 F.3d 49 (2d Cir. 1993) (noting that

overbid procedures and break-up fee arrangements that have been negotiated by a debtor are to

be reviewed according to the deferential “business judgment” standard, under which such

procedures and arrangements are “presumptively valid”); In re 995 Fifth Ave. Assocs., L.P., 96

B.R. 24, 28 (Bankr. S.D.N.Y. 1989) (holding that the business judgment standard protects break-

up fees and other contractual provisions negotiated in good faith).

       55.     The paramount goal in any proposed sale of property of the estate is to maximize

the proceeds received by the estate. See, e.g., Integrated Res., 147 B.R. at 659 (“It is a well-

established principle of bankruptcy law that the . . . [debtors’] duty with respect to such sales is

to obtain the highest price or greatest overall benefit possible for the estate.”) (quoting Cello Bag

Co. Inc. v. Champion Int’l Corp. (In re Atlanta Packaging Prods., Inc.), 99 B.R. 124, 130 (Bankr.

N.D. Ga. 1988)); see also Four B. Corp. v. Food Barn Stores, Inc. (In re Food Barn Stores, Inc.),

107 F.3d 558, 564-65 (8th Cir. 1997) (in bankruptcy sales, “a primary objective of the Code [is]

to enhance the value of the estate at hand”). To that end, courts recognize that procedures

intended to enhance competitive bidding are consistent with the goal of maximizing the value

received by the estate and therefore are appropriate in the context of bankruptcy sales. See, e.g.,

Integrated Res., 147 B.R. at 659 (such procedures “encourage bidding and to maximize the value

of the debtor’s assets”).

       56.     The Debtors’ recognition of this important point is underscored by the fact that

the Debtors turned away a potential stalking horse bidder that had proposed a significant
                                                 33
purchase price because that bid would have come with significant constraints on the Debtors’

ability to run a full and fair auction. Instead, the Debtors believe that the currently proposed Bid

Procedures will establish parameters pursuant to which the value of the Assets may be fully

tested at the Auction and ensuing Sale Hearing. Such procedures will increase the likelihood that

the Debtors receive the greatest possible consideration for the Assets because they will ensure a

competitive and fair bidding process that will encourage participation by financially capable

bidders who demonstrate the ability to close such a transaction. Indeed, the Debtors have put

limited (if any) constraints on the ability of prospective purchasers to bid on the Debtors’ assets,

and instead have encouraged bid flexibility by, among other features, allowing bidders to pool

bids and bid with non-cash consideration. Further, the Debtors have instituted mechanisms to

ensure an open and robust bidding process at the Auction. Therefore, the Debtors believe that

the Bid Procedures (i) will encourage bidding for the Assets, (ii) are consistent with other

procedures previously approved by courts in this district and (iii) are appropriate under the

relevant standards governing auction proceedings and bidding incentives in bankruptcy

proceedings. See, e.g., Integrated Res., 147 B.R. at 659; 995 Fifth Ave. Assocs., 96 B.R. at 28.

       57.     Thus, the proposed Bid Procedures are reasonable, appropriate and within the

Debtors’ sound business judgment under the circumstances because they will serve to maximize

the value the Debtors will recover on account of a sale of the Assets.

       E.      Ability to Enter into Stalking Horse Agreement with Break-Up Fee

       58.     Pursuant to the motion, the Debtors are seeking the pre-approval of this Court to

allow the Debtors to choose a Stalking Horse Bidder at any time after entry of the Bid

Procedures Order and to offer that bidder, with the reasonable consent of the Creditors’

Committee, the Bidding Protections without the need to return to Court. While such procedures

are, admittedly, not always found in “naked” auctions, the Debtors believe that, in this case, such
                                                34
relief is warranted to ensure the Debtors’ ability to take advantage of a potentially value-

maximizing bid.24 The ability of the Debtors to offer any Stalking Horse Bidder the Bidding

Protections is beneficial to the Debtors’ estates and creditors in that the Debtors can provide the

incentive required to induce a Potential Bidder to submit or increase its bid prior to the Auction.

To the extent bids can be improved prior to the Auction, a higher floor is established for further

bidding. Thus, even if a Stalking Horse Bidder is offered the Bidding Protections and ultimately

is not the Successful Bidder, the Debtors and their estates will have benefited from the higher

floor established by the improved bids. The Debtors will exercise prudent business judgment

before offering or agreeing to any of the Bidding Protections and will only do so if such

protections, in the reasonable business judgment of the Debtors and with the reasonable consent

of the Creditors’ Committee, will likely result in the realization of greater value for the Debtors

and their estates.

         59.      Approval of break-up fees and other forms of bidding protections in connection

with the sale of significant assets pursuant to Bankruptcy Code section 363 is appropriate to

protect a potential purchaser from competing purchasers that use a stalking horse offer as a

baseline to submit a better offer without undertaking customary diligence. In re Metaldyne Corp.,

409 B.R. 661, 670 (Bankr. S.D.N.Y. 2009) (approving bid protections because, among other

factors, “the stalking horse bid brings value to the estate by setting a floor on the price and

providing a structure for potential competing bids . . . [and] would provide comfort to the

Debtors’ employees and customers that the company was entering the auction with a locked-in

bid.”); In re Marrose Corp., Nos. 89 B. 12171 to 89 B. 12179, 1992 WL 33848, at *5 (Bankr.

24
     Indeed, the Debtors are cognizant of the fact that in the DBSD case, the “stalking horse” break-up fee was never
     approved because the “stalking horse” bidder was “forced to raise its bid and effectively participate in an
     auction prior to the hearing to approve the break-up fee.” See Debtors’ Statement Regarding Status and Results
     of Marketing Process, No. 09-13091 (REG) (March 15, 2011). The Debtors are wary of a similar situation
     occurring here.

                                                         35
S.D.N.Y. 1992) (bidding incentives are “meant to compensate the potential acquirer who serves

as a catalyst or ‘stalking horse’ which attracts more favorable offers”).

        60.     Bankruptcy courts have approved bidding incentives similar to the Break-Up Fee

under the business judgment rule, which proscribes judicial second-guessing of the actions of a

corporation’s board of directors taken in good faith and in the exercise of honest judgment. See,

e.g., Integrated Res., Inc., 147 B.R. at 656-62 (approving break-up fee expense reimbursement

and noting that break-up fee arrangements that have been negotiated by a debtor are to be

reviewed according to the deferential “business judgment” standard, under which such

procedures and arrangements are “presumptively valid”); Fifth Ave. Assocs., L.P., 96 B.R. at 28

(respecting the debtors’ business judgment that bidding incentives were “legitimately necessary

to convince a ‘white knight’ to enter the bidding by providing some form of compensation for the

risks it is undertaking”).

        61.     In addition, the maximum amount of the Break-Up Fee (2% of the purchase price)

is reasonable relative to the assets being proposed to be purchased, and comparable to those

approved in the context of asset sales in other large chapter 11 cases. See e.g., In re Neff Corp.,

No. 10-12610 (SCC) (Bankr. S.D.N.Y. July 13, 2010) [Docket No. 267] (approving break-up fee

of approximately 2.5% of backstopped rights offering amount and expense reimbursement of up

to $1 million); In re Extended Stay, Inc., No. 09-13764 (JMP) (Bankr. S.D.N.Y. Apr. 23, 2010)

[Docket No. 975] (approving liquidated damages of 10% of overall enterprise value to successful

bidder and expense reimbursement of up to $10 million); In re BearingPoint, Inc., No. 09-10691

(REG) (Bankr. S.D.N.Y. Apr. 7, 2009) [Docket No. 369] (approving a break-up fee of

approximately 3% of the purchase price and expense reimbursement up to $1.5 million); In re




                                                 36
Adelphia Bus. Solutions, Inc., No. 02-11389 (REG) (Bankr. S.D.N.Y. Dec. 16, 2002) [Docket No.

760] (approving break-up fee of 2.5% of the purchase price and expense reimbursement).

       62.     Likewise, any Stalking Horse Bidder should be entitled to the Expense

Reimbursement. Approval of the Expense Reimbursement as a form of bidder protection in

connection with a sale of assets pursuant to Bankruptcy Code section 363 is appropriate and has

become a recognized practice in chapter 11 cases because it enables a debtor to ensure a sale to a

contractually committed buyer at a price the debtor believes is fair, while providing the debtor

with the potential of obtaining an enhanced recovery through an auction process. See, e.g.,

Integrated Res., Inc. 147 B.R. 650 (approving break-up fee and expense reimbursement as

necessary incentives for stalking horse bidder); In re Lehman Bros. Holdings Inc., et al., No. 08-

13555 (JMP) (Bankr. S.D.N.Y. Oct. 22, 2008) [Docket No. 1175] (same); In re Steve & Barry’s

Manhattan LLC, et al., No. 08-12579 (ALG) (Bankr. S.D.N.Y. Aug. 5, 2008) [Docket No. 369]

(same); In re Bally Total Fitness of Greater N.Y., Inc., No. 07-12395 (BRL) (Bankr. S.D.N.Y.

Aug. 21, 2007) [Docket No. 269] (same).

       63.     Although not standard practice, there is substantial justification for authorizing

the Debtors to choose a stalking horse bidder after approval of the Bid Procedures but before the

Auction in a situation in which (a) the stalking horse bidder is not readily apparent and (b) any

such later determination to enter into a Stalking Horse Agreement will only be made with the

consent of the Creditors’ Committee. See, e.g., In re Footstar, Inc., No. 04-22350 (ASH) (Bankr.

S.D.N.Y. Apr. 5, 2004) [Docket No. 316] (approving a break-up fee if the debtors, after

consultation with the DIP lenders and the creditors’ committee, determined in their business

judgment to enter into a “stalking horse” asset purchase agreement); In re Rhythms

NetConnections Inc., No. 01-14283 (BRL) (Bankr. S.D.NY. Aug. 8, 2001) [Docket No. 51]



                                               37
(approving a break-up fee if the debtors determined in their sound business judgment that it was

in the best interests of the estates to enter into a "stalking horse" asset purchase agreement); In re

Leiner Health Products Inc., No. 08-10446 (Bankr. D. Del. May 14, 2008) [Docket No. 299]

(authorizing the Debtors, with the consent of, inter alia, the creditors’ committee, to set a

telephonic hearing with the court to approve a stalking horse agreement and break-up fee). In

this case, where the Debtors have not yet been presented with an acceptable stalking horse bid

but remain hopeful that such a bid will emerge, pre-approval of the Bidding Protections may be

beneficial to the Debtors’ efforts to attract a higher and better offer to maximize value for all

constituents.

       64.      The Debtors submit that, to the extent they determine that it is in the best interests

of their estates to enter into a Stalking Horse Agreement, the Bidding Protections meet the

business judgment standard.       Specifically, the Break-Up Fee is reasonable because, at a

maximum of 2% of any Guaranteed Price, (i) it is not excessive compared to fees and

reimbursements approved in other cases and (ii) it will not diminish the Debtors’ estates. More

generally, the Bidding Protections would enable the Debtors to assure a sale to a contractually

committed bidder at a price that the Debtors, with the reasonable consent of the Creditors’

Committee, believe is fair and reasonable, while providing the Debtors the opportunity to obtain

even more value for their estates through the Auction.

       65.      The Debtors submit that the proposed Bidding Protections will not chill bidding –

instead, they will only be offered, with the reasonable consent of the Creditors’ Committee, if the

Debtors receive a bid that is worthy of such protections. Moreover, the Bidding Protections are

reasonable, and their availability to the Debtors will enable the Debtors to maximize the value of




                                                 38
their estates.    Accordingly, the Debtors should be authorized to offer such forms of bid

protection, as is necessary in the Debtors’ business judgment.

       F.        Assumption and Assignment of Designated Contracts

       66.       To facilitate and affect the sale of the Assets, the Debtors seek authorization to

assume and assign the Selected Contracts to the Successful Bidder. Bankruptcy Code section

365(a) provides that a debtor in possession, “subject to the court’s approval, may assume or

reject any executory contract or unexpired lease of the debtor.” 11 U.S.C. § 365(a). A debtor’s

decision to assume an executory contract or unexpired lease must be an exercise of its sound

business judgment for the Court to approve the assumption under Bankruptcy Code section

365(a). See Nostas Assocs. v. Costich (In re Klein Sleep Prods., Inc.), 78 F.3d 18, 25

(2d Cir. 1996); Orion Pictures Corp. v. Showtime Networks, Inc. (In re Orion Pictures Corp.),

4 F.3d 1095, 1099 (2d Cir. 1993). In connection with the proposed sale, the Debtors will assume

and assign only the Selected Contracts (i.e. those executory contracts and unexpired leases that

the Successful Bidder has indicated it wants to assume).

       67.       Further, Bankruptcy Code section 365(k) provides that assignment by the debtor

to an entity of a contract or lease “relieves the trustee and the estate from any liability for any

breach of such contract or lease occurring after such assignment.” 11 U.S.C. § 365(k).

Therefore, upon the closing of the Sale Transaction (or the effective date of a plan, whichever is

earlier), the Debtors will be relieved of their obligations under the Selected Contracts, thereby

further decreasing the obligations of the estate and creating value for creditors.

       68.       The Debtors’ assumption of the Selected Contracts will be contingent upon

payment of the Cure Amounts. Bankruptcy Code section 365(b)(1) requires that any outstanding

defaults under contracts that will be assumed must be cured or that adequate assurance be

provided to the contract counterparties that such defaults will be promptly cured. As set forth in
                                                 39
the Assumption Procedures above, the Debtors propose to file with the Court, publish on the

Website, and serve on each counterparty to a Designated Contract a notice25 that shall include the

Debtors’ calculation of the Cure Amount for each such Designated Contract.                             Contract

counterparties shall have the opportunity to object to the proposed assumption and assignment to

the Successful Bidder and, if applicable, the proposed Cure Amount, and any such objections

will be heard and determined at the Sale Hearing. The Successful Bidder shall be obligated to

pay or cause to be paid any and all Cure Amounts with respect to the Selected Contracts to be

assumed. In the event of any dispute relating to any Cure Amount, the Successful Bidder may

elect not to assume the Selected Contract if it is unsatisfied with the resolution of such dispute.

         69.     Pursuant to Bankruptcy Code section 365(f)(2), a debtor may assign an executory

contract or unexpired lease of nonresidential real property if “adequate assurance of future

performance by the assignee of such contract or lease is provided.” 11 U.S.C. § 365(f)(2)(B).

The meaning of “adequate assurance of future performance” depends on the facts and

circumstances of each case, but should be given “practical, pragmatic construction.” See Carlisle

Homes, Inc. v. Azzari (In re Carlisle Homes, Inc.), 103 B.R. 524, 538 (Bankr D.N.J. 1988)

(internal citations omitted); see also In re Natco Indus., Inc., 54 B.R. 436, 440 (Bankr. S.D.N.Y.

1985) (holding that adequate assurance of future performance does not mean absolute assurance

that debtor will thrive and pay rent); In re Bon Ton Rest. & Pastry Shop, Inc., 53 B.R. 789, 803

(Bankr. N.D. Ill. 1985) (“Although no single solution will satisfy every case, the required

assurance will fall considerably short of an absolute guarantee of performance.”). Among other

things, adequate assurance may be given by demonstrating the assignee’s financial health and


25
     To be clear, the notice will include the Cure Amounts for each contract that any Qualified Bidder seeks to
     assume. If a contract was included in the notice but is not part of the Successful Bidder’s list of Selected
     Contracts (which will be noticed at least 48 hours prior to the Sale Hearing), the Debtors will not seek to
     assume such contracts at the Sale Hearing.

                                                       40
experience in managing the type of enterprise or property assigned. See In re Bygaph, Inc., 56

B.R. 596, 605-06 (Bankr. S.D.N.Y. 1986) (finding adequate assurance of future performance

when prospective assignee of lease had financial resources and expressed willingness to devote

sufficient funding to business to give it strong likelihood of succeeding; in the leasing context,

chief determinant of adequate assurance is whether rent will be paid).

         70.      At the Sale Hearing, to the extent necessary, the Debtors will be prepared to

proffer testimony or present evidence to demonstrate the ability of the Successful Bidder to

perform under the Selected Contracts. The Sale Hearing, therefore, will provide the Court and

other interested parties with the opportunity to evaluate the ability of the Successful Bidder to

provide adequate assurance of future performance under the Selected Contracts, as required by

Bankruptcy Code section 365(b)(1)(C). Accordingly, it is requested that, at the conclusion of the

Sale Hearing, the proposed assumption and assignment of the Selected Contracts be approved.

         71.      To facilitate the assumption and assignment of the Selected Contracts, the Debtors

further request the Court find all anti-assignment provisions of the Selected Contracts to be

unenforceable under section 365(f) of the Bankruptcy Code. 26 Absent such a finding, the

Debtors’ ability to attract the highest or otherwise best offer to maximize value for the estates

may be imperiled.




26
     Section 365(f)(1) provides in part that, “notwithstanding a provision in an executory contract or unexpired lease
     of the debtor, or in applicable law, that prohibits, restricts, or conditions the assignment of such contract or
     lease, the trustee may assign such contract or lease....” 11 U.S.C. § 365(f)(1). Section 365(f)(3) further provides
     that “[n]otwithstanding a provision in an executory contract or unexpired lease of the debtor, or in applicable
     law that terminates or modifies, or permits a party other than the debtor to terminate or modify, such contract or
     lease or a right or obligation under such contract or lease on account of an assignment of such contract or lease,
     such contract, lease, right, or obligation may not be terminated or modified under such provision because of the
     assumption or assignment of such contract or lease by the trustee.” 11 U.S.C. § 365(f)(3).

                                                          41
       G.        Notice of the Auction and Sale Hearing

       72.       The Debtors submit that the Sale Notice as set forth above, along with publication

of the Sale Notice in The Wall Street Journal, The New York Times, national editions, and The

Globe and Mail (National Edition) and on the Website, is reasonable and appropriate and will be

adequate to ensure that all interested parties have the opportunity to bid for the Assets, and/or

object to the proposed sale of the Debtors’ Assets. Such notice is intended, through the use of

electronic mail, fax, overnight mail, first class mail and publication, to effect service as quickly

as possible in the context of the expedited schedule proposed herein. All parties, including all

potential bidders at the Auction and other parties in interest will thus receive prompt notice.

Accordingly, the Debtors submit that the foregoing method of notice is reasonable under the

circumstances.

       H.        Request for Relief Pursuant to Bankruptcy Rules 6004(h) and 6006(d)

       73.       Bankruptcy Rule 6004(h) provides that an “order authorizing the use, sale, or

lease of property ... is stayed until the expiration of 14 days after entry of the order, unless the

court orders otherwise.” Fed. R. Bankr. P. 6004(h). Bankruptcy Rule 6006(d) further provides

that an “order authorizing the trustee to assign an executory contract or unexpired lease under

§ 365(f) is stayed until the expiration of 14 days after the entry of the order, unless the court

orders otherwise.” Fed. R. Bankr. P. 6006(d).

       74.       The Debtors believe that the sale of the Assets should be consummated as soon as

practicable in order to preserve and maximize value. Accordingly, the Debtors request that the

Sale Order approving the sale of the Assets and the assumption and assignment of the Designated

Contracts be effective immediately upon entry of such order and that the fourteen-day stay under

Bankruptcy Rules 6004(h) and 6006(d) be waived.



                                                 42
                                             NOTICE

       75.     The Debtors have provided notice of the motion to: (a) the Office of the United

States Trustee for the Southern District of New York; (b) Otterbourg, Steindler, Houston &

Rosen, P.C., as counsel to the statutory committee of unsecured creditors appointed in these

chapter 11 cases; (c) Bank of New York Mellon as agent for the Debtors’ postpetition debtor-in-

possession financing; (d) Emmet, Marvin & Martin, LLP as counsel to the agent for the Debtors’

postpetition debtor-in-possession financing; (e) U.S. Bank National Association as Collateral

Agent for the Debtors’ purchase money credit facility; (f) Weil, Gotshal & Manges LLP as

counsel to Harbinger Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners Special

Situations Fund, L.P.; (g) Willkie Farr & Gallagher LLP as counsel to EchoStar Corporation in

its capacity as Lender under the Debtors’ purchase money credit facility and Initial Lender under

the Debtors’ postpetition debtor-in-possession financing; (h) U.S. Bank National Association as

Indenture Trustee for the Debtors’ 15% Senior Secured Notes and Kelley Drye & Warren LLP as

counsel to the Indenture Trustee; (i) Deutsche Bank National Trust Company as Indenture

Trustee for the Debtors’ 6.5% Senior Exchangeable Notes and Foley & Lardner LLP as counsel

to the Indenture Trustee; (j) Quinn Emanuel Urquhart & Sullivan, LLP as counsel to certain

holders of the Debtors’ 6.5% Senior Exchangeable Notes; (k) the Internal Revenue Service;

(l) the Securities and Exchange Commission; (m) the United States Attorney for the Southern

District of New York; (n) the Federal Communications Commission; (o) Kirkland & Ellis LLP as

counsel to the Ad Hoc Group; (p) K&L Gates LLP as counsel to Sprint Nextel Corporation; (q)

Industry Canada; and (r) parties in interest who have filed a notice of appearance in these cases

pursuant to Bankruptcy Rule 2002. In light of the nature of the relief requested, the Debtors

respectfully submit that no further notice is necessary.



                                                 43
               WHEREFORE the Debtors respectfully request that the Court grant the relief

requested herein and such other and further relief as is just.



New York, New York                               /s/ Ira S. Dizengoff
Dated: April 15, 2011                            AKIN GUMP STRAUSS HAUER & FELD LLP
                                                 One Bryant Park
                                                 New York, New York 10036
                                                 (212) 872-1000 (Telephone)
                                                 (212) 872-1002 (Facsimile)
                                                 Ira S. Dizengoff
                                                 Arik Preis
                                                 Ashleigh L. Blaylock


                                                 Counsel to the Debtors and Debtors in Possession




                                                 44
              Exhibit 1
Proposed Form of Bid Procedures Order
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

                                                           )
In re:                                                     ) Chapter 11
                                                           )
TERRESTAR NETWORKS INC., et al.,1                          ) Case No. 10-15446 (SHL)
                                                           )
                         Debtors.                          ) Jointly Administered
                                                           )

         ORDER, PURSUANT TO 11 U.S.C. §§ 105, 363, 364, 365, 503 AND 507 AND
         FED. R. BANKR. P. 2002, 4001, 6004, 6006, 9008, AND 9014, APPROVING
    (A) BID PROCEDURES, (B) NOTICE OF SALE, AUCTION, AND SALE HEARING,
           AND (C) ASSUMPTION PROCEDURES AND RELATED NOTICES

                 Upon the motion (the “Motion”)2 of the above-captioned debtors and debtors in

possession (collectively, the “Debtors”), pursuant to 11 U.S.C. §§ 105, 363, 364, 365, 503 and

507 and Fed. R. Bankr. P. 2002, 4001, 6004, 6006, 9008, and 9014, for entry of (I) an order

approving (A) bid procedures in connection with the sale of substantially of all of the Debtors’

assets (the “Assets”), substantially in the form attached hereto as Exhibit A, (B) the notice of sale,

auction, and sale hearing (the “Sale Notice”) and (C) procedures and a cure notice with respect

to the assumption and assignment of executory contracts and unexpired leases in connection with

the Sale Transaction (as hereinafter defined); and (II) an order approving the sale of the Assets

and related transactions (the “Sale Transaction”) to the Successful Bidder(s); and consideration

of the Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C.

§§ 157 and 1334; and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and

1409; and due and proper notice of the Motion having been provided; and it appearing that no

other or further notice need be provided; and upon the Court’s consideration of the Motion, the

1
    The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal taxpayer
    identification number, are: TerreStar Networks Inc. (3931); TerreStar License Inc. (6537); TerreStar National
    Services Inc. (6319); TerreStar Networks Holdings (Canada) Inc. (1337); TerreStar Networks (Canada) Inc.
    (8766) and 0887729 B.C. Ltd. (1345).
2
    Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Motion.
record of the hearing held on __________, 2011 with respect to the Motion (the “Bid Procedures

Hearing”), including any objections filed and raised at the Hearing; and upon all of the

proceedings had before the Court; and any objections to the Motion having been withdrawn,

resolved, or overruled on the merits; and the Court having determined that there exists just cause

for the relief granted herein and that such relief is in the best interests of the Debtors, their estates

and creditors and all other parties in interest; it is HEREBY ORDERED that:3

        1.      The Motion is granted to the extent provided herein.

                                             Bid Procedures

        2.      The Bid Procedures, substantially in the form annexed hereto as Exhibit A and

incorporated herein by reference, are hereby approved. The failure specifically to include or

reference a particular provision of the Bid Procedures in this Order shall not diminish or impair

the effectiveness of such provision.

                              Bid Deadline, Auction and Sale Hearing

        3.      The deadline for a Potential Bidder to submit bids shall be _________, 2011 at

5:00 p.m. (prevailing Eastern Time) (the “Bid Deadline”). The Auction shall be held on ______,

2011 at the offices of Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New York, New

York 10036 at 9:00 a.m. (prevailing Eastern Time).

        4.      The Court shall hold a hearing on ______, 2011 at 10:00 a.m. (prevailing Eastern

Time) (the “Sale Hearing”) in the United States Bankruptcy Court for the Southern District of

New York, Alexander Hamilton Custom House, One Bowling Green, New York, New York

10004, at which time the Court shall consider the approval of the Sale Transaction as set forth in

the Motion, approve the Successful Bidder(s), and confirm the results of the Auction, if any.


3
        Findings of fact shall be construed as conclusions of law and conclusions of law shall be construed as
        findings of fact to the fullest extent of the law. See Fed. R. Bankr. P. 7052.

                                                      2
Objections to the Sale Transaction4 shall be in writing, filed and served so as to be actually

received by the Bankruptcy Court and the following parties (the “Objection Recipients”) on or

before _______, 2011 at 5:00 p.m. (prevailing Eastern Time) (the “Objection Deadline”):

               a.       Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New York, NY
                        10036 (Attn: Ira S. Dizengoff, Esq., idizengoff@akingump.com; and Arik
                        Preis, Esq., apreis@akingump.com), counsel to the Debtors;

               b.       the Office of the United States Trustee for the Southern District of New
                        York, 33 Whitehall Street, New York, NY 10004 (Attn: Susan D. Golden);

               c.       Otterbourg, Steindler, Houston & Rosen, P.C., 230 Park Avenue, New
                        York, NY 10169 (Attn: Scott L. Hazan, Esq., shazan@oshr.com), counsel
                        to the statutory committee of unsecured creditors appointed in these
                        chapter 11 cases;

               d.       Bank of New York Mellon, 600 E. Las Colinas Blvd, Ste. 1300, Irving,
                        TX 75039, (Attn Rhonda Tharp, rhonda.tharp@bnymellon.com;
                        asicompliance@bnymellon.com), agent for the Debtors’ postpetition
                        debtor-in-possession financing;

               e.       Emmet, Marvin & Martin, LLP, 120 Broadway, 32nd Floor, New York,
                        NY 10271 (Attn: Elizabeth M. Clark, Esq., eclark@emmetmarvin.com),
                        counsel to the agent for the Debtors’ postpetition debtor-in-possession
                        financing;

               f.       U.S. Bank National Association, 60 Livingston Ave, St. Paul, MN 55107
                        (Attn: Cindy Woodward, cindy.woodward@usbank.com; and David
                        Johnson, david.johnson9@usbank.com), Collateral Agent for the Debtors’
                        purchase money credit facility;

               g.       Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153
                        (Attn: Debra A. Dandeneau, Esq., debra.dandeneau@weil.com; and Ronit
                        J. Berkovich, Esq. ronit.berkovich@weil.com), counsel to Harbinger
                        Capital Partners Master Fund I, Ltd. and Harbinger Capital Partners
                        Special Situations Fund, L.P.;

               h.       Willkie Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY
                        10019 (Attn: Rachel C. Strickland, Esq., rstrickland@willkie.com; and
                        Matthew A. Feldman, Esq.), counsel to EchoStar Corporation in its
                        capacity as Lender under the Debtors’ purchase money credit facility and
                        Initial Lender under the Debtors’ postpetition debtor-in-possession
                        financing;

4
       Objections to the assumption and assignment of Designated Contracts are addressed below.

                                                     3
               i.      U.S. Bank National Association as Indenture Trustee for the Debtors’ 15%
                       Senior Secured Notes and Kelley Drye & Warren LLP, 101 Park Avenue,
                       New York, NY 10178 (Attn: James S. Carr, Esq., Kristin S. Elliott, Esq.,
                       KDWBankruptcyDepartment@kelleydrye.com), counsel to the Indenture
                       Trustee;

               j.      Deutsche Bank National Trust Company as Indenture Trustee for the
                       Debtors’ 6.5% Senior Exchangeable Notes and Foley & Lardner LLP, 321
                       North Clark Street, Suite 2800, Chicago, IL 60654 (Attn: Mark F. Hebbeln,
                       Esq., mhebbeln@foley.com; and Harold L. Kaplan, Esq.,
                       hkaplan@foley.com), counsel to the Indenture Trustee;

               k.      Quinn Emanuel Urquhart & Sullivan, LLP, 51 Madison Avenue,
                       22nd Floor, New York, NY 10010 (Attn: Susheel Kirpalani, Esq.,
                       susheelkirpalani@quinnemanuel.com;    Scott C.     Shelley,  Esq.,
                       scottshelley@quinnemanuel.com; and Daniel S. Holzman, Esq.,
                       danielholzman@quinnemanuel.com), counsel to certain holders of the
                       Debtors’ 6.5% Senior Exchangeable Notes;

               l.      the Internal Revenue Service, 290 Broadway, New York, NY 10007;

               m.      the Securities and Exchange Commission, New York Regional Office, 3
                       World Financial Center, Suite 400, New York, NY 10281 (Attn: George S.
                       Canellos);

               n.      the United States Attorney for the Southern District of New York, One St.
                       Andrews Plaza, New York, NY 10007 (Attn: Preet Bharara);

               o.      the Federal Communications Commission, 445 12th Street, SW,
                       Washington, DC 20554 (Attn: Office of the Secretary, fccinfo@fcc.gov;
                       and Austin Schlick, austin.schlick@fcc.gov);

               p.      Kirkland & Ellis LLP, 601 Lexington Avenue, New York, NY 10022
                       (Attn: Jonathan S. Henes, Esq., jonathan.henes@kirkland.com), and 300
                       North LaSalle, Chicago, IL 60654 (Attn: Patrick J. Nash, Esq.,
                       patrick.nash@kirkland.com), counsel to certain holders of the Debtors’ 15%
                       Senior Secured Notes;

               q.      Industry Canada, Office of the Superintendent of Bankruptcy Canada, 25
                       St. Clair Ave. E., Suite 600, Toronto, Ontario, M4T1M2, Canada (Attn:
                       CCAA Team); and

               r.      parties in interest who have filed a notice of appearance in these cases
                       pursuant to Bankruptcy Rule 2002.

       5.      The failure to file and serve an objection to the Sale Transaction by the Objection

Deadline shall be a bar to the assertion thereof at the Sale Hearing or thereafter.

                                                  4
       6.      Before the Auction and following the submission of the Qualified Bids, the

Debtors, with the reasonable consent of the Creditors’ Committee, may enter into a Purchase

Agreement (the “Stalking Horse Agreement”), subject to higher and better offers at the Auction,

with any Qualified Bidder that submits a Qualified Bid (the “Stalking Horse Bidder”) to

establish a minimum Qualified Bid (the “Stalking Horse Bid”) at the Auction. The Stalking

Horse Agreement may contain certain customary terms and conditions, including expense

reimbursement and a break-up fee in an amount to be determined by the Debtors, with the

reasonable consent of the Creditors’ Committee, but in no event shall such break-up fee exceed 2%

of the purchase price set forth in the Stalking Horse Agreement (such break-up fee or expense

reimbursement, the “Break-Up Fee” and “Expense Reimbursement,” respectively). At least

five days prior to the Auction, the Debtors will distribute the Stalking Horse Agreement, if any,

to the parties submitting the other Qualified Bids.

       7.      Should the Debtors enter into a Stalking Horse Agreement, the Debtors are

authorized to pay a Break-Up Fee and Expense Reimbursement as provided in the Stalking

Horse Agreement without further order of the Court.

       8.      The Debtors’ obligation, if any, to pay a Break-Up Fee and Expense

Reimbursement as provided herein shall survive termination of the Stalking Horse Bid, and shall

constitute a superpriority administrative claim against the Debtors’ estates pursuant to

Bankruptcy Code sections 105(a), 503(b) and 364(c)(1).

       9.      The Sale Hearing may be adjourned from time to time without further notice to

the Sale Notice Parties (as defined below), creditors or other parties in interest other than by

announcement of the adjournment in open court or an entry of a notice of such adjournment on

the Court’s docket.



                                                 5
                                           Authorization

         10.   The Debtors are authorized to take such actions as contemplated by the Motion

prior to the Auction and the Sale Hearing, including, without limitation, actions to notify

creditors, customers, regulators or other interested parties regarding the Sale Transaction and to

obtain any necessary consents or approvals regarding the Sale Transaction or any other actions

necessary to effectuate the Sale Transaction.

                                                Notice

         11.   Notice of (a) the Motion, (b) the Bid Procedures, (c) the Auction, (d) the Sale

Hearing and (e) the proposed assumption and assignment of the Designated Contracts or other

similarly designated contracts to the Successful Bidder shall be good and sufficient, and no other

or further notice shall be required, if given as follows:

Notice of Sale, Auction and Sale Hearing

         12.   Within five (5) business days after entry of this Order, the Debtors (or their agents)

shall:

               a.      Provide (i) notice, in substantially the form attached hereto as Exhibit B
                       (the “Sale Notice”), of the Sale Transaction, the Auction, and the Sale
                       Hearing, and (ii) this Order by email, mail, facsimile or overnight delivery
                       service, upon the Objection Recipients and all known bona fide entities
                       that have previously expressed an interest in purchasing the Assets in the
                       twelve months preceding the date of the Motion (together with the
                       Objection Recipients, the “Sale Notice Parties”);

               b.      Publish the Sale Notice on one occasion each in The Wall Street Journal,
                       The New York Times, national editions and The Globe and Mail (National
                       Edition),

               c.      Cause the Sale Notice to be published on www.terrestarinfo.com (the
                       “Website”).

Assumption, Assignment and Cure Notice

         a.    Within two (2) business days after receiving the schedule from each Qualified
               Bidder of those executory contracts and unexpired leases it wishes to assume (the

                                                  6
     “Designated Contracts”) and no later than nine (9) days prior to the Sale Hearing,
     the Debtors shall file with the Court and serve on each counterparty to a
     Designated Contract by email, mail, facsimile or overnight delivery service, a
     notice of assumption, assignment and cure substantially in the form attached
     hereto as Exhibit C (the “Cure Notice”). The Cure Notice shall include the
     Qualified Bidder’s calculation of the amount necessary to cure all monetary
     defaults (the “Cure Amount”) for each such Designated Contract. A list of the
     Designated Contracts, including Cure Amounts with respect thereto, will be
     posted on the Website and updated as modified. The Debtors reserve the right to
     provide the Cure Notice to counterparties not yet so designated by each Qualified
     Bidder, and each Qualified Bidder shall have the right to supplement its
     designation of contracts for assumption and assignment up until one day prior to
     the Sale Hearing, and to remove a contract from the list of Designated Contracts
     at any time prior to conclusion of the Auction.

b.   Any counterparty to a Designated Contract shall file and serve on the Objection
     Recipients any objections to (i) the proposed assumption and assignment to the
     Successful Bidder (and must state in its objection, with specificity, the legal and
     factual basis of its objection) and (ii) if applicable, the proposed Cure Amount
     (and must state in its objection, with specificity, what Cure Amount is required
     with appropriate documentation in support thereof), no later than 5:00 p.m.
     (prevailing Eastern Time) two (2) business days before the Sale Hearing. If any
     executory contract or unexpired lease is added to the schedule of Designated
     Contracts, a copy of the applicable Cure Notice shall be served on the
     counterparty by overnight courier service within one (1) day of such addition (and
     in no event less than one (1) business day before the Sale Hearing), and any
     counterparty may file an objection as aforesaid at any time that is two hours prior
     to the Sale Hearing.

c.   At the Sale Hearing, only those contracts (and the corresponding Cure Amounts)
     listed on the Cure Notice that have been selected to be assumed by the Successful
     Bidder at the Auction (the “Selected Contracts”) shall be subject to approval by
     the Bankruptcy Court, and the Debtors shall reserve their rights for all other
     contracts. If no objection to the Cure Notice with respect to the Selected
     Contracts is timely received, (x) the counterparty to a Selected Contract shall be
     deemed to have consented to the assumption and assignment of the Selected
     Contract to the Successful Bidder and shall be forever barred from asserting any
     objection with regard to such assumption and assignment, and (y) the Cure
     Amount set forth in the Cure Notice shall be controlling, notwithstanding
     anything to the contrary in any Selected Contract, or any other document, and the
     counterparty to a Selected Contract shall be deemed to have consented to the Cure
     Amount and shall be forever barred from asserting any other claims related to
     such Selected Contract against the Debtors or the Successful Bidder, or the
     property of any of them.




                                      7
       13.    This Court shall retain jurisdiction to hear and determine all matters arising from

the interpretation, implementation and enforcement of this Order.

       New York, New York
       Dated: _______________, 2011

                                            ________________________________________
                                            HONORABLE SEAN H. LANE
                                            UNITED STATES BANKRUPTCY JUDGE




                                               8
  Exhibit A

Bid Procedures
                               TERRESTAR NETWORKS INC.
                                           BID PROCEDURES

                                                 Introduction

       TerreStar Networks Inc. and certain of its subsidiaries and affiliates1 (collectively, the
“Debtors”) are debtors-in-possession in chapter 11 cases (jointly administered under Case No.
10-15446) pending in the United States Bankruptcy Court for the Southern District of New York
(the “Bankruptcy Court”).

       On April [__], 2011, the Bankruptcy Court entered its order (the “Bid Procedures
Order”), (i) authorizing the Debtors, among other things, to market substantially all of the assets
of the Debtors (the “Assets”) through the bid procedures described herein (the “Bid
Procedures”), and (ii) scheduling a hearing (the “Sale Hearing”) to consider approval of the sale
of substantially all of the assets of the Debtors to the Successful Bidder (as defined below), to be
conducted on [_____ __], 2011 at __:__ _.m., Eastern time, in Room ___ at the United States
Bankruptcy Court for the Southern District of New York, Alexander Hamilton U.S. Custom
House, One Bowling Green, New York, New York, 10004-1408.

                                    Key Dates For Potential Bidders

        These Bid Procedures provide interested parties with the opportunity to qualify and
participate in the auction of the Assets (the “Auction”) and submit competing bids for the Assets.
The Debtors shall assist Potential Bidders (as defined below) in conducting their respective due
diligence investigations and shall accept bids (as defined below) until 5:00 p.m., Eastern time on
[_____ __], 2011.2

       The key dates for the sale process are as follows:

[_____ __], 2011 at 5:00 P.M. EDT                         Bid Deadline - Due Date for Bids and Deposits

[_____ __], 2011 at 9:00 A.M. EDT3                        Auction

[_____ __], 2011 at [10]:00 [A].M. EDT4                   Sale Hearing

                                           Purchase Agreement

      On April [__], 2011, the Debtors filed a form purchase agreement (with certain ancillary
agreements thereto, the “Purchase Agreement”), a true and correct copy of which is attached as

1
       The Debtors in these chapter 11 cases, along with the last four digits of each TSN Debtor’s federal
       taxpayer-identification number, are: TerreStar Networks Inc. (3931); TerreStar License Inc. (6537);
       TerreStar National Services Inc. (6319); TerreStar Networks Holdings (Canada) Inc. (1337); TerreStar
       Networks (Canada) Inc. (8766); and 0887729 B.C. Ltd. (1345).
2
       Bid Deadline to be 35 days from date of entry of the Bid Procedures Order.
3
       Auction date to be 42 days from date of entry of the Bid Procedures Order.
4
       The Sale Hearing date, subject to Bankruptcy Court availability, to be the earlier of (a) 4 days from the date
       of conclusion of the Auction and (b) 46 days from entry of the Bid Procedures Order.
Schedule 1 hereto. Pursuant to the Purchase Agreement, and to the maximum extent permitted
by section 363 of title 11 of the United States Code (the “Bankruptcy Code”), the Successful
Bidder shall acquire the Assets, as more fully set forth in Section 2.1 of the Purchase Agreement
(the “Acquired Assets”), excluding only those certain assets expressly identified as Retained
Assets under Section 2.2 of the Purchase Agreement, free and clear of any and all Interests (as
defined below), subject to certain regulatory approvals and other conditions.

                                        Bid Procedures

        Set forth below are the Bid Procedures to be employed with respect to the proposed sale
of the Assets (the “Proposed Sale”). The Bid Procedures Order authorizes and approves the
Proposed Sale to such Qualified Bidder(s) (as defined below) as is determined to have made the
highest or otherwise best offer for some or all of the Assets. Any person or entity who wishes to
participate in the Bidding Process (as defined below) and the Proposed Sale must meet the
participation requirements to become a Potential Bidder as specified below and must thereafter
timely submit a Qualified Bid (as defined below) to become a Qualified Bidder. Neither the
Debtors nor their representatives shall be obligated to furnish information of any kind
whatsoever to any person or entity that is not a Potential Bidder (or their legal counsel and
financial advisors) and the Debtors and their representatives shall use good faith efforts to
provide all Potential Bidders with substantially similar access and information. Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to them in the
Purchase Agreement.

        The Debtors and their representatives, in consultation with the statutory committee of
unsecured creditors (the “Creditors’ Committee”), shall (i) receive and evaluate all offers made
hereunder, (ii) determine whether any person or entity has met the participation requirements to
become a Potential Bidder and has timely submitted a Qualified Bid so as to become a Qualified
Bidder, (iii) coordinate the efforts of Potential Bidders in conducting any required due diligence
investigations and (iv) negotiate in good faith with respect to any Qualified Bids (collectively,
the “Bidding Process”).

                                  Participation Requirements

        Any person or entity that wishes to conduct due diligence with respect to the Assets must
first deliver to the Debtors and the Creditors’ Committee an executed confidentiality agreement
in form and substance reasonably satisfactory to the Debtors (a form of which is attached hereto
as Schedule 2) (it being understood that any person or entity who previously signed a
confidentiality agreement in a form satisfactory to the Debtors shall not be required to execute a
new confidentiality agreement). The executed confidentiality agreement must be signed and
transmitted by the person or entity wishing to become a Potential Bidder so as to be received by
each of the following parties (the “Notice Parties”) prior to any dissemination of confidential
information: (i) The Blackstone Group, 345 Park Avenue, New York, NY 10154 (Attn: Tom
Middleton; middleton@blackstone.com and Daniel Chang; changd@blackstone.com), financial
advisors to the Debtors; (ii) Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New
York, NY 10036-6745 (Attn: Ira S. Dizengoff, Esq.; idizengoff@akingump.com and Arik Y.
                                                2
Preis, Esq.; apreis@akingump.com), counsel to the Debtors; (iii) FTI Consulting, Inc. 3 Times
Square # 9, New York, NY 10036 (Attn: Andrew Scruton; Andrew.scruton@fticonsulting.com),
financial advisors to the Creditors’ Committee; (iv) Otterbourg, Steindler, Houston & Rosen,
P.C., 230 Park Avenue, New York, NY 10169-0075 (Attn: Scott L. Hazan, Esq.;
shazan@oshr.com and David M. Posner, Esq.; dposner@oshr.com), counsel to the Creditors’
Committee; and (v) counsel to the Ad Hoc Committee of holders of the 15% Senior Secured
Notes (the “Ad Hoc Group”), Kirkland & Ellis LLP, 601 Lexington Avenue, New York, NY
10022 (Attn: Jonathan S. Henes, Esq.; jonathan.henes@kirkland.com and Patrick J. Nash, Esq.;
patrick.nash@kirkland.com) (which information in all instances in these Bid Procedures shall not
be disseminated to any members of such Ad Hoc Group unless such members (a) execute
appropriate confidentiality agreements in form and substance satisfactory to the Debtors, and
(b) provide a verified writing to the Debtors, in form and substance satisfactory to the Debtors,
that such member will not be submitting a bid in the Auction).

        A “Potential Bidder” is a person or entity that the Debtors determine, in consultation with
the Creditors’ Committee, is reasonably likely (based on relevant considerations as determined in
good faith by the Debtors in consultation with the Creditors’ Committee) to: (a) submit a bona
fide offer; and (b) be able to consummate the Proposed Sale if selected as a Successful Bidder or
Back-Up Bidder (as defined below).

                                              Due Diligence

        The Debtors may afford each Potential Bidder the time and opportunity to conduct
reasonable due diligence; provided, however, that neither the Debtors nor any of their
representatives shall be obligated to furnish any due diligence information: (i) at any time to any
person or entity other than a Potential Bidder; or (ii) after the Bid Deadline (as hereinafter
defined) to any Potential Bidder. The Debtors may, in the exercise of their business judgment,
extend a Qualified Bidder’s time to conduct due diligence after the Bid Deadline until the
Auction; provided, however, that the Successful Bidder and Back-Up Bidder shall be permitted
to continue to conduct due diligence until closing of the sale (subject to the terms of the Purchase
Agreement); provided, further, however, that a Qualified Bid shall not be subject to further due
diligence after the Bid Deadline.

                                               Bid Deadline

        The deadline for a Potential Bidder to submit bids shall be [_____ __], 2011 at 5:00 p.m.
(prevailing Eastern Time) (the “Bid Deadline”).5 Any Potential Bidder who fails to submit a
bid so as to be received by the Notice Parties (as defined below) in advance of the Bid Deadline
shall not be permitted to participate in the Bidding Process and will not be a Qualified Bidder.

       Prior to the Bid Deadline, a Potential Bidder that desires to make a bid shall deliver
written copies of its bid in writing and executed by an individual or individuals authorized to

5
       Bid Deadline to be 35 days from date of entry of the Bid Procedures Order.

                                                      3
bind the Potential Bidder. Each bid shall be served by courier, facsimile, e-mail or as otherwise
specified by the Debtors to each of the Notice Parties.

                                             Bid Requirements

        To participate in the Auction, a bidder must be a Potential Bidder and must deliver a
written offer, which includes, at a minimum, the following items (the “Required Bid Materials”)
prior to the Bid Deadline:

               Two executed originals of the purchase agreement and other documents by which
                the Potential Bidder offers to purchase the Assets that are the subject of the bid
                from the Debtors at the purchase price and upon the terms and conditions as the
                Potential Bidder sets forth therein, which documents should be in substantially the
                form of the Purchase Agreement, and any ancillary agreements, together with a
                marked copy showing any proposed changes, amendments or modifications to the
                Purchase Agreement (and exhibits) attached as Schedule 1 hereto.

               A written acknowledgment that the bid is not subject to any due diligence or
                financing contingency, is not conditioned on the payment in any circumstances of
                a break-up fee, expense reimbursement or similar type of payment to the bidder,
                is irrevocable until entry by the Bankruptcy Court of the order approving the
                Proposed Sale (the “Sale Order”) (unless it is chosen as the Successful Bid or
                Back-Up Bid (each as defined below)) and is not subject to any approvals,
                consents or conditions except as specified therein.

               A written acknowledgement by the bidder that it agrees to all of the terms for sale
                set forth in these Bid Procedures.

               Specification of the proposed purchase price and of the Assets that are the subject
                of the bid.6

               Delivery by certified check or wire transfer of a good faith deposit in immediately
                available funds equal to 5% of the proposed purchase price (the “Deposit”) for the
                Assets that are the subject of the bid. The Deposit shall be held in escrow and
                will be refunded on the terms set forth below.

               Evidence or a statement indicating that the bidder has obtained authorization and
                approval from its Board of Directors (or comparable governing body) with respect

6
       The Debtors have no assurance that their current DIP Lender will continue to provide DIP Financing after
       the maturity of the current DIP Financing facility (i.e. July 19, 2011). As such, and to the extent that the
       current DIP Lender does not extend both additional financing as well as the maturity of the Debtors’
       current DIP Financing, any Potential Bidder will need to provide the Debtors with (or otherwise include in
       its Required Bid Materials) DIP financing necessary to fund the Debtors’ chapter 11 cases and operations
       through and until the funding date of any sale contemplated by these Bid Procedures.

                                                        4
       to the submission and consummation of its bid and acceptance of the terms of sale
       in these Bid Procedures, or a representation that no such authorization or approval
       is required and that any and all initial consents required in connection with the
       submission and consummation of the bid have been obtained and that no other
       initial consents are required.

      Evidence of sufficient cash or other acceptable forms of currency on hand or
       written evidence of a commitment for financing or other evidence of the ability to
       consummate the sale satisfactory to the Debtors with appropriate contact (and any
       other necessary) information for such financing sources.

      A list of the Debtors’ executory contracts and unexpired leases with respect to
       which the bidder seeks assignment from the Debtors and a specification of what
       the bidder believes to be the appropriate cure amounts and which cure amounts
       will be the bidder’s responsibility and which will be the Debtors’ responsibility.
       For the avoidance of doubt, this information will be included on the notice sent to
       all assumed contract counterparties (without discussing the name of the bidder)
       prior to the Auction, as set forth in more detail herein.

      A written disclosure of the identity of each person or entity that is bidding for the
       Assets or otherwise participating in connection with such bid and whether such
       person or entity holds an interest in another mobile satellite service provider and,
       if so, the name of the mobile satellite service provider and the nature and size of
       the interest, provided, that the Debtors will keep such information confidential
       and will not disclose such information without the written consent of the Potential
       Bidder. Further, each bid must provide sufficient information regarding both the
       bidder and any participants (and each of their ultimate controlling persons if any),
       to satisfy the Debtors with respect to the requirements enumerated in section
       363(n) of the Bankruptcy Code and to permit the Debtors to ascertain whether a
       petition for declaratory ruling to permit indirect foreign ownership of TerreStar
       License, Inc. in excess of 25% must be filed with the FCC.

      Such other information as may be reasonably requested in writing by the Debtors
       at least two calendar days prior to the Bid Deadline.

In order to be a Qualified Bid, a bid (including all Required Bid Materials) must:

      be received by the Bid Deadline;

      not be subject to any due diligence or financing contingency; and

      not request or entitle the bidder to any break-up fee, expense reimbursement or
       similar type of payment, provided, however, that the Debtors, in their discretion
       (with the reasonable consent of the Creditors’ Committee) may decide to grant
       break-up fee and expense reimbursement protections to any bidder the Debtors
                                          5
               denote as a “Stalking Horse” bidder at any time at least five (5) days prior to the
               Auction, in accordance with the Bid Procedures Order.

        A bid received from a Potential Bidder that includes all of the Required Bid Materials
and meets all of the above requirements is a “Qualified Bid” if the Debtors, in consultation with
the Creditors’ Committee, determine that such bid evidences a bona fide interest and ability to
purchase the Assets or any material portion thereof. A Potential Bidder that submits a Qualified
Bid (a “Qualified Bidder”) shall be entitled to participate in the Auction. The Debtors reserve
the right to contact bidders before or after the Bid Deadline to discuss or clarify the terms of their
bid and to indicate any terms which may need to be modified in order to conform the bid to a
Qualified Bid or otherwise evaluate the bid.

        The Debtors, in consultation with the Creditors’ Committee, may accept a single
Qualified Bid or multiple bids for non-overlapping material portions of the Assets such that, if
taken together in the aggregate, would otherwise meet the standards for a single Qualified Bid.
The Debtors, in consultation with the Creditors’ Committee, may also permit otherwise Qualified
Bidders who submitted bids by the Bid Deadline for a material portion of the Assets but who
were not identified as a component of a single Qualified Bid consisting of multiple bids, to
participate in the Auction and to submit higher or otherwise better bids that in subsequent rounds
of bidding may be considered, together with other bids for non-overlapping material portions of
the Assets, as part of such a single Qualifying Bid.

        The Qualified Bid selected by the Debtors, in consultation with the Creditors’
Committee, as the highest or otherwise best bid following the Bid Deadline and prior to the start
of the Auction shall be provided to all other Qualified Bidders at least 24 hours prior to the start
of the Auction (the “Opening Bid”).

        As set forth in the Bid Procedures Order, at any time at least five (5) days prior to the
Auction, the Debtors, with the reasonable consent of the Creditors’ Committee, may enter into a
purchase agreement (the “Stalking Horse Agreement”), subject to higher and better offers at the
Auction, with any bidder that submits a bid (the “Stalking Horse Bidder”) to establish a
minimum Qualified Bid at the Auction. The Stalking Horse Agreement may contain certain
customary terms and conditions, including expense reimbursement and a break-up fee in an
amount to be determined by the Debtors, with the reasonable consent of the Creditors’
Committee, but in no event shall such break-up fee exceed 2% of the purchase price set forth in
the Stalking Horse Agreement. At least five (5) days prior to the Auction, the Debtors will
distribute the Stalking Horse Agreement, if any, to the parties submitting other Qualified Bids.
To the extent the Debtors enter into any such Stalking Horse Agreement, the agreement shall be
placed on the Bankruptcy Court docket and notice thereof shall be given to all parties on the
Debtors’ Rule 2002 Notice list.

                                Conduct Of The Auction, If Any

       If but only if more than one Qualified Bid is received by the Debtors prior to the Bid
Deadline, the Auction shall take place at the offices of Akin Gump Strauss Hauer & Feld LLP,

                                                  6
One Bryant Park, New York, NY 10036-6745 and shall commence on [_____ __, 2011] at 9:00
a.m. (prevailing Eastern time);7 provided, however, that the Debtors shall have the right, in
consultation with the Creditors’ Committee and counsel to the Ad Hoc Group, to adjourn or
cancel the Auction at any time by delivering notice of such adjournment or cancellation to all
Qualified Bidders; provided, further, that the Debtors shall have the right to conduct any number
of Auctions on such date to accommodate Qualified Bids for certain, but less than all, of the
Assets if the Debtors determine, in consultation with the Creditors’ Committee and counsel to
the Ad Hoc Group, that such process would be in the best interest of the Debtors’ estates. The
Debtors shall confirm to all Qualified Bidders the time and place of the Auction.

        Only a Qualified Bidder who is designated as such by the Debtors, in consultation with
the Creditors’ Committee, is eligible to participate at the Auction. During the Auction, bidding
shall begin initially with the Opening Bid, and subsequently continue with minimum increments
of at least $10 million.

       The Auction shall be governed by the following procedures, which procedures shall be
subject to modification by the Debtors as the Debtors, in consultation with the Creditors’
Committee and counsel to the Ad Hoc Group, deem necessary to better promote the goals of the
Auction and to comply with their fiduciary obligations:

       (a)     The Qualified Bidders shall appear in person at the Auction, or through a duly
               authorized representative.

       (b)     Only representatives of (i) the Debtors, (ii) persons or entities making Qualified
               Bids, (iii) the administrative agent for the Debtors’ currently outstanding DIP
               Facility (to the extent such representative has executed a confidentiality
               agreement in form and substance satisfactory to the Debtors), (iv) the indenture
               trustee for, any holder of, or any representative of the Ad Hoc Group (in the case
               of any such trustee, holder or representative, to the extent such trustee, holder, or
               representative has executed a confidentiality agreement in form and substance
               satisfactory to the Debtors) and (v) the Creditors’ Committee shall be permitted to
               be present at the Auction. For the avoidance of doubt, although these parties shall
               be permitted to be present at the Auction, only Qualified Bidders may bid at the
               Auction.

       (c)     The terms of each Qualified Bid selected from time to time by the Debtors, in
               consultation with the Creditors’ Committee, as being the highest or otherwise best
               offer at any such time (each such Qualified Bid selected at any time, the “Leading
               Bid” at such time) shall be fully disclosed to all other Qualified Bidders. For the
               avoidance of doubt, each Leading Bid and each bid identified as being the highest
               or otherwise best offer for any or all of the Assets at any time shall have no
               conditions other than those disclosed.

7
       Auction date to be 42 days from date of entry of the Bid Procedures Order.

                                                       7
(d)   The Auction shall commence with the Debtors confirming the particulars of the
      Opening Bid and asking for higher and better offers. The Auction shall continue
      with subsequent rounds of bidding and, after each round, the Debtors shall
      announce the Leading Bid.

(e)   The Debtors shall provide for a court reporter to be present at and prepare a
      transcript of the Auction. The Debtors may determine, in their discretion, to make
      all or any part of the transcript subject to confidentiality requirements and seal.

(f)   Each Qualified Bidder shall be required to confirm that it has not engaged in any
      collusion with respect to the bidding or the Proposed Sale.

(g)   The Debtors, acting in good faith and in the exercise of their fiduciary duties to
      maximize value to the Debtors’ estates, may accept Qualified Bids as Leading
      Bids or as the Successful Bid if such Qualified Bid(s), taken together, constitute a
      sale of all or substantially all of the Assets without overlap.

(h)   Bidding shall commence at the amount of the Opening Bid. Qualified Bidders
      may then submit successive bids higher than the previous bid in increments of no
      less than $10 million. The Debtors reserve the right, in consultation with the
      Creditors’ Committee and counsel to the Ad Hoc Group, to announce reductions
      or increases in minimum incremental bids (or in valuing such bids) at any time
      during the Auction.

(i)   All Qualified Bidders shall have the right to submit additional bids and make
      additional modifications to the Purchase Agreement or their respective modified
      purchase agreements, as applicable, at the Auction to improve such bids.

(j)   The Auction may include individual negotiations with the Qualified Bidders
      and/or open bidding in the presence of all other Qualified Bidders.

(k)   The Debtors reserve the right, in consultation with the Creditors Committee and
      counsel to the Ad Hoc Group, to (i) determine, in their reasonable discretion
      which bid is the highest or otherwise best, and (ii) reject at any time, without
      liability, any offer that the Debtors, in their reasonable discretion deem to be (1)
      inadequate or insufficient, (2) not in conformity with the requirements of the
      Bankruptcy Code, the Bankruptcy Rules, the Local Rules or procedures set forth
      therein or in the Bid Procedures Order, or (3) contrary to the best interests of the
      Debtors and their estates.

(l)   The Auction shall continue until there is only one bid (or more than one bid for
      non-overlapping portions of the Assets that collectively constitute substantially all
      of the Assets) that the Debtors determine, in consultation with the Creditors’
      Committee, and subject to Bankruptcy Court approval, is the highest or otherwise
      best offer or offers that together constitute the highest or otherwise best offer or
      offers for the Assets from among the Qualified Bidders submitted at the Auction
                                          8
             (the “Successful Bid”). In determining the Successful Bid, the Debtors, in
             consultation with the Creditors’ Committee and counsel to the Ad Hoc Group in
             the exercise of the Debtors’ business judgment, shall consider, without limitation,
             the amount of the purchase price, the form of consideration being offered (i.e.
             although the Debtors will consider all forms of consideration, the Debtors prefer
             cash to all other types of consideration), the Qualified Bidders’ ability to complete
             the transaction constituting the Successful Bid (including without limitation, the
             ability to obtain any required regulatory approvals or consents or the lack
             thereof), the proposed timing thereof, the contracts being assumed by the bidder,8
             the rights of such Qualified Bidder and the Debtors with respect to the termination
             thereof, the number, type and nature of any changes reflected in the purchase
             agreement requested by each Qualified Bidder, and the net benefit to the Debtors’
             estates. The Qualified Bidder(s) submitting such Successful Bid(s) for the Assets
             shall become the “Successful Bidder(s),” and shall have such rights and
             responsibilities of a purchaser, as set forth in the Purchase Agreement, or
             modified definitive purchase agreement, as applicable. The next highest or
             otherwise best bid will be the “Back-Up Bid” and the maker of the bid will be the
             “Back-Up Bidder.” Within two (2) days after conclusion of the Auction, the
             Successful Bidder, the Back-Up Bidder and the Debtors shall complete and
             execute all agreements, contracts, instruments or other documents evidencing and
             containing the terms and conditions upon which the Successful Bid and the Back-
             Up Bid were made (subject, in the case of the Debtors, to the qualifications set
             forth in “Acceptance and Termination of Qualified Bids” below).

     THE SUCCESSFUL BID(S) SUBMITTED AT THE AUCTION SHALL CONSTITUTE
AN IRREVOCABLE OFFER AND BE BINDING ON THE SUCCESSFUL BIDDER AND
THE BACK-UP BIDDER FROM THE TIME THE BID IS SUBMITTED UNTIL THE
EARLIEST OF (1) [_________, 2011]9 OR (2) ENTRY OF THE SALE ORDER. IF THE
SUCCESSFUL BID AND BACK-UP BID ARE APPROVED PURSUANT TO THE SALE
ORDER, THE SUCCESSFUL BID SHALL BE BINDING IN ACCORDANCE WITH THE
TERMS OF THE PURCHASE AGREEMENT, AND THE BACK-UP BID SHALL BE
BINDING UNTIL 20 DAYS AFTER ENTRY OF THE SALE ORDER. EACH QUALIFIED
BID THAT IS NOT THE SUCCESSFUL BID OR THE BACK-UP BID AS APPROVED BY
THE BANKRUPTCY COURT AT THE SALE HEARING SHALL BE DEEMED
WITHDRAWN AND TERMINATED AT THE CONCLUSION OF THE SALE HEARING.
EACH BID (INCLUDING THE SUCCESSFUL BID) SHALL BE DEEMED WITHDRAWN IF
THE AUCTION IS CANCELLED OR DOES NOT TAKE PLACE PRIOR TO 75 DAYS
AFTER BANKRUPTCY COURT APPROVAL OF THE BID PROCEDURES UNLESS


8
     In this regard, the form of Purchase Agreement contains a closing condition with respect to the assumption
     of certain specified contracts.
9
     To be 75 days from date of entry of the Bid Procedures Order.

                                                     9
EXTENDED BY MUTUAL AGREEMENT OF THE DEBTORS AND THE BIDDER IN
QUESTION.

                           Acceptance And Termination Of Qualified Bids

       The Debtors intend to sell the Assets to the Successful Bidder upon the approval of the
Successful Bid and the Back-Up Bid(s) by the Bankruptcy Court after the Sale Hearing. The
Debtors’ presentation of a particular Successful Bid and Back-Up Bid to the Bankruptcy Court
for approval does not constitute the Debtors’ acceptance of the bid. The Debtors will be deemed
to have accepted a bid only when the bid has been approved by the Bankruptcy Court at the Sale
Hearing.

                                                  Sale Hearing

        The Sale Hearing shall be conducted by the Bankruptcy Court on [_____ __, 2011] at
[10]:00 [a].m. (prevailing Eastern Time)10 and may be adjourned or rescheduled without
notice. At the Sale Hearing, the Debtors will seek Bankruptcy Court approval of the Successful
Bid and the Back-Up Bid. Unless the Bankruptcy Court orders otherwise, the Sale Hearing shall
be an evidentiary hearing on matters relating to the Proposed Sale and there will be no further
bidding at the Sale Hearing. In the event that the Successful Bidder cannot or refuses to
consummate the sale because of the breach or failure on the part of the Successful Bidder, the
Back-Up Bidder will be deemed the new Successful Bidder and the Debtors shall be authorized,
but not required, to close with the Back-Up Bidder on the Back-Up Bid without further order of
the Bankruptcy Court.

                                                 Terms Of Sale

        Except as and to the extent provided in the Purchase Agreement, and subject to
Bankruptcy Court approval, the sale of the Assets shall be on an “AS IS, WHERE IS” basis and
without representations or warranties of any kind, nature or description by the Debtors or their
agents, and by submitting a bid, each bidder is deemed to acknowledge and agree to the
foregoing. Subject to Bankruptcy Court approval and the terms of the Purchase Agreement, all
of the Debtors’ right, title and interest in and to the Assets shall be sold free and clear of all liens,
claims, interests, encumbrances, rights, remedies, restrictions, liabilities and contractual
commitments of any kind or nature whatsoever, whether arising before or after the Petition Date,
whether at law or in equity (collectively “Interests”), to the fullest extent available under
Bankruptcy Code section 363 with such Interests, if any, attaching to the net proceeds of the sale
of the Assets in the same order, dignity and priority as existed at the commencement of the
bankruptcy cases and subject to certain FCC and Industry Canada and other conditions set forth
in the Purchase Agreement. Notwithstanding the foregoing, the Debtors reserve the right to
contest the validity, nature, extent or priority of and/or seek to set aside or avoid any and all
Interests under applicable law.

10
        The Sale Hearing date, subject to Bankruptcy Court availability, to be the earlier of (a) 4 days from the date
        of conclusion of the Auction and (b) 46 days from entry of the Bid Procedures Order.

                                                         10
                                      Return Of Deposits

        Each Deposit submitted pursuant to the Bid Procedures will be held in escrow by the
Escrow Agent and will not become property of the Debtors’ estates absent further order of the
Bankruptcy Court. Within two Business Days following the approval by the Bankruptcy Court
of the Successful Bidder and Back-Up Bidder, the Escrow Agent shall return the Deposits made
by any other Qualified Bidders and the Escrow Agent shall return the Back-Up Bidder’s Deposit
within two business days after the Back-Up Bid is terminated in accordance with the provisions
herein.

        If the Successful Bidder or the Back-Up Bidder shall fail to consummate an approved
sale because of a breach or failure to perform on the part of such Successful Bidder (or Back-Up
Bidder, as the case may be), the Debtors shall be entitled to retain such Successful Bidder’s (or
Back-Up Bidder’s, as the case may be) Deposit, in addition to other additional remedies
available to the Debtors under applicable law. The Debtors shall credit the Deposit of the
Successful Bidder or the Back-Up Bidder towards the purchase price at the time of funding
pursuant to the terms of the Purchase Agreement.

                                    Reservation Of Rights

       The Debtors reserve the right to modify the Bid Procedures at or prior to the Auction if
such modification will better promote the goals of the Auction, is not materially inconsistent
with any prior order of the Bankruptcy Court and the Debtors, in consultation with the Creditors’
Committee and counsel to the Ad Hoc Group, deem such modifications consistent with the
performance of their fiduciary obligations.

                                           # # # # #




                                               11
    Schedule 1

Purchase Agreement
                                                           TERRESTAR NETWORKS INC.
                                                               12010 Sunset Hills Road
                                                                 Reston, VA 201090
                                                                           
 
April 15, 2011
 
 
To: Potential Bidders

         Please find attached a draft Asset Purchase Agreement (the “APA”) and Bidding Procedures (the
“Bidding Procedures”) and certain other ancillary agreements, which will be used in connection with the
proposed auction to sell all or substantially all of the assets of TerreStar Networks Inc. and certain of its
affiliated debtors and debtors-in-possession (collectively, the “Debtors”) pursuant to section 363 of the
Bankruptcy Code (the “Transactions”). Capitalized terms used herein and not defined shall have the
meanings ascribed to them in the APA. In order to assist you in making your bid, the Debtors would
like to note the following regarding the draft agreements:

      1. Transaction Structure: The draft APA contemplates that the Purchaser will fund the full amount
         of the Purchase Price after receipt of applicable anti-trust and foreign investment clearances but
         in advance of FCC Consent and Industry Canada Approval. The Acquired Assets would be
         transferred to the Purchaser at the Closing, after receipt of the FCC Consent and Industry Canada
         Approval. We have proposed this structure in order to both (1) speed the distribution of funds to
         our creditors and minimize accrued interest of our secured debt (if any) to the extent possible,
         and (2) reduce the amount of time between execution of the agreement and the funding date, so
         that the Purchaser’s commitment is for a limited duration. In the event that the FCC Consent or
         Industry Canada Approval is not obtained, the APA provides that the Purchaser may direct the
         Debtors to sell their assets to one or more third parties, with the Purchase Price in connection
         with any such sale(s) going to the Purchaser (an “Alternative Sale”).

             Although the Debtors have proposed this structure in an effort to maximize value for the
             Debtors’ estates, the Debtors will evaluate any and all transaction structures from bidders,
             and are not requiring that the structure set forth in the draft APA be followed. The
             Debtors will work with bidders with whatever structure is offered, including making
             themselves (and their legal, financial and regulatory advisors) available to discuss costs and
             benefits of alternative structures for both the Purchaser and the Debtors.

      2. Purchase Price/Escrow: The draft APA contemplates that the Purchase Price will consist of the
         following: (i) a Good Faith Deposit of 5% of the total Purchase Price, which would be placed
         into an escrow account upon the execution of the APA1 and credited toward the Purchase Price
         on the Funding Date, (ii) a deposit into the escrow account of an amount necessary to fund the

                                                        
1        To the extent the Debtors execute an agreement with a Stalking Horse bidder, such Stalking Horse bidder would
provide a Good Faith Deposit at that time, which would be refundable if the Stalking Horse Bidder is not chosen as the
winning bid at the auction.  


 
                     
       Debtors’ working capital and administrative expenses until December 31, 2011, and (iii) a
       payment to Sellers of the remaining Purchase Price.

    3. Debtor-In-Possession Financing: The entry of a Sale Order may be an Event of Default under
       the Debtors’ current debtor-in-possession financing facility. As a result the draft APA provides
       that the Purchaser will provide the Debtors with a debtor-in-possession credit facility, with the
       proceeds of such facility used to repay in full the amount outstanding under the Debtors’ current
       debtor-in-possession financing facility and to fund the Debtors’ working capital and
       administrative expenses from the date of the Sale Order through the Funding Date. The amount
       of any such debtor-in-possession financing facility is dependent upon the amount of the current
       debtor-in-possession financing facility outstanding at the time (currently contemplated to be
       approximately $70-75 million) and the period of time between the date of the Sale Order and the
       Funding Date. Additionally, and as set forth in the APA, the APA contemplates that amounts
       borrowed under the debtor-in-possession financing facility provided by the Purchaser would be
       forgiven instead of being repaid in cash on the Funding Date.

    4. Timing: The agreements have been drafted assuming that the sale will be consummated on or
       before December 31, 2011 (which is based on the projected timing of the auction process,
       auction, sale hearing, and agreement execution set forth in the bidding procedures), with all
       escrowed amounts for working capital purposes being released from escrow on such date (to the
       extent not previously distributed). In the event that the closing occurs after December 31, 2011
       (or the Purchaser determines to engage in an Alternative Sale, as described above), the Purchaser
       will need to make arrangements to provide the Debtors with additional funding to operate the
       business and manage any Alternative Sale process, if applicable.

    5. Confidential Information: Access to confidential information regarding the Debtors and the
       Disclosure Letter to the APA will be granted to potential bidders who execute a non-disclosure
       agreement reasonably acceptable in form and substance to Sellers, a form of which is attached as
       a schedule to the Bid Procedures.

       The Debtors look forward to working with you in this process and receiving your bid. To the
extent you have any questions about the process, please contact our legal advisors, Akin Gump Strauss
Hauer & Feld, LLP (Ira Dizengoff at 212-872-1096, Arik Preis at 212-872-7418, Stephen Kuhn at 212-
872-1008, or Zachary Wittenberg at 212-872-1081) or our financial advisors, The Blackstone Advisory
Group, LLP (Steven Zelin at 212-583-5886, C.J. Brown at 212-583-5582, Tom Middleton at 212-583-
5252, or Daniel Chang at 212-583-5238).

                                                           Sincerely,

                                                           TerreStar Networks Inc.




 
            
            PURCHASE AGREEMENT

                   by and among

         TERRESTAR NETWORKS INC.,

            TERRESTAR LICENSE INC.,

     TERRESTAR NATIONAL SERVICES INC.,

TERRESTAR NETWORKS HOLDINGS (CANADA) INC.,

    TERRESTAR NETWORKS (CANADA) INC.,

                0887729 B.C. LTD.

                        and

        [                               ]

                dated as of [●], 2011
                                                        TABLE OF CONTENTS

                                                                                                                                        Page

ARTICLE I. DEFINITIONS ...........................................................................................................2 

ARTICLE II. PURCHASE AND SALE OF ASSETS ....................................................................2 

      Section 2.1             Sale and Transfer of Assets..........................................................................2 
      Section 2.2             Retained Assets ............................................................................................4 
      Section 2.3             Assumption of Liabilities.............................................................................5 
      Section 2.4             Non-Assumed Liabilities .............................................................................5 
      Section 2.5             The Purchase Price.......................................................................................5 
      Section 2.6             Sale Free and Clear ......................................................................................7 

ARTICLE III. CLOSING ................................................................................................................7 

      Section 3.1             Funding and Closing ....................................................................................7 
      Section 3.2             Deliveries by Sellers ....................................................................................8 
      Section 3.3             Deliveries by Purchaser ...............................................................................9 
      Section 3.4             Nonassignable Assets...................................................................................9 
      Section 3.5             Termination and Alternative Sale ..............................................................10 

ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF SELLERS .............................13 

      Section 4.1             Organization...............................................................................................13 
      Section 4.2             Financial Statements ..................................................................................13 
      Section 4.3             Real and Personal Property ........................................................................14 
      Section 4.4             Authorization; Enforceability ....................................................................15 
      Section 4.5             No Conflicts ...............................................................................................15 
      Section 4.6             Consents and Approvals ............................................................................15 
      Section 4.7             Intellectual Property ...................................................................................16 
      Section 4.8             Material Contracts......................................................................................17 
      Section 4.9             Absence of Certain Developments.............................................................18 
      Section 4.10            No Undisclosed Liabilities.........................................................................18 
      Section 4.11            Litigation ....................................................................................................18 
      Section 4.12            Permits and Compliance with Laws ..........................................................18 
      Section 4.13            Taxes ..........................................................................................................19 
      Section 4.14            Employees ..................................................................................................20 
      Section 4.15            Compliance With ERISA and Canadian Plans ..........................................20 
      Section 4.16            Communications Matters ...........................................................................21 
      Section 4.17            Company Satellites ....................................................................................21 
      Section 4.18            Coordination Agreements ..........................................................................22 
      Section 4.19            Company Earth Stations ............................................................................22 
      Section 4.20            U.S. Labor Relations ..................................................................................22 
      Section 4.21            Canada Labor Relations .............................................................................22 


                                                                     i
      Section 4.22           Brokers .......................................................................................................23 
      Section 4.23           Environmental Matters...............................................................................23 
      Section 4.24           Title to Assets; Sufficiency of Assets ........................................................23 
      Section 4.25           Insurance ....................................................................................................24 

ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PURCHASER ........................24 

      Section 5.1            Organization...............................................................................................24 
      Section 5.2            Authorization; Enforceability ....................................................................24 
      Section 5.3            No Conflicts ...............................................................................................24 
      Section 5.4            Consents and Approvals ............................................................................25 
      Section 5.5            Financial Capability ...................................................................................25 
      Section 5.6            Bankruptcy .................................................................................................25 
      Section 5.7            Broker’s, Finder’s or Similar Fees .............................................................25 
      Section 5.8            Litigation ....................................................................................................25 
      Section 5.9            Investment Intention ..................................................................................25 
      Section 5.10           Qualifications to Hold Communications Licenses ....................................26 
      Section 5.11           Investment Canada Act ..............................................................................26 
      Section 5.12           GST/HST Registration ...............................................................................26 
      Section 5.13           Condition of Business ................................................................................26 

ARTICLE VI. COVENANTS .......................................................................................................27 

      Section 6.1            Interim Operations of the Business ............................................................27 
      Section 6.2            Access; Confidentiality ..............................................................................28 
      Section 6.3            Efforts and Actions to Cause Closing to Occur .........................................29 
      Section 6.4            Notification of Certain Matters ..................................................................31 
      Section 6.5            Transition of the Business..........................................................................31 
      Section 6.6            Submission for Court Approvals ...............................................................32 
      Section 6.7            Employee Matters ......................................................................................32 
      Section 6.8            Subsequent Actions ....................................................................................33 
      Section 6.9            Publicity .....................................................................................................33 
      Section 6.10           Tax Matters ................................................................................................33 
      Section 6.11           Designation Dates; Assumption of Costs and Expenses............................35 
      Section 6.12           Prompt Payment of Cure Amounts ............................................................36 
      Section 6.13           Completion of Nonassignable Designated Contracts ................................36 
      Section 6.14           Entry into New DIP Agreement .................................................................36 
      Section 6.15           No Violation...............................................................................................37 

ARTICLE VII. CONDITIONS......................................................................................................37 

      Section 7.1            Conditions to Obligations of Purchaser .....................................................37 
      Section 7.2            Conditions to Obligations of Sellers ..........................................................40 

ARTICLE VIII. TERMINATION .................................................................................................42 



                                                                   ii
        Section 8.1            Termination ................................................................................................42 
        Section 8.2            Effect of Termination .................................................................................43 
        Section 8.3            Good Faith Deposit ....................................................................................43 

ARTICLE IX. MISCELLANEOUS ..............................................................................................44 

        Section 9.1            Survival of Covenants, Representations and Warranties ...........................44 
        Section 9.2            Amendment and Modification ...................................................................44 
        Section 9.3            Notices .......................................................................................................44 
        Section 9.4            Counterparts ...............................................................................................45 
        Section 9.5            Entire Agreement; No Third Party Beneficiaries.......................................45 
        Section 9.6            Severability ................................................................................................45 
        Section 9.7            Governing Law ..........................................................................................45 
        Section 9.8            Exclusive Jurisdiction ................................................................................45 
        Section 9.9            Remedies ....................................................................................................46 
        Section 9.10           Specific Performance .................................................................................46 
        Section 9.11           Purchaser Acknowledgement.....................................................................46 
        Section 9.12           Assignment ................................................................................................46 
        Section 9.13           Confidential Information ...........................................................................46 
        Section 9.14           Headings ....................................................................................................46 
        Section 9.15           No Consequential or Punitive Damages ....................................................46 
        Section 9.16           Definitions..................................................................................................47 
        Section 9.17           Bulk Transfer Notices ................................................................................61 
        Section 9.18           Interpretation ..............................................................................................61 


EXHIBITS

Exhibit A            Alternative Sale Procedures
Exhibit B            Form of Bill of Sale1
Exhibit C            Form of Escrow Agreement
Exhibit D            Form of Instrument of Assumption2
Exhibit E            Form of Sale Order3
Exhibit F            Form of New DIP Agreement




1
    Draft to be provided at a later date.
2
    Draft to be provided at a later date.
3
    Draft to be provided at a later date.




                                                                     iii
                                       PURCHASE AGREEMENT

                This Purchase Agreement, dated as of [●], 2011, is made and entered into by and
among TerreStar Networks Inc., a Delaware corporation (“TerreStar Networks”), TerreStar
License Inc., a Delaware corporation, TerreStar National Services Inc., a Delaware corporation,
TerreStar Networks Holdings (Canada) Inc., an Ontario corporation, TerreStar Networks
(Canada) Inc., an Ontario corporation, and 0887729 B.C. Ltd., a British Columbia corporation
(each, a “Seller” and collectively, “Sellers”), on the one hand, and [                    ],
a                         (“Purchaser”), on the other hand.4

                                                  RECITALS

               WHEREAS, Sellers are engaged in the business of operating a mobile wireless
communications system based on integrated satellite and ground-based technology to provide
mobile coverage throughout the United States and Canada as conducted through the Acquired
Assets (as defined below) (the “Business”);

                WHEREAS, on October 19, 2010, Sellers filed voluntary petitions for relief under
chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended (the
“Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of New
York (the “Bankruptcy Court”), which cases are being jointly administered under Case No. 10-
15446 (the “Bankruptcy Cases”);

               WHEREAS, on October 21, 2010, the Ontario Superior Court of Justice
(Commercial List) (the “Canadian Court” and the proceeding before the Canadian Court, the
“CCAA Recognition Proceeding”) granted orders under Part IV of the Companies' Creditors
Arrangement Act, R.S.C. 1985, c.C-36 that, among other things, recognized the Bankruptcy
Cases as the “foreign main proceedings” of Sellers;

                WHEREAS, Purchaser desires to purchase and acquire from Sellers certain assets
and rights used in the operation of the Business, and Sellers desire to sell, convey, assign and
transfer such assets and rights to Purchaser, in the manner and subject to the terms and
conditions set forth herein and as authorized under sections 105, 363 and 365 of the Bankruptcy
Code; and

               WHEREAS, Sellers desire to assign to Purchaser, and Purchaser desires to
assume from Sellers, certain liabilities, in the manner and subject to the terms and conditions set
forth herein and as authorized under sections 105, 363 and 365 of the Bankruptcy Code.

               NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:


4
 Depending on the entity that will be the Purchaser a guarantee from a credit worthy entity may be required by
Sellers in connection with this Agreement.
                                                        ARTICLE I.

                                                      DEFINITIONS

              The terms defined or referenced in Section 9.16, whenever used herein, shall have
the meanings set forth therein for all purposes of this Agreement.

                                                        ARTICLE II.

                                       PURCHASE AND SALE OF ASSETS

                        Section 2.1 Sale and Transfer of Assets. On the terms and subject to
the conditions set forth in this Agreement, on the Closing Date, Sellers shall unconditionally
Transfer to Purchaser and/or one or more of Purchaser’s Affiliates or Subsidiaries, as designated
by Purchaser, and Purchaser and/or one or more of its Affiliates or Subsidiaries, as applicable,
shall purchase, acquire, assume and accept from Sellers, free and clear of all Seller Liabilities,
Liens, Claims and Interests (except for Liens created by Purchaser and any Assumed Permitted
Liens and Assumed Liabilities), all of Sellers’ right, title and interest in and to all of their Assets,
other than the Retained Assets (collectively, the “Acquired Assets”), including (except as listed
in Section 2.2):

       (a)    the shares of capital in TerreStar Solutions Inc. listed on Section 4.24(c) of the
Disclosure Letter5;

        (b)    all Intellectual Property of the Sellers, including the items listed on Section 2.1(b)
of the Disclosure Letter;

        (c)     all Contracts set forth on Section 2.1(c) of the Disclosure Letter (which Purchaser
has the right to revise in its discretion in accordance with Section 6.11 hereof (collectively, the
“Designated Contracts”);

       (d)     the Real Property and personal property of Sellers, including the Leased Real
Property (to the extent the applicable lease is a Designated Contract), all easements and rights of
way and all buildings, fixtures and improvements erected on the Real Property;

         (e)   all books, files, data, customer and supplier lists, cost and pricing information,
business plans, quality control records and manuals, blueprints, research and development files,
personnel records of Transferred Employees to the extent the Transfer of such items is permitted
under Applicable Law (excluding personnel files for employees who are not Transferred
Employees) and related books and records for the Acquired Assets and all other records of
Sellers;

            (f)      all computer systems, computer hardware and Software of Sellers;


5
    Note that the transfer of these shares are subject to a right of first refusal in favor of the majority stockholders of
    Terrestar Solutions Inc.

                                                              -2-
       (g)   all inventory, supplies, finished goods, works in process, goods-in-transit,
packaging materials and other consumables of Sellers (the “Inventory”);

       (h)    all Transferable Permits of any Seller, including all letters of intent, reservations
of spectrum and Permits issued by the FCC and Industry Canada listed on Section 2.1(h) of the
Disclosure Letter;

        (i)     the mobile satellite service system owned or operated by Sellers (including
Sellers’ rights or rights of use with respect to T1 and T2, gateway earth stations, calibration earth
stations, mobile earth stations to which Sellers hold legal title, and other facilities and equipment
related thereto, collectively, the “Mobile Satellite System”), including all rights to (i) own,
operate and control the Mobile Satellite System and (ii) fully utilize the FCC and Industry
Canada Licenses in accordance with the conditions set out therein;

        (j)     all machinery, vehicles, tools, equipment, furnishings, office equipment, fixtures,
furniture, spare parts and other fixed Assets which are owned by Sellers (and Sellers’ right, title
and interest in any leases relating to the same to the extent the applicable lease is a Designated
Contract), including all of Sellers’ right, title and interest in or to all ground infrastructure,
towers, transmission lines, antennas, microwave facilities, transmitters and related equipment
(“System Equipment”) (all of the foregoing, collectively, “Equipment”);

       (k)   all advertising or promotional materials of Sellers to the extent related to the other
Acquired Assets set forth in this Section 2.1;

       (l)    all manufacturer’s warranties to the extent related to the Acquired Assets and all
claims under such warranties;

        (m)    to the extent Transferable under Applicable Law, all rights to the telephone
numbers (and related directory listings), Internet domain names, Internet sites and other
electronic addresses used by, assigned or allocated to Sellers;

        (n)     all prepaid expenses (excluding prepaid expenses related to Taxes) of Sellers
relating to any portion of the Acquired Assets;

       (o)     all advances or similar prepayments relating to Transferred Employees;

       (p)      all Investments and any and all Cash and Cash Equivalents or revenues received
by the Sellers after the Funding Date in respect of the Acquired Assets;

        (q)    proceeds received after the Funding Date under insurance policies of Sellers to the
extent received or receivable with respect to the Business or the Acquired Assets other than (i)
policies which relate to any Employee Benefit Plans of Sellers which are not being assumed by
Purchaser and (ii) any policies relating to the liability of Sellers’ directors and officers;

        (r)   all Accounts Receivable and Intercompany Receivables, whether or not reflected
on the books of Sellers as of the Closing Date;


                                                 -3-
      (s)     customer relationships, goodwill and all other intangible assets relating to,
symbolized by or associated with the Business;

       (t)     all other Assets owned by the Sellers necessary to or utilized in the operation of
the Business as it is presently conducted other than the Retained Assets; and

        (u)    all rights, privileges, claims, demands, choses in action, prepayments, deposits,
refunds, indemnification rights, warranty claims, offsets and other claims of Sellers against Third
Parties (“Actions”) relating to the Acquired Assets set forth in clauses (a) through (t) of this
Section 2.1, other than Avoidance Actions set forth in Section 2.2(k).

                       Section 2.2 Retained Assets. Notwithstanding anything in this
Agreement to the contrary, the Acquired Assets shall not include the Assets which are to be
retained by Sellers and not sold or assigned to Purchaser (collectively, the “Retained Assets”),
which shall be limited to the following:

        (a)     Cash and Cash Equivalents on hand of the Sellers as of the Closing Date other
than as specifically provided for in Sections 2.1(p) and 2.1(q);

           (b)       [ ]6

           (c)      all rights of Sellers in and to all Contracts other than the Designated Contracts;

        (d)    all losses, loss carryforwards and rights to receive refunds, and credits with
respect to any and all Taxes of Sellers (and/or of any of their Affiliates);

           (e)      all Tax Returns of Sellers;

       (f)      all personnel files for employees who are not Transferred Employees and
personnel files of Transferred Employees that may not be Transferred under Applicable Laws;

        (g)     books and records that Sellers are required by Applicable Law to retain to the
extent they relate exclusively to the Retained Assets or the Non-Assumed Liabilities;

      (h)     customer relationships, goodwill and other intangible assets relating to,
symbolized by or associated exclusively with the Retained Assets;

        (i)    rights and any assets under any Employee Benefit Plan or Canadian Plan of
Sellers which are not being assumed by Purchaser;

       (j)          any directors and officers liability insurance policies of Sellers and any claims
thereunder;

       (k)    the Avoidance Actions and all other Actions, including those related to the
Retained Assets set forth in clauses (a) through (i) of this Section 2.2; and

6
    Purchaser to identify any additional Retained Assets.

                                                            -4-
      (l)   all right and claims of Sellers arising under this Agreement and the Ancillary
Agreements.

                       Section 2.3     Assumption of Liabilities.

         (a)      Purchaser shall (or shall cause its designated Subsidiaries or Affiliates to) assume,
and become solely and exclusively liable for, the following liabilities of Sellers and no others
(collectively, the “Assumed Liabilities”): (i) all liabilities and obligations of Sellers under the
Designated Contracts that arise exclusively after the Closing Date, (ii) any other liabilities and
obligations that are specifically designated by Purchaser in writing on or prior to the Closing
Date, (iii) all liabilities relating to, or arising in respect of the Acquired Assets accruing, arising
out of or relating to events, occurrences, acts or omissions occurring or existing after the Closing
Date, or the operation of the Business or the Acquired Assets after the Closing Date, (iv) all
accrued liabilities with respect to the Employees and the Transferred Employees, including all
accrued salary, vacation, and other compensation, except as set forth in Section 2.4(a), (v) all
liabilities arising out of or resulting from a change of control, layoffs or termination of the
Employees and the Transferred Employees by any Seller prior to or on the Closing Date that
arises from the consummation of the Transactions, including any such layoffs or terminations
that are or were sufficient in the aggregate to required notice under the WARN Act and (vi) all
liabilities and obligations of the Purchaser under Section 6.7 herein.

        (b)     Nothing contained in this Agreement shall require Purchaser or any of its
Affiliates to pay, perform or discharge any Assumed Liability so long as it shall in good faith
contest or cause to be contested the amount or validity thereof.

        (c)     Nothing contained in this Section 2.3 or in any Instrument of Assumption or
similar instrument, agreement or document executed by Purchaser at the Closing shall release or
relieve Sellers from their covenants and agreements contained in this Agreement or any
certificate, schedule, instrument, agreement or document executed pursuant hereto or in
connection herewith.

                        Section 2.4 Non-Assumed Liabilities. Notwithstanding anything in this
Agreement to the contrary, Purchaser shall not assume, and shall be deemed not to have
assumed, any Seller Liabilities or any obligations or liabilities of any of their Subsidiaries or
Affiliates or the Business, other than the Assumed Liabilities specified in Section 2.3(a)
(collectively, the “Non-Assumed Liabilities”). For purposes of clarity, each of (a) any liabilities
or obligations with respect to any Employee Benefit Plan or Canadian Plan, (b) any Cure
Amounts and (c) any liabilities or obligations of Sellers with respect to Taxes with respect to
Sellers, the Business, or the Acquired Assets (except as provided in Section 6.10), and (d) other
claims (including Taxes) against or relating to any of the Acquired Assets, Assumed Liabilities
and/or the Business arising prior to the Closing Date, shall be Non-Assumed Liabilities.

                       Section 2.5     The Purchase Price.

        (a)     Purchase Price. The purchase price of $     billion for the Acquired Assets shall
consist of (i) payment to Sellers of consideration of $     billion (the “Cash Consideration”)
and (ii) the deposit of $       million into the Escrow Account to provide funding for working

                                                  -5-
capital and administrative expenses of Sellers from the Funding Date through December 31,
2011 (the “Escrow Consideration,” and together with the Cash Consideration, the “Purchase
Price”).

           (b)      Payment of Purchase Price.

                    (i)      Simultaneously with the execution of this Agreement, the parties shall
                             execute and deliver the Escrow Agreement and Purchaser shall
                             contemporaneously deposit into the Escrow Account, by wire transfer of
                             immediately available funds, cash in the amount of $         million7,
                             which funds shall be held by the Escrow Agent and invested as provided
                             for in the Escrow Agreement (such funds, together with all interest,
                             income, dividends, distributions and earnings thereon, the “Good Faith
                             Deposit”) and released by the Escrow Agent only in accordance with the
                             Escrow Agreement.

                    (ii)     On the Funding Date, Purchaser shall pay the Purchase Price by wire
                             transfer of immediately available funds as follows: (1) the Cash
                             Consideration, less the amount of the Good Faith Deposit (which shall be
                             released from the Escrow Account pursuant to the Escrow Agreement and
                             credited against the Purchase Price on such date), shall be paid to one or
                             more accounts specified by Sellers in writing, and (2) the Escrow
                             Consideration shall be deposited into the Escrow Account, with such
                             amount to be thereafter held, invested and released by the Escrow Agent
                             only in accordance with the Escrow Agreement; provided that, for the
                             avoidance of doubt, amounts of or in respect of Transfer Taxes shall be
                             paid directly by the Purchaser to the relevant Tax Authority or Seller
                             pursuant to and in accordance with the relevant provisions of this
                             Agreement.

        (c)     Allocation of Purchase Price. Within sixty (60) days of the Closing Date,
Purchaser shall prepare and deliver to Sellers a statement allocating the sum of the Purchase
Price, the Assumed Liabilities and other relevant items among the Acquired Assets in accordance
with Section 1060 of the Code and the Treasury regulations promulgated thereunder and the
Income Tax Act and upon reasonable consultation with Sellers, and with Sellers’ consent, which
consent shall not be unreasonably withheld or delayed (such statement, the “Allocation
Statement”). The parties shall follow the Allocation Statement for purposes of filing IRS Form
8594 and all other Tax Returns, and shall not voluntarily take any position inconsistent
therewith. If the IRS or any other taxation authority proposes a different allocation, Sellers or
Purchaser, as the case may be, shall promptly notify the other party of such proposed allocation.
Sellers or Purchaser, as the case may be, shall provide the other party with such information and
shall take such actions (including executing documents and powers of attorney in connection
with such proceedings) as may be reasonably requested by such other party to carry out the
purposes of this section. Except as otherwise required by Applicable Law or pursuant to a

7
    This amount to equal five percent of the Purchase Price.

                                                           -6-
“determination” under Section 1313(a) of the Code (or any comparable provision of United
States state, local, or non-United States law), (i) the transactions contemplated by Article II of
this Agreement shall be reported for all Tax purposes in a manner consistent with the terms of
this Section 2.5(c); and (ii) neither party (nor any of their Affiliates) will take any position
inconsistent with this Section 2.5(c) in any Tax Return, in any refund claim, in any litigation or
otherwise. Notwithstanding the allocation of the Purchase Price set forth in the Allocation
Statement, nothing in the foregoing shall be determinative of values ascribed to the Acquired
Assets or the allocation of the value of the Acquired Assets in any plan or reorganization or
liquidation that may be proposed and the Sellers reserve the right, to the extent not prohibited by
Applicable Law and accounting rules, for purposes of any plan of reorganization or liquidation,
to ascribe values to the Acquired Assets and to allocate the value of the Acquired Assets to
different Sellers in the event of, or in order to resolve, inter-estate creditor disputes in the
Bankruptcy Cases.

                        Section 2.6 Sale Free and Clear. Sellers acknowledge and agree and
the Sale Order shall provide that, on the Funding Date and concurrently with the Funding, all
then existing or thereafter arising Seller Liabilities, Claims, Interests and Liens (other than those
in favor of Purchaser created under this Agreement and/or any Ancillary Agreement, the
Assumed Permitted Liens, if any, and Assumed Liabilities) of, against or created by any of
Sellers or their bankruptcy estates, to the fullest extent permitted by Section 363 of the
Bankruptcy Code, shall be fully released from and with respect to the Acquired Assets and
thereupon shall attach to the Purchase Price with the same force, effect, validity, enforceability,
and priority as such Seller Liabilities, Claims, Interests and Liens had attached to the Acquired
Assets as of the Funding Date. Following receipt of the Specified Regulatory Approvals, on the
Closing Date in accordance with Section 3.1(c)(i) of this Agreement, the Acquired Assets shall
be Transferred to Purchaser and/or one or more of its Affiliates or Subsidiaries, as applicable, to
the fullest extent permitted by Section 363 of the Bankruptcy Code, free and clear of all Seller
Liabilities, Claims, Interests, and Liens other than the Assumed Permitted Liens, if any, and the
Assumed Liabilities or, in the event of an Alternative Sale to a Third Party purchaser under
Section 3.5 of this Agreement, the Acquired Assets shall be Transferred to such Third Party
purchaser and/or one or more of its Affiliates or Subsidiaries, as applicable, free and clear to the
fullest extent permitted by Section 363 of the Bankruptcy Code, to the same extent as
contemplated under this Agreement had the Acquired Assets been transferred to Purchaser
hereunder.

                                           ARTICLE III.

                                             CLOSING

                       Section 3.1     Funding and Closing.

        (a)    Upon the terms and subject to the conditions of this Agreement, each of the
Funding and the Closing shall take place at the offices of Akin Gump Strauss Hauer & Feld LLP,
One Bryant Park, New York, NY 10036-6745, at 10:00 a.m., New York time as specified below,
unless another date, time and/or place is agreed in writing by each of the parties hereto.



                                                 -7-
        (b)      The Funding shall occur on or before the date (the “Funding Date”) that is not
later than the fifth Business Day following the satisfaction and/or waiver of all conditions to the
Funding as set forth in Article VII (other than conditions which by their nature can be satisfied
only at the Funding). On the Funding Date, the Good Faith Deposit shall be released to Sellers
and Purchaser shall deliver the Purchase Price to Sellers in accordance with Section 2.5(b)(ii).

        (c)     The Closing shall occur on the date (the “Closing Date”) that is either (i) not later
than the fifth Business Day following the satisfaction and/or waiver of all conditions to the
Closing as set forth in Article VII (other than conditions which by their nature can be satisfied
only at the Closing), or (ii) the date upon which an Alternative Sale is consummated in
accordance with Section 3.5.

       (d)      Sellers will retain de facto and de jure ownership, direction and control (within
the meaning of the Communications Laws), of the Acquired Assets, including, for the avoidance
of doubt of all FCC Licenses, FCC-licensed facilities, Industry Canada Licenses and Industry
Canada-licensed facilities, until the Closing has occurred.

       (e)    For the avoidance of doubt, the parties hereby agree that once the Funding shall
have occurred, Purchaser shall not be entitled to any refund of any portion of the Purchase Price.

                       Section 3.2     Deliveries by Sellers.

       (a)     At the Funding, Sellers shall deliver or cause to be delivered to Purchaser (unless
previously delivered):

               (i)     the officers’ certificate referred to in Section 7.1(a)(vii);

               (ii)    a certified copy of the Sale Order and a copy of the docket of the
                       Bankruptcy Court evidencing the entry of the Sale Order (updated through
                       the date and time of the Funding); and

               (iii)   a certified copy of the Sale Recognition Order.

       (b)     At the Closing, Sellers shall deliver or cause to be delivered to Purchaser (unless
previously delivered) each of the following:

               (i)     copies of the FCC Consent and the Industry Canada Consent;

               (ii)    the duly executed Bill of Sale and duly executed counterparts of each
                       Conveyance Document in respect of the Acquired Assets;

               (iii)   a duly executed Instrument of Assumption for the Designated Contracts
                       and Assumed Liabilities;

               (iv)    stock certificates or similar documents representing the shares of capital
                       owned by Sellers in TerreStar Solutions Inc.;



                                                 -8-
               (v)     a certification of non-foreign status for each Seller (other than Sellers
                       organized in Canada) in a form and manner which complies with the
                       requirements of Section 1445 of the Code and the Treasury regulations
                       promulgated thereunder;

               (vi)    executed copies of the consents and approvals referred to in Section
                       7.1(b)(i); and

               (vii)   all other documents required to be delivered by Sellers to Purchaser at or
                       prior to the Closing in connection with the Transactions, including any tax
                       election provided in Section 6.10 hereof.

Subject to the provisions of Section 6.13 hereof, nothing contained in this Section 3.2 is intended
to nor shall be deemed to require the assignment or novation of, at the Closing, any
Nonassignable Designated Contract.

                       Section 3.3    Deliveries by Purchaser.

       (a)     At the Funding, Purchaser shall deliver or cause to be delivered to Sellers (unless
previously delivered):

               (i)     the Purchase Price, as provided in Section 2.5(b)(ii);

               (ii)    all other documents required to be delivered by Purchaser to Sellers at or
                       prior to the Funding in connection with the Transactions; and

               (iii)   the New DIP Termination Letter.

       (b)     At the Closing, Purchaser shall deliver or cause to be delivered to Sellers (unless
previously delivered):

               (i)     a duly executed Instrument of Assumption for the Designated Contracts
                       and Assumed Liabilities;

               (ii)    a duly executed joinder to the Shareholders Agreement; and

               (iii)   all other documents required to be delivered by Purchaser to Sellers at or
                       prior to the Closing in connection with the Transactions, including any tax
                       election provided in Section 6.10 hereof.

                      Section 3.4 Nonassignable Assets. To the extent that any Asset
otherwise to be acquired by Purchaser upon the Closing pursuant to Section 2.1 hereof is
determined by the Bankruptcy Court to be non-assignable pursuant to section 365(c) of the
Bankruptcy Code (each, a “Nonassignable Asset”), such Nonassignable Asset shall be held, as of
and from the Closing Date, for the benefit and burden of Purchaser and the covenants and
obligations thereunder shall be fully performed by Purchaser on the relevant Seller’s behalf (to
the extent such covenants and obligations are Assumed Liabilities) and all rights (to the extent
such rights are Acquired Assets) existing thereunder shall be for Purchaser’s account. To the
                                                -9-
extent permitted by Applicable Law, the relevant Seller shall take or cause to be taken, at
Purchaser’s expense, such actions as Purchaser may reasonably request which are required to be
taken or appropriate in order to provide Purchaser with the benefits and burdens of the
Nonassignable Asset. The relevant Seller shall promptly pay over to Purchaser the net amount
(after expenses and Taxes of Seller (after taking into account any Tax benefits arising from such
payments)) of all payments received by it in respect of all Nonassignable Assets, other than
payments received from Purchaser pursuant to this Agreement.

                       Section 3.5     Termination and Alternative Sale.

         (a)     Notwithstanding anything to the contrary set forth in this Agreement, in any
Ancillary Agreement or otherwise, if the Funding shall have occurred, then neither party shall
thereafter have any right to terminate this Agreement (pursuant to Article VIII hereof or
otherwise) or rescind any of its actions or modify any of its obligations hereunder, except
pursuant to this Section 3.5. After the Funding, the obligations of Sellers under this Section 3.5
and the accompanying Alternative Sale Procedures (the “Alternative Sale Obligations”) shall (x)
not be terminable or dischargeable at any time for any reason except as set forth in this
Section 3.5, (y) survive any conversion, dismissal, or consolidation of the Bankruptcy Cases or
the CCAA Recognition Proceeding and (z) survive the termination of this Agreement by any
means other than as expressly set forth in this Section 3.5. In addition, the Alternative Sale
Obligations shall survive the confirmation of any plan of reorganization or liquidation in the
Bankruptcy Cases (a “Plan”) or any plan, scheme, composition, reorganization, liquidation or
other arrangement in the Bankruptcy Cases or other insolvency proceeding related to Sellers,
including any order in the CCAA Recognition Proceeding recognizing any of the foregoing (an
“Arrangement”) and shall be binding in any additional or subsequent insolvency proceeding
whether under the Bankruptcy Code or any other state, national or international insolvency or
bankruptcy law. This Section 3.5 is intended to be, and the Sale Order shall specifically provide
that it shall be, binding upon (i) any successors or assigns of Sellers, (ii) any trustee, examiner, or
other party in interest or representative of any Seller’s estate, (iii) any reorganized Seller,
liquidating trustee, debtor in possession, administrator, liquidator or trustee in the Bankruptcy
Cases, the CCAA Recognition Proceeding or any other insolvency proceeding involving or
related to the Acquired Assets, (iv) any other entity vested or revested with any right, title or
interest in or to the Acquired Assets, whether under a Plan, an Arrangement or otherwise and
(v) any other Person claiming any rights in or control over any of the Acquired Assets, (each of
the foregoing, under subclauses (i)-(v), inclusive of this Section 3.5(a), a “Seller Successor”) as
if such Seller Successor were a Seller hereunder. After the Funding, the obligations under this
Agreement, including the Alternative Sale Obligations, may not be discharged under Bankruptcy
Code section 1141 or 727 or otherwise and may not be abandoned under Bankruptcy Code
section 554 or otherwise or terminated for any reason except as specifically set forth in this
Section 3.5.

       (b)     Alternative Sale.

               (i)     Sale Notice. At the earliest to occur of (A) the date six months after the
                       application for the FCC Consent with respect to the Transactions has been
                       submitted to the FCC, if all or any one of the Specified Regulatory

                                                 -10-
       Approvals shall not have been granted on or prior to such date, (B) the
       date that is ten (10) Business Days after Purchaser becomes aware that any
       of Sellers has or have committed a material breach of a material provision
       of this Agreement, and such material breach shall not have been cured
       during the ten (10) Business Day period after Purchaser provides written
       notice thereof to the Sellers, or (C) the date upon which the FCC or
       Industry Canada denies, dismisses or designates for an evidentiary hearing
       the applications for the FCC Consent or the Industry Canada Approval,
       Purchaser shall have the right to deliver a written notice (“Purchaser
       Alternative Sale Notice”) to Sellers to implement the Alternative Sale
       Procedures and request that Sellers sell or otherwise dispose of some or all
       of the Acquired Assets to one or more Third Parties that are eligible to
       hold legal title to such Acquired Assets, with all proceeds from such sales
       accruing to the sole benefit and account of Purchaser in accordance with
       the procedures set out in Exhibit A, including the procedure for identifying
       bona fide potential Third Party purchasers (each such sale or disposal, the
       “Alternative Sale”). In the event that the Closing has not occurred, at any
       time after January 1, 2012, unless a Purchaser Alternative Sale Notice
       shall previously have been delivered, Sellers shall have the right to deliver
       a written notice (“Seller Alternative Sale Notice” and together with the
       Purchaser Alternative Sale Notice, the “Alternative Sale Notice”) to
       Purchaser to implement the Alternative Sale Procedures to sell or
       otherwise dispose of the Acquired Assets. Notwithstanding any other
       provision hereof, it is understood and agreed that all Specified Regulatory
       Approvals and any other required approvals from Governmental Entities
       must be obtained for any Alternative Sale and are conditions precedent to
       the closing of any Alternative Sale and Sellers will retain de facto and de
       jure ownership, direction and control (within the meaning of the
       Communications Laws) of the Acquired Assets, including, for the
       avoidance of doubt, of all FCC Licenses, FCC-licensed facilities, Industry
       Canada Licenses and Industry Canada-licensed facilities until the closing
       of any Alternative Sale.

(ii)   Alternative Sale Procedures. From and after the date of an Alternative
       Sale Notice, Sellers shall comply with all commercially reasonable
       directions from Purchaser with respect to an Alternative Sale and
       otherwise cooperate with Purchaser in conducting each Alternative Sale in
       accordance with the Alternative Sale Procedures (including engaging the
       Investment Bank and such other advisors in connection with each
       Alternative Sale as may be requested by Purchaser), and shall follow
       reasonable instructions from Purchaser in determining the terms and
       conditions of the Alternative Sale and the sale process. It is expressly
       understood and agreed that the Alternative Sale is for the sole benefit and
       account and at the sole risk of Purchaser, in no event shall Sellers enter
       into any Alternative Sale or any agreement therefor without the prior
       written consent of Purchaser and in no event shall Sellers be required to
       provide any indemnification to a Third Party purchaser in connection with
                                -11-
                      an Alternative Sale nor shall Purchaser be entitled to any refund or
                      reduction of the Purchase Price regardless of the price paid for the
                      Acquired Assets by a Third Party in an Alternative Sale. Sellers further
                      agree and confirm that they shall direct the Third Party purchasers in the
                      Alternative Sale to pay all proceeds payable in the Alternative Sale
                      directly to Purchaser. From time to time in advance of the consummation
                      of an Alternative Sale at the request of Sellers, Purchaser shall reimburse
                      Sellers for any and all of their costs and expenses reasonably incurred in
                      accordance with this Section 3.5(b) in conducting such Alternative Sale;
                      provided, however, that the engagement of any Investment Bank or any
                      other professional shall be governed by and paid for pursuant to the
                      procedures set forth in Exhibit A.

              (iii)   Effect of Alternative Sale. Upon the closing and consummation of any
                      Alternative Sale, (A) all amounts in the Escrow Account, to the extent not
                      previously released and delivered to Sellers, shall be released therefrom
                      and delivered to Sellers in accordance with this Agreement and the
                      Escrow Agreement and (B) this Agreement and the Escrow Agreement
                      shall immediately be terminated (except for provisions of this
                      Section 3.5(b) and such other provisions of this Agreement and the
                      Escrow Agreement as are expressly stated to survive termination).

        (c)    Subject to any order of the Bankruptcy Court, the Canadian Court or other court
of competent jurisdiction, and without in any way limiting any provision of this Agreement
(including Section 6.1 or Section 6.4 hereof) that is otherwise operative during such period,
Sellers covenant and agree that, after the Funding and until the Closing:

              (i)     Sellers shall cause to be delivered to Purchaser the following:

                      (1)    as soon as practicable, but in any event within 90 days after the end
                             of each fiscal year, the audited consolidated balance sheet as of the
                             last day of such year and related consolidated statements of income
                             and cash flow of TerreStar Networks (including the notes thereto)
                             for such year, reported on and accompanied by a report from Ernst
                             & Young LLP or other independent public accountants of
                             nationally recognized standing selected by Sellers, such year-end
                             financial reports to be in reasonable detail and prepared in
                             accordance with GAAP;

                      (2)    as soon as practicable, but in any event within 45 days after the end
                             of each of the first 3 quarters of each fiscal year, an unaudited
                             consolidated balance sheet and related consolidated statement of
                             income, schedule as to the sources and application of funds for
                             such fiscal quarter, and statement of cash flow for TerreStar
                             Networks (including the notes thereto) as of the end of such fiscal
                             quarter, prepared in accordance with Sellers’ internal accounting

                                              -12-
                              policies applied consistently with those used in the Audited
                              Financial Statements and in accordance with GAAP; and

                       (3)    as soon as practicable, but in any event within 30 days of the end
                              of each month, an unaudited consolidated balance sheet and the
                              related unaudited consolidated statements of income and cash flow
                              for TerreStar Networks (including the notes thereto) as of the end
                              of such month, prepared in accordance with Sellers’ internal
                              accounting policies applied consistently with those used in the
                              Audited Financial Statements and in accordance with GAAP.

                                          ARTICLE IV.

                  REPRESENTATIONS AND WARRANTIES OF SELLERS

               Each Seller, with respect to itself only, hereby represents and warrants to
Purchaser that the statements contained in this Article IV are true and correct as of the date of
this Agreement, except as otherwise stated in this Article IV and except as set forth in the
corresponding sections or subsections of the Disclosure Letter delivered by Sellers to Purchaser
concurrently with the execution and delivery hereof (it being agreed that disclosure of any
information in a particular section or subsection of the Disclosure Letter shall be deemed
disclosure with respect to any other section or subsection only to the extent that the relevance of
such item is readily apparent).

                        Section 4.1 Organization. Each of Sellers has been duly organized and
is validly existing in good standing under the laws of its respective jurisdiction of incorporation
or organization, with the requisite power and authority to own its properties and conduct its
business as currently conducted. Each of Sellers has been duly qualified as a foreign corporation
or organization for the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any business so as to require
such qualification, except to the extent that the failure to be so qualified or be in good standing
has not had and would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

                       Section 4.2    Financial Statements.

        (a)     The audited consolidated balance sheet as of December 31, 2009 and related
consolidated statements of income and cash flow of TerreStar Networks (including the notes
thereto) for the year ended December 31, 2009, reported on and accompanied by a report from
Ernst & Young LLP (the “Audited Financial Statements”), copies of which have heretofore been
furnished to Purchaser, were prepared in accordance with GAAP and present fairly in all
material respects the consolidated financial position of TerreStar Networks as at such date and
the consolidated results of operations and cash flows of TerreStar Networks for the period then
ended.

       (b)     The unaudited consolidated balance sheet as of December 31, 2010 (the “Balance
Sheet”) and the related unaudited statements of income and cash flow of TerreStar Networks

                                                -13-
(including the notes thereto) for the year ended December 31, 2010, and the unaudited
consolidated statements of income and cash flow of TerreStar Networks (including the notes
thereto) for the period from January 1, 2011 to [___], 2011 (collectively, the “Unaudited
Financial Statements” and, together with the Audited Financial Statements, the “Historical
Financial Statements”), copies of which have heretofore been furnished to Purchaser, were
prepared in accordance with Sellers’ internal accounting practices applied consistently with those
used in the Audited Financial Statements and in accordance with GAAP and present fairly in all
material respects the consolidated financial position of TerreStar Networks as at such dates and
the consolidated results of operations and cash flows of TerreStar Networks for the applicable
periods.

                       Section 4.3     Real and Personal Property.

        (a)      Each Seller has good and insurable fee simple title to, or valid leasehold interests
in, or easements or other limited property interests in, all of its Real Properties constituting
Acquired Assets and has good and marketable title to its personal property and Assets
constituting Acquired Assets, in each case, except for defects in title that do not materially
interfere with its ability to conduct its business as currently conducted or to utilize such
properties and Assets for their intended purposes and except where the failure to have such title
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect. All such Acquired Assets are free and clear of Liens, other than as (i) are described in
the consolidated balance sheets included in the Historical Financial Statements, (ii) are Permitted
Liens or (iii) individually or in the aggregate, have not had and would not reasonably be
expected to have a Material Adverse Effect.

        (b)     Each Seller has complied with all obligations under all leases relating to Acquired
Assets to which it is a party, except where the failure to comply would not be reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect. All such leases
may be assumed or rejected in the Bankruptcy Cases and otherwise are in full force and effect,
except as set forth in Section 4.3(b) of the Disclosure Letter, or in respect of which the failure to
be in full force and effect would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect. Except as set forth in Section 4.3(b) of the Disclosure
Letter, each Seller enjoys peaceful and undisturbed possession under all such leases, other than
leases in respect of which the failure to enjoy peaceful and undisturbed possession would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

       (c)     Section 4.3(c) of the Disclosure Letter is a true and correct list, as of the date of
this Agreement, of all Real Property constituting Acquired Assets owned by Sellers and the
addresses thereof.

       (d)     Section 4.3(d) of the Disclosure Letter is a true and correct list, as of the date of
this Agreement, of all Real Property constituting Acquired Assets leased by Sellers and the
addresses thereof.

       (e)    As of the date of this Agreement, no Seller has received any written notice of any
pending or contemplated condemnation proceeding affecting any of its owned Real Property

                                                 -14-
constituting Acquired Assets or any sale or disposition thereof in lieu of condemnation that
remains unresolved.

                        Section 4.4 Authorization; Enforceability. Subject to the entry of the
Sale Order and the Canadian Court’s entry of the Sale Recognition Order, each Seller has all
requisite corporate power and authority to enter into, execute and deliver this Agreement and the
other Ancillary Agreements to which it is or is to be a party and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by each Seller of this
Agreement and each of the other Ancillary Agreements to which it is or is to be a party, and the
consummation by each Seller of the Transactions, have been duly authorized by all necessary
corporate action on the part of each Seller. The Board of Directors of each Seller has resolved to
recommend that the Bankruptcy Court approve this Agreement, the Ancillary Agreements and
the Transactions. This Agreement has been and, when executed and delivered, each other
Ancillary Agreement to which each of them is to be a party, will be, duly and validly executed
and delivered by each Seller and, subject to the entry of the Sale Order and the Sale Recognition
Order, constitutes (in the case of this Agreement) and will constitute (in the case of each of the
Ancillary Agreements) the valid and binding obligation of each Seller, enforceable against such
Seller in accordance with its terms, subject to laws of general application relating to bankruptcy,
insolvency, and the relief of debtors and other laws of general application affecting enforcement
of creditors’ rights generally, rules of law governing specific performance, injunctive relief and
other equitable remedies.

                         Section 4.5 No Conflicts. Subject to the entry of the Sale Order and the
Canadian Court’s entry of the Sale Recognition Order, the execution, delivery and performance
of this Agreement and each other Ancillary Agreement, and the consummation of the
Transactions will not (a) result in a violation of the certificate of incorporation, certificate of
formation or bylaws or similar organizational document of any Seller, (b) assuming receipt of all
required consents and approvals from Governmental Entities in accordance with Section
7.1(b)(i), result in a violation of any Applicable Law, except for violations which, individually or
in the aggregate, would not be reasonably likely to have a Material Adverse Effect, or (c) result
in the creation or imposition of any Lien upon or with respect to any Acquired Asset, other than
in favor of Purchaser as specified in the Ancillary Agreements and Permitted Liens. No Seller is
in violation of its certificate of incorporation, articles of organization or bylaws or similar
organizational document (as applicable in each case).

                        Section 4.6 Consents and Approvals. Except as set forth in Section 4.6
of the Disclosure Letter or otherwise in this Agreement, no consent, approval, authorization,
order, registration or qualification of or with any Governmental Entity having jurisdiction over
Sellers or any of their properties is required for the execution and delivery by Sellers of the
Agreement and the Ancillary Agreements and performance of and compliance by Sellers with all
of the provisions hereof and thereof and the consummation of the Transactions, except (a) the
entry of the Sale Order and the expiration, or waiver by the Bankruptcy Court, of the 14-day
period set forth in Bankruptcy Rules 6004(h) and 3020(e), as applicable, and the entry of the Sale
Recognition Order and the expiry of any appeal periods in respect thereof, (b) filings with
respect to and any consents, approvals or expiration or termination of any waiting period,
required under any United States or foreign antitrust or investment laws which may include the
Competition Act, the Investment Canada Act, the HSR Act and any other Regulatory Approvals
                                               -15-
required, (c) the prior approval of the FCC for the assignment of the FCC licenses, letters of
intent, reservations of spectrum, permits and authorizations (the “FCC Licenses”) held by
Sellers, (d) the Industry Canada Consent, and (e) such other consents, approvals, authorizations,
registrations or qualifications the absence of which will not have or would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

                       Section 4.7     Intellectual Property.

        (a)     Section 4.7(a) of the Disclosure Letter sets forth a complete and accurate list of all
(i) United States and non-United States Patents and Patent applications owned by Sellers;
(ii) United States and non-United States Trademark registrations (including Internet domain
registrations), Trademark applications, and material unregistered Trademarks owned by Sellers;
(iii) United States and non-United States Copyright and mask work registrations, and material
unregistered Copyrights owned by Sellers; and (iv) Software (other than readily available
commercial software programs having an acquisition price of less than $10,000) that is owned,
licensed, leased, by Sellers, describing which Software is owned, licensed, or leased, as the case
may be, and the applicable owner, licensor or lessor. All of the Intellectual Property set forth in
Section 4.7(a) of the Disclosure Letter constitutes Acquired Assets, except as otherwise stated
therein.

         (b)     Section 4.7(b) of the Disclosure Letter sets forth a complete and accurate list of
all Contracts (whether oral or written, and whether between any Seller and Third Parties or inter-
corporate) to which a Seller is a party or otherwise bound, (i) granting or obtaining any right to
use or practice any rights under any Intellectual Property (other than licenses for readily
available commercial software programs having an acquisition price of less than $10,000), or
(ii) restricting any Seller’s rights to use any Intellectual Property, including license agreements,
development agreements, distribution agreements, settlement agreements, consent to use
agreements, and covenants not to sue (collectively, the “License Agreements”). Each License
Agreement constitutes a Designated Contract except as otherwise indicated in Section 4.7(b) of
the Disclosure Letter. No Seller has licensed or sublicensed its rights in any Intellectual Property
other than pursuant to the License Agreements.

        (c)     Sellers own or possess valid and enforceable rights to use all Intellectual Property
used in the conduct of the Business, the failure to own or possess which has had or would
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. All
registrations with and applications to Governmental Entities in respect of such Intellectual
Property are valid and in full force and effect, have not, except in accordance with the ordinary
course practices of Sellers, lapsed, expired or been abandoned (subject to the vulnerability of a
registration for trademarks to cancellation for lack of use), are not the subject of any opposition
filed with the United States Patent and Trademark Office or any other applicable Intellectual
Property registry. The consummation of the Transactions will not result in the loss or
impairment of any rights to use such Intellectual Property or obligate Purchaser to pay any
royalties or other amounts to any third party in excess of the amounts that would have been
payable by Sellers absent the consummation of the Transactions.

       (d)      Each Seller has taken reasonable security measures to protect the confidentiality
and value of its and their trade secrets (or other Intellectual Property for which the value is
                                                -16-
dependent upon its confidentiality), and no such information has been misappropriated or the
subject of an unauthorized disclosure, except to the extent that such misappropriation or
unauthorized disclosure has not had and would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect.

        (e)      No present or former employee, officer or director of any Seller, or agent, outside
contractor or consultant of any Seller, holds any right, title or interest, directly or indirectly, in
whole or in part, in or to any Intellectual Property. Other than with respect to copyrightable
works Sellers hereby represent to be “works made for hire” within the meaning of Section 101 of
the Copyright Act of 1976 owned by Sellers, each Seller has obtained from all individuals who
participated in any respect in the invention or authorship of any Intellectual Property created by
or for such Seller (the “Owned Intellectual Property”), as consultants, as employees of
consultants or otherwise, effective waivers of any and all ownership rights of such individuals in
the Owned Intellectual Property and written assignments to Sellers of all rights with respect
thereto. No officer or employee of any Seller is subject to any agreement with any third party
that requires such officer or employee to assign any interest in inventions or other Intellectual
Property or to keep confidential any trade secrets, proprietary data, customer lists or other
business information or that restricts such officer or employee from engaging in competitive
activities or solicitation of customers.

        (f)     No Seller has (i) incorporated open source materials into, or combined open
source materials with, Intellectual Property or Software, (ii) distributed open source materials in
conjunction with Intellectual Property or Software, or (iii) used open source materials that create,
or purport to create, obligations for any Seller with respect to any Intellectual Property or grant,
or purport to grant to any Third Party, rights or immunities under any Intellectual Property
(including, but not limited to, using open source materials that require, as a condition of use,
modification and/or distribution that other Software incorporated into, derived from or
distributed with such open source materials be (A) disclosed or distributed in source code form,
(B) be licensed for the purpose of making derivative works, or (C) redistributable at no charge).
No Seller has disclosed, or is under an obligation to disclose, any material Software in source
code form, except to parties that have executed written obligations to preserve the confidentiality
of such source code.

        (g)     No Seller has received any notice that it is, or they are, in default (or with the
giving of notice or lapse of time or both, would be in default) under any contract relating to such
Intellectual Property. No Intellectual Property rights of any Seller are being infringed by any
other Person, except to the extent that such infringement has not had and would not have,
individually or in the aggregate, a Material Adverse Effect. The conduct of the Business does
not conflict in any respect with any Intellectual Property rights of others, and no Seller has
received any notice of any claim of infringement or conflict with any such rights of others which
has had or would in any such case be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect.

                      Section 4.8 Material Contracts. Except as may have occurred solely as
a result of the commencement of the Bankruptcy Cases (or any other action taken by Sellers
during the Bankruptcy Cases), each of the Contracts that is material to the conduct and
operations of the Business, taken as a whole (each a “Material Contract”), is in full force and
                                                -17-
effect and, to the Knowledge of Sellers, there are no material defaults thereunder on the part of
any other party thereto which are not subject to an automatic stay or which would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect. None of Sellers is
in default in any material respect in the performance, observance or fulfillment of any of its
obligations, covenants or conditions contained in any Material Contract to which it is a party or
by which it or its property is bound which are not subject to an automatic stay or which would
reasonably be expected to have a Material Adverse Effect.

                        Section 4.9 Absence of Certain Developments. Since December 31,
2010, (i) no Seller has suffered any change or development which has had or would be
reasonably likely to have a Material Adverse Effect and (ii) no Seller has Transferred ownership
of any of its Assets to any of its Subsidiaries or Affiliates that is not a Seller.

                        Section 4.10 No Undisclosed Liabilities. Except (a) as disclosed or
reflected in the Historical Financial Statements, (b) as incurred in the ordinary course of business
consistent with past practice since December 31, 2010, (c) professional fees and expenses
accrued in the Bankruptcy Cases or the CCAA Recognition Proceeding; and (d) obligations due
under the DIP Credit Agreement, no Seller has any liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise) that are or would reasonably be expected to
be, individually or in the aggregate, material in relation to the total liabilities reported in the
Historical Financial Statements.

                         Section 4.11 Litigation. There are no legal, governmental or regulatory
actions, suits, proceedings or, to the Knowledge of Sellers, investigations pending or threatened
to which any Seller is or may be a party or to which any property of any Seller, any director or
officer of a Seller in their capacities as such, or the Business, Assumed Liabilities or Acquired
Assets is or may be the subject that, individually or in the aggregate, has had or, if determined
adversely to Sellers, would reasonably be expected to have a Material Adverse Effect.

                       Section 4.12 Permits and Compliance with Laws.

       (a)    No Seller is, or has been at any time since January 1, 2008, in violation of any
Applicable Law except for any such violation that has not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.

         (b)     No Seller has received written notification from any Governmental Entity
(i) asserting a violation of any Applicable Law regarding the conduct of the Business;
(ii) threatening to revoke any Permit; or (iii) restricting or in any way limiting its operations as
currently conducted, except for notices of violations, revocations or restrictions which,
indvidually or in the aggregate, would not reasonably be likely to have a Material Adverse
Effect.

        (c)    Sellers possess all Permits issued by, and have made all declarations and filings
with, the appropriate Governmental Entities that are necessary for the ownership, lease, use and
operation of the Acquired Assets (collectively, the “Seller Permits”), except any such Permits the
absence of which would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. Section 4.12(c) of the Disclosure Letter sets forth a true and correct list

                                                 -18-
of all Seller Permits as presently in effect and a true and correct list of all material pending
applications for Permits, that would be Seller Permits if issued or granted and all material
pending applications by Sellers for modification, extension or renewal of the Seller Permits.
Except as set forth in Section 4.12(c) of the Disclosure Letter, all Seller Permits constitute
Acquired Assets. Sellers have operated the Business in compliance with the terms and
conditions of the Seller Permits except where the failure to comply would not reasonably be
likely to have a Material Adverse Effect, and no Seller has received any written notice alleging
any such failure to comply. Except as, individually or in the aggregate, has not had and would
not reasonably be expected to have a Material Adverse Effect, no Seller has received notice of
any revocation or modification of any such Permit or has any reason to believe that any such
Permit will not be renewed in the ordinary course.

                       Section 4.13 Taxes.

        (a)    Each Seller has timely filed or caused to be filed all United States federal, state,
local and non-United States Tax Returns required to have been filed that are material to the
Acquired Assets, taken as a whole, and each such Tax Return is true, complete and correct in all
material respects.

        (b)    Each Seller has timely paid or caused to be timely paid all Taxes shown to be due
and payable by it or them on the returns referred to in Section 4.13(a) and all other Taxes or
assessments (or made adequate provision (in accordance with GAAP) for the payment of all
Taxes due) with respect to all periods or portions thereof ending on or before the Closing Date
(except Taxes or assessments that are being contested in good faith by appropriate proceedings
and for which any Seller has set aside on its books adequate reserves in accordance with GAAP),
which Taxes, if not paid or adequately provided for, would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.

        (c)    Except as set forth in Section 4.13(c) of the Disclosure Letter to Sellers’
Knowledge, there are no material United States federal, state, local or non-United States federal
or provincial audits, examinations, investigations or other administrative proceedings or court
proceedings have been commenced or are presently pending or threatened in writing with regard
to any Taxes or Tax Returns with respect to the Acquired Assets. There is no material
unresolved dispute or claim concerning any Tax liability with respect to the Acquired Assets
either claimed or raised by any Tax Authority in writing.

        (d)    Except as set forth in Section 4.13(d) of the Disclosure Letter, there are no
statutory Liens for Taxes upon any of the Acquired Assets or the Business.

       (e)      No Seller, other than the Canadian Sellers, is selling property used or held by it in
the course of a business carried on in Canada.

        (f)    The Canadian Sellers (other than 0887729 B.C. Ltd.) are registered under Part IX
of the Excise Tax Act (Canada) and Chapter VIII of an Act Respecting the Quebec Sales Tax
(Quebec) and their registration numbers are [ ].



                                                -19-
      (g)      The Canadian Sellers are not non-residents of Canada for purposes of the Income
Tax Act.

        (h)   Except for the representations and warranties contained in this Section 4.13,
Sellers makes no other express or implied representation or warranty with respect to Taxes.

                       Section 4.14 Employees. Section 4.14 of the Disclosure Letter contains
a complete and accurate list of all current employees of Sellers and each such employee’s
respective positions, dates of hire, current annual salary and any other relevant compensation and
benefits and indicates which employees are parties to a written or oral agreement with Sellers
(including confidentiality and non-competition agreements). Except as disclosed in Section 4.14
of the Disclosure Letter, no Seller is party to any currently in effect agreement(s) with past or
present employees, agents or independent contractors in connection with the Business.

                       Section 4.15 Compliance With ERISA and Canadian Plans.

        (a)    Section 4.15(a) of the Disclosure Letter contains a complete and accurate list of
all material Employee Benefit Plans of Sellers. Except as would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, each Seller and any trade or
business (whether or not incorporated) that, together with a Seller, is treated as a single employer
under Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA, and
Section 412 of the Code, is treated as a single employer under Section 414 of the Code (the
“ERISA Affiliates”), are in compliance with the applicable provisions of ERISA and the
provisions of the Code relating to ERISA Plans and the regulations and published interpretations
thereunder. No ERISA Plan is subject to Title IV of ERISA or Section 412 of the Code.

        (b)    Each Seller is in compliance (A) with all applicable provisions of law and all
applicable regulations and published interpretations thereunder with respect to any employee
pension benefit plan or other employee benefit plan governed by the laws of a jurisdiction other
than the United States and (B) with the terms of any such plan, except, in each case, for such
noncompliance that would not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

        (c)      Except as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, (A), each of the Canadian Plans is and has been
established, maintained, funded, invested and administered in compliance in all material respects
with its terms, all employee plan summaries and booklets and with Applicable Laws, (B) current
and complete copies of all written Canadian Plans (or, where oral, written summaries of the
material terms thereof) have been provided or made available to Purchaser, (C) no Seller
currently sponsors, maintains, contributes to or has any liability, nor has ever sponsored,
maintained, contributed to or incurred any liability under a “registered pension plan” or a
“retirement compensation arrangement” or a “deferred profit sharing plan”, each as defined
under the Income Tax Act, a “pension plan” as defined under applicable pension standards
legislation, or any other plan organized and administered to provide pensions for employees, (D)
no amendments or promises of benefit improvements under the Canadian Plans have been made
or will be made prior to the Funding Date by any Seller to its or their Canadian employees or
former Canadian employees, except as required by the terms of such plans or Applicable Laws
                                                -20-
(and any such amendments shall be communicated to Purchaser in writing before the Funding),
and (E) the sole obligation of any Seller to or in respect of any Canadian Union Plan is to make
monetary contributions to the Canadian Union Plan in the amounts and in the manner set forth in
the applicable Canadian Union Plan, collective agreement or participation agreement, and all
such contributions have been made.

                       Section 4.16 Communications Matters.

        (a)    Sellers hold all the licenses, permits, authorizations, orders and approvals issued
by a Governmental Entity under the Communications Laws (collectively, “Communications
Licenses”) necessary for the lawful conduct of the Business as currently conducted, except for
any licenses, permits, authorizations, orders and approvals, the absence of which would not,
individually or in the aggregate, have or reasonably be expected to have a Material Adverse
Effect. Section 4.16(a) of the Disclosure Letter sets forth a true and correct list of all
Communications Licenses held by each Seller.

        (b)     Except as would not, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect, (i) each Communications License identified on
Section 4.16(a) of the Disclosure Letter is in full force and effect; (ii) Sellers are operating or
preparing to operate the facilities authorized by the Communications Licenses identified on
Section 4.16(a) of the Disclosure Letter in accordance with their terms and such operation is in
compliance in all material respects with the Communications Laws; (iii) each Seller is operating
in substantial compliance with Communications Laws; and (iv) to the Knowledge of Sellers, no
action or proceeding is pending or threatened to revoke, suspend, cancel, or refuse to renew or
modify in any material respect any of the Communications Licenses identified on Section 4.16(a)
of the Disclosure Letter or any ITU registration.

        (c)   Except for the representations and warranties contained in this Section 4.16,
Sellers makes no other express or implied representation or warranty with respect to
Communications Laws.

                       Section 4.17 Company Satellites.

       (a)     No Material Satellite Event or, to the Knowledge of Sellers, conditions that would
reasonably be expected to result in a Material Satellite Event have been observed on T1 since its
launch. Sellers have previously made available to Purchaser copies of all T1 Monthly Status
Reports. No Seller or Sold Company has waived or modified or agreed to waive any provision
of any Contract in a manner that could reasonably be expected to impair T1’s ability to perform
in accordance with the agreed operating Satellite Performance Specifications of T1.

        (b)     Section 4.17(b) of the Disclosure Letter contains a summary, by orbital location,
of the status of frequency registration at the ITU, of T1 and each advanced published satellite
filed on behalf of any Seller, including the identity of the sponsoring administration and the
frequency bands covered. Except as set forth in Section 4.17(b) of the Disclosure Letter, as of
the date hereof, Sellers have no Knowledge of any material claims(s) with respect to any Seller’s
use of the frequency assignment(s) described in their ITU filings at any such orbital locations(s).


                                               -21-
        (c)     Section 4.17(c) of the Disclosure Letter contains a summary, to the Knowledge of
Sellers, of prejudicial interferences to T1 by other satellites at nearby orbital locations that have
resulted in formal disputes at the ITU.

                        Section 4.18 Coordination Agreements. As of the date of this
Agreement, to the Knowledge of Sellers, there are no pending claim(s) with respect to any
Seller’s use of the frequency and orbital location assignment(s) described in any Coordination
Agreement that, individually or in the aggregate, have or would reasonably be expected to have a
Material Adverse Effect other than any such claim(s) that are resolved by operation of the
relevant Coordination Agreement. As of the date of this Agreement, to the Knowledge of
Sellers, there are no pending material claim(s) with respect to any Seller’s use of the frequency
and orbital location assignment(s) whether or not described in any Concession Agreement that,
individually or in the aggregate, have or would reasonably be expected to have a Material
Adverse Effect.

                        Section 4.19 Company Earth Stations. Except as have not had, and
would not reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect, the material improvements to each Company Earth Station and all material items of
equipment used in connection therewith are in good operating condition and repair and are
suitable for their intended purposes, subject to normal wear and tear. To the Knowledge of
Sellers, as of the date hereof, no other radio communications facility is causing interference to
the transmissions from or the receipt of signals by any Company Satellite or Company Earth
Station, except for any instances of interference that, individually or in the aggregate, have not
had, and would not reasonably be expected to have a Material Adverse Effect.

                        Section 4.20 U.S. Labor Relations. To the Knowledge of Sellers, except
as set forth in Section 4.20 of the Disclosure Letter and except as would not reasonably be
expected to have a Material Adverse Effect: (i) there are no pending or threatened strikes or
other labor disputes against any Seller; (ii) no Seller has received written notice of any claim for
a material violation of any applicable federal, state, or local civil rights law, the Fair Labor
Standards Act, as amended, the Age Discrimination in Employment Act, as amended, the
National Labor Relations Act, as amended, the Occupational Safety and Health Act, as amended,
the Americans with Disabilities Act, as amended, or the Vocational Rehabilitation Act of 1973,
as amended, any applicable state or local laws analogous to the United States federal laws listed
above; and (iii) all payments due from any Seller or for which any claim may be made against
any Seller, on account of wages and employee health and welfare insurance and other benefits,
have been paid or accrued as a liability on the books of Sellers to the extent required by GAAP.
Except (i) as, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or (ii) as set forth in the Disclosure Letter, the consummation of the
Transactions will not give rise to a right of termination or renegotiation of any material collective
bargaining agreement governing employees located in the United States to which any Seller (or
any predecessor thereof) is a party or by which any Seller (or any predecessor thereof) is bound.

                        Section 4.21 Canada Labor Relations. To the Knowledge of Sellers,
except as set forth in Section 4.21 of the Disclosure Letter and except as would not reasonably be
expected to have a Material Adverse Effect, (i) no Seller has made any agreements, whether
directly or indirectly, with any labor union, employee association or any similar entity or made
                                                -22-
any commitments to or conducted negotiations with any labor union or employee association or
other similar entity with respect to any future agreements, (ii) no trade union, employee
association or other similar entity has any bargaining rights acquired either by certification or
voluntary recognition with respect to any employees of any Seller, (iii) no Seller is aware of any
attempt to organize or establish any labor union, employee association or other similar entity
affecting the Business, (iv) there are no outstanding labor relations tribunal proceedings of any
kind, including any proceedings which could result in certification of a trade union as bargaining
agent for the employees, and there have not been any such proceedings within the last two years
and (v) there are no threatened or apparent union organizing activities involving employees of
any Seller.

                        Section 4.22 Brokers. Except with respect to fees payable to Blackstone
Advisory Partners, L.P., no Seller is a party to any contract, agreement or understanding with any
Person that would give rise to a valid claim against Purchaser for a brokerage commission,
finder’s fee or like payment in connection with the Transactions.

                         Section 4.23 Environmental Matters. Except as disclosed in
Section 4.23 of the Disclosure Letter and except as to matters that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect: (i) no written
notice, request for information, claim, demand, order, complaint or penalty has been received by
any Seller, and there are no judicial, administrative or other actions, suits or proceedings pending
or, to any Seller’s Knowledge, threatened, which allege a violation of or liability under any
Environmental Laws, in each case relating to any Seller or any of the Acquired Assets, (ii) each
Seller has all Permits necessary for its or their operations to comply with all applicable
Environmental Laws and are, and during the term of all applicable statutes of limitation, have
been, in compliance with the terms of such Permits and with all other applicable Environmental
Laws, and (iii) no pollutants, contaminants, wastes, chemicals, materials, substances and
constituents of any nature which are subject to regulation or which would reasonably be likely to
give rise to liability under any Environmental Law, including Hazardous Material, is located at,
in, or under any property currently or formerly owned, operated or leased by any Seller that
would reasonably be expected to give rise to any liability or obligation of any Seller under any
Environmental Laws, and no Hazardous Material has been generated, owned or controlled by
any Seller and has been transported to or released at any location in a manner that would
reasonably be expected to give rise to any liability or obligation on any Seller under any
Environmental Laws.

                       Section 4.24 Title to Assets; Sufficiency of Assets.

        (a)     Sellers hold, and subject to the entry of the Sale Order and the Canadian Court’s
entry of the Sale Recognition Order, at the Closing shall cause to be delivered to Purchaser (or,
in the case of an Alternative Sale, a Third Party purchaser), good and valid title to or, in the case
of leased or licensed Assets, a valid and binding leasehold interest in or license to or rights under
(as the case may be), all of the Acquired Assets, free and clear of all Liens, other than Assumed
Permitted Liens and Permitted Liens.

       (b)     The Acquired Assets include all tangible Assets, intangible Assets and Intellectual
Property that are necessary for the conduct of the Business immediately following the Closing
                                                -23-
Date in substantially the same manner as conducted by Sellers prior to the commencement of the
Bankruptcy Cases, except for (i) Employees that are not Transferred Employees and (ii) the
Retained Assets.

        (c)     Section 4.24(c) of the Disclosure Letter lists the outstanding capital stock of
TerreStar Solutions Inc. owned by the Sellers. All the outstanding shares of capital stock owned
by Sellers in TerreStar Solutions Inc. are owned, directly or indirectly, by Sellers free and clear
of all Liens other than Permitted Liens and the terms of the Shareholders Agreement. Sellers,
directly or indirectly, have good and valid title to the outstanding stock of TerreStar Solutions
Inc. owned by Sellers and listed in Section 4.24(c) of the Disclosure Letter and, upon delivery by
Sellers of the outstanding stock of TerreStar Solutions Inc. at the Closing, good and valid title to
the outstanding stock of TerreStar Solutions Inc. owned by the Sellers will pass to Purchaser.

                        Section 4.25 Insurance. Section 4.25 of the Disclosure Letter sets forth a
true, complete and correct description of all material insurance maintained by or on behalf of any
Seller as of the date of this Agreement other than those relating to any Employee Benefit Plan.
As of such date, such insurance is in full force and effect.

                                           ARTICLE V.

                          REPRESENTATIONS AND WARRANTIES
                                   OF PURCHASER

                Purchaser hereby represents and warrants to Sellers that the statements contained
in this Article V are true and correct as of the date of this Agreement.

                       Section 5.1 Organization. Purchaser is a                       duly
organized, validly existing and in good standing under the laws of the State of
        . Purchaser is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where the nature of the property owned or leased by it or the nature
of the business conducted by it makes such qualification necessary, except where the failure to
be so qualified would not have a Purchaser Material Adverse Effect.

                        Section 5.2 Authorization; Enforceability. Purchaser has all requisite
corporate power and authority to enter into this Agreement and the other Ancillary Agreements
to which Purchaser is a party. The execution, delivery and performance by Purchaser of this
Agreement and each of the other Ancillary Agreements to which Purchaser is a party, and the
consummation by Purchaser of the Transactions, have been duly authorized by all necessary
corporate action on the part of Purchaser. Subject to the entry of the Sale Order and the
Canadian Court’s entry of the Sale Recognition Order, this Agreement and, when executed, each
other Ancillary Agreement to which Purchaser is a party, have been duly and validly executed
and delivered by Purchaser and, assuming due and valid execution and delivery by Sellers,
constitute the valid and binding obligation of Purchaser, enforceable against them in accordance
with its terms, subject to laws of general application relating to bankruptcy, insolvency, and the
relief of debtors and other laws of general application affecting enforcement of creditors’ rights
generally, rules of law governing specific performance, injunctive relief and other equitable
remedies.

                                                -24-
                         Section 5.3 No Conflicts. Subject to the entry of the Sale Order and the
Canadian Court’s entry of the Sale Recognition Order, the execution, delivery and performance
of this Agreement and each other Ancillary Agreement, and the consummation of the
Transactions will not (a) result in a violation of the certificate of incorporation, certificate of
formation or bylaws or similar organizational document of Purchaser or (b) assuming receipt of
all required consents and approvals from Governmental Entities in accordance with Section
7.1(b)(i), result in a violation of any law, statute, rule or regulation of any Governmental Entity
or any applicable order of any court or any rule, regulation or order of any Governmental Entity
applicable to Purchaser or by which any property or asset of Purchaser is bound, except for
violations which, individually or in the aggregate, has not had and would not reasonably be
likely to have a Purchaser Material Adverse Effect.

                       Section 5.4 Consents and Approvals. Except as set forth in this
Agreement, no consent, approval, authorization, order, registration or qualification of or with any
Governmental Entity having jurisdiction over Purchaser or any of its properties is required for
the execution and delivery by Purchaser of the Agreement and the Ancillary Agreements and
performance of and compliance by Purchaser with all of the provisions hereof and thereof and
the consummation of the Transactions, except (a) the entry of the Sale Order and the expiration,
or waiver by the Bankruptcy Court, of the 14-day period set forth in Bankruptcy Rules 6004(h)
and 3020(e), as applicable, and the entry of the Sale Recognition Order and the expiry of any
appeal periods in respect thereof, (b) filings with respect to and any consents, approvals or
expiration or termination of any waiting period, required under any United States or foreign
antitrust investment laws which may include the Competition Act, the Investment Canada Act,
the HSR Act and any other Regulatory Approvals required, (c) the prior approval of the FCC for
the assignment of the FCC Licenses, (d) the Industry Canada Consent, and (e) such other
consents, approvals, authorizations, registrations or qualifications the absence of which will not
have or would not reasonably be expected to have, individually or in the aggregate, a Purchaser
Material Adverse Effect.

                       Section 5.5 Financial Capability. Purchaser (a) has as of the date of
this Agreement and will have on the Funding Date sufficient funds available to pay the Purchase
Price and any expenses incurred by Purchaser in connection with the Transactions, and (b) has as
of the date of this Agreement and will have on the Funding Date the resources and capabilities
(financial or otherwise) to perform its obligations hereunder.

                      Section 5.6 Bankruptcy. There are no bankruptcy, reorganization or
arrangement proceedings pending against, being contemplated by, or to the knowledge of
Purchaser, threatened against, Purchaser.

                    Section 5.7 Broker’s, Finder’s or Similar Fees. Except fees payable to
                            , there are no brokerage commissions, finder’s fees or similar fees
or commissions payable by Purchaser in connection with the Transactions.

                       Section 5.8 Litigation. There are no legal proceedings pending or, to
the knowledge of Purchaser, threatened against Purchaser, or to which Purchaser is otherwise a
party, which, if adversely determined, would reasonably be expected to have a Purchaser
Material Adverse Effect.
                                               -25-
                        Section 5.9 Investment Intention. Purchaser is acquiring the issued and
outstanding stock of TerreStar Solutions Inc. for its own account, for investment purposes only
and not with a view to the distribution thereof in violation of the Securities Act of 1933, as
amended (the “Securities Act”). Purchaser understands that the issued and outstanding stock of
TerreStar Solutions Inc., owned by Sellers, have not been registered under the Securities Act and
cannot be sold unless subsequently registered under the Securities Act or an exemption from
such registration is available.

                        Section 5.10 Qualifications to Hold Communications Licenses.
Purchaser is legally, financially and otherwise qualified under the Communications Laws to own
and hold the Communications Licenses as contemplated by this Agreement and to perform its
obligations hereunder and thereunder. To the knowledge of Purchaser, no fact or circumstance
exists that (a) would reasonably be expected to prevent or delay, in any material respect, (i) the
issuance of the FCC Consent or (ii) the issuance of the Industry Canada Consent, or (b) would
cause the FCC or Industry Canada acting pursuant to the Communications Laws to impose a
condition or conditions that would, individually or in the aggregate, have or reasonably be
expected to have a Material Adverse Effect.8

                        Section 5.11 Investment Canada Act. Purchaser is a “WTO Investor” as
that term is defined in the Investment Canada Act.

                       Section 5.12 GST/HST Registration. Purchaser is registered under Part
IX of the Excise Tax Act (Canada) and Chapter VIII of An Act Respecting the Quebec Sales Tax
(Quebec) and its registration number are [ ].

                        Section 5.13 Condition of Business. Notwithstanding anything
contained in this Agreement to the contrary, Purchaser acknowledges and agrees that no Seller,
its Affiliates or any other Person is making any representations or warranties whatsoever, express
or implied, beyond those expressly given by Sellers in Article IV hereof (as modified by the
Disclosure Letter), and Purchaser acknowledges and agrees that, except for the representations
and warranties contained therein, the Acquired Assets are being transferred on a “where is” and,
as to condition, “as is” basis. Purchaser further represents that no Seller, its Affiliates or any
other Person has made any representation or warranty, express or implied as to the accuracy or
completeness of any information regarding Sellers, the Business or the transactions contemplated
by this Agreement not expressly set forth in this Agreement, and no Seller, its Affiliates or any
other Person will have or be subject to liability to Purchaser or any other Person resulting from
the distribution to Purchaser or its Representatives of Purchaser’s use of, any such information,
including data room information provided to Purchaser or its representatives, in connection with
the sale of the Business and the Transactions. Purchaser acknowledges that it has conducted to
its satisfaction its own independent investigation of the Business and, in making the
determination to proceed with the Transactions, Purchaser has relied on the results of its own
independent investigation.



8
    Purchaser may need to establish a Canadian entity to hold the Industry Canada licenses.

                                                          -26-
                                           ARTICLE VI.

                                          COVENANTS

                       Section 6.1 Interim Operations of the Business. From the date of this
Agreement through the Closing Date, subject to Section 3.5, any matters set forth in Section 6.1
of the Disclosure Letter and any limitations imposed on Sellers as a result of their status as
debtors-in-possession in the Bankruptcy Cases, including, the exercise of their fiduciary duties to
maximize the value of their estates, Sellers shall use their reasonable best efforts to ensure that,
and Sellers covenant and agree that, except as expressly provided in this Agreement, required by
Applicable Law or as may be agreed in writing by Purchaser, such agreement not to be
unreasonably withheld, conditioned or delayed:

        (a)     (i) the Business shall be conducted only in the ordinary course and (ii) subject to
prudent management of workforce and business needs, each Seller shall use reasonable best
efforts to preserve intact the business organization of the Business, keep available the services of
the current officers and employees of the Business and maintain the existing relations with
customers, suppliers, vendors, creditors, business partners and others having business dealings
with the Business;

       (b)     Sellers shall use reasonable best efforts to, maintain, preserve and protect all of
the Acquired Assets in the condition in which they exist on the date hereof, except for ordinary
wear and tear and except for replacements, modifications or maintenance in the ordinary course
of business;

        (c)    Sellers shall use reasonable best efforts not to (i) modify, amend, reject, waive
any rights under or terminate any Designated Contract or (ii) waive, release, compromise, settle
or assign any material rights or claims related to any Designated Contract;

       (d)      Sellers shall use reasonable best efforts to make all payments related to
Designated Contracts that become or became due or payable pursuant to the terms thereof and
promptly pay, as approved and directed pursuant to any Bankruptcy Court order, and on the
terms set forth therein, all Cure Amounts due or under any order of the Bankruptcy Court
authorizing the assumption and assignment of any such Designated Contract to Purchaser;

        (e)    Sellers shall use reasonable best efforts not to take or agree to or commit to assist
any other Person in taking any action that would reasonably be expected to result (i) in a failure
of any of the conditions to the Funding or the Closing as set forth in Article VII or (ii) that would
reasonably be expected to impair the ability of Sellers or Purchaser to consummate the Funding
or the Closing in accordance with the terms hereof or to materially delay such consummation;

        (f)     Sellers shall use reasonable best efforts not to, with respect to the Acquired Assets
or the Business, make or authorize (i) any material change to its accounting principles, methods
or practices or (ii) any material change to its Tax accounting principles, methods or practices
other than, in each case, as required by changes in Applicable Law, or GAAP, or would not
reasonably be expected to affect any material Tax related to the Acquired Assets after the
Closing Date;

                                                -27-
        (g)      no Seller shall (i) cause or permit the amendment, restatement or modification of
the certificate of incorporation, certificate of formation or bylaws or similar organizational
document of itself or any other Seller, except as otherwise required by Applicable Law, (ii)
effect a split or reclassification or other adjustment of any equity interests of itself or any other
Seller or a recapitalization thereof, (iii) issue, sell, pledge, dispose of or encumber, or authorize
the issuance, sale, pledge, disposition or encumbrance of, any equity interest of itself or any
other Seller or any equity interest of, or similar interest in, a joint venture or similar arrangement
to which a Seller is a party which is an Acquired Asset hereunder, (iv) alter, whether through a
complete or partial liquidation, dissolution, merger, consolidation, restructuring, reorganization
or in any other manner, the legal structure or ownership of itself or any other Seller or any joint
venture or similar arrangement to which a Seller is a party which is an Acquired Asset
hereunder, (v) declare, set aside or pay any type of dividend, whether in cash, stock or other
property, in respect of any of the equity interests of itself or any other Seller, or repurchase,
redeem or otherwise acquire or offer to repurchase, redeem or otherwise acquire any such equity
interests, or (vi) propose, adopt or approve a plan with respect to any of the foregoing;

        (h)    Sellers shall not: (i) enter into any new material Contracts with respect to any
spectrum capacity held by Sellers under any Communications Licenses identified on Section
4.16(a) of the Disclosure Letter; (ii) enter into any new Contracts to accept harmful interference
as defined by the FCC or Industry Canada in connection with any of the Communications
Licenses identified on Section 4.16(a) of the Disclosure Letter; or (iii) seek to modify any
Communications Licenses identified on Section 4.16(a) of the Disclosure Letter, except for such
modifications, which become authorized pursuant to pending applications of Sellers as of the
date hereof or which are reasonably required in the judgment of Sellers in order to maintain the
Communications Licenses in effect; and

        (i)    Sellers shall not enter into any Contract, directly or indirectly, unilaterally or in
concert, and whether orally, in writing, formally or informally, to do any of the foregoing or
assist or cooperate with any other Person in doing any of the foregoing, or authorize,
recommend, propose or announce an intention to do any of the foregoing.

                       Section 6.2     Access; Confidentiality.

        (a)     Subject to Section 9.13, from the date hereof until the earlier of (i) termination of
this Agreement and (ii) the Closing, Sellers will, (w) upon reasonable notice, give Purchaser and
its employees, accountants, financial advisors, counsel and other representatives reasonable
access during normal business hours to the offices, properties, books and records of Sellers
relating to the Acquired Assets, the Assumed Liabilities, and the Business; (x) furnish to
Purchaser such financial and operating data and other information relating to the Acquired
Assets, the Assumed Liabilities, and the Business as may be reasonably requested; and (y)
instruct the executive officers and senior business managers, employees, counsel, auditors and
financial advisors of Sellers to cooperate with Purchaser’s employees, accountants, counsel and
other representatives; provided (A) all activities covered by this Section 6.2(a) shall be at the sole
cost and expense of Purchaser and (B) that any such activities pursuant to this provision shall be
conducted in such manner as not to interfere unreasonably with the conduct of the business of
Sellers. Notwithstanding anything herein to the contrary, no such investigation or examination
shall be permitted to the extent that it would require Sellers to disclose information, (i) subject to
                                                 -28-
attorney-client privilege or that conflicts with any confidentiality obligations to which Sellers are
bound, (ii) related to pricing or other matters that are highly competitively sensitive or (iii) that
would otherwise in the exercise of Sellers’ good faith judgment, be inappropriate in light of the
Bankruptcy Cases.

        (b)     Purchaser shall cooperate with Sellers and make available to Sellers such
documents, books, records or information Transferred to Purchaser and relating to activities of
the Business prior to the Closing as Sellers may reasonably require after the Funding in
connection with any Tax determination or contractual obligations to Third Parties or to defend or
prepare for the defense of any claim against Sellers or to prosecute or prepare for the prosecution
of claims against Third Parties by Sellers relating to the conduct of the Business by Sellers prior
to the Closing or in connection with any governmental investigation of Sellers or any of its
Affiliates; provided that any such activities pursuant to this provision shall be conducted in such
manner as not to interfere unreasonably with the conduct of the business of Purchaser.

        (c)    No party shall destroy any files or records which are subject to this Section 6.2
without giving reasonable notice to the other parties, and within 15 days of receipt of such
notice, any such other party may cause to be delivered to it the records intended to be destroyed,
at such other party’s expense.

                       Section 6.3     Efforts and Actions to Cause Closing to Occur.

        (a)      At all times prior to the Closing, upon the terms and subject to the conditions of
this Agreement, Sellers and Purchaser shall use their reasonable best efforts to take, or cause to
be taken, all actions, and to do, or cause to be done all things necessary, proper or advisable
(subject to any Applicable Laws) to cause the Funding Date to occur and consummate the
Closing and the other Transactions as promptly as practicable including, (i) the preparation and
filing of all forms, registrations and notices required to be filed to cause the Funding Date to
occur and consummate the Closing and the other Transactions and the taking of such actions as
are necessary to obtain any requisite approvals, authorizations, consents, releases, orders,
licenses, Permits, qualifications, exemptions or waivers by any Third Party or Governmental
Entity, including the Specified Regulatory Approvals; and (ii) at the sole cost of Purchaser, the
preparation of any documents reasonably requested by Purchaser in order to facilitate financing
(if any) of any of the Transactions. In addition, subject to the terms of this Agreement, no party
hereto shall take any action after the date hereof that would reasonably be expected to materially
delay the obtaining of, or result in not obtaining, any permission, approval or consent from any
Governmental Entity or other Person required to be obtained prior to the Closing as applicable.
Each of Purchaser and Sellers shall bear their own costs, fees and expenses relating to the
obtaining of any approvals, authorizations, consents, releases, orders, licenses, Permits,
qualifications, exemptions or waivers referred to in this Section 6.3(a) except that Purchaser shall
pay the filing fee required by the Competition Bureau in relation to any pre-notification filing or
any filing of a request for an Advance Ruling Certificate made under the Competition Act and
any fees associated with the filings related to the FCC Consent and Industry Canada Consent
shall be paid equally by Purchaser on the one hand and Sellers on the other hand.

       (b)     Prior to the Closing, each of Sellers, on the one hand, and Purchaser, on the other
hand, shall promptly consult with the other with respect to, provide any necessary information
                                                -29-
with respect to, and provide the other (or its counsel) with copies of, all filings made by such
party with any Governmental Entity or any other information supplied by such party to a
Governmental Entity in connection with this Agreement and the Transactions. Each of Sellers,
on the one hand, and Purchaser, on the other hand, shall promptly provide the other with copies
of any written communication received by it from any Governmental Entity regarding any of the
Transactions. If any of Sellers or their respective Affiliates, on the one hand, and Purchaser or
its Affiliate, on the other hand, thereof receives a request for additional information or
documentary material from any such Governmental Entity with respect to any of the
Transactions, then such party shall endeavor in good faith to make, or cause to be made, as soon
as reasonably practicable and after consultation with the other, an appropriate response in
compliance with such request. To the extent that Transfers, amendments or modifications of
Permits are required as a result of the execution of this Agreement or consummation of any of
the Transactions, Sellers shall use their reasonable best efforts to effect such Transfers,
amendments or modifications.

        (c)    In addition to and without limiting the agreements of the parties contained above,
Sellers and Purchaser shall:

               (i)     take promptly, but in no event more than twenty (20) Business Days after
                       the execution of this Agreement, all actions, necessary to make any filings
                       required of them or any of their Affiliates in order to obtain the FCC
                       Consent, Industry Canada Consent or any other required approvals or
                       consents, including but not limited to the filing of any required petition for
                       declaratory ruling seeking FCC Consent to permit indirect foreign
                       ownership of TerreStar License, Inc. in excess of 25%;

               (ii)    comply at the earliest practicable date with any request for additional
                       information or documentary material received by Sellers or Purchaser or
                       any of their Affiliates from the FCC or Industry Canada or other
                       Governmental Entity in connection with the FCC Consent, the Industry
                       Canada Consent or any other required approvals or consents;

               (iii)   cooperate with each other in connection with any filing in connection with
                       the FCC Consent, the Industry Canada Consent or any other required
                       approvals or consents;

               (iv)    use their respective commercially reasonable efforts to oppose any
                       petitions to deny or other objections that may be filed with respect to the
                       FCC Consent application and any requests for reconsideration or review of
                       the grant of the FCC Consent, provided, however, that the parties shall
                       have no obligation to participate in any evidentiary hearing before the
                       FCC on the FCC Consent application. None of the parties shall take any
                       action that it knows or should know would adversely affect or delay the
                       grant of FCC Consent;

               (v)     use all reasonable best efforts to resolve such objections, if any, as may be
                       asserted in connection with the FCC Consent, Industry Canada Consent,

                                                -30-
                       under any antitrust law or otherwise in connection with any other required
                       approvals or consents;

               (vi)    advise the other party promptly of any material communication received
                       by such party from the FCC in connection with the FCC Consent, from
                       Industry Canada or the Commissioner of Competition in connection with
                       the Industry Canada Consent or from any Governmental Entity in
                       connection with any of the Transactions;

               (vii)   not make any submission or filings, participate in any meetings or any
                       material conversations with Governmental Entities in respect of any
                       required Competition Act Approval and any required Investment Canada
                       Act Approval unless the party consults with the other party in advance and
                       to the extent permitted by such Governmental Entity, gives the other party
                       the opportunity to review drafts of any submissions or filings, and attend
                       and participate in any communications or meetings; and

               (viii) where a party seeks not to provide the other party with any information
                      under this Section 6.3 on grounds that such information is competitively
                      sensitive, such party will be required to provide the information to the
                      other party’s external counsel and such external counsel will not provide
                      the information to its client.

         (d)     Nothing in this Agreement shall be deemed to require Purchaser or Sellers to (i)
commence any litigation against any Person in order to facilitate the consummation of any of the
Transactions, except as otherwise set forth in Section 6.3 hereof; (ii) take or agree to take any
other action or agree to any limitation that would reasonably be expected to have a Purchaser
Material Adverse Effect on the one hand, or a Material Adverse Effect on the other hand; (iii)
defend against any litigation brought by any Governmental Entity seeking to prevent the
consummation of, or impose limitations on, any of the Transactions, except as otherwise set forth
in Section 6.3 hereof; or (iv) participate in an evidentiary hearing before the FCC in order to
facilitate the consummation of any of the Transactions.

                       Section 6.4 Notification of Certain Matters. Sellers shall give written
notice to Purchaser promptly after becoming aware of (i) the occurrence of any event, which
would be likely to cause any condition set forth in Article VII to be unsatisfied in any material
respect at any time from the date hereof to the Closing Date or (ii) any notice or other
communication from (x) any Person alleging that the consent of such Person is or may be
required in connection with any of the Transactions or (y) any Governmental Entity in
connection with any of the Transactions; provided, however, that the delivery of any notice
pursuant to this Section 6.4 shall not limit or otherwise affect the remedies available hereunder to
Purchaser.

                         Section 6.5 Transition of the Business. Sellers shall use reasonable
best efforts to assist Purchaser in accomplishing a smooth transition of the Business from Sellers
to Purchaser. In this regard, Sellers and Purchaser agree that they will enter into good faith


                                               -31-
discussions concerning the Business, including, personnel policies and procedures, and other
operational matters relating to the Business.

                       Section 6.6     Submission for Court Approvals.

        (a)     Promptly upon the execution of this Agreement, Sellers shall use reasonable best
efforts to obtain as soon as possible, but subject to the full notice requirements of the Bankruptcy
Code and Bankruptcy Rules, and the Bankruptcy Court’s availability, the Bankruptcy Court’s
entry of the Sale Order, and thereafter the Canadian Court’s entry of the Sale Recognition Order.
Each of the Sale Order and the Sale Recognition Order shall be in form and substance reasonably
satisfactory to Purchaser.

         (b)     If the Sale Order or the Sale Recognition Order shall be appealed by any Person
(or if any petition for certiorari or motion for reconsideration, amendment, clarification,
modification, vacation, stay, rehearing, reargument or leave to appeal shall be filed with respect
to any such order), Sellers and Purchaser will cooperate in taking steps to reasonably diligently
defend such appeal, petition or motion and use reasonable best efforts to obtain an expedited
resolution of any such appeal, petition or motion.

                       Section 6.7     Employee Matters.

         (a)    Prior to the Closing Date, Purchaser shall offer to employ, such employment to
begin on the Closing Date, each of the employees of Sellers (including those designated by the
Chief Executive Officer of TerreStar Networks to be included therein and not to exceed a total
number of 25 individuals) listed in the Key Employee Incentive Plan (each such employee who
accepts the offer, a “Transferred Employee”) on terms and conditions that are at least the same as
or better than the terms and conditions that are in effect for those employees immediately prior to
the Closing Date (including, the terms of the Key Employee Incentive Plan), except as may be
amended or supplemented by the Employment Term Sheets included as Exhibit I to the Sellers’
Plan Supplement dated as of February 2, 2011 [Docket No. 387]. Purchaser shall assume all
obligations and liabilities with respect to the Transferred Employees except for liabilities related
to the Canadian Plans, including workers’ compensation liability. Sellers shall use reasonable
efforts to cooperate with Purchaser in Purchaser’s recruitment of and offer to employ the
Transferred Employees.

        (b)     Purchaser will assume all costs, obligations, and liabilities arising from or relating
to any Employee who does not become a Transferred Employee, including liabilities related to
the Canadian Plans and Canadian Union Plans in so far as such liabilities arise as a result of the
termination of such Employees regardless of the reason, and to the extent that an offer made
pursuant to Section 6.7(a) is not a qualifying offer under the applicable Employee’s severance
package (as such package was described in the Plan Supplement dated February 2, 2011), such
offer shall not reduce Purchasers’ liability under this Section 6.7(b).

       (c)    Except as provided in this Agreement, Sellers shall retain, and Purchaser shall not
assume, any Employee Benefit Plans or Canadian Plans or any other arrangement or agreements
with any employees of any Seller or any other Person. All Seller Liabilities to, or relating to, the
Employee Benefit Plans or Canadian Plans, shall be Non-Assumed Liabilities, and Purchaser

                                                -32-
shall have no obligation or liability with respect to such Employee Benefit Plans and Canadian
Plans. Purchaser and Sellers shall take all actions necessary to cause the retention by Sellers of
all such Employee Benefit Plans and Canadian Plans.

        (d)      With respect to the Employees and Transferred Employees, Purchaser shall
assume all obligations and liabilities under the Worker Adjustment Retraining Notification Act
(“WARN”), 29 U.S.C. Section 2101 et seq., or under any similar provision of any United States
federal, state, regional, non-United States or local law, rule or regulation (hereinafter referred to
collectively as “WARN Act”) for any actions prior to, on, or after the Closing Date, including
without limitation actions arising as a result of the Transactions. With respect to the Employees
and Transferred Employees, Purchaser hereby indemnifies Sellers against and agrees to hold
each of them harmless from any and all damages, costs, liabilities and/or obligations incurred or
suffered by Sellers with respect to the WARN Act for any actions prior to, on, or after the
Closing Date, including actions arising as a result of the Transactions.

                          Section 6.8 Subsequent Actions. If at any time after the Closing Date,
Purchaser or Sellers consider or are advised that any deeds, bills of sale, instruments of
conveyance, assignments, assurances or any other actions or things are necessary or desirable to
vest, perfect or confirm ownership (of record or otherwise) in Purchaser, its right, title or interest
in, to or under any or all of the Acquired Assets or otherwise to carry out this Agreement,
including the assumption of the Assumed Liabilities, Purchaser or Sellers shall at Purchaser’s
expense, execute and deliver all deeds, bills of sale, instruments of conveyance, powers of
attorney, assignments, assumptions and assurances and take and do all such other actions and
things as may be requested by the other party in order to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in Purchaser or otherwise
to carry out this Agreement.

       For the avoidance of doubt, this Section 6.8 shall survive the Closing.

                        Section 6.9 Publicity. Prior to the Closing and without limiting or
restricting any party from making any filing with the Bankruptcy Court with respect to this
Agreement or the Transactions, no party shall issue any press release or public announcement
concerning this Agreement or the Transactions without obtaining the prior written approval of
the other party, which approval will not be unreasonably withheld or delayed, unless, in the
reasonable judgment of Purchaser or Sellers, disclosure is otherwise required by Applicable Law,
the Bankruptcy Code or the Bankruptcy Court with respect to filings to be made with the
Bankruptcy Court in connection with this Agreement or by the applicable rules of the Securities
Exchange Commission or any stock exchange on which Purchaser lists securities, provided that
the party intending to make such release shall use its reasonable best efforts consistent with such
Applicable Law, the Bankruptcy Code or Bankruptcy Court requirement to consult with the other
party with respect to the text thereof.

                       Section 6.10 Tax Matters.

       (a)     The Purchaser and the Sellers agree that the Purchase Price is exclusive of any
Transfer Taxes. The Purchaser shall promptly pay directly to the appropriate Tax Authority all
applicable Transfer Taxes that may be imposed upon or payable or collectible or incurred in

                                                 -33-
connection with this Agreement or the transactions contemplated herein, or that may be imposed
upon or payable or collectible or incurred in connection with the Transactions provided that if
any such Transfer Taxes are required to be collected, remitted or paid by a Seller, such Transfer
Taxes shall be paid by the Purchaser to such Seller at the Closing or thereafter, as requested of or
by the applicable Seller.

        (b)    In the event that Sellers elect to file a plan of reorganization or liquidation in
conjunction with the Transactions, Purchaser and Sellers covenant and agree that they will use
their reasonable best efforts to obtain an order from the Bankruptcy Court pursuant to section
1146 of the Bankruptcy Code exempting, to the maximum extent possible, the Transfer of the
Acquired Assets from Sellers to Purchaser from any and all Transfer Taxes (as hereinafter
defined). To the extent the Transactions or any portion of the Transactions are not exempt from
Transfer Taxes under section 1146 of the Bankruptcy Code, Purchaser shall be responsible for
and shall pay all Transfer Taxes in accordance with Section 6.10(a). Purchaser and Sellers shall
cooperate in providing each other with any appropriate certification and other similar
documentation relating to exemption from Transfer Taxes (including any appropriate resale
exemption certifications), as provided under Applicable Law.

        (c)      Purchaser and Sellers agree to furnish, or cause their Affiliates to furnish, to each
other, upon request, as promptly as practicable, such information and assistance relating to the
Acquired Assets or the Business (including access to books and records) as is reasonably
necessary for the filing of all Tax Returns, and making of any election related to Taxes, the
preparation for any audit by any taxing authority, and the prosecution or defense of any claim,
suit or proceeding relating to any Tax Return. Purchaser and Sellers shall cooperate, and cause
their Affiliates to cooperate, with each other in the conduct of any audit or other proceeding
related to Taxes and each shall execute and deliver such powers of attorney and other documents
as are reasonably necessary to carry out the intent of this Section 6.10(c). Purchaser and Sellers
shall provide, or cause their Affiliates to provide, timely notice to each other in writing of any
pending or threatened tax audits, assessments or litigation with respect to the Acquired Assets or
the Business for any taxable period for which the other party may have liability under this
Agreement. Purchaser and Sellers shall furnish, or cause their respective Affiliates to furnish, to
each other copies of all correspondence received from any taxing authority in connection with
any tax audit or information request with respect to any taxable period for which the other party
or its Affiliates may have liability under this Agreement.

        (d)     Real and personal property Taxes and assessments, and all rents, utilities and
other charges, on the Acquired Assets for any taxable period commencing on or prior to the
Closing Date and ending after the Closing Date (the “Straddle Period Property Tax”) shall be
prorated on a per diem basis between Purchaser and Sellers as of the Closing Date; provided,
however, that Sellers shall not be responsible for, or benefit from, any increased or decreased
assessments on real or personal property resulting from the transactions contemplated hereby.
All such prorations of Straddle Period Property Taxes shall be allocated so that items relating to
time periods ending on or prior to the Closing Date shall be allocated to Sellers and items
relating to time periods beginning after the Closing Date shall be allocated to Purchaser. The
amount of all such prorations shall be settled and paid on the Closing Date. If any of the rates
for the Straddle Period Property Taxes for any taxable period commencing on or prior to the
Closing Date and ending after the Closing Date are not established by the Closing Date, the
                                                 -34-
prorations shall be made on the basis of such rates in effect for the preceding taxable period. The
apportioned obligations under this Section 6.10(d) shall be shall be timely paid and all applicable
filings made in the same manner as set forth for the apportioned Transfer Taxes in Section
6.10(a) and (b).

        (e)     The Canadian Sellers and Purchaser shall jointly execute an election, where such
election is available, under Section 22 of the Income Tax Act and the corresponding sections
of any other applicable provincial statute and any regulations under such statutes with respect to
the sale, assignment, transfer and conveyance of the Accounts Receivable. The Canadian Sellers
and Purchaser further agree to make jointly the necessary elections and execute and file, within
the prescribed delays, the prescribed election forms and any other documents required to give
effect to the foregoing and shall also prepare and file all of their respective Tax Returns
in a manner consistent with the aforesaid allocations.

        (f)     The Canadian Sellers and Purchaser shall each execute and file a joint election under
subsection 20(24) of the Income Tax Act and the corresponding provisions of any other
applicable provincial statute and any regulations under such statutes, within the prescribed time
periods, as to such amount paid by the Canadian Sellers to Purchaser for undertaking future
obligations. In this regard, the Canadian Sellers and Purchaser acknowledge that part of the
Acquired Assets was transferred to Purchaser as a payment by the Canadian Sellers to Purchaser
for the assumption by Purchaser of such future obligations of the Canadian Sellers.

        (g)      The Canadian Sellers and Purchaser shall, where such election is available, jointly
execute an election under Section 167 of the Excise Tax Act (Canada) and the corresponding
provisions of any applicable provincial statute and any regulations under such statutes on the
forms prescribed for such purposes along with any documentation necessary or desirable in order
to effect the transfer of the Acquired Assets by Canadian Sellers without payment of any
GST/HST or any other applicable provincial tax. Purchaser shall file the election forms referred
to above, along with any documentation necessary or desirable to give effect to such, with the tax
authorities, together with Purchaser's GST/HST or any other applicable provincial tax returns for
the reporting period in which the transactions contemplated herein are consummated.
Notwithstanding such election, in the event that it is determined by the tax authorities that there
is GST/HST or any other provincial tax liability of Purchaser to pay GST/HST or any other
provincial tax on all or part of the Acquired Assets, the Canadian Sellers and Purchaser agree
that such GST/HST or any other provincial tax shall, unless already collected from Purchaser
and remitted by the Canadian Sellers, be forthwith remitted by Purchaser to the tax authorities,
and Purchaser shall indemnify and save the Canadian Sellers harmless with respect to any such
GST/HST or any other provincial tax liability arising herein, as well as any interest and
penalties related thereto.

                       Section 6.11 Designation Dates; Assumption of Costs and Expenses9.
Upon the execution and delivery of this Agreement by Purchaser, Purchaser shall make its final
designations of all contracts, in accordance with Section 2.1(c) hereof, and may, prior to the

9
 Any proposed Purchaser shall be required to provide a definitive list of proposed Designated Contracts to the
Sellers at the Bid Deadline.

                                                       -35-
Closing Date, revise Section 2.1(c) of the Disclosure Letter to exclude from the definition of
Designated Contracts and to include in the definition of Retained Assets, any Contract previously
included in the definition of Designated Contracts and not otherwise included in the definition of
Retained Assets; provided, that no such final designation or revision shall reduce the amount of
the Purchase Price.

                         Section 6.12 Prompt Payment of Cure Amounts. With respect to each
Designated Contract, Sellers shall deposit into the Escrow Account, as soon as practicable after
the Funding Date, all amounts (the “Cure Amounts”) that (i) are required to be paid under
section 365(b)(1)(A) or (b)(1)(B) of the Bankruptcy Code in order to assume and assign such
contract, or (ii) are due pursuant to order of the Bankruptcy Court as a condition to assuming and
assigning such Designated Contract; provided, however, that Cure Amounts that are the subject
of a bona fide dispute shall be paid within two (2) Business Days of the effectiveness of a
settlement or order of the Bankruptcy Court, as the case may be, with respect thereto. All Cure
Amounts deposited into the Escrow Account shall be thereafter held, invested and released by
the Escrow Agent to Sellers only in accordance with this Agreement and the Escrow Agreement.
For the avoidance of doubt, the Cure Amounts that are required to be paid with respect to each
Designated Contract shall, unless otherwise agreed to by Sellers, be paid by Sellers on or about
the effective date of a plan of reorganization.

                         Section 6.13 Completion of Nonassignable Designated Contracts.
Sellers shall use their reasonable best efforts to obtain any consent, approval or amendment, if
any, required to novate and/or assign any Designated Contract to be assigned to Purchaser
hereunder which the Bankruptcy Court determines is not able to be assumed and assigned under
section 365(c) of the Bankruptcy Code (a “Nonassignable Designated Contract”). Sellers shall
keep Purchaser reasonably informed from time to time of the status of the foregoing and
Purchaser shall cooperate with Seller in this regard. To the extent that the rights of Sellers under
any Nonassignable Designated Contract, or under any other Asset to be assigned to Purchaser
hereunder, may not be assigned without the consent of a Third Party which has not been obtained
prior to the Closing this Agreement shall not constitute an agreement to assign the same at the
Closing, if an attempted assignment would be unlawful. If any such consent has not been
obtained or if any attempted assignment would be ineffective or would impair Purchaser’s rights
under the instrument in question so that Purchaser would not acquire the benefit of all such
rights, then Sellers, to the maximum extent permitted by Applicable Law and the instrument,
shall act as Purchaser’s agent in order to obtain for Purchaser the benefits thereunder and shall
cooperate, to the maximum extent permitted by Applicable Law and the instrument, with
Purchaser in any other reasonable arrangement designed to provide such benefits to Purchaser;
provided, however, that nothing contemplated by this Section 6.13 shall reduce the amount of the
Purchase Price.

                         Section 6.14 Entry into New DIP Agreement. Prior to or on the date
upon which the Sale Order is entered by the Bankruptcy Court, Purchaser and Seller shall enter
into the New DIP Agreement. Purchaser acknowledges that entry into the New DIP Agreement
is an integral part of the transactions contemplated by this Agreement and that any breach by




                                               -36-
Purchaser of this Section 6.14 (or its obligations under the New DIP Agreement) shall be
incapable of being cured.10

                       Section 6.15 No Violation. Purchaser will not assume ownership or
control (whether de facto or de jure) of the FCC Licenses and Industry Canada Licenses of
Sellers hereunder in a manner that violates any Communications Laws of the United States or
Canada.

                                                ARTICLE VII.

                                                CONDITIONS

                      Section 7.1 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the Funding and the Closing shall be subject to the satisfaction (or
waiver by Purchaser) on or prior to the Funding Date or the Closing Date, respectively, of the
following conditions:

        (a)      Conditions to the Funding:

                 (i)      Government Action. There shall be no injunction or restraining order of
                          any Governmental Entity (other than the FCC or Industry Canada):

                          (1)      prohibiting or imposing any material limitations on Purchaser’s
                                   ownership or operation (or that of any of its Subsidiaries) of all or
                                   a material portion of its businesses or assets or the Acquired
                                   Assets, or compelling Purchaser or any of its Subsidiaries to
                                   dispose of or hold separate any material portion of the Acquired
                                   Assets or the business or assets of Purchaser or any of its
                                   Subsidiaries;

                          (2)      restraining or prohibiting the consummation of the Funding or the
                                   performance of any of the other Transactions, or imposing upon
                                   Purchaser or any of its Subsidiaries any damages or payments that
                                   are material;

                          (3)      imposing material limitations on the ability of Purchaser, or
                                   rendering Purchaser unable, to accept for payment or pay for or
                                   purchase a material portion of the Acquired Assets or otherwise to
                                   consummate the Funding;

                          (4)      imposing material limitations on the ability of Purchaser
                                   effectively to exercise full rights of ownership of the Acquired
                                   Assets; or

10
  New DIP Agreement to provide Sellers with funding to repay the existing DIP Agreement and for working capital
and administrative expense requirements from the date the Sale Order is entered to the Funding Date, and will not be
repaid in cash (or from any sale proceeds on the Funding Date).

                                                       -37-
        (5)     otherwise having a Material Adverse Effect.

(ii)    Regulatory Action. There shall be no injunction or restraining order by the
        FCC or Industry Canada prohibiting the consummation of the Funding or
        the performance of any material aspect of the Transactions, taken as a
        whole.

(iii)   Antitrust Approvals. Other than the Specified Regulatory Approvals
        (excluding for this purpose any Competition Act Approval and any
        Investment Canada Approval, which, if required, must have been
        obtained), all terminations or expirations of waiting periods imposed by
        any Governmental Entity necessary for the consummation of the
        transactions contemplated by this Agreement, including under any
        applicable antitrust regulations in any non-United States jurisdiction, shall
        have occurred and all other notifications, consents, authorizations and
        approvals required to be made or obtained from any non-United States
        competition or antitrust authority (including any required Competition Act
        Approval and any required Investment Canada Approval) shall have been
        obtained for the transactions contemplated by this Agreement.

(iv)    Material Adverse Effect. Since the date of this Agreement, there shall not
        have occurred and be continuing any Material Adverse Effect or any facts,
        events or circumstances that would reasonably be expected to have such a
        Material Adverse Effect.

(v)     Sellers’ Representations and Warranties. Each of the representations and
        warranties set forth in Article IV disregarding all materiality and Material
        Adverse Effect qualifications contained therein, shall be true and correct
        (i) as of the date hereof or (ii) if made as of a date specified therein, as of
        such date, except for any failure to be true and correct that, individually
        and together with other such failures, has not had and would not
        reasonably be expected to have a Material Adverse Effect.

(vi)    Sellers’ Performance of Covenants. Sellers shall not have failed to
        perform in any material respect any material obligation or to comply in
        any material respect with any material agreement or material covenant of
        Sellers to be performed or complied with by them under this Agreement.

(vii)   Certificate of Sellers’ Officers. Purchaser shall have received from Sellers
        a certificate, dated the Funding Date, duly executed by the Chief
        Executive Officer, and the Chief Financial Officers of each individual
        Seller, reasonably satisfactory in form to Purchaser, to the effect of
        paragraph (iv) through (vi) above.

(viii) Sale Order. The Bankruptcy Court shall have entered the Sale Order, the
       Sale Order shall have become a Final Order and the Sale Order shall not


                                 -38-
                       have been reversed, stayed, modified or amended in any manner
                       materially adverse to Purchaser without Purchaser’s consent.

               (ix)    Sale Recognition Order. The Canadian Court shall have entered the Sale
                       Recognition Order in form and substance reasonably satisfactory to
                       Purchaser, the Sale Recognition Order shall be a Final Order and the Sale
                       Recognition Order shall not have been reversed, stayed, modified or
                       amended in any manner materially adverse to Purchaser without
                       Purchaser’s consent.

        (b)     Conditions to the Closing. All of the conditions specified in Section 7.1(a) shall
be conditions to the Closing (treating references in Section 7.1(a) to the “Funding” as references
to the Closing, as applicable, and “Funding Date” as references to the Closing Date, as
applicable), in addition to the following conditions:

               (i)     Consents, Approvals and Permits. All consents and approvals of any
                       Person (other than a Governmental Entity) set forth in Section 7.1(b)(i) of
                       the Disclosure Letter shall have been obtained, except (x) to the extent that
                       the requirement for a particular consent or approval is rendered
                       inapplicable by the Sale Order or other order of the Bankruptcy Court or
                       the Canadian Court, if applicable, or (y) in the case of any Nonassignable
                       Designated Contract. All consents and approvals of any Governmental
                       Entity, whether United States federal, state, local or non-United States,
                       required in connection with the consummation of the Closing and the
                       other Transactions, including consents and approvals required in
                       connection with the Designated Contracts set forth in Section 7.1(b)(i) of
                       the Disclosure Letter, shall have been obtained except where the failure to
                       obtain would not constitute a Material Adverse Effect. A copy of each
                       such consent or approval referred to in this Section 7.1(b)(i) shall have
                       been provided to Purchaser at or prior to the Closing. All Permits
                       necessary for the operation of the Business included in the Acquired
                       Assets will be Transferred to Purchaser or have been obtained by
                       Purchaser except where the failure to Transfer or obtain would not
                       constitute a Material Adverse Effect.

               (ii)    FCC Consent. The FCC Consent shall have been issued.

               (iii)   Industry Canada Consent. The Industry Canada Consent shall have been
                       issued.

               (iv)    Bill of Sale; Conveyance Documents. Sellers shall have duly executed
                       and delivered to Purchaser the Bill of Sale, each of the Intellectual
                       Property Instruments and each other Conveyance Document.

               (v)     Tax Certifications. Purchaser shall have received a certification of non-
                       foreign status for each Seller (other than the Canadian Sellers) in the form


                                               -39-
                       and manner which complies with the requirements of Section 1445 of the
                       Code and the Treasury regulations promulgated thereunder.

               The foregoing conditions in this Section 7.1(a) and Section 7.1(b) are for the sole
benefit of Purchaser and may be waived by Purchaser, in whole or in part, at any time and from
time to time in its sole discretion. The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right and each such right shall be
deemed an ongoing right which may be asserted at any time and from time to time.

                        Section 7.2 Conditions to Obligations of Sellers. The obligations of
Sellers to consummate the Funding and the Closing shall be subject to the satisfaction (or waiver
by Sellers) on or prior to the Funding Date or Closing Date, respectively, of the following
conditions:

       (a)     Conditions to the Funding.

               (i)     Government Action. There shall be no injunction or restraining order of
                       any Governmental Entity in effect restraining or prohibiting the
                       consummation of the Funding or imposing upon Sellers any damages or
                       payments that are material.

               (ii)    Antitrust Approvals. Other than the Specified Regulatory Approvals
                       (excluding for this purpose any Competition Act Approval and any
                       Investment Canada Approval, which, if required, must have been
                       obtained), all terminations or expirations of waiting periods imposed by
                       any Governmental Entity necessary for the consummation of the
                       transactions contemplated by this Agreement, including under any
                       applicable antitrust regulations in any non-United States jurisdiction, shall
                       have occurred and all other notifications, consents, authorizations and
                       approvals required to be made or obtained from any non-United States
                       competition or antitrust authority (including any required Competition Act
                       Approval and any required Investment Canada Approval) shall have been
                       obtained for the transactions contemplated by this Agreement.

               (iii)   Representations and Warranties. The representations and warranties of
                       Purchaser set forth in this Agreement shall be true and correct, in all
                       material respects, as of the date of this Agreement and as of the Funding
                       Date as though made as of the Funding Date (except to the extent such
                       representations and warranties expressly relate to an earlier date, in which
                       case as of such earlier date).

               (iv)    New DIP Agreement. The New DIP Agreement shall have been entered
                       into by Purchaser and Sellers prior to or on the date upon which the Sale
                       Order is entered by the Bankruptcy Court.

               (v)     Sale Order. The Sale Order, in form and substance reasonably satisfactory
                       to Sellers, shall have become a Final Order and the Sale Order shall not

                                               -40-
                       have been reversed, stayed, modified or amended in any manner
                       materially adverse to Sellers without Sellers’ consent.

               (vi)    Sale Recognition Order. The Canadian Court shall have entered the Sale
                       Recognition Order in form and substance reasonably satisfactory to
                       Sellers, the Sale Recognition Order shall be a Final Order and the Sale
                       Recognition Order shall not have been reversed, stayed, modified or
                       amended in any manner materially adverse to Sellers without Sellers’
                       consent.

       (b)     Conditions to Closing.

               (i)     Consents, Approvals and Permits. All consents and approvals of any
                       Person other than a Governmental Entity set forth in Section 7.1(b)(i) of
                       the Disclosure Letter, shall have been obtained, except (x) to the extent
                       that the requirement for a particular consent or approval is rendered
                       inapplicable by the Sale Order or other order of the Bankruptcy Court or
                       the Canadian Court, if applicable, or (y) in the case of any Nonassignable
                       Designated Contract. All consents and approvals of any Governmental
                       Entity, whether United States federal, state, local or non-United States,
                       required in connection with the consummation of the Closing and the
                       other Transactions, including consents and approvals required in
                       connection with the Designated Contracts set forth in Section 7.1(b)(i) of
                       the Disclosure Letter, shall have been obtained except where the failure to
                       obtain would not constitute a Material Adverse Effect. A copy of each
                       such consent or approval referred to Section 7.1(b)(i) shall have been
                       provided to Purchaser at or prior to the Funding.

               (ii)    FCC Consent. The FCC Consent shall have been issued.

               (iii)   Industry Canada Consent. The Industry Canada Consent shall have been
                       issued.

               (iv)    Assumption of Designated Contracts. Purchaser shall have executed an
                       Instrument of Assumption for the Designated Contracts (which shall
                       include the Wholesale Capacity Agreement, the Master Service
                       Agreement and the Rights and Services Agreement).

               The foregoing conditions in Section 7.2(a) and 7.2(b) are for the sole benefit of
Sellers and may be waived by Sellers, in whole or in part, at any time and from time to time in its
sole discretion. The failure by Sellers at any time to exercise any of the foregoing rights shall
not be deemed a waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.




                                               -41-
                                          ARTICLE VIII.

                                         TERMINATION

                     Section 8.1 Termination. This Agreement may be terminated or
abandoned at any time prior to the Funding Date as follows:

       (a)     By the mutual written consent of Purchaser and Sellers;

        (b)    By either Purchaser or Sellers (and if by Sellers, in consultation with the
Creditors’ Committee) upon written notice given to the other, if the Bankruptcy Court, Canadian
Court or any other Governmental Entity shall have issued an order, decree or ruling or taken any
other action (which order, decree, ruling or other action the parties hereto shall use their
reasonable best efforts to prevent the entry of and remove), which permanently restrains, enjoins
or otherwise prohibits the consummation of the Transactions and such order, decree, ruling or
other action shall have become final and non-appealable;

        (c)      By either Purchaser or Sellers upon written notice given to the other, if the
Funding Date shall not have taken place on or before December 31, 2011 (the “Termination
Date”); provided, however, that if all of the conditions to Funding shall have been satisfied or
shall be then capable of being satisfied (other than the conditions set forth in Sections 7.1(a)(iii)
and 7.2(a)(ii)), the Termination Date may be extended by the Sellers from time to time by written
notice to Purchaser up to but not beyond March 31, 2012, the latest of any of which dates shall
thereafter be deemed to be the Termination Date; provided, further that the failure of the Funding
to occur on or before such date is not the result of a material breach of any covenant, agreement,
representation or warranty hereunder by the party seeking such termination; and

        (d)     By Sellers (in consultation with the Creditors’ Committee) upon written notice
given to Purchaser, if Purchaser shall have breached or failed to perform in any material respect
any of its representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (i) would result in a failure of a condition set
forth in Section 7.2 and (ii) cannot be cured within ten (10) Business Days after Sellers notify
Purchaser of such breach.

       (e)     By Purchaser upon written notice given to Sellers:

               (i)     if any Seller shall have breached or failed to perform in any material
                       respect any of its representations, warranties, covenants or other
                       agreements contained in this Agreement, which breach or failure to
                       perform (i) would result in a failure of a condition set forth in Section 7.1
                       and (ii) cannot be cured within ten (10) Business Days after Purchaser
                       notifies Sellers of such breach;

               (ii)    unless, on or prior to September 30, 2011, (i) the Bankruptcy Court has
                       entered the Sale Order and (ii) the Canadian Court has subsequently
                       entered the Sale Recognition Order no longer than 21 days after (i);
                       provided that Purchaser shall have the right to designate any later date for
                       this purpose in its sole discretion; or
                                                 -42-
               (iii)   if the Sale Order or the Sale Recognition Order has been revoked,
                       rescinded or modified in any material respect and the order revoking,
                       rescinding or modifying such order(s) shall not be reversed or vacated
                       within three days after the entry thereof; provided that Purchaser shall
                       have the right to designate any later date for this purpose in its sole
                       discretion.

                After the Funding Date, this Agreement may not be terminated for any reason
other than pursuant to and strictly in compliance with the terms of Section 3.5 hereof. Any party
seeking to invoke its rights to terminate this Agreement shall give written notice thereof to the
other party or parties specifying the provision hereof pursuant to which such termination is made
and the effective date of such termination being the date of such notice.

                       Section 8.2 Effect of Termination. If this Agreement is terminated by
either party in accordance with and pursuant to Section 8.1, then, except as otherwise provided in
Section 8.3 and Section 9.10, all rights and obligations of the parties under this Agreement shall
terminate; provided, however, that nothing herein shall relieve any party from liability for any
breach of this Agreement prior to such termination.

                       Section 8.3    Good Faith Deposit.

        (a)     Solely in the event that this Agreement is terminated by Sellers pursuant to
Section 8.1(d), the Good Faith Deposit shall be paid to Sellers in accordance with a Final
Instruction delivered pursuant to the Escrow Agreement.

        (b)     Except as described in Section 8.3(a), in all other cases under Section 8.1, upon
the termination or abandonment of this Agreement by any party, the Good Faith Deposit shall be
returned to Purchaser by wire transfer in immediately available funds or applied as Purchaser
may in its sole discretion direct the Escrow Agent, in each case without withholding, set-off or
deduction and so as to be received not later than two (2) Business Days following the date of
such termination or abandonment.

        (c)     The parties acknowledge that the agreements contained in this Section 8.3 are an
integral part of the transactions contemplated by this Agreement and that without these
agreements neither Sellers nor Purchaser would enter into this Agreement.

        (d)     If Sellers, acting reasonably, determine that any payment of the Good Faith
Deposit or any other amount payable under this section is subject to GST/HST or any other
applicable provincial sales tax or is deemed by any provision of the Excise Tax Act (Canada) or
the corresponding provisions of any applicable provincial statute and any regulation under such
statute to be inclusive of such tax or taxes, the party required to make such payment agrees to
pay in addition to the payment an amount equal to all GST/HST or any other applicable
provincial sales tax payable or deemed to be included in respect of such payment.




                                               -43-
                                          ARTICLE IX.

                                       MISCELLANEOUS

                       Section 9.1 Survival of Covenants, Representations and Warranties.
The representations and warranties set forth in Article IV and Article V shall not survive the
Closing Date; provided, however, that all covenants and agreements set forth herein that
contemplate or may involve actions to be taken or obligations in effect after the Closing Date
(including, for the avoidance of doubt, Sections 3.5(a), 6.2(c), 6.5, 6.7, 6.8 and 6.10) shall
survive the Closing Date.

                       Section 9.2 Amendment and Modification. This Agreement may be
amended, modified and supplemented in any and all respects, but only by a written instrument
signed by all of the parties hereto expressly stating that such instrument is intended to amend,
modify or supplement this Agreement.

                        Section 9.3 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when mailed, delivered personally, telecopied
(which is confirmed) or sent by an overnight courier service, such as Federal Express, to the
parties at the following addresses:

               if to Purchaser, to:

                       [To come]

                       with a copy (which shall not constitute notice) to:

                       [To come]

               if to any Seller, to:

                       TerreStar Networks Inc.
                       12010 Sunset Hills Road
                       Reston, Virginia 20190
                       Facsimile: (703) 483-7800
                       Attention: Douglas Brandon, Esq.

                       with a copy (which shall not constitute notice) to:

                       Akin Gump Strauss Hauer & Feld LLP
                       One Bryant Park
                       New York, New York 10016
                       Facsimile: (212) 872-1002
                       Attention: Arik Preis, Esq.
                                  Zachary N. Wittenberg, Esq.
                                  Stephen B. Kuhn, Esq.


                                               -44-
                 or to such other address as a party may from time to time designate in writing in
accordance with this Section 9.3. Each notice or other communication given to any party hereto
in accordance with the provisions of this Agreement shall be deemed to have been received (i) on
the Business Day it is sent, if sent by personal delivery or telecopy, or (ii) on the first Business
Day after sending, if sent by overnight delivery, properly addressed and prepaid or (iii) upon
receipt, if sent by mail (regular, certified or registered); provided, however, that notice of change
of address shall be effective only upon receipt. The parties agree that delivery of process or
other papers in connection with any such action or proceeding in the manner provided in this
Section 9.3, or in such other manner as may be permitted by law, shall be valid and sufficient
service thereof.

                       Section 9.4 Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement and shall
become effective when two or more counterparts have been signed by each of the parties and
delivered to the other party.

                       Section 9.5 Entire Agreement; No Third Party Beneficiaries. This
Agreement, the Disclosure Letter and other schedules, annexes, and exhibits hereto, the
Ancillary Agreements, the Conveyance Documents, the Sale Order and the Confidentiality
Agreement (i) constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the subject matter hereof
and thereof and supersede and cancel all prior agreements, negotiations, correspondence,
undertakings, understandings and communications of the parties, oral and written, with respect to
the subject matter hereof, and (ii) are not intended to confer upon any Person other than the
parties hereto and thereto any rights or remedies hereunder.

                        Section 9.6 Severability. Any term or provision of this Agreement that
is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable
in any situation in any jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof is invalid, void or
unenforceable, the parties agree that the court making such determination shall have the power to
reduce the scope, duration, area or applicability of the term or provision, to delete specific words
or phrases, or to replace any invalid, void or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision.

               Section 9.7 Governing Law. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE APPLICABLE PROVISIONS OF THE BANKRUPTCY
CODE.

                        Section 9.8 Exclusive Jurisdiction. If the Bankruptcy Court does not
have or declines to exercise subject matter jurisdiction over any action or proceeding arising out
of or relating to this Agreement, then each party (i) agrees that all such actions or proceedings
shall be heard and determined in federal court of the United States for the Southern District of
                                                -45-
New York, (ii) irrevocably submits to the jurisdiction of such courts in any such action or
proceeding, (iii) consents that any such action or proceeding may be brought in such courts and
waives any objection that such party may now or hereafter have to the venue or jurisdiction or
that such action or proceeding was brought in an inconvenient court, and (iv) agrees that service
of process in any such action or proceeding may be effected by mailing a copy thereof by
registered or certified mail (or any substantially similar form of mail), postage prepaid, to such
party at its address as provided in Section 9.3 (provided that nothing herein shall affect the right
to effect service of process in any other manner permitted by New York law).

                        Section 9.9 Remedies. Neither the exercise of nor the failure to
exercise a right of set-off or to give notice of a claim under this Agreement will constitute an
election of remedies or limit Sellers or Purchaser in any manner in the enforcement of any other
remedies that may be available to any of them, whether at law or in equity.

                       Section 9.10 Specific Performance. Purchaser acknowledges and agrees
that any breach of the terms of this Agreement would give rise to irreparable harm for which
money damages would not be an adequate remedy, and, accordingly agrees that, in addition to
any other remedies, Sellers shall be entitled to enforce the terms of this Agreement, including,
for the avoidance of doubt, Purchaser’s obligation to fund the Purchase Price, by a decree of
specific performance without the necessity of proving the inadequacy of money damages as a
remedy and without the necessity of posting a bond.

                       Section 9.11 Purchaser Acknowledgement. Notwithstanding anything to
the contrary in this Agreement (including Exhibit A), Purchaser hereby acknowledges that
Sellers will not have funding available to operate the Business after December 31, 2011 and in
the event that the Closing has not occurred prior to such date, Purchaser will be required to
provide funding to Sellers in order to operate the Business and comply with their obligations
under this Agreement after December 31, 2011.

                        Section 9.12 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written content of the other party. Subject to the
first sentence of this Section 9.12, this Agreement shall be binding upon, inure to the benefit of
and be enforceable by the parties and their respective successors and permitted assigns.

                       Section 9.13 Confidential Information. Notwithstanding anything to the
contrary contained in this Agreement, Purchaser shall not have access to any of Sellers’
confidential information, until such time that Purchaser executes a confidentiality agreement in
form and substance reasonably acceptable to Sellers.

                       Section 9.14 Headings. The article, section, paragraph and other
headings contained in this Agreement are inserted for convenience of reference only and shall
not affect in any way the meaning or interpretation of this Agreement.

                  Section 9.15 No Consequential or Punitive Damages. NO PARTY (OR
ITS AFFILIATES OR REPRESENTATIVES) SHALL, UNDER ANY CIRCUMSTANCE, BE
LIABLE TO THE OTHER PARTY (OR ITS AFFILIATES OR REPRESENTATIVES) FOR

                                                -46-
ANY CONSEQUENTIAL, EXEMPLARY, SPECIAL, INCIDENTAL OR PUNITIVE
DAMAGES CLAIMED BY SUCH OTHER PARTY UNDER THE TERMS OF OR DUE TO
ANY BREACH OF THIS AGREEMENT, INCLUDING LOSS OF REVENUE OR INCOME,
DAMAGES BASED ON ANY MULTIPLIER OF PROFITS OR OTHER VALUATION
METRIC, COST OF CAPITAL, DIMINUTION OF VALUE OR LOSS OF BUSINESS
REPUTATION OR OPPORTUNITY.

                      Section 9.16 Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context clearly requires otherwise:

               “Accounts Receivable” means any and all trade accounts, notes and other
receivables and indebtedness for borrowed money or overdue accounts receivable, in each case
owing to any Seller and all claims relating thereto or arising therefrom.

               “Acquired Assets” has the meaning set forth in Section 2.1.

               “Actions” has the meaning set forth in Section 2.1(u).

               “Advance Ruling Certificate” means an advance ruling certificate issued by the
Commissioner of Competition pursuant to section 102 of the Competition Act with respect to the
transactions contemplated by this Agreement.

               “Affiliate” has the meaning set forth in Rule 12b-2 of the Exchange Act.

               “Agreement” or “this Agreement” means this Purchase Agreement, together with
the Exhibits hereto and the exhibits and schedules thereto and the Disclosure Letter.

               “Allocation Statement” has the meaning set forth in Section 2.5(c)

               “Alternative Sale” has the meaning set forth in Section 3.5(b)(i).

               “Alternative Sale Notice” has the meaning set forth in Section 3.5(b)(i).

               “Alternative Sale Obligations” has the meaning set forth in Section 3.5(a).

               “Alternative Sale Procedures” means those processes and obligations triggered by
Purchaser’s delivery of notice of an Alternative Sale under Section 3.5(b) as determined pursuant
to Exhibit A, and as the parties may agree.

             “Ancillary Agreements” means the Escrow Agreement and the New DIP
Agreement, and, in the case of each of the foregoing, all exhibits and appendices thereto.

              “Applicable Law” means any law, regulation, rule, order, judgment, guideline or
decree to which the Business, any Acquired Asset, or any Seller or Sold Company, is subject.

               “Arrangement” has the meaning set forth in Section 3.5(a).

               “Assets” means assets, properties, rights, interests, claims, contracts, and
businesses of every kind, type, character and description, whether tangible or intangible, whether
                                               -47-
real, personal or mixed, whether accrued, contingent, liquidated or unliquidated, whether owned,
leased or licensed and wherever located, and all rents, issues, profits, royalties, entitlements,
products and proceeds of any of the foregoing.

               “Assumed Liabilities” has the meaning set forth in Section 2.3(a).

                “Assumed Permitted Liens” means, (i) with respect to Real Property (a) zoning
laws and other land use restrictions that do not materially impair the present use or occupancy of
the property subject thereto; and (b) defects, easement rights of way, restrictions, covenants,
claims or other similar charges, that would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect on the use, title, value or possession of such Real
Property; and (ii) other Permitted Liens, if any, as may be expressly designated by Purchaser in
its sole and absolute discretion by written notice delivered to Sellers at least two Business Days’
prior to the Funding.

               “Audited Financial Statements” has the meaning set forth in Section 4.2(a).

                “Avoidance Action” means any claim, right or cause of action of Sellers arising
under sections 544 through 553 of the Bankruptcy Code, except for any such actions (i) against
Purchaser (all such claims to be released at Funding); (ii) related to Designated Contracts; or (iii)
in connection with any setoffs related to Acquired Assets.

               “Balance Sheet” has the meaning set forth in Section 4.2(b).

               “Bankruptcy Cases” has the meaning set forth in the recitals hereof.

               “Bankruptcy Code” has the meaning set forth in the recitals hereof.

               “Bankruptcy Court” has the meaning set forth in the recitals hereof.

               “Bankruptcy Rules” means the Federal Rules of Bankruptcy Procedure.

               “Bill of Sale” means the bill of sale substantially in the form attached as Exhibit B
hereto.

               “Business” has the meaning set forth in the recitals hereof.

               “Business Day” means any day other than a Saturday, Sunday or a day on which
banks in New York are authorized or obligated by Applicable Law or executive order to close or
are otherwise generally closed.

               “Canadian Court” has the meaning set forth in the recitals hereof.

                “Canadian Plan” means all plans, arrangements, programs, policies, undertakings,
whether formal or informal, funded or unfunded, insured or uninsured, registered or unregistered
to which any Seller is a party to or bound by or in which the Canadian employees or former
Canadian employees of any Seller participate or under which any Seller has, or will have, any
liability or contingent liability or, pursuant to which payments are made, or benefits are provided

                                                -48-
to, or an entitlement to payments or benefits may arise with respect to any Canadian employees
or former Canadian employees of any Seller, or Canadian directors, officers or individuals
working on contract with any Seller (or any spouses, dependents, survivors or beneficiaries of
any such persons), relating to retirement savings, pensions, supplemental pensions, bonuses,
profit sharing, deferred compensation, incentive compensation, equity or unity based
compensation, life or accident insurance, hospitalization, health , medical or dental treatment or
expenses, disability, unemployment insurance benefits, employee loans, vacation pay, fringe
benefits, severance or termination pay or other benefit plan, other than any Canadian Union Plan;
or the Canada Pension Plan or other such plan created by an Applicable Law or administered by
a Governmental Entity.

               “Canadian Sellers” means TerreStar Networks Holdings (Canada) Inc., an Ontario
corporation, TerreStar Networks (Canada) Inc., an Ontario corporation, and 0887729 B.C. Ltd., a
British Columbia corporation.

               “Canadian Union Plans” mean all pension and other benefit plans for the benefit
of Canadian employees or former Canadian employees of any Seller to which any Seller is or
was required to contribute pursuant to a collective agreement or participation agreement.

                “Cash and Cash Equivalents” means (a) cash; (b) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States government or issued by any
agency thereof, maturing within one (1) year from the date of issuance; (c) certificates of deposit,
time deposits, eurodollar time deposits, deposit accounts or overnight bank deposits having
maturities of six months or less from the date of acquisition issued by any commercial bank;
(d) commercial paper of an issuer and maturing within six (6) months from the date of
acquisition; (e) securities with maturities of one (1) year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth or territory or by any
non-United States government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or non-United States government (as the case may be);
(f) eurodollar time deposits having a maturity not in excess of 180 days to final maturity; (g) any
other investment in United States Dollars which has no more than 180 days to final maturity; or
(h) shares of money market mutual or similar funds which invest exclusively in assets satisfying
the requirements of clauses (a) through (g) of this definition.

               “Cash Consideration” has the meaning set forth in Section 2.5(a).

               “CCAA Recognition Proceeding” has the meaning set forth in the recitals hereof.

             “Claim” has the meaning assigned to such term under Section 101(5) of the
Bankruptcy Code.

              “Closing” means the consummation of all transactions contemplated in this
Agreement or, at Purchaser’s or Sellers’ election, the consummation of an Alternative Sale in
accordance with Section 3.5.

               “Closing Date” has the meaning set forth in Section 3.1(c).

                                               -49-
               “Code” means the Internal Revenue Code of 1986, as amended.

              “Commissioner of Competition” means the Commissioner of Competition
appointed pursuant to the Competition Act or a person designated or authorized pursuant to the
Competition Act to exercise the powers and perform the duties of the Commissioner of
Competition.

                “Communications Laws” means the Communications Act of 1934, as amended,
the Telecommunications Act of 1996, as amended, and/or any rule, regulation or published
policy of the Federal Communications Commission or its staff acting pursuant to delegated
authority, and the Radiocommunication Act (Canada), as amended, and the Telecommunications
Act (Canada), as amended, and all rules, regulations, orders, and published decisions
promulgated thereunder by Industry Canada and the CRTC.

               “Communications Licenses” has the meaning set forth in Section 4.16(a).

                “Company Earth Station” means any material Tracking, Telemetry, Command
and Monitoring and transmitting and/or receiving teleport earth station facility on real property
that is either owned in fee or leased by any Seller, except for earth stations facilities (i) hosted by
any Seller for Third Parties and (ii) for which no Seller is liable for instances of interference.

              “Company Satellite” means a satellite owned by any Seller or any of their
respective Subsidiaries as of the date of this Agreement.

               “Competition Act” means the Competition Act (Canada), as amended.

               “Competition Act Approval” means

                (i)    the issuance of an Advance Ruling Certificate and such Advance Ruling
Certificate has not been rescinded prior to Closing; or

              (ii)    both of (A) the waiting period, including any extension thereof, under
section 123 of the Competition Act shall have expired or been terminated or the obligation to
provide a pre-merger notification in accordance with Part IX of the Competition Act shall have
been waived in accordance with subsection 113(c) of the Competition Act, and (B) no order shall
have been issued by, or be pending from, the Competition Tribunal under sections 92, 100 or 104
of the Competition Act and there shall be no other agreement with the Commissioner of
Competition or between the Parties precluding completion of the Transactions.

              “Competition Tribunal” means the Competition Tribunal established under the
Competition Tribunal Act (Canada).

                “Concession Agreement” means any concession agreement that any Seller has
entered into, as of the date hereof, with the ITU sponsoring administrations that permits any
Seller to operate Company Satellites pursuant to the ITU filings of such administrations.

              “Confidentiality Agreement” means that certain non-disclosure agreement by and
between Sellers and Purchaser dated [ ], 2011.
                                                 -50-
               “Contract” means any written agreement, contract, lease, license, consensual
obligation, promise or undertaking.

                “Conveyance Documents” means (a) the Bill of Sale; (b) the Intellectual Property
Instruments; (c) all documents of title and instruments of conveyance necessary to Transfer
record and/or beneficial ownership to Purchaser of Acquired Assets composed of automobiles,
trucks, or other vehicles, trailers, and any other property owned by any Seller which requires
execution, endorsement and/or delivery of a certificate of title or other document in order to vest
record or beneficial ownership thereof in Purchaser; and (d) all such other documents of title,
customary title insurance affidavits, deeds, endorsements, assignments and other instruments of
conveyance or Transfer as, in the reasonable opinion of Purchaser’s counsel, are necessary or
appropriate to vest in Purchaser good and marketable title to any Acquired Assets.

              “Coordination Agreement” means any satellite intersystem coordination
agreement entered into by any ITU sponsoring administration related to the Company Satellites.

                “Copyrights” means any non-United States or United States copyright
registrations and applications for registration thereof, and any nonregistered copyrights, all
content and information contained on any website, “mask works” (as defined under 17 U.S.C.
§ 901) and any registrations and applications for “mask works.”

              “Creditors’ Committee” means the Official Committee of Unsecured Creditors in
the Bankruptcy Cases.

             “CRTC” means the Canadian Radio-television and Telecommunications
Commission or any successor agency thereto.

               “Cure Amounts” has the meaning set forth in Section 6.13.

               “Debtors” has the meaning set forth in the recitals hereof.

               “Designated Contracts” has the meaning set forth in Section 2.1(c).

              “Disclosure Letter” means the disclosure letter of even date herewith prepared
and signed by Sellers and delivered to Purchaser simultaneously with the execution hereof.

                “DIP Credit Agreement” means that certain Debtor-In-Possession Credit, Security
& Guaranty Agreement, dated as of October 19, 2010, by and among TerreStar Networks, as
borrower, each of the other Debtors, as guarantors, The Bank of New York Mellon, as
administrative agent and collateral agent, and EchoStar Corporation, a Nevada corporation, and
any other lenders that may become party thereto from time to time, as may be amended,
modified, ratified, extended, renewed, or restated, as well as any other documents entered into in
connection therewith.

                “Employee Benefit Plans” means all bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership, stock bonus, stock
purchase, restricted stock and stock option plans, employment, termination, change-in-control or
severance contracts, health and medical insurance plans, life insurance and disability insurance
                                               -51-
plans, other employee benefit plans, contracts or arrangements which cover employees or former
employees of any Seller including “employee benefit plans” within the meaning of Section 3(3)
of ERISA, other than the Key Employee Incentive Plan or any Canadian Plans or Canadian
Union Plans.

              “Employee” means any employee of the Sellers as of the Closing Date.

               “Environmental Laws” means United States federal, state, local and non-United
States laws, permits and governmental agreements and requirements of Governmental Entities
relating to human health, safety and the environment, including, but not limited to, Hazardous
Materials.

              “Equipment” has the meaning set forth in Section 2.1(j).

              “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.

              “ERISA Affiliate” has the meaning set forth in Section 4.15(a).

               “ERISA Plan” means an “employee benefit plan” as defined in Section 3(3) of
ERISA which is subject to Title I of ERISA or a “plan” within the meaning of Section
4975(e)(1) of the Code that is subject to Section 4975 of the Code.

              “Escrow Account” has the meaning specified for the term in the Escrow
Agreement.

              “Escrow Agent” has the meaning specified for the term in the Escrow Agreement.

              “Escrow Agreement” means an agreement between Purchaser, Sellers and Escrow
Agent in substantially the form attached as Exhibit C hereto.

              “Escrow Consideration” has the meaning set forth in Section 2.5(a).

              “Exchange Act” means the Securities Exchange Act of 1934, as amended.

              “FCC” means the Federal Communications Commission or any successor agency
thereto.

                “FCC Consent” means an order, orders, or public notice of the FCC (or its staff
acting pursuant to delegated authority) consenting or confirming the consent, to the Transfer of
control and/or assignment of Permits from Sellers to Purchaser and, if required, waiving the 25%
indirect foreign owership limit of TerreStar License Inc. as requested in a petition for a
declaratory ruling to exceed such cap.

              “FCC Licenses” has the meaning set forth in Section 4.6.

              “Final Instruction” has the meaning specified for the term in the Escrow
Agreement.

                                              -52-
                “Final Order” means an order or judgment of the Bankruptcy Court, the Canadian
Court or other court of competent jurisdiction, the implementation or operation or effect of
which has not been stayed, and as to which the time to appeal or petition for certiorari, has
expired and as to which no appeal or petition for certiorari, shall then be pending or in the event
that an appeal or writ of certiorari thereof has been sought, such order of the Bankruptcy Court,
the Canadian Court or other court of competent jurisdiction shall have been determined by the
highest court to which such order was appealed, or certiorari, shall have been denied and the time
to take any further appeal or petition for certiorari shall have expired.

               “Funding” means the consummation of the transactions contemplated hereby
except the Transfer of the Acquired Assets.

               “Funding Date” has the meaning set forth in Section 3.1(b).

               “GAAP” means United States generally accepted accounting principles, Canadian
generally accepted accounting principles or international financial reporting standards, as may be
applicable, and as consistently applied.

               “Good Faith Deposit” has the meaning set forth in Section 2.5(b)(i).

                “Governmental Entity” means any national, federal, state, municipal, local,
provincial, territorial, government or any department, commission, board, bureau, agency,
regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral
body or public or private tribunal, including any United States, Canadian or other such entity
anywhere in the world.

               “GST/HST” means goods and services tax or harmonized sales tax payable under
Part IX of the Excise Tax Act (Canada).

               “Hazardous Material” means all substances or materials regulated as hazardous,
toxic, explosive, dangerous, flammable or radioactive under any Environmental Law including,
but not limited to: (i) petroleum, asbestos, or polychlorinated biphenyls; and (ii) all substances
defined as Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan.

               “Historical Financial Statements” has the meaning set forth in Section 4.2(b).

               “HSR Act” means the Hart-Scott-Rodino Antitrust Improvement Act of 1976, as
amended.

               “Income Tax Act” means the Income Tax Act (Canada), as amended.

                 “Indebtedness” means, at any time and with respect to any Person: (a) all
indebtedness of such Person for borrowed money; (b) all indebtedness of such Person for the
deferred purchase price of property or services (other than trade payables, other expense accruals
and deferred compensation items arising in the ordinary course of business, consistent with past
practice); (c) all obligations of such Person evidenced by notes, bonds, debentures or other
similar instruments (other than performance, surety and appeal bonds arising in the ordinary
                                                -53-
course of business in respect of which such Person’s liability remains contingent); (d) all
indebtedness of such Person created or arising under any conditional sale or other title retention
agreement with respect to property acquired by such Person (even though the rights and remedies
of the seller or lender under such agreement in the event of default are limited to repossession or
sale of such property); (e) all obligations of such Person under leases which have been or should
be, in accordance with GAAP, recorded as capital leases, to the extent required to be so
recorded; (f) all reimbursement, payment or similar obligations of such Person, contingent or
otherwise, under acceptance, letter of credit or similar facilities; (g) all Indebtedness of others
referred to in clauses (a) through (f) above guaranteed directly or indirectly by such Person, or in
effect guaranteed directly or indirectly by such Person through an agreement (i) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or purchase of such
Indebtedness, (ii) to purchase, sell or lease (as lessee or lessor) property, or to purchase or sell
services, primarily for the purpose of enabling the debtor to make payment of such Indebtedness,
(iii) to supply funds to or in any other manner invest in the debtor (including any agreement to
pay for property or services irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss in respect of such Indebtedness; and
(h) all Indebtedness referred to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any
Lien upon or in property (including accounts and contract rights) owned by such Person, even
though such Person has not assumed or become liable for the payment of such Indebtedness.

               “Industry Canada” means the Canadian federal Department of Industry, or any
successor or any department or agency thereof, administering the Radiocommunication Act
(Canada), among other statutes, including its staff acting under delegated authority, and includes
the Minister of Industry (Canada) and the Commissioner of Competition (Canada).

                “Industry Canada Approval” means the prior approval of Industry Canada in
respect of the transfer of control of TerreStar Networks (Canada) Inc. and/or the Transfer of the
Industry Canada Licenses from Sellers to Purchaser, pursuant to the terms and conditions set out
in the Industry Canada Licenses.

                “Industry Canada Consent” includes the Industry Canada Approval and if
required, the Investment Canada Approval and the Competition Act Approval.

               “Industry Canada Licenses” means the Industry Canada licenses and
authorizations held by Sellers listed on Section 2.1(h) of the Disclosure Letter.

               “Instrument of Assumption” means the instrument of assumption substantially in
the form attached as Exhibit D hereto.

                “Intellectual Property” means Trademarks; Patents; Copyrights; Software; rights
of publicity and privacy relating to the use of the names, likenesses, voices, signatures and
biographical information of real persons; inventions (whether or not patentable), discoveries,
improvements, ideas, know-how, formulae, methodologies, research and development, business
methods, processes, technology, interpretive code or source code, object or executable code,
libraries, development documentation, compilers (other than commercially available compilers),
programming tools, drawings, specifications and data, and applications or grants in any

                                               -54-
jurisdiction pertaining to the foregoing, including re-issues, continuations, divisions,
continuations-in-part, reexaminations, renewals and extensions; trade secrets, including
confidential information and the right in any jurisdiction to limit the use or disclosure thereof;
database rights; Internet websites, web pages, domain names and applications and registrations
pertaining thereto and all intellectual property used in connection with or contained in websites;
all rights under agreements relating to the foregoing; all books and records pertaining to the
foregoing, and claims or causes of action arising out of or related to past, present or future
infringement or misappropriation of the foregoing; in each case used in or necessary for the
conduct of Sellers’ businesses as currently conducted or contemplated to be conducted.

               “Intellectual Property Instruments” instruments of Transfer, in form suitable for
recording in the appropriate office or bureau, effecting the Transfer of the Copyrights,
Trademarks and Patents owned or held by Sellers.

                “Intercompany Receivables” means any and all amounts that are owed (i) by any
direct or indirect Subsidiary or Affiliate of any Seller to any Seller, or (ii) from one Seller to
another, in each case pursuant to bona fide obligations, and all claims relating thereto or arising
therefrom.

                 “Interests” means all liens, claims, interests, encumbrances, rights, remedies,
restrictions, liabilities and contractual commitments of any kind or nature whatsoever, whether
arising before or after the petition date in the Bankruptcy Cases, whether at law or in equity.

               “Inventory” has the meaning set forth in Section 2.1(g).

               “Investment” means shares of stock (other than shares of stock in Subsidiaries),
notes, bonds, debentures, options and other securities but not including Cash and Cash
Equivalents.

               “Investment Bank” means a national or international investment bank of
recognized standing acceptable to Sellers and Purchaser or, if Sellers and Purchasers cannot
agree, then one of two such institutions proposed by Purchaser with the final selection from the
two to be made by Sellers.

               “Investment Canada Act” means the Investment Canada Act (Canada), as
amended.

               “Investment Canada Approval” means that the Minister of Industry has approved
or shall be deemed to have approved the transactions contemplated by this Agreement.

               “IRS” means the United States Internal Revenue Service.

               “ITU” means the International Telecommunications Union.

               “Key Employee Incentive Plan” means the Key Employee Incentive Plan
referenced in Sellers’ motion dated as of February 1, 2011, and granted by the Bankruptcy Court
on February 23, 2011 [Docket #444].

                                                -55-
                 “Knowledge” as applied to each Seller, means a person listed on Section 9.16(a)
of the Disclosure Letter hereto with respect to the applicable Seller is actually aware of a
particular fact; and “knowledge” as applied to Purchaser, means any officer of Purchaser or any
other person listed in Section 9.16(a) of the Disclosure Letter hereto is actually aware of a
particular fact.

              “Leased Real Property” means the leasehold interests held by Sellers under the
Real Property Leases.

               “License Agreements” has the meaning set forth in Section 4.7(b).

               “Lien” means, with respect to any asset, any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security interest, easement
or encumbrance, or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever (including any lease or title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing, and the filing of, or
agreement to give, any financing statement perfecting a security interest under the Uniform
Commercial Code as in effect from time to time in the State of New York or comparable law of
any jurisdiction) and, in the case of securities, any purchase option, call or similar right of a third
party with respect to such securities.

              “Master Service Agreement” means that certain Master Service Agreement dated
June 29, 2009 between Equinix Canada Ltd. and TerreStar Networks (Canada) Inc.

                 “Material Adverse Effect” means any change, effect, event or condition that has
had or would reasonably be expected to have (i) a material adverse effect on the assets,
operations, results of operations or financial condition of the Business, or (ii) a material adverse
effect on the ability of Sellers to consummate the Transactions; it being understood and agreed
that any Material Satellite Event shall constitute a Material Adverse Effect; provided that the
following shall not constitute a Material Adverse Effect and shall not be taken into account in
determining whether or not there has been or would reasonably be expected to be a Material
Adverse Effect: (A) changes in general economic conditions or securities or financial markets in
general that do not have a disproportionate effect on the Business (relative to the effect on other
Persons operating in the same industry as Sellers), (B) changes in the industry in which Sellers
operate and that do not specifically relate to, or have a disproportionate effect on, the Business
(relative to the effect on other Persons operating in the same industry as Sellers), (C) changes in
Applicable Law or interpretations thereof by any Governmental Entity that do not have a
disproportionate effect on the Business (relative to the effect on other Persons operating in the
same industry as Sellers), (D) any outbreak or escalation of hostilities or war (whether declared
or not declared) or any act of terrorism that does not have a disproportionate effect on the
Business (relative to the effect on other Persons operating in the same industry as Sellers), (E)
changes to the extent resulting from the announcement or the existence of, or compliance with,
this Agreement and the Transactions (including without limitation any lawsuit related thereto),
the impact on relationships with suppliers, customers, employees or others and any action or
anticipated action by the FCC or Industry Canada as a result of this Agreement and/or the
Transactions, (F) any changes in accounting regulations or principles that does not have a
disproportionate effect on the Business (relative to the effect on other Persons operating in the
                                                 -56-
same industry as Sellers), (G) any change in the market price or trading volumes of Sellers (it
being understood for the purposes of this subclause (G) that any facts underlying such change
that are not otherwise covered by the immediately preceding clauses (A) through (F) may be
taken into account in determining whether or not there has been a Material Adverse Effect), and
(H) any changes resulting from actions of Sellers expressly agreed to or requested in writing by
Purchaser.

               “Material Contract” has the meaning set forth in Section 4.8.

               “Material Satellite Event” means, with respect to T1 any anomaly or series of
anomalies resulting in a Percentage of Performance Earned of 90% or less as defined in the
Amended and Restated Contract for TerreStar-1, dated December 12, 2007 as compared to the
agreed operating Satellite Performance Specifications of T1.

               “Mobile Satellite System” has the meaning set forth in Section 2.1(i).

              “New DIP Agreement” means that certain Debtor-in-Possession Credit
Agreement, between Purchaser and Sellers, which shall be substantially in the form of Exhibit F
attached hereto.

              “New DIP Termination Letter” means that certain payoff letter, dated as of [date],
from [lender/administrative agent] to Sellers in connection with the payment of all amounts
outstanding under the New DIP Agreement and the termination of all obligations thereunder.

               “Nonassignable Asset” has the meaning set forth in Section 3.4.

               “Nonassignable Designated Contract” has the meaning set forth in Section 6.13.

               “Non-Assumed Liabilities” has the meaning set forth in Section 2.4.

               “Owned Intellectual Property” has the meaning set forth in Section 4.7(e).

               “Patents” means all patents, patent applications and non-United States
counterparts thereof, and industrial designs (including any continuations, divisionals,
continuations-in-part, renewals, reissues, and applications for any of the foregoing).

               “Permits” means permits, certificates, licenses, filings, approvals and other
authorizations of any Governmental Entity.

                “Permitted Liens” means (i) zoning laws and other land use restrictions that do
not materially impair the present use or occupancy of the property subject thereto, (ii) any
statutory Liens imposed by law for material Taxes that are not yet due and payable, or that a
Seller is contesting in good faith in proper proceedings and which are set forth on Section
9.16(b) of the Disclosure Letter, (iii) any mechanics’, workmen’s, repairmen’s, warehousemen’s,
carriers’ or other similar Liens arising in the ordinary course of business, consistent with past
practice or being contested in good faith, (iv) with respect to any Real Property, any defects,
easement rights of way, restrictions, covenants, claims or other similar charges, that would not,
individually or in the aggregate, be reasonably likely to have a Material Adverse Effect on the
                                               -57-
use, title, value or possession of such Real Property, and (v) any Liens imposed by the DIP
Credit Agreement in accordance with the terms thereof.

                “Person” means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, incorporated organization, association, corporation, institution,
public benefit corporation, Governmental Entity or other entity.

               “Plan” has the meaning set forth in Section 3.5(a).

               “Purchase Price” has the meaning set forth in Section 2.5(a).

               “Purchaser” has the meaning set forth in the preamble hereof.

               “Purchaser Material Adverse Effect” means a material adverse effect on the
business, assets, operations, results of operations or financial condition of Purchaser or on
Purchaser’s ability to consummate the Transactions or delay the same in any material respect.

               “Purchaser Alternative Sale Notice” has the meaning set forth in Section 3.5(b)(i).

                 “Real Property” means all real property that is owned or used by any Seller or that
is reflected as an Asset of any Seller on the Balance Sheet.

               “Real Property Leases” means the real property leases to which any Seller is a
party as described in Section 2.1(c).

               “Regulatory Approvals” means those sanctions, rulings, consents, orders,
exemptions, permits and other approvals (including the lapse, without objection, of a prescribed
time under a statute or regulation that states that a transaction may be implemented if a
prescribed time lapses following the giving of notice without an objection being made), waivers,
early termination authorizations, clearances or written confirmation of no intention to initiate
legal proceedings from Governmental Entities as required and as set out in Section 4.6 of the
Disclosure Letter.

               “Retained Assets” has the meaning set forth in Section 2.2.

                “Rights” means, with respect to any Person, securities or obligations convertible
into or exercisable or exchangeable for, or giving any other Person any right to subscribe for or
acquire, or any options, calls, warrants, performance awards, units, dividend equivalent awards,
deferred rights, “phantom” stock or other equity or equity-based rights or commitments relating
to, or any stock appreciation right or other instrument the value of which is determined in whole
or in part by reference to the market price of or value for or which has the right to vote with,
shares of capital stock or other voting securities or equity interests of such first Person.

             “Rights and Services Agreement” means that certain Rights And Services
Agreement effective August 11, 2009 between TerreStar Solutions Inc. and TerreStar Networks
Inc.



                                               -58-
               “Sale Order” means an order of the Bankruptcy Court in substantially the form
attached as Exhibit E hereto (or as may be modified pursuant to any Bankruptcy Court hearing
with regard thereto), approving the Agreement and consummation of the Transactions under
sections 105, 363 and 365 of the Bankruptcy Code.

               “Sale Recognition Order” means an order of the Canadian Court recognizing the
Sale Order.

                “Satellite Performance Specifications” of a satellite means the performance
specifications as set forth in the construction contract for such satellite.

               “Securities Act” has the meaning set forth in Section 5.9.

               “Seller” and “Sellers” each has the meaning set forth in the preamble hereof.

               “Seller Alternative Sale Notice” has the meaning set forth in Section 3.5(b)(i).

               “Seller Liabilities” means all Indebtedness, Claims, Liens, demands, expenses,
commitments and obligations (whether accrued or not, known or unknown, disclosed or
undisclosed, matured or unmatured, fixed or contingent, asserted or unasserted, liquidated or
unliquidated, arising prior to, at or after the commencement of the Bankruptcy Cases) of or
against any Seller or any of the Acquired Assets.

               “Seller Permits” has the meaning set forth in Section 4.12(c).

               “Seller Successor” has the meaning set forth in Section 3.5(a).

               “Shareholders Agreement” means that certain Shareholders Agreement, dated
August 11, 2009, by and among TerreStar Solutions Holdings Inc., Trio 2 General Partnership,
TerreStar Solutions Inc. (a/k/a 4491190 Canada Inc.) and TerreStar Networks.

                “Software” means any and all (a) computer programs, including any and all
software implementation of algorithms, models and methodologies, whether in source code or
object code form, (b) computerized databases and compilations, including any and all data and
collections of data, and (c) all documentation, including user manuals and training materials,
relating to any of the foregoing.

               “Sold Company” has the meaning set forth in Section 2.1(a).

            “Specified Regulatory Approvals” means the FCC Consent and the Industry
Canada Consent and “Specified Regulatory Approval” means any of them.

               “Straddle Period Property Tax” has the meaning set forth in Section 6.10(d).

                 “Subsidiary” means, with respect to any Person, any corporation, association
trust, limited liability company, partnership, joint venture or other business association or entity
(i) at least 50% of the outstanding voting securities of which are at the time owned or controlled


                                                -59-
directly or indirectly by such Person or (ii) with respect to which such Person possesses, directly
or indirectly, the power to direct or cause the direction of the affairs or management.

               “System Equipment” has the meaning set forth in Section 2.1(j).

               “System Failure” means the failure of any component that supports the overall
power supply, operation, and/or maneuverability of a satellite, including solar arrays, momentum
wheels, earth sensors, thrusters, propulsion systems, traveling wave tube amplifiers, low noise
amplifiers, and other similar equipment.

               “T1” means the first-generation satellite TerreStar-1 and its components.

              “T2” means the second-generation satellite TerreStar-2 and its components,
presently under construction pursuant to the T2 Construction Contract.

               “T2 Construction Contract” means the Amended and Restated Contract for
TerreStar-2, dated as of December 12, 2007, by and between TerreStar Networks and Space
Systems/Loral, Inc., as amended from time to time.

                “Tax” or “Taxes” means any and all United States federal, state, local or non-
United States taxes, fees, levies, duties, tariffs, imposts, and other similar charges on or with
respect to net income, alternative or add-on minimum, gross income, gross receipts, sales, use,
ad valorem, franchise, capital, paid-up capital, profits, license, withholding, payroll,
employment, excise, severance, stamp, occupation, premium, property, environmental, or
windfall profit tax, customs duties, value added or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, together with any interest or any penalty, addition
to tax or additional amount imposed by any Governmental Entity responsible for the imposition
of any such tax.

              “Tax Authority” means any Governmental Entity with responsibility for, and
competent to impose, collect or administer, any form of Tax.

               “Tax Return” means any return, claim, election, information return, declaration,
report, statement, schedule, or other document required to be filed in respect of Taxes and
amended Tax Returns and claims for refund.

               “Termination Date” has the meaning set forth in Section 8.1(c).

               “TerreStar Networks” has the meaning set forth in the preamble hereof.

               “Third Party” means any Person other than Sellers, Purchaser or any of their
respective Affiliates.

               “Trademarks” means any trademarks, service marks, trade names, corporate
names, Internet domain names, designs, trade dress, product configurations, logos, slogans, and
general intangibles of like nature, together with all translations, adaptations, derivations and
combinations thereof, all goodwill, registrations and applications in any jurisdiction pertaining to
the foregoing.
                                               -60-
               “Transfer” means sell, convey, assign, transfer and deliver, and “Transferable”
shall have a corollary meaning.

                 “Transfer Taxes” means all goods and services, harmonized sales, excise, sales,
use, transfer, stamp, stamp duty, recording, value added, gross receipts, documentary, filing, and
all other similar Taxes or duties, fees or other like charges, however denominated (including any
real property transfer taxes and conveyance and recording fees and notarial fees), in each case
including interest, penalties or additions attributable thereto whether or not disputed and for
greater certainty includes GST/HST and any other Canadian federal or provincial sales or excise
taxes, arising out of or in connection with the Transactions, regardless of whether the
Governmental Entity seeks to collect the Transfer Tax from Sellers or Purchasers.

               “Transferred Employee” has the meaning set forth in Section 6.7(a).

             “Transactions” means all the transactions provided for or contemplated by this
Agreement and/or the Ancillary Agreements.

               “Unaudited Financial Statements” has the meaning set forth in Section 4.2(b).

               “WARN” has the meaning set forth in Section 6.7(d).

               “WARN Act” has the meaning set forth in Section 6.7(d).

               “Wholesale Capacity Agreement” means the First Amended and Restated
Wholesale Satellite Capacity Agreement dated October 6, 2010 between Terrestar Networks
(Canada) Inc. and Terrestar Solutions Inc.

                      Section 9.17 Bulk Transfer Notices. Sellers and Purchaser hereby waive
compliance with any bulk transfer provisions of the Uniform Commercial Code (or any similar
Applicable Law), to the extent not repealed in any applicable jurisdiction, in connection with this
Agreement and the Transactions.

                       Section 9.18 Interpretation.

        (a)    When a reference is made in this Agreement to a Section, Article, subsection,
paragraph, item or Exhibit, such reference shall be to a Section, Article, subsection, paragraph,
item or Exhibit of this Agreement unless clearly indicated to the contrary.

      (b)    Whenever the words “include,” “includes” or “including” are used in this
Agreement they shall be deemed to be followed by the words “without limitation.”

        (c)    The words “hereof,” “herein” and “herewith” and words of similar import shall,
unless otherwise stated, be construed to refer to this Agreement as a whole and not to any
particular provision of this Agreement.

       (d)     The meaning assigned to each term defined herein shall be equally applicable to
both the singular and the plural forms of such term, and words denoting any gender shall include


                                               -61-
all genders. Where a word or phrase is defined herein, each of its other grammatical forms shall
have a corresponding meaning.

        (e)     A reference to any party to this Agreement or any other agreement or document
shall include such party’s predecessors, successors and permitted assigns.

        (f)     A reference to any legislation or to any provision of any legislation shall include
any amendment to, and any modification or re-enactment thereof, any legislative provision
substituted therefore and all regulations and statutory instruments issued thereunder or pursuant
thereto.

       (g)     References to $ are to United States Dollars.

       (h)      The parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden
of proof shall arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.

                           [Remainder of page intentionally left blank]




                                                -62-
                 IN WITNESS WHEREOF, Purchaser and Sellers have executed this Agreement
or caused this Agreement to be executed by their respective officers thereunto duly authorized as
of the date first written above.

                                          SELLERS:

                                          TERRESTAR NETWORKS INC.



                                          By:
                                                Name:
                                                Title:



                                          TERRESTAR LICENSE INC.



                                          By:
                                                Name:
                                                Title:



                                          TERRESTAR NATIONAL SERVICES INC.



                                          By:
                                                Name:
                                                Title:



                                          TERRESTAR NETWORKS HOLDINGS (CANADA)
                                          INC.



                                          By:
                                                Name:
                                                Title:




                               [Signature Pages to Purchase Agreement]
           TERRESTAR NETWORKS (CANADA) INC.



           By:
                 Name:
                 Title:



           0887729 B.C. LTD.



           By:
                 Name:
                 Title:



           PURCHASER:

           [ ]



           By:
                 Name:
                 Title:




[Signature Pages to Purchase Agreement]
                                               Exhibit A

                                      Alternative Sale Procedures

               These Procedures will be utilized by Sellers and Purchaser in the marketing for an
Alternative Sale.

                Purchaser and Sellers shall agree on the selection of an investment bank (“Investment
Bank”) to market the Alternative Sale. If Purchaser and Sellers are unable to agree, Purchaser shall
provide Sellers with the names of at least two nationally recognized investment banks and Sellers shall
select an investment bank from the list provided by Purchaser to market the Alternative Sale. The
Investment Bank selected to market the Alternative Sale shall be directed to identify bona fide and
potential Third Party purchasers for the Alternative Sale. All fees, expenses and indemnities due to the
Investment Bank under its engagement letter shall be paid for by Purchaser to the extent that Purchaser
reviews and approves in writing the engagement letter terms, it being understood that Sellers will not be
required to engage an Investment Bank until Purchaser approves an engagement letter. In addition, and
to the extent requested and prepaid by Purchaser, Sellers shall engage such other accountants, advisors
and other professionals as may be necessary to market the Alternative Sale. For the avoidance of doubt,
Sellers shall not be responsible for any costs associated with or incurred in connection with the
Alternative Sale process, other than as necessary to ensure that Sellers’ business operates through and
including [ ].

                Sellers shall make themselves, their management team and their advisors available to the
Investment Bank during the sale process and shall assist the Investment Bank by providing marketing
materials and letters of representation in customary form subject to customary indemnities in favor of
Sellers for liabilities they may incur in doing so, provided Purchaser reviews and approves in writing the
marketing materials and marketing process. Sellers shall not be required to do any of the foregoing
without receipt of such indemnity and reasonable compensation with regard thereto. For the avoidance
of doubt, Purchaser hereby acknowledges and agrees that during the process of seeking an Alternative
Sale, neither Sellers nor the Boards of Directors of any of the Sellers shall have any obligations,
fiduciary or otherwise to Purchaser, other than as set forth in this Agreement.

             At Purchaser’s election, the Alternative Sale may include all or any portion of the
Acquired Assets.

                If a Plan for the Sellers is to be consummated during the process of seeking an
Alternative Sale, then, prior to the consummation of the Plan, the Sellers shall seek approval from the
Bankruptcy Court to appoint a responsible officer reasonably satisfactory to Purchaser, with such
appointment to become effective immediately following the consummation of the Plan, to exercise
management authority in respect of the Seller entities that hold the Acquired Assets, FCC Licenses and
the Industry Canada Licenses pending the closing of an Alternative Sale, provided, however, that in such
instance the Plan shall provide that the equity interests in the Sellers shall not be extinguished or
cancelled until the closing of the Alternative Sale and control of the board of directors of the Seller
entities that hold the FCC Licenses and the Industry Canada Licenses shall not be changed in a manner
that would require FCC or Industry Canada approval or constitute a major amendment under applicable
FCC or Industry Canada rules pending the closing of the Alternative Sale.


                                                 Exhibits
     Exhibit B

Form of Bill of Sale




      Exhibits
       Exhibit C

Form of Escrow Agreement




        Exhibits
                                      ESCROW AGREEMENT


        THIS AGREEMENT (“Agreement”) is made this [ ] day of [ ], 2011, by and among TerreStar
Networks Inc., a Delaware corporation, TerreStar License Inc., a Delaware corporation, TerreStar
National Services Inc., a Delaware corporation, TerreStar Networks Holdings (Canada) Inc., an Ontario
corporation, TerreStar Networks (Canada) Inc., an Ontario corporation, and 0887729 B.C. Ltd., a British
Columbia corporation (each, a “Seller” and collectively, “Sellers”), [ ], a [ ] (the “Purchaser”) and [ ]
(“Escrow Agent”).

                                              RECITALS

         WHEREAS, on October 19, 2010, Sellers filed voluntary petitions for relief under chapter 11 of
title 11 of the United States Code, 11 U.S.C. §§ 101-1532, as amended (the “Bankruptcy Code”), in the
United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), which
cases are being jointly administered under Case No. 10-15446 (the “Bankruptcy Cases”);

         WHEREAS, on October 21, 2010, the Ontario Superior Court of Justice (Commercial List)
granted orders under Part IV of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as
amended, that, among other things, recognized the Bankruptcy Cases as the “foreign main proceedings”
of Sellers;

         WHEREAS, on the date hereof, Sellers entered into that certain Asset Purchase Agreement with
Purchaser, pursuant to which, among other things, Sellers agreed to sell and transfer to Purchaser,
pursuant to sections 363 and 365 of the Bankruptcy Code, all of the Acquired Assets and Assumed
Liabilities on the terms and subject to the conditions set forth in such agreement (the “Purchase
Agreement”);

        WHEREAS, pursuant to the Purchase Agreement, Purchaser and Sellers have agreed to place
into the Escrow Account certain monies to be held and disbursed in accordance with the Purchase
Agreement and this Agreement;

      WHEREAS, this Agreement constitutes the Escrow Agreement referred to in the Purchase
Agreement; and

       WHEREAS, capitalized terms used herein and not otherwise defined shall have the respective
meanings set forth in the Purchase Agreement.

       NOW, THEREFORE, in consideration of the premises, and further consideration of the
covenants set forth hereafter, it is hereby mutually agreed as follows:

I.      Designation as Escrow Agent.

       Sellers and Purchaser hereby appoint Escrow Agent to act as escrow agent and Escrow Agent
hereby accepts such appointment, all on the terms and subject to the conditions set forth in this
Agreement.




         
II.    Deposit of Escrow Funds.

       (a)       Upon execution of this Agreement, Purchaser shall deposit $[ ] (such funds, together
             with all interest, income, dividends, distributions and earnings thereon the “Good Faith
             Deposit”) by wire transfer of immediately available funds into an account (the “Escrow
             Account”) established with Escrow Agent, with such amount to be thereafter held, invested
             and released by Escrow Agent only in accordance with this Agreement.

       (b)       On the Funding Date, Purchaser shall deposit $[ ] (such funds, together with all interest,
             income, dividends, distributions and earnings thereon, the “Escrow Consideration”) by wire
             transfer of immediately available funds into the Escrow Account, with such amount to be
             thereafter held, invested and released by Escrow Agent to Sellers only in accordance with this
             Agreement.

       (c)       As soon as practicable after the Funding Date, Sellers shall deposit $[ ] (such funds,
             together with all interest, income, dividends, distributions and earnings thereon, the “Cure
             Funds,” together, with the Good Faith Deposit and the Escrow Consideration, the “Escrow
             Funds”) by wire transfer of immediately available funds into the Escrow Account, with such
             Cure Funds to be thereafter held, invested and released by Escrow Agent to Sellers only in
             accordance with this Agreement, and used to pay the Cure Amounts in respect of the
             contracts designated by Purchaser to be Designated Contracts pursuant to Section 6.13 of the
             Purchase Agreement.

       (d)       Escrow Agent hereby agrees to accept the Escrow Funds and hold the Escrow Funds in
             the Escrow Account in escrow upon the terms and conditions set forth in this Agreement and
             disburse the Escrow Funds from the Escrow Account only in accordance with this
             Agreement.

       (e)       Escrow Agent shall invest the Escrow Account pursuant to the joint written directions of
             Sellers and Purchaser and in the absence of such directions, in [ ].


III.    Disbursement of Escrow Account. Escrow Agent will hold the Escrow Funds in its possession
in the Escrow Account until authorized hereunder to deliver such Escrow Funds as follows:

       (a)       Good Faith Deposit.

                         (i)     On the Funding Date, Purchaser shall direct Escrow Agent in writing to
                                 deliver the Good Faith Deposit to Sellers by wire transfer of immediately
                                 available funds to an account designated in writing by Sellers, and
                                 Sellers agree to credit the Good Faith Deposit so received by them
                                 against the Purchase Price as set forth in Section 2.5 of the Purchase
                                 Agreement. Purchaser shall give Escrow Agent sufficient prior written
                                 notice of the Funding to enable Escrow Agent to comply herewith.

                         (ii)    If Purchaser delivers a written notice to Escrow Agent and Sellers (a
                                 “Purchaser Certificate of Instruction”) stating that the Purchase
                                 Agreement has been terminated by Purchaser pursuant to Section 8.1(a),
                                 (b) or (c) of the Purchase Agreement, then if within ten (10) Business
                                 Days after Sellers’ receipt (as determined in accordance with Section V)




                                                     2
            of the Purchaser Certificate of Instruction Escrow Agent does not receive
            from Sellers a written notice objecting to the release of the Good Faith
            Deposit to Purchaser (a “Sellers Objection Notice”), Escrow Agent shall
            deliver to Purchaser the Good Faith Deposit then held by Escrow Agent
            pursuant to this Agreement. Purchaser shall provide to Escrow Agent
            evidence of Seller’s receipt of the Purchaser Certificate of Instruction,
            evidencing the date of such receipt. In the event that a Sellers Objection
            Notice is received by Escrow Agent within such ten (10) Business Day
            period, the provisions of Section III(a)(v) shall apply. Sellers shall send
            Purchaser a copy of any Sellers Objection Notice delivered to Escrow
            Agent.

    (iii)   If Sellers deliver a written notice to Escrow Agent and Purchaser (a
            “Sellers Certificate of Instruction”) stating that the Purchase Agreement
            has been terminated by Sellers pursuant to Section 8.1(d) of the Purchase
            Agreement, then if within ten (10) Business Days after Purchaser’s
            receipt (as determined in accordance with Section V) of the Sellers
            Certificate of Instruction Escrow Agent does not receive written notice
            from Purchaser objecting to the release of the Good Faith Deposit to
            Sellers (a “Purchaser Objection Notice”), Escrow Agent shall deliver to
            Sellers the Good Faith Deposit then held by Escrow Agent pursuant to
            this Agreement. Sellers shall provide to Escrow Agent evidence of
            Purchaser’s receipt of the Sellers Certificate of Instruction, evidencing
            the date of such receipt. In the event that a Purchaser Objection Notice is
            received by Escrow Agent within such ten (10) Business Day period, the
            provisions of Section III(a)(v) of this Agreement shall apply. Purchaser
            shall send Sellers a copy of any Purchaser Objection Notice delivered to
            Escrow Agent.

    (iv)    Upon receipt of joint written instructions from Sellers and Purchaser to
            Escrow Agent (a “Joint Certificate of Instruction”), Escrow Agent shall
            deliver the Good Faith Deposit in accordance with such instructions by
            wire transfer of immediately available funds to such account or accounts
            as are designated in such instructions.

    (v)     In the event of a dispute between Sellers and Purchaser as to their
            respective rights to the Good Faith Deposit, Escrow Agent shall continue
            to hold the Good Faith Deposit until otherwise directed by either (i) a
            Joint Certificate of Instruction or (ii) a final and non-appealable order of
            the Bankruptcy Court binding on Escrow Agent which has not been
            stayed or vacated before disbursement of the Good Faith Deposit;
            provided, however, that notwithstanding the foregoing, Escrow Agent
            shall have the right in the event of such a dispute to deposit the Good
            Faith Deposit with the Clerk of the Bankruptcy Court or any federal or
            state court then having jurisdiction over an interpleader action with
            respect to the Good Faith Deposit. Escrow Agent shall give written
            notice of any such deposit to Sellers and Purchaser. Upon such deposit
            or other disbursement in accordance with the provisions of this Section
            III(a)(v), Escrow Agent shall be relieved and discharged of all further
            obligations with respect to the Good Faith Deposit.




                                3
        (b)       Escrow Consideration. Upon receipt from Sellers of a written instruction authorizing the
              disbursement of any or all of the Escrow Consideration, Escrow Agent shall, within one (1)
              Business Day of receipt of such instruction, disburse all or such portion of the Escrow
              Consideration in accordance with such instruction by wire transfer of immediately available
              funds to such account or accounts as are designated in such instruction.

        (c)      Cure Funds.

                         (i)     Subject to the effectiveness of a plan of reorganization of Sellers, upon
                                 receipt of a joint written instruction from Sellers and Purchaser
                                 authorizing the disbursement of a Cure Amount in respect of a
                                 Designated Contract, Escrow Agent shall disburse all or such portion of
                                 the Cure Funds in accordance with such instruction by wire transfer of
                                 immediately available funds to such account or accounts as are
                                 designated in such instruction.

                         (ii)    On December 31, 2011, Escrow Agent shall disburse all of the Cure
                                 Funds remaining in the Escrow Account to Sellers, by wire transfer of
                                 immediately available funds to an account or accounts as are designated
                                 in writing by Sellers, in accordance with an order of the Bankruptcy
                                 Court.

        (d)       Court Order. In the event Escrow Agent is directed by a final and non-appealable order
              of the Bankruptcy Court binding on Escrow Agent which has not been stayed or vacated
              before disbursement of all of the Escrow Funds to release all or a portion of the Escrow
              Funds, Escrow Agent shall promptly disburse all or such portion of the Escrow Funds in
              accordance with such Bankruptcy Court order; provided, however, that notwithstanding the
              foregoing, Escrow Agent shall have the right in the event of such a dispute to deposit the
              Escrow Funds with the Clerk of the Bankruptcy Court. Escrow Agent shall give written
              notice of any such deposit to Sellers and Purchaser. Upon such deposit or other disbursement
              in accordance with the provisions of this Section III(d), Escrow Agent shall be relieved and
              discharged of all further obligations with respect to the Escrow Funds and all further
              obligations and liability to the parties hereto with respect to its obligations under this
              Agreement, provided that the foregoing shall not apply to liability of Escrow Agent for acts
              or omissions of Escrow Agent prior to such deposit or disbursement.

IV.     Authority of Escrow Agent and Limitation of Liability.

        (a)       In acting hereunder, Escrow Agent shall have only such duties as are specified herein and
no implied duties shall be read into this Agreement, and Escrow Agent shall not be liable for any act
done, or omitted to be done, by it in the absence of its gross negligence or willful misconduct. Escrow
Agent shall not be charged with knowledge or notice of any fact, order, agreement or circumstance not
specifically set forth herein including without limitation the terms of the Purchase Agreement.

        (b)     Escrow Agent may act in reliance upon any writing or instrument or signature which it,
in good faith, believes to be genuine, and may assume the validity and accuracy of any statement or
assertion contained in such a writing or instrument and may assume that any person purporting to give
any writing, notice, advice or instruction in connection with the provisions hereof has been duly
authorized to do so.




                                                     4
        (c)      Escrow Agent shall be entitled to consult with legal counsel in the event that a question
or dispute arises with regard to the construction of any of the provisions hereof, and, in the absence of its
gross negligence or willful misconduct, shall incur no liability and shall be fully protected in acting in
accordance with the advice or opinion of such counsel.

        (d)      Escrow Agent shall not be required to use more than a de minimis amount of (in Escrow
Agent’s reasonable determination) its own funds in the performance of any of its obligations or duties or
the exercise of any of its rights or powers, and shall not be required to take any action which, in Escrow
Agent’s sole and absolute judgment, could involve more than a de minimis (in Escrow Agent’s reasonable
determination) expense or liability unless furnished with security and indemnity which it deems, in its
sole and absolute discretion, to be satisfactory. Nothing in this Section IV(d) is meant to limit the terms
in Section IV(e) below.

        (e)     Sellers shall pay to Escrow Agent compensation for its services hereunder together with
such other applicable transaction fees, in each case, as set forth on the Fee Schedule annexed hereto as
Exhibit A. Sellers also agree to pay the reasonable legal fees of Escrow Agent in connection with this
Agreement, which shall be due and payable contemporaneous with the deposit of the Good Faith Deposit,
and from time to time thereafter as incurred and upon written invoice. Escrow Agent’s legal fees,
disbursements and expenses shall be payable whether or not the transactions contemplated hereby occur.
The terms of this paragraph shall survive termination of this Agreement.

        (f)       Sellers hereby agree to indemnify Escrow Agent, its directors, officers, employees and
agents (collectively, the “Indemnified Parties”), and hold the Indemnified Parties harmless from any and
against all liabilities, losses, actions, suits or proceedings at law or in equity, and any other expenses, fees
or charges of any character or nature, including, without limitation, reasonable attorney’s fees and
expenses, which an Indemnified Party may incur or with which it may be threatened by reason of acting
as or on behalf of Escrow Agent under this Agreement or arising out of the existence of the Escrow
Account, except to the extent the same shall be caused by Escrow Agent’s gross negligence or willful
misconduct. Escrow Agent may retain counsel of its choice to participate in the defense of any
indemnified claims, at the expense of Sellers and Sellers shall not settle or otherwise resolve any
indemnified claim without an unconditional release in favor of Escrow Agent in form, scope and
substance satisfactory to Escrow Agent. The terms of this paragraph shall survive termination of this
Agreement.

        (g)     In the event Escrow Agent receives conflicting instructions hereunder, Escrow Agent
shall be fully protected in refraining from acting until such conflict is resolved to the satisfaction of
Escrow Agent.

        (h)     Escrow Agent may resign as Escrow Agent, and, upon its resignation, shall thereupon be
discharged from any and all further duties and obligations under this Agreement by giving notice in
writing of such resignation to Sellers, which notice shall specify a date upon which such resignation shall
take effect. Upon the resignation of Escrow Agent, Sellers shall, within thirty (30) Business Days after
receiving the foregoing notice from Escrow Agent, designate a substitute escrow agent (the “Substitute
Escrow Agent”), which Substitute Escrow Agent shall, upon its designation and notice of such
designation to Escrow Agent, succeed to all of the rights, duties and obligations of Escrow Agent
hereunder. In the event Sellers shall not have delivered to Escrow Agent a written designation of
Substitute Escrow Agent within the aforementioned thirty (30) Business Day period, together with the
consent to such designation by the Substitute Escrow Agent, Escrow Agent may apply to the Bankruptcy
Court to appoint a Substitute Escrow Agent, and the costs of obtaining such appointment shall be




                                                       5
reimbursable from Sellers and from the Escrow Funds. Upon the delivery of the funds in the Escrow
Account to a Substitute Escrow Agent, Escrow Agent shall be relieved of all liability hereunder, provided
that the foregoing shall not apply to any liability of Escrow Agent for acts or omissions of Escrow Agent
prior to such delivery of funds.

V.      Notices.

        Except as otherwise provided herein, any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given (a) on the day of delivery if
delivered in person, or if delivered by facsimile upon confirmation of receipt, (b) on the first (1st)
Business Day following the date of dispatch if delivered by a nationally recognized express courier
service guaranteeing next Business Day delivery, or (c) on the fifth (5th) Business Day following the date
of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All
notices and other communications hereunder shall be delivered as set forth below or pursuant to such
other instructions as may be designated by notice given in accordance with this Section V by the party to
receive such notice.

        if to Purchaser, to:
        [To come]

        with a copy (which shall not constitute notice) to:
        [To come]

        if to any Seller, to:

        TerreStar Networks Inc.
        12010 Sunset Hills Road
        Reston, Virginia 20190
        Facsimile: (703) 483-7800
        Attention: Douglas Brandon, Esq.

        with a copy (which shall not constitute notice) to:
        Akin Gump Strauss Hauer & Feld LLP
        One Bryant Park
        New York, New York 10016
        Facsimile: (212) 872-1002
        Attention: Arik Preis, Esq.
                   Zachary N. Wittenberg, Esq.
                   Stephen B. Kuhn, Esq.

        if to Escrow Agent, to:
        [To come]

        with a copy (which shall not constitute notice) to:
        [To come]


VI.     Amendment.




                                                     6
        This Escrow Agreement may not be amended, modified, supplemented or otherwise altered
except by an instrument in writing signed by each of the parties hereto.

VII.    Termination.

       This Agreement will terminate upon the disbursement of all Escrow Funds in the Escrow
Account, as provided above, by Escrow Agent.

VIII.   Tax Reporting.

         The parties hereto, other than Escrow Agent, agree that for tax reporting purposes all interest and
other income earned from the investment of (i) the Good Faith Deposit in any tax year shall be allocated
to Purchaser (“Purchaser Taxable Income”) and (ii) the Escrow Consideration and the Cure Funds in any
tax year shall be allocated to Sellers (“Seller Taxable Income”). As applicable, upon execution of this
Escrow Agreement, Sellers and Purchaser shall provide Escrow Agent with their respective certified tax
identification numbers (“TIN”) on an executed Internal Revenue Service (“IRS”) Form W-9 or other
applicable IRS Form. Sellers agree to report the Sellers Taxable Income and Purchaser agrees to report
the Purchaser Taxable Income allocable to them on their respective federal and other applicable tax
returns. Sellers and Purchaser acknowledge and agree that in the event their respective TIN is not
certified to Escrow Agent, and/or if Seller or Purchaser does not make all certifications set forth in their
respective IRS Form W-9 or other applicable IRS Form, applicable tax laws may require withholding of a
portion of any income earned with respect to amounts in the Escrow Account that are allocable to it.

IX.     Anti-Terrorism/Anti-Money Laundering Laws.

         IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT
- To help the United States government fight the funding of terrorism or money laundering activities,
Federal law requires all financial institutions to obtain, verify, and record information that identifies each
person who opens a new account. What this means for the parties to this Agreement: Escrow Agent will
ask for your name, address, date of birth, and other information that will allow Escrow Agent to identify
you (e.g., your social security number or tax identification number.). Escrow Agent may also ask to see
your driver’s license or other identifying documents (e.g., passport, evidence of formation of corporation,
limited liability company, limited partnership, etc., certificate of good standing.)

        Each party to this Agreement hereby agrees to provide Escrow Agent, prior to the establishment
of the Escrow Account, with the information identified above pertaining to it by completing the form
attached as Exhibit B and returning it to Escrow Agent. Exhibit B includes one form for individuals and
another form for entities.

X.      Governing Law.

      This Agreement shall be governed by and construed in accordance with the laws of the State of
New York in all respects without giving effect to the conflicts of laws principles thereof.

XI.     Submission to Jurisdiction; No Jury Trial.

         With respect to any action, complaint, claim, charge, suit, litigation, or proceeding (“Action”)
arising out of or relating to this Agreement, each of the parties hereby irrevocably:




                                                      7
         (a)     consents to the exclusive jurisdiction of the Bankruptcy Court as the sole judicial forum
for the adjudication of any matters arising under or in connection with the Agreement. After Sellers are
no longer subject to the jurisdiction of the Bankruptcy Court, each of the parties irrevocably submits to
the exclusive jurisdiction of the courts of the State of New York and of the United States of America, in
each case located in Manhattan (“Selected Courts”), for any Action arising out of or relating to this
Agreement and the transactions contemplated hereby and thereby (and agrees not to commence any
Action relating hereto or thereto except in such courts) and waives any objection to venue being laid in
the Selected Courts whether based on the grounds of forum non conveniens or otherwise;

         (b)     consents to service of process in any Action by the mailing of copies thereof by
registered or certified mail, postage prepaid, or by recognized international express carrier or delivery
service, to Sellers, Purchaser or Escrow Agent at their respective address set forth in Section V; provided,
however, that nothing herein shall affect the right of any party hereto to serve process in any other manner
permitted by law; and

     (c)   WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.

XII.    Entire Agreement.

        This Agreement constitutes the full and entire understanding and agreement between the parties
with regard to the subject matter hereof and supersedes all prior agreements relating to the subject matter
hereof.

XIII.   Delays or Omissions.

         Except as expressly provided herein, no delay or omission to exercise any right, power or remedy
accruing to each of the parties upon any breach or default of any party under this Agreement shall impair
any such right, power or remedy of each of the parties nor shall it be construed to be a waiver of any such
breach or default, or an acquiescence therein, or in any similar breach or default thereafter occurring; nor
shall any waiver of any single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on
the part of each of the parties of any breach or default under this Agreement, or any waiver on the part of
any such party of any provisions or conditions of this Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by
law, in equity, or otherwise afforded to each of the parties shall be cumulative and not alternative.

XIV.    Severability.

         In the event that any provision of this Agreement becomes or is declared by a court of competent
jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect
without said provisions; provided that no such severability shall be effective if it materially changes the
economic benefit of this Agreement to any party. Any provision held invalid or unenforceable only in
part or degree will remain in full force to the extent not held invalid or unenforceable.

XV.     Successors and Assigns.

       Except as otherwise provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors by operation of law and permitted assigns of the parties hereto. No




                                                     8
assignment of this Agreement may be made by any party at any time, whether or not by operation of law,
without the other party’s prior written consent. Except as specifically provided for herein, only the
parties to this Agreement or their permitted assigns shall have rights under this Agreement.

XVI.    Third-Party Beneficiaries.

        The terms and provisions of this Agreement are intended solely for the benefit of each party
hereto and their respective successors or permitted assigns, and it is not the intention of the parties to
confer third-party beneficiary rights upon any other person.

XVII. Counterparts.

         This Agreement may be executed in any number of counterparts, each of which when so executed
shall be deemed to be an original, and such counterparts together shall constitute and be one and the same
instrument.


                                 [This space is intentionally left blank.]




                                                    9
         IN WITNESS WHEREOF, the parties hereto have caused their names to be hereto subscribed
by their respective authorized officers as of the day and year first above written.


                                                SELLERS:

                                                TERRESTAR NETWORKS INC.

                                                By: ________________________
                                                Name:
                                                Title:

                                                TERRESTAR LICENSE INC.


                                                By: ________________________
                                                Name:
                                                Title:

                                                TERRESTAR NATIONAL SERVICES INC.


                                                By: ________________________
                                                Name:
                                                Title:

                                                TERRESTAR NETWORKS HOLDINGS
                                                (CANADA) INC.


                                                By: ________________________
                                                Name:
                                                Title:

                                                TERRESTAR NETWORKS (CANADA) INC.


                                                By: ________________________
                                                Name:
                                                Title:

                                                0887729 B.C. LTD.


                                                By: ________________________
                                                Name:
                                                Title:




        
    PURCHASER:


    [             ]

    By: ________________________
    Name:
    Title:




 
    ESCROW AGENT:


    [             ]

    By: ________________________
    Name:
    Title:




 
    EXHIBIT A




 
    EXHIBIT B




 
           Exhibit D

Form of Instrument of Assumption




            Exhibits
    Exhibit E

Form of Sale Order




     Exhibits
        Exhibit F

Form of New DIP Agreement




         Exhibits
                                                         $[•] 1

         DEBTOR-IN-POSSESSION CREDIT, SECURITY & GUARANTY AGREEMENT

                                                   Dated as of [•]

                                               _________________

                                                        Among


                              TERRESTAR NATIONAL SERVICES, INC.
                                      TERRESTAR LICENSE INC.,
                       TERRESTAR NETWORKS HOLDINGS (CANADA) INC.,
                             TERRESTAR NETWORKS (CANADA) INC.,
                                           0887729 B.C. LTD.,
                    each a debtor and debtor-in-possession, as a Guarantor,

                                     TERRESTAR NETWORKS INC.,
                              debtor and debtor-in-possession, as the Borrower,

                                      THE LENDERS PARTY HERETO,2

                                                          and

                                                     [•],
                                 as Administrative Agent and Collateral Agent




1
 Amount will equal the outstanding amount owed under the Existing DIP Credit Agreement plus $[•] for operating
expenses from date of Sale Order (as defined in the Purchase Agreement) through the Purchase Agreement Funding
Date.
2
    Lender to be Purchaser or other entity designated by Purchaser.
                                             TABLE OF CONTENTS

ARTICLE I DEFINITIONS                                                                                                                      2 

Section 1.01.    Defined Terms .......................................................................................................2 
Section 1.02.    Terms Generally ..................................................................................................17 

ARTICLE II THE CREDITS                                                                                                                   18 

Section 2.01.    Commitments.......................................................................................................18 
Section 2.02.    Loans and Borrowings. ........................................................................................18 
Section 2.03.    Funding of Borrowings ........................................................................................18 
Section 2.04.    Repayment of Loans; Evidence of Debt. .............................................................18 
Section 2.05.    Prepayment of Loans. ..........................................................................................19 
Section 2.06.    [Reserved]. ...........................................................................................................20 
Section 2.07.    [Reserved]. ...........................................................................................................20 
Section 2.08.    Interest. ................................................................................................................20 
Section 2.09.    Increased Costs. ...................................................................................................21 
Section 2.10.    Taxes....................................................................................................................22 
Section 2.11.    Payments Generally; Pro Rata Treatment; Sharing of Set-offs. ..........................24 
Section 2.12.    Mitigation Obligations.........................................................................................25 
Section 2.13.    Illegality ...............................................................................................................26 
Section 2.14.    Waiver of Any Priming Rights ............................................................................26 

ARTICLE III REPRESENTATIONS AND WARRANTIES                                                                                               26 

Section 3.01.    Organization; Powers ..........................................................................................26 
Section 3.02.    Authorization .......................................................................................................26 
Section 3.03.    Enforceability ......................................................................................................27 
Section 3.04.    Governmental Approvals.....................................................................................27 
Section 3.05.    Financial Statements; Undisclosed Liabilities. ....................................................27 
Section 3.06.    No Material Adverse Change or Material Adverse Effect ..................................28 
Section 3.07.    Title to Properties; Possession Under Leases; Location of Real Property
                     and Leased Premises. .....................................................................................28 
Section 3.08.    Subsidiaries..........................................................................................................29 
Section 3.09.    Litigation; Compliance with Laws. .....................................................................29 
Section 3.10.    Federal Reserve Regulations. ..............................................................................30 
Section 3.11.    Investment Company Act ....................................................................................30 
Section 3.12.    Use of Proceeds ...................................................................................................30 
Section 3.13.    Tax Returns..........................................................................................................30 
Section 3.14.    No Material Misstatements ..................................................................................31 
Section 3.15.    Employee Benefit Plans.......................................................................................31 
Section 3.16.    Environmental Matters ........................................................................................32 
Section 3.17.    Labor Matters ......................................................................................................32 
Section 3.18.    Insurance ..............................................................................................................33 
Section 3.19.    Anti-Terrorism Laws. ..........................................................................................33 
Section 3.20.    Licensing and Accreditation ................................................................................33 

                                                                  i
Section 3.21.    [Reserved] ............................................................................................................34 
Section 3.22.    Accounts and Cash Management Accounts ........................................................34 
Section 3.23.    Brokers.................................................................................................................34 
Section 3.24.    Reorganization Matters........................................................................................34 
Section 3.25.    Material Contracts ...............................................................................................35 
Section 3.26.    Transactions with Affiliates.................................................................................35 
Section 3.27.    Collateral .............................................................................................................35 

ARTICLE IV CONDITIONS PRECEDENT                                                                                                         35 

ARTICLE V COVENANTS                                                                                                                     37 

ARTICLE VI [RESERVED]                                                                                                                   37 

ARTICLE VII EVENTS OF DEFAULT                                                                                                           37 

Section 7.01.    Events of Default .................................................................................................37 
Section 7.02.    Remedies .............................................................................................................37 

ARTICLE VIII THE ADMINISTRATIVE AGENT                                                                                                   38 

Section 8.01.    Appointment ........................................................................................................38 
Section 8.02.    Delegation of Duties ............................................................................................39 
Section 8.03.    Exculpatory Provisions ........................................................................................39 
Section 8.04.    Reliance by Administrative Agent ......................................................................41 
Section 8.05.    Notice of Default .................................................................................................42 
Section 8.06.    Non-Reliance on Administrative Agent and Other Lenders ...............................42 
Section 8.07.    Indemnification....................................................................................................42 
Section 8.08.    Agent in Its Individual Capacity ..........................................................................43 
Section 8.09.    Successor Administrative Agent. ........................................................................43 
Section 8.10.    Authority of Agent...............................................................................................44 

ARTICLE IX MISCELLANEOUS                                                                                                                44 

Section 9.01.    Notices. ................................................................................................................44 
Section 9.02.    Survival of Agreement.........................................................................................45 
Section 9.03.    Binding Effect......................................................................................................45 
Section 9.04.    Successors and Assigns. ......................................................................................45 
Section 9.05.    Expenses; Indemnity............................................................................................48 
Section 9.06.    Right of Set-off ....................................................................................................49 
Section 9.07.    Applicable Law....................................................................................................49 
Section 9.08.    Waivers; Amendment. .........................................................................................49 
Section 9.09.    Interest Rate Limitation .......................................................................................51 
Section 9.10.    Entire Agreement .................................................................................................51 
Section 9.11.    Waiver of Jury Trial ............................................................................................52 
Section 9.12.    Severability ..........................................................................................................52 
Section 9.13.    Counterparts.........................................................................................................52 
Section 9.14.    Headings ..............................................................................................................52 

                                                                 ii
Section 9.15.     Confidentiality .....................................................................................................52 
Section 9.16.     Direct Website Communications. ........................................................................53 
Section 9.17.     Release of Liens...................................................................................................54 
Section 9.18.     USA Patriot Act ...................................................................................................54 
Section 9.19.     Conflicts...............................................................................................................54 

ARTICLE X SECURITY AND GUARANTEE                                                                                                        54 

Section 10.01.    Security Interest. ..................................................................................................54 
Section 10.02.    Perfection and Protection of Security Interest. ....................................................56 
Section 10.03.    Title to, Liens on, and Use of Collateral..............................................................57 
Section 10.04.    Proceeds of Accounts ..........................................................................................57 
Section 10.05.    Delivery and Other Perfection .............................................................................57 
Section 10.06.    Other Financing Statements and Liens ................................................................58 
Section 10.07.    Preservation of Rights .........................................................................................59 
Section 10.08.    Special Provisions Relating to Certain Collateral. ..............................................59 
Section 10.09.    Additional Remedies During an Event of Default, Etc .......................................59 
Section 10.10.    Private Sale ..........................................................................................................61 
Section 10.11.    Application of Proceeds.......................................................................................61 
Section 10.12.    Attorney-in-Fact ..................................................................................................62 
Section 10.13.    Further Assurances ..............................................................................................62 
Section 10.14.    Certain Regulatory Requirements. ......................................................................62 
Section 10.15.    Agents and Attorneys-in-Fact ..............................................................................64 
Section 10.16.    No Senior Liens ...................................................................................................64 
Section 10.17.    Guarantee. ............................................................................................................64 
Section 10.18.    Purchase Agreement. ...........................................................................................66 

Exhibits and Schedules


Exhibit A              Form of Assignment and Acceptance
Exhibit B              Form of DIP Order
Exhibit C              Form of Recognition Order
Exhibit D              Form of Promissory Note

Schedule 2.01          Commitments
Schedule 3.01          Organization and Good Standing
Schedule 3.04          Governmental Approvals
Schedule 3.05          Disclosed Liabilities
Schedule 3.06          Material Adverse Effect Exceptions
Schedule 3.07(b)       Possession under Leases
Schedule 3.07(c)       Real Property
Schedule 3.07(d)       Leased Premises
Schedule 3.08          Subsidiaries
Schedule 3.09          Litigation
Schedule 3.13          Taxes
Schedule 3.15          Canadian Pension Plan Matters

                                                                 iii
Schedule 3.16   Environmental Matters
Schedule 3.17   Labor Matters
Schedule 3.18   Insurance
Schedule 3.20   Licenses
Schedule 3.22   Accounts
Schedule 3.23   Brokers
Schedule 3.26   Transactions with Affiliates
Schedule 3.27   Collateral




                                               iv
               DEBTOR-IN-POSSESSION CREDIT, SECURITY & GUARANTY
AGREEMENT dated as of [•] (as amended, supplemented or otherwise modified from time to
time, this “Agreement”), among:

                    (i) TERRESTAR NETWORKS INC., a Delaware corporation (the “Borrower”),

              (ii) TERRESTAR NATIONAL SERVICES, INC., a Delaware corporation, and
TERRESTAR LICENSE INC., a Delaware corporation (together the “Domestic Subsidiary
Guarantors”);

               (iii) TERRESTAR NETWORKS HOLDINGS (CANADA) INC., an Ontario
corporation, TERRESTAR NETWORKS (CANADA) INC., an Ontario corporation (“TerreStar
Canada”), and 0887729 B.C. LTD., a British Columbia corporation (collectively the “Canadian
Guarantors” and together with the Domestic Subsidiary Guarantors and such other guarantors
from time to time party hereto, the “Guarantors”),

                    (iv) the Lenders3 from time to time party hereto; and

              (v) [•], as administrative agent and collateral agent (in such capacities, the
“Administrative Agent”).

               The Borrower and the Guarantors are sometimes referred to herein collectively as
the “Loan Parties.”

                                               W I T N E S S E T H:

                WHEREAS, on October 19, 2010, the Borrower and each of the other Loan
Parties filed, with the Bankruptcy Court, a voluntary petition for relief (the “US Cases”) under
Chapter 11 of the Bankruptcy Code;

               WHEREAS, on October 21, 2010, the Borrower, as foreign representative for the
Loan Parties, commenced a recognition proceeding before the Ontario Superior Court of Justice
(Commercial List) (the “Canadian Court”) pursuant to Part IV of the Companies’ Creditors
Arrangement Act, R.S.C. 1985, c. C-36, as amended (the “Canadian Cases” and together with
the US Cases, the “Cases”) to recognize the US Cases as “foreign main proceedings”;

                WHEREAS, the Borrower and each of the other Loan Parties are continuing to
operate their respective businesses and manage their respective properties as debtors-in-
possession under Sections 1107(a) and 1108 of the Bankruptcy Code;

                WHEREAS, the Loan Parties and [•] (the “Purchaser”), entered into the Purchase
Agreement, dated as of [•] (as amended, supplemented or otherwise modified from time to time,
the “Purchase Agreement”), pursuant to which the Purchaser has agreed to purchase and acquire
certain assets of the Loan Parties as authorized under Sections 105, 363 and 365 of the
Bankruptcy Code;

3
    Lender to be Purchaser or other entity designated by Purchaser.


                                                            1
                WHEREAS, in connection with the Purchase Agreement, the Borrower has
requested that the Lenders provide a secured debtor-in-possession single draw term loan facility
to the Borrower in an aggregate principal amount of $[•], which amount shall repay the Existing
DIP Credit Agreement and fund the Borrower’s operating and other expenses of the Cases from
the date of the Sale Order (as defined in the Purchase Agreement) until the Purchase Agreement
Funding Date;

               WHEREAS, the Guarantors have agreed to guarantee the obligations of the
Borrower hereunder and each of the Loan Parties has agreed to secure its obligations to the
Lenders hereunder with, inter alia, security interests in, and liens on, all of its property and
assets, whether real or personal, tangible or intangible, now existing or hereafter acquired or
arising, and subject to certain exceptions, all as more fully provided herein; and

               WHEREAS, the Lenders are willing, on the terms and conditions hereinafter set
forth, to make available to the Borrower such debtor-in-possession loans.

                NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:

                                            ARTICLE I

                                          DEFINITIONS

       Section 1.01. Defined Terms. As used in this Agreement, the following terms shall have
the meanings specified below:

                “Account” shall have the meaning assigned to such term in the UCC.

               “Act” shall have the meaning assigned to such term in Section 9.18.

               “Administrative Agent” shall have the meaning assigned to such term in the
introductory paragraph of this Agreement.

               “Administrative Agent-Related Persons” shall have the meaning assigned to such
term in Section 8.03.

                “Affiliate” shall mean, when used with respect to a specified person, another
person that directly, or indirectly through one or more intermediaries, Controls or is Controlled
by or is under common Control with the person specified; provided, however, no Agent Party or
Lender shall be deemed to be an Affiliate of any Loan Party by virtue of its execution of this
Agreement or its execution of the Purchase Agreement.

               “Agent Parties” shall have the meaning assigned to such term in Section 9.16(c).

              “Agreed Budget” shall mean the budget provided to the initial Lender, which is a
Lender party hereto on the Closing Date, pursuant to clause (c) of Article IV.


                                                  2
               “Agreement” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

                  “Anti-Terrorism Laws” shall have the meaning assigned to such term in Section
3.19(a).

                  “Assignee” shall have the meaning assigned to such term in Section 9.04(b).

              “Assignment and Acceptance” shall mean an assignment and acceptance entered
into by a Lender and an assignee, and accepted by the Administrative Agent and the Borrower, in
the form of Exhibit A.

                  “Avoidance Actions” shall have the meaning assigned to such term in Section
10.01(a)(xvii).

               “Bankruptcy Code” shall mean Title 11 of the United States Code, as amended, or
any similar federal or state law for the relief of debtors.

               “Bankruptcy Court” shall mean the United States Bankruptcy Court for the
Southern District of New York.

               “Board” shall mean the Board of Governors of the Federal Reserve System of the
United States of America.

               “Borrower” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

                  “Borrowing” shall mean a group of Loans made on a single date.

            “Business Day” shall mean any day that is not a Saturday, Sunday or other day on
which commercial banks in New York City are authorized or required by law to remain closed.

               “Canadian Anti-Money Laundering & Anti-Terrorism Legislation” shall mean the
Criminal Code, R.S.C. 1985, c. C-46, The Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, S.C. 2000, c. 17 and the United Nations Act, R.S.C. 1985, c. U-2 or any similar
Canadian legislation, together with all rules, regulations and interpretations thereunder or related
thereto including, without limitation, the Regulations Implementing the United Nations
Resolutions on the Suppression of Terrorism and the United Nations Al-Qaida and Taliban
Regulations promulgated under the United Nations Act.

               “Canadian Cases” shall have the meaning assigned to such term in the
introductory paragraphs of this Agreement.

               “Canadian Court” shall have the meaning assigned to such term in the
introductory paragraphs of this Agreement.

               “Canadian Guarantors” shall have the meaning assigned to such term in the
introductory paragraphs of this Agreement.

                                                  3
                “Canadian Pension Event” shall mean (a) the termination in whole or in part of
any Canadian Pension Plan or Canadian Union Plan, (b) the merger of a Canadian Pension Plan
with another pension plan, (c) a negative material change in the funded status of a Canadian
Pension Plan, (d) the occurrence of an event under the Income Tax Act (Canada) that could
reasonably be expected to affect the registered status of any Canadian Pension Plan or, to the
knowledge of a Loan Party, a Canadian Union Plan, (e) the receipt by any Loan Party of any
order or notice of intention to issue an order from the applicable pension standards regulator that
could reasonably be expected to affect the registered status or cause the termination (in whole or
in part) of any Canadian Pension Plan, (f) the receipt of notice by the administrator or the
funding agent of any failure to remit contributions to a Canadian Pension Plan or a similar notice
from a governmental authority relating to a failure to pay any fees or other amounts (including
payments in respect of the pension benefits guarantee fund of Ontario), (g) the receipt by a Loan
Party of any notice concerning liability arising from the withdrawal or partial withdrawal of a
Loan Party or any other party from a Canadian Union Plan, (h) the adoption of any amendment
to a Canadian Pension Plan that requires the provision of security pursuant to the Requirement of
Law, (i) the failure to satisfy any statutory funding requirement in respect of any Canadian
Pension Plan, or (j) any other extraordinary event or condition with respect to a Canadian
Pension Plan or, to the knowledge of a Loan Party, a Canadian Union Plan, that could reasonably
be expected to result in a Lien or any acceleration of any Requirement of Law to fund all or a
substantial portion of the unfunded accrued benefit liabilities of such plan.

               “Canadian Pension Plans” shall mean a pension plan that is a “registered pension
plan” as defined in the Income Tax Act (Canada) or is subject to the funding requirements of
applicable pension benefits standards legislation in any Canadian jurisdiction (in each case,
whether or not registered) and is applicable to employees resident in Canada of a Loan Party,
other than any Canadian Union Plans.

               “Canadian Union Plans” shall mean all pension and other benefit plans for the
benefit of Canadian employees or former Canadian employees of a Loan Party which are not
maintained, sponsored or administered by a Loan Party, but to which a Loan Party is or was
required to contribute pursuant to a collective agreement or participation agreement.

                “Capital Lease Obligations” of any person shall mean the obligations of such
person to pay rent or other amounts under any lease of (or other arrangement conveying the right
to use) real or personal property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such person under GAAP and,
for purposes hereof, the amount of such obligations at any time shall be the capitalized amount
thereof at such time determined in accordance with GAAP (without giving effect to any change
to GAAP after the date hereof regarding the accounting treatment of capitalized versus operating
leases).

               “Carve-Out” shall mean (i) all fees required to be paid to the Clerk of the
Bankruptcy Court and to the Office of the United States Trustee under section 1930(a) of title 28
of the United States Code; (ii) fees and expenses up to $50,000 incurred by a trustee under
section 726(b) of the Bankruptcy Code; (iii) with respect to the Foreign Information Officer, all
fees and expenses required to be paid to the Foreign Information Officer and its counsel in
connection with the Canadian Cases, including as secured by the charge granted by the Canadian

                                                 4
Court over the Loan Parties’ assets in Canada, in the amount of CDN $125,000, to secure
payment of any such fees and expenses of the Foreign Information Officer and its counsel; and
(iv) after the occurrence and during the continuance of an Event of Default, the payment of
allowed professional fees and disbursements incurred by the Loan Parties or the Statutory
Committee of Unsecured Creditors after the occurrence of the Event of Default not in excess of
$800,000 (plus all unpaid professional fees and expenses allowed by the Bankruptcy Court that
were incurred prior to the occurrence of such Event of Default).

               “Cases” shall have the meaning assigned to such term in the recitals to this
Agreement.

                “Change in Law” shall mean (a) the adoption of any law, rule or regulation after
the Closing Date, (b) any change in law, rule or regulation or in the interpretation or application
thereof by any Governmental Authority after the Closing Date, or (c) compliance by any Lender
(or, for purposes of Section 2.09(b), by any Lending Office of such Lender or by such Lender’s
holding company, if any) with any written request, guideline or directive (whether or not having
the force of law) of any Governmental Authority made or issued after the Closing Date.

               “Charges” shall have the meaning assigned to such term in Section 9.09.

               “Closing Date” shall mean the later of: (i) the date upon which the Bankruptcy
Court enters the DIP Order and (ii) the date on which the DIP Order is recognized by the
Canadian Court.

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

               “Collateral” shall have the meaning assigned to such term in Section 10.01(a).

             “Commitment” shall mean, with respect to each Lender, the commitment of such
Lender to make Loans as set forth in Section 2.01. The initial amount of each Lender’s
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance pursuant to
which such Lender shall have assumed its Commitment, as applicable. The aggregate amount of
the Commitments on the Closing Date is $[•].

               “Communications” shall have the meaning assigned to such term in Section
9.16(a).

                “Control” shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a person, whether through the ownership
of voting securities, by contract or otherwise, and “Controlling” and “Controlled” shall have
meanings correlative thereto.

               “Copyright Collateral” means all Copyrights, including all Copyright Licenses.

              “Copyright Licenses” means any agreement providing for the grant to or from any
Obligor of any right under any Copyright, including, without limitation, the grant of rights to
manufacture, distribute, sell or otherwise exploit materials derived from any Copyright.

                                                 5
                “Copyrights” means all domestic and foreign copyrights and works of authorship,
whether registered or not, anywhere in the world, whether now or hereafter owned, developed,
acquired or used by the Obligors, including, without limitation, all applications, registrations and
recordings thereof (including, without limitation, applications, registrations and recordings in the
United States Copyright Office or in any similar office of any other country or any political
subdivision thereof), software, programs and databases (including, without limitation, source
code, object code and all related applications and data files, firmware and documentation and
materials relating thereto, and any substitutions, replacements, improvements, error corrections,
updates and new versions of any of the foregoing, but excluding, “shrink-wrap” computer
software, programs and databases), writings and internet site content.

               “Currency Due” shall have the meaning assigned to such term in Section 9.05(d).

              “Default” shall mean any event or condition that upon notice, lapse of time or
both would constitute an Event of Default.

               “DIP Order” shall mean an order of the Bankruptcy Court entered in the Cases
approving this Agreement and the other Loan Documents and authorizing the incurrence by the
Loan Parties of post-petition secured and super-priority debtor-in-possession Indebtedness in
accordance with this Agreement, and which is substantially in the form attached hereto as
Exhibit B and otherwise in form and substance reasonably acceptable to the Required Lenders.

               “Dollars” or “$” shall mean lawful money of the United States of America.

                “Domestic Subsidiary Guarantors” shall have the meaning assigned to such term
in the introductory paragraph of this Agreement.

               “Environment” shall mean ambient and indoor air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or subsurface strata,
natural resources such as flora and fauna, the workplace or as otherwise defined in any
Environmental Law.

                “Environmental Laws” shall mean all applicable laws (including common law),
rules, regulations, codes, ordinances, orders, decrees or judgments, promulgated or entered into
by any Governmental Authority, relating in any way to the Environment, preservation or
reclamation of natural resources, the generation, management, Release or threatened Release of,
or exposure to, any Hazardous Material or to occupational health and safety matters (to the
extent relating to the Environment or Hazardous Materials).

               “Equity Interests” of any person shall mean any and all shares, interests, rights to
purchase, warrants, options, participation or other equivalents of or interests in (however
designated) equity of such person, including any preferred stock, any limited or general
partnership interest and any limited liability company membership interest.

             “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time, and the regulations promulgated and rulings issued
thereunder.


                                                 6
                “ERISA Affiliate” shall mean any trade or business (whether or not incorporated)
that, together with any Loan Party or any subsidiary thereof, is treated as a single employer under
Section 414(b) or (c) of the Code, or, solely for purposes of Section 302 of ERISA and Section
412 of the Code, is treated as a single employer under Section 414 of the Code.

               “ERISA Event” shall mean (a) any Reportable Event, (b) the existence with
respect to any ERISA Plan of an “accumulated funding deficiency” (as defined in Section 412 of
the Code or Section 302 of ERISA), whether or not waived, (c) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any ERISA Plan, the failure to make by its due date a required
installment under Section 412(m) of the Code with respect to any ERISA Plan or the failure to
make any required contribution to a Multiemployer Plan, (d) the incurrence by any Loan Party,
any subsidiary of any Loan Party or any ERISA Affiliate of any liability under Title IV of
ERISA with respect to the termination of any ERISA Plan, (e) the receipt by any Loan Party, any
subsidiary of any Loan Party or any ERISA Affiliate from the PBGC or a plan administrator of
any notice relating to an intention to terminate any ERISA Plan or to appoint a trustee to
administer any ERISA Plan under Section 4042 of ERISA, (f) the incurrence by any Loan Party,
any subsidiary of any Loan Party or any ERISA Affiliate of any liability with respect to the
withdrawal or partial withdrawal from any ERISA Plan or Multiemployer Plan, or (g) the receipt
by any Loan Party, any subsidiary of any Loan Party or any ERISA Affiliate of any notice, or the
receipt by any Multiemployer Plan from any Loan Party, any subsidiary of any Loan Party or
any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a
determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.

                 “ERISA Plan” shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
and in respect of which any Loan Party, any subsidiary of any Loan Party or any ERISA Affiliate
is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an
“employer” as defined in Section 3(5) of ERISA.

               “Event of Default” shall have the meaning assigned to such term in Section 7.01.

               “Exchange Act” means the Securities Exchange Act of 1934, as amended and the
rules and regulations promulgated thereunder.

               “Exchange Rate” shall mean the prevailing spot rate of exchange of Reference
Bank (or if such rate is not available from Reference Bank, such other bank as Administrative
Agent may reasonably select) for the purpose of conversion of one currency to another, at or
around 11:00 a.m., Local Time, on the date on which any such conversion of currency is to be
made under this Agreement.

                “Excluded Taxes” shall mean, with respect to the Administrative Agent, any
Lender or any other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income taxes imposed on (or measured by) its net income (or
franchise taxes imposed in lieu of net income taxes) by the United States of America (or any
state thereof) or the jurisdiction under the laws of which such recipient is organized or in which

                                                 7
its principal office is located or, in the case of any Lender, in which its applicable Lending Office
is located or any other jurisdiction as a result of such recipient engaging in a trade or business in
such jurisdiction for tax purposes, (b) any branch profits tax or any similar tax that is imposed by
any jurisdiction described in clause (a) above, and (c) in the case of a Lender making a Loan to
the Borrower, any withholding tax imposed by the United States that (x) is in effect and would
apply to amounts payable hereunder to such Lender at the time such Lender becomes a party to
such Loan to the Borrower (or designates a new Lending Office) except to the extent that such
Lender (or its assignor, if any) was entitled, immediately prior to the time of designation of a
new Lending Office (or assignment), to receive additional amounts from a Loan Party with
respect to any withholding tax pursuant to Section 2.10(a) or (c), or (y) is attributable to such
Lender’s failure to comply with Section 2.10(f) or (g) with respect to such Loan.

               “Executive Order” shall have the meaning assigned to such term in Section
3.19(a).

               “Existing DIP Credit Agreement” shall mean that certain Debtor-in-Possession
Credit, Security & Guaranty Agreement, dated as of October 21, 2010 among TerreStar
Networks Inc., the guarantors from time to time party thereto, the lenders from time to time party
thereto and the Bank of New York Mellon, as administrative agent and collateral agent, as
amended, restated, supplemented or otherwise modified from time to time.

               “Facility” shall mean the Loans made hereunder by the Lenders.

               “FCC” shall mean the Federal Communications Commission, or any successor
entity.

               “FCC License” means any license, authorization, approval, or permit granted by
the FCC pursuant to the Communications Act of 1934, as amended, modified or supplemented
from time to time, to the Borrower or any other Obligor or assigned or transferred to the
Borrower or any other Obligor pursuant to any FCC consent, in each case for or in connection
with the construction and/or operation of any satellite system.

              “FCC License Rights” means any right, title or interest in, to or under any FCC
License, whether directly or indirectly held, including, without limitation, any rights owned,
granted, approved or issued directly or indirectly by the FCC or held, leased, licensed or
otherwise acquired from or through any party.

                “15% Notes” shall mean the 15% Senior Secured PIK Notes issued pursuant to
the Indenture, dated as of February 14, 2007, among TerreStar Networks Inc, as Issuer (the
“Issuer”) and U.S. Bank National Association, as Trustee (the “Trustee”), together with the notes
issued pursuant to the First Supplemental Indenture, dated as of February 7, 2008, by and among
the Issuer, the Trustee and the guarantors party thereto; and the notes issued pursuant to the
Second Supplemental Indenture, dated as of February 7, 2008, by and among the Issuer, the
Trustee, and the guarantors party thereto.

                 “15% Notes Adequate Protection” shall have the meaning assigned to such term
in clause (f) of Article IV.


                                                  8
             “15% Notes Trustee” shall mean U.S. Bank National Association, as trustee under
the 15% Notes.

               “Financial Officer” of any person shall mean the Chief Financial Officer,
principal accounting officer, Treasurer, Assistant Treasurer or Controller of such person.

              “Foreign Information Officer” means that certain Information Officer appointed
by the Canadian Court in respect of the Canadian Cases.

                “Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than the United States of America. For purposes of this definition, the United
States of America, each State thereof and the District of Columbia shall be deemed to constitute
a single jurisdiction.

                “GAAP” shall mean generally accepted accounting principles in effect from time
to time in the United States, Canada or international financial reporting standards as may be
applicable and as applied on a consistent basis, subject to the provisions of Section 1.02.

               “Governmental Authority” shall mean any federal, state, provincial, local or
foreign court or governmental agency, authority, instrumentality or regulatory or legislative
body.

                  “Guarantee” of or by any person (the “guarantor”) shall mean (a) any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of the guarantor, direct
or indirect, (i) to purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation (whether arising by virtue of partnership arrangements, by
agreement to keep well, to purchase assets, goods, securities or services, to take-or-pay or
otherwise) or to purchase (or to advance or supply funds for the purchase of) any security for the
payment of such Indebtedness or other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (iii) to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation, (iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness or other obligation of the payment thereof or to protect
such holders against loss in respect thereof (in whole or in part) or (v) as an account party in
respect of any letter of credit or letter of guaranty issued to support such Indebtedness or other
obligation, or (b) any Lien on any assets of the guarantor securing any Indebtedness (or any
existing right, contingent or otherwise, of the holder of Indebtedness to be secured by such a
Lien) of any other person, whether or not such Indebtedness or other obligation is assumed by
the guarantor; provided, however, that the term “Guarantee” shall not include endorsements for
collection or deposit, in either case in the ordinary course of business, or customary.

              “guarantor” shall have the meaning assigned to such term in the definition of the
term “Guarantee.”



                                                 9
               “Guarantors” shall have the meaning assigned to such term in the introductory
paragraph of this Agreement.

               “Hazardous Materials” shall mean all pollutants, contaminants, wastes, chemicals,
materials, substances and constituents of any nature which are subject to regulation or which
would reasonably be likely to give rise to liability under any Environmental Law, including,
without limitation, explosive or radioactive substances or petroleum or petroleum distillates,
asbestos or asbestos-containing materials, polychlorinated biphenyls or radon gas.

               “Income Tax Act (Canada)” shall mean shall mean the Income Tax Act (Canada),
as amended.

                “Indebtedness” of any person shall mean, without duplication, (a) all obligations
of such person for borrowed money, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments to the extent the same would appear as a liability on a
balance sheet prepared in accordance with GAAP, (c) all obligations of such person under
conditional sale or other title retention agreements relating to property or assets purchased by
such person, (d) all obligations of such person issued or assumed as the deferred purchase price
of property or services (other than current trade liabilities and current intercompany liabilities
(but not any refinancings, extensions, renewals or replacements thereof) incurred in the ordinary
course of business and maturing within 90 days after the incurrence thereof and that are not
overdue by over 90 days (except prepetition trade liabilities and intercompany liabilities the
enforcement thereof which is stayed by the virtue of the filing of the Cases)), to the extent that
the same would be required to be shown as a long-term liability on a balance sheet prepared in
accordance with GAAP, (e) all Guarantees by such person of Indebtedness of others, (f) all
Capital Lease Obligations of such person, (g) the principal component of all obligations,
contingent or otherwise, of such person as an account party in respect of letters of credit and (h)
the principal component of all obligations of such person in respect of bankers’ acceptances.
The Indebtedness of any person shall include the Indebtedness of any partnership in which such
person is a general partner, other than to the extent that the instrument or agreement evidencing
such Indebtedness expressly limits the liability of such person in respect thereof.

               “Indemnified Taxes” shall mean all Taxes other than Excluded Taxes and Other
Taxes.

               “Indemnitee” shall have the meaning assigned to such term in Section 9.05(b).

               “Industry Canada” shall mean the Canadian federal Department of Industry or any
successor or any department or agency thereof administering the Radiocommunication Act
(Canada), among other statutes, including its staff acting under delegated authority and including
the Minister of Industry (Canada).

               “Industry Canada License Rights” means any right, title or interest in, to or under
any Industry Canada License, whether directly or indirectly held, including, without limitation,
any rights owned, granted, approved or issued directly or indirectly by Industry Canada or held,
leased, licensed or otherwise acquired from or through any party.



                                                 10
               “Industry Canada License” means any license, authorization, approval, or permit
granted by Industry Canada pursuant to the Radiocommunication Act (Canada), as amended,
modified or supplemented from time to time, to TerreStar Canada and 0887729 B.C. Ltd., or
assigned or transferred to TerreStar Canada or 0887729 B.C. Ltd., pursuant to any Industry
Canada consent, in each case for or in connection with the operation of the TerreStar-1 satellite
or TerreStar-2 satellite in a Canadian orbital position and to use associated service, feeder link
and telemetry, telecommand and control radio spectrum.

               “Information” shall have the meaning assigned to such term in Section 3.14(a).

                “Initial Funding Date” shall mean the first Business Day upon which the
conditions set forth in Article IV are satisfied or waived by the Required Lenders, which shall in
no event be more than two (2) Business Days following the Closing Date.

               “Interest Payment Date” shall mean the Termination Date, and, thereafter, on
demand.

               “Investment Property” shall have the meaning assigned to such term: (i) in the
UCC or (ii) in the PPSA, as applicable at the time of determination.

                “IP Collateral” means, collectively, (a) all Copyright Collateral, (b) all Patent
Collateral, (c) all Trademark Collateral, (d) all confidential and proprietary information,
including, without limitation, know-how, trade secrets, manufacturing and production processes
and techniques, inventions, research and development information, databases and data, (e) all
other intellectual property or similar proprietary rights, (f) all tangible embodiments of any of the
foregoing and all rights corresponding thereto throughout the world, and (g) any and all claims
for damages and injunctive relief for past, present and future infringement, dilution,
misappropriation, violation, misuse or breach with respect to any of the foregoing, with the right,
but not the obligation, to sue for and collect, or otherwise recover, such damages.

               “Judgment Currency” shall have the meaning assigned to such term in Section
9.05(d).

               “Lender” shall mean the financial institution listed on Schedule 2.01, as well as
any person that becomes a “Lender” hereunder pursuant to Section 9.04, in such capacity.

                “Lending Office” shall mean, as to any Lender, the applicable branch, office or
Affiliate of such Lender designated by such Lender to make Loans.

                “Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien,
hypothecation, pledge, encumbrance, charge or security interest in or on such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital lease or title
retention agreement (or any financing lease having substantially the same economic effect as any
of the foregoing) relating to such asset and (c) in the case of securities (other than securities
representing an interest in a joint venture that is not a Subsidiary), any purchase option, call or
similar right of a third party with respect to such securities to the extent that any such right is
intended to have an effect equivalent to that of a security interest in such securities.


                                                 11
              “Loan Documents” shall mean this Agreement, the DIP Order, any Note issued
under Section 2.04(e), any security agreements, mortgages and other instruments and documents
executed and delivered pursuant to any of the foregoing. For the avoidance of doubt, the
Purchase Agreement and any and all documents related thereto are not Loan Documents.

               “Loan Parties” shall mean the Borrower and the Guarantors.

               “Loans” shall mean the term loans made by each Lender to the Borrower pursuant
to Section 2.01.

               “Local Time” shall mean New York City time.

               “Margin Stock” shall have the meaning assigned to such term in Regulation U.

              “Material Adverse Change” shall mean any event, circumstance or condition
which has or would reasonably be expected to have a Material Adverse Effect.

                “Material Adverse Effect” shall mean a material adverse effect on (a) the
business, assets, operations, financial condition or operating results of the Loan Parties, taken as
a whole, other than (i) those customarily caused by the filing of a chapter 11 case under the
Bankruptcy Code and (ii) those resulting from the continuation of the Cases (including, without
limitation, the execution and delivery of the Loan Documents and/or the entry of the DIP Order),
(b) the Collateral, taken as a whole, other than those customarily caused by the filing of a chapter
11 case under the Bankruptcy Code or any of the transactions contemplated by the Purchase
Agreement, (c) the validity and enforceability of any of the Loan Documents or (d) the rights and
remedies of the Administrative Agent or the Lenders under the Loan Documents.

               “Material Contract” shall mean all contracts which are material to the conduct and
operations of the business of the Loan Parties, taken as a whole, and the loss, termination or
absence of which would reasonably be expected to have a Material Adverse Effect.

               “Maximum Rate” shall have the meaning assigned to such term in Section 9.09.

               “Moody’s” shall mean Moody’s Investors Service, Inc. and any successor thereto.

                “Multiemployer Plan” shall mean a multiemployer plan as defined in Section
4001(a)(3) of ERISA to which any Loan Party, any subsidiary of any Loan Party or any ERISA
Affiliate (other than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Code Section 414) is making or accruing an obligation to make contributions, or has within any
of the preceding six plan years made or accrued an obligation to make contributions.

               “Net Proceeds” shall mean:

               (a)     100% of the cash proceeds actually received by any Loan Party (including
any cash payments received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise and including
casualty insurance settlements and condemnation awards, but only as and when received) from
any loss, damage, destruction or condemnation of, or any sale, transfer or other disposition

                                                12
(including any sale and leaseback of assets and any mortgage or lease of real property) to any
person of, any asset or assets of a Loan Party or any subsidiary of a Loan Party, net of (i)
attorneys’ fees, accountants’ fees, investment banking fees, survey costs, title insurance
premiums, and related search and recording charges, transfer taxes, deed or mortgage recording
taxes, any amount required by the Bankruptcy Court to be paid or prepaid on Indebtedness (other
than the Obligations) secured by a perfected and unavoidable Lien on the applicable assets, other
customary expenses and brokerage, consultant and other customary fees actually incurred in
connection therewith, and (ii) Taxes paid or payable as a result thereof, provided, however, that
evidence of (i) and (ii) are provided to the Administrative Agent in form and substance
satisfactory to the Required Lenders; and

               (b)    100% of the cash proceeds from the incurrence, issuance or sale by the
Borrower or any Subsidiary of any Indebtedness, net of all taxes and fees (including investment
banking fees), commissions, costs and other expenses, in each case incurred in connection with
such incurrence, issuance or sale.

For purposes of calculating the amount of Net Proceeds, fees, commissions and other costs and
expenses payable to any Loan Party or any Affiliate of a Loan Party shall be disregarded. For
the avoidance of doubt, Net Proceeds shall not include proceeds which the Loan Parties received
pursuant to the Purchase Agreement or any transactions related thereto.

               “Note” shall have the meaning assigned to such term in Section 2.04(e).

                “Obligations” shall mean (a) the due and punctual payment by the Borrower of (i)
the unpaid principal of and interest (including paid in kind interest and all interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding) on
the Loans made to the Borrower, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise and (ii) all other monetary obligations of the
Borrower to any of the Secured Parties under this Agreement and each of the other Loan
Documents, including obligations to pay fees, expense and reimbursement obligations and
indemnification obligations, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy, insolvency,
receivership or other similar proceeding, regardless of whether allowed or allowable in such
proceeding), (b) the due and punctual performance of all other obligations of the Borrower under
or pursuant to this Agreement and each of the other Loan Documents, and (c) the due and
punctual payment and performance of all the obligations of each other Loan Party under or
pursuant to this Agreement and each of the other Loan Documents.

              “Obligor” shall mean either the Borrower or any Guarantor, and “Obligors”
means the Borrower and the Guarantors.

               “OFAC” shall have the meaning assigned to such term in Section 3.19(b).

                “Other Taxes” shall mean any and all present or future stamp, registration,
recording, filing, transfer or documentary taxes or any other excise or property taxes, charges or
similar levies arising from any payment made hereunder or from the execution, delivery or



                                                13
enforcement of, or otherwise with respect to, the Loan Documents, and any and all interest and
penalties related thereto.

               “Participant” shall have the meaning assigned to such term in Section 9.04(c).

              “Patent Collateral” means all Patents, whether now owned or hereafter acquired
by any Obligor, including all Patent Licenses.

               “Patent License” means any agreement providing for the grant to or from any
Obligor of any right to manufacture, use, sell or otherwise exploit any invention covered in
whole or in part by a Patent.

                “Patents” means all patents, patent applications, and inventions claimed or
disclosed therein and all improvements thereto, all registrations and applications for registration
for any of the foregoing, together with all reissues, divisions, continuations,
continuations-in-part, extensions and reexaminations thereof.

              “PBGC” shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA.

                “Person” or “person” shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company or government,
individual or family trusts, or any agency or political subdivision thereof.

               “Plan” shall mean a plan of reorganization of the Borrower and the Guarantors.

               “Platform” shall have the meaning assigned to such term in Section 9.16(b).

               “Pledged Equity” means any Investment Property constituting Collateral.

                “PMCA” shall mean the Purchase Money Credit Agreement, dated as of February
5, 2008, among the Borrower, the guarantors party thereto, U.S. Bank National Association, as
collateral agent, Harbinger Capital Partners Master Fund 1, Ltd., Harbinger Capital Partners
Special Situations Fund, L.P. and EchoStar Corporation, each as a lender, and the other lenders
party thereto, as amended, restated, supplemented or otherwise modified prior to the
commencement of the Cases.

                “PMCA Adequate Protection” shall have the meaning assigned to such term in
clause (f) of Article IV.

             “PMCA Agent” shall mean U.S. Bank National Association, as collateral agent
under the PMCA.

                 “PPSA” shall mean the Personal Property Security Act (Ontario) and any other
applicable Canadian or provincial personal property security or similar legislation, together with
all rules, regulations and interpretations thereunder or related thereto.




                                                 14
             “Prepetition Secured Notice Parties” shall mean the PMCA Agent, each lender
under the PMCA and the 15% Notes Trustee.

              “primary obligor” shall have the meaning given such term in the definition of the
term “Guarantee.”

                “Prior Liens” shall mean (a) the non-avoidable, valid, enforceable and perfected
liens securing the valid and enforceable obligations in respect of the 15% Notes and (b) the non-
avoidable, valid, enforceable and perfected liens securing the valid and enforceable obligations
under the PMCA.

              “Purchase Agreement” shall have mean assigned to such term in the recitals to
this Agreement.

             “Purchase Agreement Funding Date” shall have the meaning assigned to the term
“Funding Date” under the Purchase Agreement.

               “Purchaser” shall have the meaning assigned to such term in the recitals to this
Agreement.

               “Recognition Order” shall mean an order of the Canadian Court recognizing the
DIP Order and which is substantially in the form attached hereto as Exhibit C and otherwise in
form and substance reasonably acceptable to the Required Lenders.

                “Reference Bank” shall mean [•], or such other bank as Administrative Agent
(acting at the direction of the Required Lenders) may from time to time designate.

               “Register” shall have the meaning assigned to such term in Section 9.04(b).

                “Regulation U” shall mean Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

                “Regulation X” shall mean Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.

                “Related Parties” shall mean, with respect to any specified person, such person’s
Affiliates and the respective directors, trustees, officers, employees, agents and advisors of such
person and such person’s Affiliates.

               “Release” shall mean any spilling, leaking, seepage, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, emanating
or migrating in, into, onto or through the Environment.

               “Reportable Event” shall mean any reportable event as defined in Section 4043(c)
of ERISA or the regulations issued thereunder, other than those events as to which the 30-day
notice period referred to in Section 4043(c) of ERISA has been waived, with respect to an
ERISA Plan (other than an ERISA Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Section 414 of the Code).

                                                 15
             “Required Lenders” shall mean, at any time, Lenders having Loans and
Commitments outstanding, that, taken together, represent more than 50% of the sum of all Loans
outstanding.

               “Requirement of Law” shall mean, for any Person, the organizational documents
of such Person and any law or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

               “Responsible Officer” of any person shall mean any executive officer or Financial
Officer of such person and any other officer or similar official thereof responsible for the
administration of the obligations of such person in respect of this Agreement.

               “S&P” shall mean Standard & Poor’s Ratings Group, Inc. or any successor
thereto.

               “Secured Parties” shall mean (a) the Lenders (and any Affiliate of a Lender), (b)
the Administrative Agent, (c) the beneficiaries of each indemnification obligation undertaken by
any Loan Party under any Loan Document, and (d) the successors and permitted assigns of each
of the foregoing.

               “Securities Act” shall mean the Securities Act of 1933, as amended and the rules
and regulations promulgated thereunder.

               “Stated Maturity Date” shall mean the Purchase Agreement Funding Date.

              “Statutory Committee of Unsecured Creditors” shall mean the official statutory
committee of unsecured creditors appointed in the Cases pursuant to Section 1102 of the
Bankruptcy Code.

                  “subsidiary” shall mean, with respect to any person (herein referred to as the
“parent”), any corporation, partnership, association or other business entity (a) of which
securities or other ownership interests representing more than 50% of the equity or more than
50% of the ordinary voting power or more than 50% of the general partnership interests are, at
the time any determination is being made, directly or indirectly, owned, Controlled or held, or
(b) that is, at the time any determination is made, otherwise Controlled, by the parent or one or
more subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.

               “Subsidiary” shall mean any direct or indirect subsidiary of the Borrower.

               “Taxes” shall mean any and all present or future taxes, levies, imposts, duties
(including stamp duties), deductions, charges (including ad valorem charges) or withholdings
imposed by any Governmental Authority and any and all interest and penalties related thereto.

                “Tax Related Person” shall mean a Person (including a beneficial owner of an
interest in a pass through entity) whose income is realized through or determined by reference to
Administrative Agent, a Participant, or any Tax Related Person of any of the foregoing.


                                                16
               “Termination Date” shall mean the earliest to occur of (a) the Stated Maturity
Date and (b) the acceleration of the Loans upon the occurrence of an Event of Default.

               “TerreStar Canada” shall have the meaning assigned to such term in the
introductory paragraphs of this Agreement.

               “Trademark Collateral” means all Trademarks, whether now owned or hereafter
acquired by any Obligor, including, in each case, with the goodwill of the business connected
with the use of, and symbolized by, each such trade name, trademark and service mark and all
Trademark Licenses, excluding any United States “intent to use” applications unless and until a
“Statement of Use” or “Amendment to Allege Use” has been filed with and accepted by the
United States Patent and Trademark Office.

              “Trademark License” means any agreement providing for the grant to or from any
Obligor of any right to use any Trademark.

               “Trademarks” means all domestic and foreign trade names, trademarks and
service marks, logos, domain names, trade dress, designs, slogans, business names, corporate
names and other source identifiers, whether registered or unregistered, all registrations and
applications for registration for any of the foregoing, together with all modifications, extensions
and renewals thereof.

                “UCC” shall mean the Uniform Commercial Code (or any successor statute) of
the State of New York or of any other state the laws of which are required by Section 9-301
thereof to be applied in connection with the issue of perfection of security interests.

               “US Cases” shall have the meaning assigned to such term in the introductory
paragraphs of this Agreement.

                “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of
a complete or partial withdrawal from such Multiemployer Plan, as such term is defined in Part I
of Subtitle E of Title IV of ERISA.

        Section 1.02. Terms Generally. The definitions set forth or referred to in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed
by the phrase “without limitation.” All references herein to Articles, Sections, Exhibits and
Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require. Except as otherwise expressly
provided herein, any reference in this Agreement to any Loan Document shall mean such
document as amended, restated, supplemented or otherwise modified from time to time. Except
as otherwise expressly provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an amendment to any
provision hereof to eliminate the effect of any change occurring after the Closing Date in GAAP
or in the application thereof on the operation of such provision (or if the Administrative Agent
notifies the Borrower that the Required Lenders request an amendment to any provision hereof

                                                 17
for such purpose), regardless of whether any such notice is given before or after such change in
GAAP or in the application thereof, then such provision shall be interpreted on the basis of
GAAP as in effect and applied immediately before such change shall have become effective until
such notice shall have been withdrawn or such provision amended in accordance herewith.
Notwithstanding any provision to the contrary contained in this Agreement, including without
limitation the use of the term “per annum”, all interest hereunder shall be computed on the basis
of a year of 360 days, and in each case shall be payable for the actual number of days elapsed
(including the first day but excluding the last day). Dollars or $ means United States Dollars.

                                          ARTICLE II

                                         THE CREDITS

        Section 2.01. Commitments. Subject to the terms and conditions set forth herein, each
Lender severally agrees to make Loans to the Borrower on the Initial Funding Date, in the
aggregate principal amount of $[•] as set forth in the Agreed Budget; provided, that the Loans
shall not exceed, for any Lender, in aggregate principal amount, the amount which equals the
Commitment of such Lender. Proceeds of the Loans shall be used solely for the purposes set
forth in Section 3.12.

       Section 2.02. Loans and Borrowings.

               (a) The Loan shall be made as part of a single Borrowing consisting of Loans
made by the Lenders ratably in accordance with their respective Commitments. The failure of
any Lender to make any Loan required to be made by it shall not relieve any other Lender of its
obligations hereunder; provided that the Commitments of the Lenders are several and no Lender
shall be responsible for any other Lender’s failure to make Loans as required.

               (b) Each Lender at its option may make any Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such
option shall not affect the obligation of the Borrower to repay such Loan in accordance with the
terms of this Agreement and such Lender shall not be entitled to any amounts payable under
Section 2.09 solely in respect of increased costs resulting from such exercise and existing at the
time of such exercise.

       Section 2.03. Funding of Borrowings. On the Initial Funding Date, the Administrative
Agent shall give each Lender prompt notice of the occurrence of such date. Each Lender shall
make the Loans to be made by it hereunder on the Initial Funding Date by wire transfer of
immediately available funds by 1:00 p.m. (Local Time), to the account of the Administrative
Agent most recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly wiring the
amounts received, in like funds, to an account of the Borrower previously provided to the
Administrative Agent.

       Section 2.04. Repayment of Loans; Evidence of Debt.

               (a) The Borrower hereby unconditionally promises to pay to the Administrative
Agent for the ratable account of the Lenders in cash the aggregate outstanding principal amount

                                                18
of the Loans and all accrued but unpaid interest thereon on the Termination Date; provided
however, that to the extent the Termination Date occurs by virtue of subclause (a) of the term
“Termination Date,” such repayment shall take the form of _____________.4

               (b) Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting from the Loans
made by such Lender, including the amounts of principal and interest payable, and interest paid
in-kind and capitalized pursuant to this Agreement or paid in cash to such Lender from time to
time hereunder.

               (c) The Administrative Agent shall maintain accounts in which it shall record (i)
the amount of the Loan made hereunder, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder and (iii) any
amount received by the Administrative Agent hereunder for the account of the Lenders and each
Lender’s share thereof.

                (d) The entries made in the accounts maintained pursuant to paragraph (b) or (c)
of this Section shall be prima facie evidence of the existence and amounts of the obligations
recorded therein; provided that the failure of any Lender or the Administrative Agent to maintain
such accounts or any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement; provided, further, that in the
event of any inconsistency between the accounts maintained pursuant to paragraph (b) or (c) of
this Section 2.04, accounts maintained pursuant to Section 2.04(c) shall govern.

               (e) Any Lender may request that Loans made by it be evidenced by a promissory
note (a “Note”). In such event, the Borrower shall prepare, execute and deliver to such Lender a
promissory note payable to the order of such Lender (or, if requested by such Lender, to such
Lender and its registered assigns) and in the form attached hereto as Exhibit D. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall, to the extent requested by
any such Lender, at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of the payee
named therein (or, if such promissory note is a registered note, to such payee and its registered
assigns).

           Section 2.05. Prepayment of Loans.

               (a) The Borrower shall have the right at any time and from time to time to prepay
any Borrowing in whole or in part, without premium or penalty, in an aggregate principal
amount of $5,000,000 or any whole multiple of $1,000,000 in excess thereof or if less, the
aggregate amount of Loans then outstanding, subject to prior notice in accordance with
paragraph (c) of this Section.

                (b) The Borrower shall apply all Net Proceeds promptly upon receipt thereof to
prepay Borrowings in accordance with paragraph (c) of this Section; provided that no prior
notice shall be required for prepayments made pursuant to this paragraph (b).
4
    For the avoidance of doubt, the Debtors contemplate that the Loans will be forgiven in such event.


                                                           19
                (c) Prior to any prepayment of any Borrowing hereunder, the Borrower shall
notify the Administrative Agent by telephone (confirmed by telecopy) of such prepayment not
later than 2:00 p.m. (Local Time), three (3) Business Days before the scheduled date of such
prepayment. Each prepayment shall be applied ratably to the Loans and shall be accompanied by
accrued interest and fees on the amount repaid.

       Section 2.06. [Reserved].

       Section 2.07. [Reserved].

       Section 2.08. Interest.

               (a) The Loans shall bear interest at a rate per annum equal to 15.00%.

                (b) Notwithstanding the foregoing, if a Default occurs and is continuing, all
outstanding Obligations then due and owing (including, if applicable, any overdue amount) shall
bear interest during the continuance of such Default, after as well as before judgment, at a rate
per annum equal to 2.00% plus the rate otherwise applicable to such Obligation; provided that
this paragraph (b) shall not apply to any Default that has been waived by the Lenders pursuant to
Section 9.08.

               (c) Accrued interest on the Loan shall be payable in arrears on each Interest
Payment Date. On each Interest Payment Date, all accrued interest shall be capitalized and
added to the principal amount of the Loans then outstanding, and shall be repaid in the same
manner as repayment of the Loans set forth in Section 2.04.

               (d) All interest hereunder shall be computed on the basis of a year of 360 days
and shall be payable for the actual number of days elapsed (including the first day but excluding
the last day).

                (e) For the purposes of this Agreement, whenever interest is calculated on the
basis of a period which is less than the actual number of days in a calendar year, each rate of
interest determined pursuant to such calculation is, for the purposes of the Interest Act (Canada),
equivalent to such rate multiplied by the actual number of days in the calendar year in which
such rate is to be ascertained and divided by the number of days used as the basis of such
calculation.

                (f) The Loan Parties acknowledge and agree that all calculations of interest under
this Agreement are to be made on the basis of the nominal interest rate described herein and not
on the basis of effective yearly rates or on any other basis which gives effect to the principle of
deemed reinvestment of interest. The Loan Parties acknowledge that there is a material
difference between the stated nominal interest rates and the effective yearly rates of interest and
that they are capable of making the calculations required to determine such effective yearly rates
of interest.

              (g) In no event shall “interest” (as such term is defined in Section 347 of the
Criminal Code of Canada) on the “credit advanced” (as defined therein) hereunder be payable by
any Loan Party in excess of sixty percent (60%) per annum and if any Loan Party does pay an

                                                20
amount of interest in excess of sixty percent (60%) in any particular year, the amount of such
excess shall be repaid by the Lenders (through the Administrative Agent) to such party.

       Section 2.09. Increased Costs.

               (a) If any Change in Law shall:

                      (i) impose, modify or deem applicable any reserve, special deposit or
similar requirement against assets of, deposits with or for the account of, or credit extended by,
any Lender; or

                       (ii) impose on any Lender or the London interbank market any other
condition affecting this Agreement or the Loan made by such Lender;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any Loan (or of maintaining its obligation to make any such Loan) or to reduce the
amount of any sum received or receivable by such Lender hereunder (whether of principal,
interest or otherwise), then the Borrower will pay to such Lender such additional amount or
amounts as will compensate such Lender for such additional costs incurred or reduction suffered.

                (b) If any Lender determines that any Change in Law regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s capital
or on the capital of such Lender’s holding company, if any, as a consequence of this Agreement
or the Loans made by such Lender to a level below that which such Lender or such Lender’s
holding company could have achieved but for such Change in Law (taking into consideration
such Lender’s policies and the policies of such Lender’s holding company with respect to capital
adequacy), then from time to time the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such Lender’s holding company for any such
reduction suffered.

                (c) A certificate of a Lender setting forth the amount or amounts necessary to
compensate such Lender or its holding company, as applicable, as specified in paragraph (a) or
(b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest
error. The Borrower shall pay such Lender the amount shown as due on any such certificate
within 10 days after receipt thereof.

                (d) Promptly after any Lender has determined that it will make a request for
increased compensation pursuant to this Section 2.09, such Lender shall notify the Borrower
thereof. Failure or delay on the part of any Lender to demand compensation pursuant to this
Section shall not constitute a waiver of such Lender’s right to demand such compensation;
provided, that the Borrower shall not be required to compensate a Lender pursuant to this Section
2.09 for any increased costs or reductions incurred more than 180 days prior to the date that such
Lender notifies the Borrower of the Change in Law giving rise to such increased costs or
reductions and of such Lender’s intention to claim compensation thereof; provided, further, that
if the Change in Law giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of retroactive effect
thereof.


                                                 21
       Section 2.10. Taxes.

               (a) Unless otherwise required by applicable laws, any and all payments by or on
account of any obligation of any Loan Party hereunder shall be made free and clear of and
without deduction for any Indemnified Taxes or Other Taxes; provided that if a Loan Party shall
be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section) the
Administrative Agent or any Lender, as applicable, receives an amount equal to the sum it would
have received had no such deductions been made, (ii) such Loan Party shall make such
deductions and (iii) such Loan Party shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

             (b) In addition, the Loan Parties shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

                 (c) Each Loan Party shall indemnify the Administrative Agent and each Lender,
within 10 days after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent or such Lender, as applicable, on or with respect
to any payment by or on account of any obligation of such Loan Party hereunder (including
Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any reasonable expenses arising therefrom or with respect thereto. A
certificate as to the amount of such payment or liability, prepared in good faith and delivered to
such Loan Party by a Lender, or by the Administrative Agent on its own behalf or on behalf of a
Lender, shall be conclusive absent manifest error.

              (d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by a Loan Party to a Governmental Authority, such Loan Party shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such Governmental
Authority evidencing such payment or other evidence of such payment reasonably satisfactory to
the Administrative Agent.

                (e) If any Loan Party or any other Person is required by applicable law or
Governmental Authority to make any deduction or withholding on account of any Indemnified
Taxes from any sum paid or payable under any of the Loan Documents: (i) the Loan Parties shall
notify the Administrative Agent of any such requirement or any change in any such requirement
as soon as any of the applicable Loan Parties become aware of it; (ii) the Loan Parties shall pay
any such Indemnified Taxes before the date on which penalties attach thereto, such payment to
be made (if the liability to pay is imposed on any Loan Party) for its own account or (if that
liability is imposed on Administrative Agent or such Lender, as the case may be) on behalf of
and in the name of Administrative Agent or such Lender; (iii) the sum payable by such Loan
Party in respect of which the relevant deduction, withholding, or payment is required shall be
increased to the extent necessary to ensure that, after the making of that deduction, withholding,
or payment of all Indemnified Taxes, Administrative Agent or such Lender, as the case may be,
and each of their Tax-Related Persons receives on the due date and retains a net sum equal to
what it would have received and retained had no such deduction, withholding, or payment been
required or made; and (iv) within 30 days after making any such deduction or withholding, and

                                                22
within 30 days after the due date of payment of any Indemnified Tax or Other Tax which it is
required by clause (ii) above to pay, the applicable Loan Party shall deliver to Administrative
Agent evidence satisfactory to the other affected parties of such deduction, withholding, and
payment and of the remittance thereof to the relevant taxing or other authority.

                 (f) Any Lender that is entitled to an exemption from or reduction of withholding
Tax under the law of the jurisdiction in which the Borrower is located, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement shall deliver to the
Borrower (with a copy to the Administrative Agent), to the extent such Lender is legally entitled
to do so, at the time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law as may reasonably be requested by the Borrower or
the Administrative Agent to permit such payments to be made without such withholding Tax or
at a reduced rate.

                (g) Each Foreign Lender shall deliver to the Borrower and the Administrative
Agent (in such number of copies as shall be reasonably requested by the recipient) on the date on
which such Foreign Lender becomes a Lender under this Agreement (and from time to time
thereafter upon the reasonable request of the Borrower or the Administrative Agent), whichever
of the following is applicable: (i) duly completed copies of Internal Revenue Service Form W-
8BEN (or any subsequent versions thereof or successors thereto), claiming eligibility for benefits
of an income tax treaty to which the United States of America is a party, (ii) duly completed
copies of Internal Revenue Service Form W-8ECI (or any subsequent versions thereof or
successors thereto), (iii) in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under Section 871(h) or 881(c) of the Code, (x) a certificate to the effect
that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the
Code, (B) a “10 percent shareholder” of the Borrower within the meaning of Section 871(h)(3) or
881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-
8BEN (or any subsequent versions thereof or successors thereto) or (iv) any other form
prescribed by applicable law as a basis for claiming exemption from or a reduction in United
States federal withholding tax duly completed, together with such supplementary documentation
as may be prescribed by applicable law to permit the Borrower to determine the withholding or
deduction required to be made. In addition, in each of the foregoing circumstances, each Foreign
Lender shall deliver such forms promptly upon the obsolescence, expiration, or invalidity of any
form previously delivered by such Foreign Lender. Each Foreign Lender shall promptly notify
the Borrower at any time it determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification adopted by the United
States of America or other taxing authorities for such purpose). In addition, each Lender that is
not a Foreign Lender shall deliver to the Borrower and the Administrative Agent two copies of
Internal Revenue Service Form W-9 (or any subsequent versions thereof or successors thereto)
on or before the date such Lender becomes a party and upon the expiration of any form
previously delivered by such Lender. Notwithstanding any other provision of this paragraph, a
Lender shall not be required to deliver any form pursuant to this paragraph that such Lender is
not legally able to deliver.

               (h) If the Administrative Agent or a Lender determines that it has received a
refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Loan

                                                23
Party or with respect to which such Loan Party has paid additional amounts pursuant to this
Section 2.10, it shall pay over such refund to such Loan Party (but only to the extent of
indemnity payments made, or additional amounts paid, by such Loan Party under this Section
2.10 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent or such Lender (including any Taxes
imposed with respect to such refund) as is determined by the Administrative Agent or such
Lender in good faith, and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided that such Loan Party, upon the
request of the Administrative Agent or such Lender, agrees to repay as soon as reasonably
practicable the amount paid over to such Loan Party (plus any penalties, interest or other charges
imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender in
the event the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This Section 2.10(h) shall not be construed to require the
Administrative Agent or any Lender to make available its Tax returns (or any other information
relating to its Taxes which it deems confidential) to the Loan Parties or any other person.
Notwithstanding anything to the contrary, in no event will the Administrative Agent or any
Lender be required to pay any amount to any Loan Party the payment of which would place such
Lender in a less favorable net after-tax position than such Lender would have been in if the
additional amounts giving rise to such refund of any Indemnified Taxes or Other Taxes had
never been paid.

       Section 2.11. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.

                 (a) Unless otherwise specified, each Loan Party shall make each payment
required to be made by it hereunder (whether of principal, interest or fees, or of amounts payable
under Section 2.09 or 2.10, or otherwise) prior to 2:00 p.m. (Local Time), on the date when due,
in immediately available funds, without condition or deduction for any defense, recoupment, set-
off or counterclaim. Any amounts received after such time on any date shall be deemed to have
been received on the next succeeding Business Day for purposes of calculating interest thereon.
All such payments shall be made to the Administrative Agent to the applicable account
designated to each Loan Party by the Administrative Agent, except that payments pursuant to
Sections 2.09 or 2.10 and 9.05 shall be made directly to the persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the account of any
other person to the appropriate recipient promptly following receipt thereof. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment shall be
extended to the next succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All cash payments hereunder
shall be made in Dollars. Any payment required to be made by the Administrative Agent
hereunder shall be deemed to have been made by the time required if the Administrative Agent
shall, at or before such time, have taken the necessary steps to make such payment in accordance
with the regulations or operating procedures of the clearing or settlement system used by the
Administrative Agent to make such payment.

               (b) If at any time insufficient funds are received by and available to the
Administrative Agent from each Loan Party to pay fully all amounts of principal, interest and
fees then due from the Borrower hereunder, such funds shall be applied (i) first, towards
payment of interest and fees then due from each Loan Party hereunder, ratably among the parties

                                                24
entitled thereto in accordance with the amounts of interest and fees then due to such parties, and
(ii) second, towards payment of principal (including paid in kind interest previously added to the
principal) then due from the Borrower hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal then due to such parties.

                 (c) If any Lender shall, by exercising any right of set-off or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on its Loans resulting in such
Lender receiving payment of a greater proportion of the aggregate amount of its Loans and
accrued interest thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value) participations in the
Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be
shared by the Lenders ratably in accordance with the aggregate amount of principal of and
accrued interest on their respective Loans; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is recovered, such
participations shall be rescinded and the purchase price restored to the extent of such recovery,
without interest, and (ii) the provisions of this paragraph (c) shall not be construed to apply to
any payment made by each Loan Party pursuant to and in accordance with the express terms of
this Agreement or any payment obtained by a Lender as consideration for the assignment of or
sale of a participation in its Loan to any assignee or participant, other than to each Loan Party or
any Subsidiary or any Affiliate of the Borrower (as to which the provisions of this paragraph (c)
shall apply). Each Loan Party consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Loan Party rights of set-off and counterclaim
with respect to such participation as fully as if such Lender were a direct creditor of the Loan
Party in the amount of such participation.

                (d) Unless the Administrative Agent shall have received notice from the Loan
Party prior to the date on which any payment is due to the Administrative Agent for the account
of the Lenders hereunder that the Loan Party will not make such payment, the Administrative
Agent may assume that the Loan Party has made such payment on such date in accordance
herewith and may, in reliance upon such assumption, distribute to the Lenders the amount due.
In such event, if the Loan Party has not in fact made such payment, then each of the Lenders
severally agrees to repay to the Administrative Agent forthwith on demand the amount so
distributed to such Lender with interest thereon, for each day from and including the date such
amount is distributed to it to but excluding the date of payment to the Administrative Agent, at a
rate determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation.

               (e) If any Lender shall fail to make any payment required to be made by it
pursuant to Section 2.03 or 2.11(d), then the Administrative Agent may, in its discretion
(notwithstanding any contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under
such Sections until all such unsatisfied obligations are fully paid.

       Section 2.12. Mitigation Obligations. If any Lender requests compensation under
Section 2.09, or if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.10, then such

                                                 25
Lender shall use reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or Affiliates, if, in the reasonable judgment of such Lender, such designation or
assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.09 or 2.10, as
applicable, in the future and (ii) would not subject such Lender to any material unreimbursed
cost or expense and would not otherwise be disadvantageous to such Lender in any material
respect. The Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender in connection with any such designation or assignment.

        Section 2.13. Illegality. If any Lender reasonably determines that any change in law has
made it unlawful, or that any Governmental Authority has asserted after the Closing Date that it
is unlawful, for any Lender or its applicable Lending Office to make or maintain any Loans,
then, on notice thereof by such Lender to any Loan Party through the Administrative Agent, any
obligations of such Lender to maintain its Loan shall be terminated. Upon receipt of such notice,
the Loan Party shall, upon demand from such Lender (with a copy to the Administrative Agent),
immediately prepay such Lender’s Loan. Upon any such prepayment, the Loan Party shall also
pay accrued interest on the amount so prepaid.

        Section 2.14. Waiver of Any Priming Rights. Upon the Closing Date, and on behalf of
themselves and their estates, and for so long as any Obligations shall be outstanding, the Loan
Parties hereby irrevocably waive any right, pursuant to Section 364(c) or (d) of the Bankruptcy
Code or otherwise, to grant any Lien on any of the Collateral having priority senior to or pari
passu with the Liens securing the Obligations, without the prior written consent of the Lenders.

                                           ARTICLE III

                          REPRESENTATIONS AND WARRANTIES

               Each of the Loan Parties represents and warrants to the Administrative Agent and
each of the Lenders that:

        Section 3.01. Organization; Powers. Except as set forth on Schedule 3.01, each of the
Loan Parties and each of their subsidiaries (a) is a limited partnership, limited liability company
or corporation duly organized, validly existing and in good standing (or, if applicable in a foreign
jurisdiction, enjoys the equivalent status under the laws of any jurisdiction of organization
outside the United States) under the laws of the jurisdiction of its organization, (b) subject to the
approval of the Bankruptcy Court and recognition thereof by the Canadian Court has all requisite
power and authority to own its property and assets and to carry on its business as now conducted,
(c) is qualified to do business in each jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, and (d) subject to entry of the DIP Order, has the power
and authority to execute, deliver and perform its obligations under each of the Loan Documents
and each other agreement or instrument contemplated thereby to which it is or will be a party
and, in the case of the Borrower, to borrow hereunder.

      Section 3.02. Authorization. Subject to the entry and terms of the DIP Order and
Recognition Order, the execution, delivery and performance by the Loan Parties of each of the

                                                 26
Loan Documents to which it is a party, and the borrowings hereunder (a) have been duly
authorized by all corporate, stockholder, limited partnership or limited liability company action
required to be obtained by the Loan Parties and (b) will not (i) violate (A) any provision of law,
statute, rule or regulation, or the certificate or articles of incorporation or other constitutive
documents or by-laws of any Loan Party, (B) any applicable order of any court or any rule,
regulation or order of any Governmental Authority or (C) any provision of any post-petition
indenture, certificate of designation for preferred stock, agreement or other instrument to which
such Loan Party or any of its subsidiaries is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or constitute (alone or
with notice or lapse of time or both) a default under, give rise to a right of or result in any
cancellation or acceleration of any right or obligation (including any payment) or a loss of a
material benefit under any such post-petition indenture, certificate of designation for preferred
stock, agreement or other instrument, where any such post-petition conflict, violation, breach or
default referred to in clause (i) or (ii) of this Section 3.02 could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, or (iii) result in the creation or
imposition of any Lien upon or with respect to any property or assets now owned or hereafter
acquired by such Loan Party or any of its subsidiaries, other than the Liens created by the Loan
Documents and Liens permitted hereunder.

       Section 3.03. Enforceability. This Agreement has been duly executed and delivered by
each of the Loan Parties and constitutes, and each other Loan Document when executed and
delivered by each Loan Party that is party thereto will constitute, subject to entry of the DIP
Order and Recognition Order, a legal, valid and binding obligation of such Loan Party
enforceable against each such Loan Party in accordance with its terms and the DIP Order and
Recognition Order.

        Section 3.04. Governmental Approvals. Subject to entry and terms of the DIP Order
and Recognition Order, no action, consent or approval of, registration or filing with or any other
action by any Governmental Authority is or will be required in connection with the transactions
contemplated hereby, except for (a) the entry of the DIP Order and Recognition Order, (b) such
as have been made or obtained and are in full force and effect, (c) such actions, consents and
approvals the failure of which to be obtained or made would not reasonably be expected to have
a Material Adverse Effect, and (d) filings or other actions listed on Schedule 3.04.

       Section 3.05. Financial Statements; Undisclosed Liabilities.

               (a) The audited consolidated balance sheet as of December 31, 2009 and related
statements of income and cash flow of the Borrower (including the notes thereto) for the year
ended December 31, 2009, reported on and accompanied by a report from Ernst & Young, copies
of which have heretofore been furnished to the Lenders, were prepared in accordance with
GAAP and present fairly in all material respects the consolidated financial position of the
Borrower as at such date and the consolidated results of operations and cash flows of the
Borrower for the period then ended.

                (b) The unaudited consolidated balance sheet as of December 31, 2010 and
related unaudited statements of income and cash flow of the Borrower (including the notes
thereto) for the year ended December 31, 2010, copies of which have heretofore been furnished

                                                 27
to the Lenders, were prepared in accordance with Borrower’s internal accounting practices
applied consistently with those used in the financial statements referenced in Section 3.05(a) and
in accordance with GAAP and present fairly in all material respects the consolidated financial
position of the Borrower as at such dates and the consolidated results of operations and cash
flows of the Borrower for the applicable periods.

                (c) Except as (i) disclosed on Schedule 3.05, (ii) disclosed or reflected in the
financial statements referred to in clauses (a) or (b) of this Section 3.05 or (iii) incurred in the
ordinary course of business consistent with past practice, and except for obligations incurred in
connection with the Cases and the Loan Documents, none of the Loan Parties has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or otherwise) which,
individually or in the aggregate, has had or are likely to have a Material Adverse Effect on the
Loan Parties.

        Section 3.06. No Material Adverse Change or Material Adverse Effect. Except as set
forth on Schedule 3.06, since December 31, 2010, there has been no event, circumstance or
condition that has or would reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.

       Section 3.07. Title to Properties; Possession Under Leases; Location of Real Property
and Leased Premises.

                 (a) Each Loan Party and each of its subsidiaries has good and insurable fee
simple title to, or valid leasehold interests in, or easements or other limited property interests in,
all its real properties and has good and marketable title to its personal property and assets, in
each case, except for defects in title that do not interfere with its ability to conduct its business as
currently conducted or to utilize such properties and assets for their intended purposes and except
where the failure to have such title could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect. All such properties and assets are free and clear of
Liens, other than Liens permitted hereunder.

                (b) Each Loan Party and each of its subsidiaries has complied with all obligations
under all leases to which it is a party, except where the failure to comply would not have a
Material Adverse Effect, and all such leases are in full force and effect, except leases in respect
of which the failure to be in full force and effect could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth on Schedule
3.07(b), each Loan Party and each of its subsidiaries enjoys peaceful and undisturbed possession
under all such leases, other than leases in respect of which the failure to enjoy peaceful and
undisturbed possession could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.

               (c) Schedule 3.07(c) lists completely and correctly, as of the Closing Date, all real
property owned by any Loan Party or any of its subsidiaries and the addresses thereof. As of the
Closing Date, the Loan Parties and their subsidiaries own in fee all of the real property set forth
as being owned by them on such Schedule.




                                                  28
                (d) Schedule 3.07(d) lists completely and correctly, as of the Closing Date, all
real property leased by any Loan Party or any of its subsidiaries and the addresses thereof. The
Loan Parties and their subsidiaries have valid leases in all of the material real property set forth
as being leased by them on such Schedule.

                (e) Each Loan Party and each of its subsidiaries owns or possesses, or is licensed
to use, all patents, trademarks, service marks, trade names and copyrights (and all other IP
Collateral) and all licenses and rights with respect to the foregoing, necessary for the present
conduct of its business, without any conflict (of which any Loan Party or any of its subsidiaries
has been notified in writing) with the rights of others, and free from any burdensome restrictions
on the present conduct of the Loan Party, except where such conflicts and restrictions could not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

               (f) As of the Closing Date, none of the Loan Parties and none of their subsidiaries
has received any notice of any pending or contemplated condemnation proceeding affecting any
of its owned real property or any sale or disposition thereof in lieu of condemnation that remains
unresolved.

              (g) None of the Loan Parties and none of their subsidiaries are obligated on the
Closing Date under any right of first refusal, option or other contractual right to sell, assign or
otherwise dispose of any of its owned real property or any interest therein, except as permitted
hereunder.

       Section 3.08. Subsidiaries.

               (a) Schedule 3.08 sets forth as of the Closing Date the name and jurisdiction of
incorporation, formation or organization of each Loan Party and each of its subsidiaries, as to
each such Loan Party or subsidiary, the percentage of each class of Equity Interests owned by the
parties holding such Equity Interests.

               (b) As of the Closing Date, except for (i) the call option and put option set forth in
the Amended and Restated Shareholders Agreement dated August 11, 2009 among 4491165
Canada Inc., the Borrower, TerreStar Networks Holdings (Canada) Inc., TerreStar Canada and
Trio 2 General Partnership and (ii) the transactions contemplated by the Purchase Agreement,
there are no outstanding subscriptions, options, warrants, calls, rights or other agreements or
commitments (other than stock options granted to employees or directors and directors’
qualifying shares) of any nature relating to any Equity Interests of any Loan Party or any of its
subsidiaries.

       Section 3.09. Litigation; Compliance with Laws.

                (a) Except as set forth on Schedule 3.09 and other than the Cases or those that
may otherwise be stayed by the Cases, there are no actions, suits, investigations or proceedings at
law or in equity or by or on behalf of any Governmental Authority or in arbitration now pending,
or, to the knowledge of any Loan Party, threatened in writing against or affecting any Loan Party
or any of its subsidiaries or any business, property or rights (including FCC License Rights and
Industry Canada License Rights) of any such person, that (i) involve any Loan Document or (ii)


                                                  29
could reasonably be expected to have, individually or in the aggregate, a Material Adverse
Effect.

                 (b) No Loan Party or any of its subsidiaries or any of their respective properties or
assets is in violation of (nor will the continued operation of their material properties and assets as
currently conducted violate) any law, rule or regulation (including any zoning, building,
ordinance, code or approval or any building permit, but excluding any Environmental Laws,
which are subject to Section 3.16) or any restriction of record or agreement affecting any of its
owned real property, or is in default with respect to any judgment, writ, injunction or decree of
any Governmental Authority, where such violation or default could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.

       Section 3.10. Federal Reserve Regulations.

               (a) No Loan Party and none of its subsidiaries is engaged principally, or as one of
its important activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.

                (b) No part of the proceeds of any Loan will be used, whether directly or
indirectly, and whether immediately, incidentally or ultimately, (i) to purchase or carry Margin
Stock or to extend credit to others for the purpose of purchasing or carrying Margin Stock or to
refund indebtedness originally incurred for such purpose, or (ii) for any purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of the Board, including
Regulation U or Regulation X.

       Section 3.11. Investment Company Act. No Loan Party and none of its subsidiaries is
an “investment company” as defined in, or subject to regulation under, the Investment Company
Act of 1940, as amended.

         Section 3.12. Use of Proceeds. The Borrower will use the proceeds of the Loans solely
for (i) post petition operating expenses of the Borrower and the other Loan Parties and their
subsidiaries incurred in the ordinary course of business in accordance with the Agreed Budget,
and the fees and expenses of the Foreign Information Officer and its counsel, (ii) the payment of
costs and expenses of the administration of the Cases, including, without limitation, the payment
of fees and expenses of attorneys, accountants and other professionals retained in the Cases
pursuant to Sections 327 and 1103 of the Bankruptcy Code and the fees and expenses of the
office of the United States Trustee, in accordance with the terms of this Agreement and the DIP
Order, (iii) the repayment in full of all amounts outstanding under the Existing DIP Credit
Agreement and (iv) any other costs and expenses approved by the Required Lenders.

       Section 3.13. Tax Returns. Except as set forth on Schedule 3.13:

                 (a) each of the Loan Parties and their subsidiaries has filed or caused to be filed
all federal, state, provincial, local and non-U.S. Tax returns required to have been filed by it that
are material to such companies, taken as a whole, and each such Tax return is true and correct in
all material respects;



                                                 30
                 (b) each of the Loan Parties and their subsidiaries has timely paid or caused to be
timely paid all Taxes shown to be due and payable by it on the returns referred to in clause (a)
and all other Taxes or assessments (or made adequate provision (in accordance with GAAP) for
the payment of all Taxes due) with respect to all periods or portions thereof ending on or before
the Closing Date (except Taxes or assessments that are being contested in good faith by
appropriate proceedings and for which such Loan Party or its subsidiary (as the case may be) has
set aside on its books adequate reserves in accordance with GAAP), which Taxes, if not paid or
adequately provided for, could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect; and

                (c) other than as could not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect as of the Closing Date, with respect to the Loan Parties and
their subsidiaries, there are no claims being asserted in writing with respect to any Taxes.

        Section 3.14. No Material Misstatements. All written information (the “Information”)
concerning the Loan Parties and their subsidiaries and any transactions contemplated hereby
prepared by or on behalf of the foregoing or their representatives and made available to any
Lenders or the Administrative Agent in connection with the transactions contemplated hereby,
when taken as a whole, was true and correct in all material respects as of the date such
Information was furnished to the Lenders and as of the Closing Date and did not contain any
untrue statement of a material fact as of any such date or omit to state a material fact necessary in
order to make the statements contained therein not materially misleading in light of the
circumstances under which such statements were made.

       Section 3.15. Employee Benefit Plans.

                 (a) Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect: (i) the Loan Parties, their subsidiaries and the ERISA
Affiliates are in compliance with the applicable provisions of ERISA and the provisions of the
Code relating to ERISA Plans and the regulations and published interpretations thereunder; (ii)
other than as a result of the filing of the Cases, no Reportable Event has occurred during the past
five (5) years as to which any Loan Party or any subsidiary thereof or any ERISA Affiliate was
required to file a report with the PBGC, other than reports that have been filed; (iii) other than as
a result of the filing of the Cases, no ERISA Event has occurred or is reasonably expected to
occur; and (iv) none of the Loan Parties, any of their subsidiaries or any ERISA Affiliate has
received any written notification that any Multiemployer Plan is in reorganization or has been
terminated within the meaning of Title IV of ERISA, or has knowledge that any Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated.

               (b) Each Loan Party and each of its subsidiaries is in compliance (i) with all
Requirements of Law with respect to any employee pension benefit plan or other employee
benefit plan governed by the laws of a jurisdiction other than the United States and (ii) with the
terms of any such plan, except, in each case, for such noncompliance that could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect.

              (c)     Except as could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect: (i) each Canadian Pension Plan and any participation

                                                 31
requirements of a Loan Party in each Canadian Union Plan are in compliance with all
Requirements of Law, (ii) each Canadian Pension Plan that requires registration is duly
registered under the Income Tax Act (Canada) and all other applicable laws, (iii) all employer
and employee payments, contributions or premiums to be remitted or paid by any Loan Party to
or in respect of each Canadian Union Plan have been paid in a timely fashion in accordance with
the Requirements of Law, (iv) no Canadian Pension Event has occurred or is reasonably
expected to occur, (v) except as disclosed on Schedule 3.15, each of the Canadian Pension Plans
is fully funded on a going concern and solvency basis (using actuarial methods and assumptions
that are consistent with the valuations last filed with the applicable governmental authorities and
that are consistent with generally accepted actuarial principles) and (vi) all obligations of a Loan
Party participating in a Canadian Union Plan are set out in the applicable collective agreement.

         Section 3.16. Environmental Matters. Except as disclosed on Schedule 3.16 and except
as to matters that could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect: (i) no written notice, request for information, claim, demand, order,
complaint or penalty has been received by the Loan Parties or any of their subsidiaries, and there
are no judicial, administrative or other actions, suits or proceedings pending or, to the
Borrower’s knowledge, threatened, which allege a violation of or liability under any
Environmental Laws, in each case relating to the Loan Parties or any of their subsidiaries, (ii) the
Loan Parties and their subsidiaries have all authorizations and permits necessary for their
operations to comply with all applicable Environmental Laws and are, and during the term of all
applicable statutes of limitation, have been, in compliance with the terms of such permits and
with all other applicable Environmental Laws, and (iii) no Hazardous Material is located at, in,
or under any property currently or formerly owned, operated or leased by any Loan Party or any
of its subsidiaries that could reasonably be expected to give rise to any liability or obligation of
any Loan Party or any of its subsidiaries under any Environmental Laws, and no Hazardous
Material has been generated, owned or controlled by any Loan Party or any of its subsidiaries
and has been transported to or released at any location in a manner that would reasonably be
expected to give rise to any liability or obligation of any Loan Party or any of its subsidiaries
under any Environmental Laws.

        Section 3.17. Labor Matters. Except as, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect: (a) there are no strikes or other labor
disputes pending or threatened against any Loan Party or any of its subsidiaries; (b) the hours
worked and payments made to employees of the Loan Parties and their subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable law dealing with such
matters; and (c) all payments due from any Loan Party or any of its subsidiaries or for which any
claim may be made against any Loan Party or any of its subsidiaries, on account of wages and
employee health and welfare insurance and other benefits have been paid or accrued as a liability
on the books of any Loan Party or any of its subsidiaries to the extent required by GAAP.
Except (i) as, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or (ii) as set forth on Schedule 3.17, the consummation of the
transactions contemplated hereby will not give rise to a right of termination or right of
renegotiation on the part of any union under any material collective bargaining agreement to
which any Loan Party or any of its subsidiaries (or any predecessor of any Loan Party or any of
its subsidiaries) is a party or by which any Loan Party or any of its subsidiaries (or any
predecessor of any Loan Party or any of its subsidiaries) is bound.

                                                 32
        Section 3.18. Insurance. Schedule 3.18 sets forth a true, complete and correct
description of all material insurance maintained by or on behalf of each Loan Party and its
subsidiaries as of the Closing Date. As of such date, such insurance is in full force and effect.
The Loan Parties believe that the insurance maintained by or on behalf of the Loan Parties and
their subsidiaries is adequate.

       Section 3.19. Anti-Terrorism Laws.

                 (a) No Loan Party and, to the knowledge of the Loan Parties, none of its
Affiliates is in violation of any Requirement of Law relating to terrorism or money laundering
(“Anti-Terrorism Laws”), including, without limitation, Executive Order No. 13224 on Terrorist
Financing, effective September 24, 2001 (the “Executive Order”), the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001, Public Law 107-56 and Canadian Anti-Money Laundering & Anti-Terrorism Legislation.

               (b) To the knowledge of the Loan Parties, no Loan Party and no Affiliate or
broker or other agent of any Loan Party acting or benefiting in any capacity in connection with
the Loans is any of the following:

                       (i) a person that is listed in the annex to, or is otherwise subject to the
provisions of, the Executive Order;

                         (ii) a person owned or controlled by, or acting for or on behalf of, any
person that is listed in the annex to, or is otherwise subject to the provisions of, the Executive
Order;

                      (iii)a person with which any Lender is prohibited from dealing or
otherwise engaging in any transaction by any Anti-Terrorism Law;

                       (iv) a person that commits, threatens or conspires to commit acts of, or
supports, “terrorism” as defined in the Executive Order; or

                        (v) a person that is named as a “specially designated national and blocked
person” on the most current list published by the U.S. Treasury Department Office of Foreign
Assets Control (“OFAC”) at its official website or any replacement website or other replacement
official publication of such list.

                (c) To the knowledge of the Loan Parties, no Loan Party and none of its Affiliates
and no broker or other agent of any Loan Party or any of its Affiliates acting in any capacity in
connection with the Loans (i) conducts any business or engages in making or receiving any
contribution of funds, goods or services to or for the benefit of any person described in paragraph
(b) above, (ii) deals in, or otherwise engages in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order, or (iii) engages in or conspires to
engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

       Section 3.20. Licensing and Accreditation. Schedule 3.20 set forth all material FCC
Licenses and Industry Canada Licenses. The Loan Parties and their respective Affiliates to the

                                                  33
extent applicable have (a) obtained and maintained in good standing all required material
licenses, permits, certificates, registrations, authorizations and approvals necessary for the
operation of their businesses as currently conducted, and (b) to the extent necessary for the
operation of its businesses as currently conducted, obtained and maintains accreditation from all
generally recognized accrediting agencies. To the knowledge of the Loan Parties, all such
required material licenses (including FCC Licenses and Industry Canada Licenses) are in full
force and effect on the Closing Date and have not been revoked or suspended or otherwise
limited and there no appeals directly relating thereto.

       Section 3.21. [Reserved].

       Section 3.22. Accounts and Cash Management Accounts. Schedule 3.22 sets forth a
complete and accurate list, as of the Closing Date, of all deposit accounts and securities accounts
(as such terms are defined in Section 9-102 of the UCC) of each Loan Party.

      Section 3.23. Brokers. Except as set forth on Schedule 3.23, no broker’s, finder’s or
placement fee or commission is or will be payable to any broker, investment banker or agent
engaged by any Loan Party or it officers, directors or agents with respect to the transactions
contemplated by this Agreement, except for fees payable to the Administrative Agent and
Lenders.

       Section 3.24. Reorganization Matters.

              (a) The Loan Parties have given (and shall give), on a timely basis as specified in
the DIP Order, all notices required to be given to all parties specified in the DIP Order.

               (b) After the entry of the DIP Order and to the extent provided therein, the
Obligations will constitute allowed super-priority administrative expense claims in the Cases
having priority under Section 364(c)(i) of the Bankruptcy Code over all administrative expense
claims and unsecured claims against the Loan Parties now existing or hereafter arising, of any
kind whatsoever, including, without limitation, all administrative expense claims of the kind
specified in Sections 105, 326, 328, 330, 331, 363, 364, 503, 506, 507, 546, 1113 and 1114 or
any other provision of the Bankruptcy Code or otherwise, as provided under Section 364(c)(1) of
the Bankruptcy Code, subject, as to priority only, to the Carve-Out to the extent set forth in the
DIP Order.

                 (c) After the entry of the DIP Order and pursuant to and to the extent provided
therein, the Obligations will be secured by a valid, legal and perfected Lien on and security
interest in all of the Collateral of the Loan Parties having the priority afforded by Sections
364(c)(1), (2) and (3) and 364(d)(1) of the Bankruptcy Code, as set forth in the DIP Order.

                 (d) The DIP Order, with respect to the period on and after entry of the DIP Order,
is in full force and effect and has not been modified or amended without the consent of the
Required Lenders, or reversed or stayed.

              (e) The Borrower consents to the lien priming provisions herein and in the DIP
Order regarding the priming of any Liens held by the Borrower.


                                                34
        Section 3.25. Material Contracts. Except as may occur as a result of the commencement
and continuation of the Cases, (a) each of the Material Contracts is in full force and effect and, to
the knowledge of the Loan Parties, there are no material defaults thereunder on the part of any
other party thereto which are not subject to an automatic stay or which would reasonably be
expected to have a Material Adverse Effect, and (b) no Loan Party is in default in any material
respect in the performance, observance or fulfillment of any of its obligations, covenants or
conditions contained in any agreement evidencing or creating any Lien permitted hereunder
which is not subject to an automatic stay or any other Material Contract to which it is a party or
by which it or its property is bound which are not subject to an automatic stay or which would
reasonably be expected to have a Material Adverse Effect.

        Section 3.26. Transactions with Affiliates. Except as disclosed on Schedule 3.26, no
Affiliate of any Loan Party which is not a Loan Party, including but not limited to TerreStar
Corporation and any of its subsidiaries that are not Loan Parties, has on the date hereof (i) any
interest in any property (whether real, personal or mixed and whether tangible or intangible) used
in or pertaining to any of the businesses of the Loan Parties or (ii) any transaction with the Loan
Parties (other than, in the ordinary course of business, (x) fees and compensation paid to and
indemnity provided on behalf of, officers, employees, consultants or agents of the Loan Parties,
and benefits received by such Persons in connection with participation in any Plans, (y) ordinary
course reimbursement of expenses incurred on behalf of a Loan Party, and (z) transactions on
terms no less favorable to a Loan Party than those which could have been obtained in an arm’s-
length transaction with an unrelated third party and which provide for payments in any full year
period of less than $100,000).

       Section 3.27. Collateral. The information contained in Schedule 3.27 relating to certain
Collateral is correct.

                                           ARTICLE IV

                                  CONDITIONS PRECEDENT

        Conditions Precedent to Initial Funding Date. The obligation of each Lender to make the
Loan required to be made by it on the Initial Funding Date is subject to the satisfaction of all of
the following conditions precedent:

                (a) (i) The representations and warranties set forth herein and in the other Loan
Documents shall be true and correct in all material respects on and as of the Initial Funding Date
except to the extent such representations and warranties expressly relate solely to an earlier date,
in which case such representations and warranties shall be true and correct in all material
respects as of such earlier date (provided, however, in each case if any such representation or
warranty shall be subject of a qualification as to “materiality,” such qualified representation and
warranty shall be true and correct in all respects as of such date) and (ii) no Default or Event of
Default shall have occurred and be continuing or would result from the making of such Loan or
the application of the proceeds therefrom. Each Loan Party shall have delivered a certificate of a
Responsible Officer, in form and substance satisfactory to the Required Lenders, certifying the
foregoing.


                                                 35
                (b) The Administrative Agent (or its counsel) shall have received from each party
hereto either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written
evidence satisfactory to the Administrative Agent (which may include telecopy transmission of a
signed signature page of this Agreement) that such party has signed a counterpart of this
Agreement.

               (c) The Lenders shall have received the Agreed Budget.

               (d) The Lenders shall have received a copy of the DIP Order, which DIP Order
shall have been entered by the Bankruptcy Court and recognized by the Canadian Court, after
notice given and a hearing conducted in accordance with Bankruptcy Rule 4001(c), authorizing
and approving the transactions contemplated by the Loan Documents and finding that the
Lenders are extending credit to the Loan Parties in good faith within the meaning of Bankruptcy
Code Section 364(e), which DIP Order and Recognition Order shall (i) be in form and
substance reasonably satisfactory to the Required Lenders and (ii) be in full force and effect and
shall not have been stayed, reversed, vacated, or otherwise modified in a manner adverse to any
Lender.

                (e) Each Loan Party shall have executed and delivered all documentation required
in respect of this Agreement, in each case reasonably satisfactory to the Lenders.

                 (f) The DIP Order shall permit the Loan Parties to use all cash that is subject to
non-avoidable, valid, enforceable and perfected Liens on the Closing Date, including, without
limitation, and to the extent such Liens are non-avoidable, valid, enforceable and perfected, the
Liens securing obligations in respect of the 15% Notes and the PMCA. The DIP Order will
include the provision of adequate protection for the lenders and collateral agent under the 15%
Notes (the “15% Notes Adequate Protection”), which shall be in the form of (a) replacement
Liens on any and all non-avoidable, valid, enforceable and perfected collateral held by such
lenders and collateral agent, (b) a non-avoidable, valid, enforceable and perfected Lien, subject
only to those Liens securing the Loan and those Liens securing the PMCA on all of the Loan
Parties’ assets which are collateral under the Loan but not included in (a) above, (c) a priority
adequate protection claim ranking junior to the claims of the Lenders and (d) payment of
professional fees and expenses of the Trustee (as defined in the 15% Notes) and collateral agent
under the 15% Notes. The DIP Order will also include the provision of adequate protection for
the lenders and the collateral agent under the PMCA (the “PMCA Adequate Protection”) which
shall be in the form of (x) replacement Liens on any and all non-avoidable, valid, enforceable
and perfected collateral held by the PMCA lenders and collateral agent, (y) a priority adequate
protection claim ranking junior to the claims of the Lenders (and pari passu with the adequate
protection claims of the lenders and the collateral agent under the 15% Notes) and (z) payment of
professional fees and expenses of the collateral agent under the PMCA.

                (g) The Lenders shall have received confirmation satisfactory to them of
sufficient insurance coverage for all property of the Loan Parties and their subsidiaries, general
liability insurance and other forms of insurance in amounts with deductibles satisfactory to the
Required Lenders, and that the Administrative Agent, on behalf of and for the benefit of the
Lenders, is named an additional insured.


                                                 36
              (h) Except for the commencement and continuation of the Cases and as caused by
such commencement and as may otherwise be disclosed in writing to the Lenders prior to the
Closing Date, no Material Adverse Change shall have occurred since December 31, 2010.

               (i) All necessary governmental and third-party licenses, consents and approvals
in connection with the Loans and the transactions contemplated thereby shall have been obtained
(without the imposition of any conditions that are not reasonably acceptable to the Lenders) and
shall remain in effect; and no law or regulation shall be applicable in the reasonable judgment of
the Lenders that restrains, prevents or imposes materially adverse conditions upon the Loans.

               (j) The Canadian Court shall have entered the Recognition Order and the Lenders
shall have received evidence thereof.

                                          ARTICLE V

                                         COVENANTS

        Each of the Loan Parties covenants and agrees with the Administrative Agent and each
Lender that so long as this Agreement shall remain in effect and until the Commitments have
been terminated and the principal of and interest on the Loan, and all other expenses or amounts
payable under any Loan Document shall have been paid in full, unless the Required Lenders
shall otherwise consent in writing, the Loan Parties will comply with the applicable provisions of
Article VI of the Purchase Agreement.

                                          ARTICLE VI

                                         [RESERVED]

                                         ARTICLE VII

                                    EVENTS OF DEFAULT

       Section 7.01. Events of Default. In case of the happening of a termination of the
Purchase Agreement pursuant to Section 8.1 of the Purchase Agreement (an “Event of Default”);
provided that a termination of the Purchase Agreement that is a result of a breach of the Purchase
Agreement by the party seeking such termination shall not be an Event of Default;

then, and in every such event, and at any time thereafter during the continuance of such event,
the Administrative Agent may, and at the request of the Required Lenders, shall, by notice to the
Borrower take any or all of the actions pursuant to Section 7.02.

        Section 7.02. Remedies. Upon the occurrence and continuation of an Event of Default,
the Administrative Agent and the Lenders shall have all remedies available to them at law and
equity, including, but not limited to the following and those set forth in Article X:

               (a) upon ten (10) Business Days’ written notice to the Borrower, the Statutory
Committee of Unsecured Creditors, the United States Trustee, the Foreign Information Officer
and the Prepetition Secured Notice Parties, the automatic stay under section 362 of the

                                                37
Bankruptcy Code, and any similar or corresponding stay imposed by the Canadian Court, shall
be deemed lifted without further order of or application to the Bankruptcy Court or the Canadian
Court, to permit the Lenders to (i) reduce or terminate outstanding Commitments, (ii) terminate
the Loans, (iii) charge the default interest on the Loans, (iv) declare the Loans then outstanding
to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any unpaid accrued
fees and all other liabilities of the Borrower accrued hereunder and under any other Loan
Document, shall become forthwith due and payable, without presentment, demand, protest or any
other notice of any kind, all of which are hereby expressly waived by the Borrower, anything
contained herein or in any other Loan Document to the contrary notwithstanding, and (v) subject
to the Carve-Out and applicable laws relating to regulatory approvals, exercise any and all
remedies under this Agreement, including without limitation to permit the Lenders to realize on
all Collateral and exercise remedies under applicable law (including the UCC and the PPSA);
and

                (b)    At any time after a hearing before the Bankruptcy Court after an Event of
Default, and during the continuance of such event (but subject to the limitations set forth in
Section 7.02(a)), the Administrative Agent may and, at the written request of the Required
Lenders, shall, upon notice to the Borrower and as otherwise required by the DIP Order and
Recognition Order, declare the Loans then outstanding to be forthwith due and payable in whole
or in part, whereupon the principal of the Loans so declared to be due and payable, together with
accrued interest thereon and any unpaid accrued fees and all other liabilities of the Borrower
accrued hereunder and under any other Loan Document, shall become forthwith due and
payable, without presentment, demand, protest or any other notice of any kind, all of which are
hereby expressly waived by the Borrower, anything contained herein or in any other Loan
Document to the contrary notwithstanding.

              All remedies stated above or in any Loan Document are cumulative. The
Administrative Agent and the Lenders shall have no obligation to marshall assets.

                                         ARTICLE VIII

                              THE ADMINISTRATIVE AGENT

        Section 8.01. Appointment. Each Lender hereby irrevocably designates and appoints
the Administrative Agent as the agent of such Lender under this Agreement and the other Loan
Documents, and each such Lender irrevocably authorizes the Administrative Agent, in such
capacity, to take such action on its behalf under the provisions of this Agreement and the other
Loan Documents and to exercise such powers and perform such duties as are expressly delegated
to the Administrative Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto. Notwithstanding any
provision to the contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, or any fiduciary
relationship with any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent; it being expressly understood and agreed that
the use of the word “Administrative Agent” is for convenience only and that the Administrative

                                               38
Agent is merely the representative of the Lenders and only has the contractual duties set forth
herein. The Administrative Agent will not be required to take any action that it reasonably
determines (or in the opinion of its legal counsel) is contrary to applicable law or any provision
of this Agreement or any other Loan Document or that would subject the Administrative Agent
to any liability and the Administrative Agent may consult with counsel of its selection and seek
the advice of such counsel in respect of its obligations hereunder and under the other Loan
Documents.

        Section 8.02. Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents, employees or
attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the negligence or misconduct
of any agents or attorneys-in-fact selected by it, so long as such selection was made without
gross negligence or willful misconduct.

        Section 8.03. Exculpatory Provisions. Neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates (collectively, the
“Administrative Agent-Related Persons”) shall be (i) liable for any lawful action taken or
omitted to be taken by it or such person under or in connection with this Agreement or any other
Loan Document (except to the extent that any of the foregoing are found by a final and non-
appealable decision of a court of competent jurisdiction to have resulted from its or such
person’s own gross negligence or willful misconduct) or (ii) responsible in any manner to any of
the Lenders for any recitals, statements, representations or warranties made by any Loan Party or
any officer thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in, or received by the
Administrative Agent under or in connection with, this Agreement or any other Loan Document
or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any other Loan Document or for any failure of any Loan Party as a party thereto to
perform its obligations hereunder or thereunder. The Administrative Agent-Related Persons
shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this Agreement or any other
Loan Document, or to inspect the properties, books or records of any Loan Party.

        To the fullest extent permitted by applicable law, no Loan Party or Lender shall assert,
and each Loan Party and Lender hereby waives, any claim against the Administrative Agent, its
sub-agents and their respective Affiliates in respect of any actions taken or omitted to be taken
by any of them, on any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement, any other Loan Document or any agreement or instrument contemplated
herby or thereby, the transactions contemplated hereby or thereby, any Loan or the use of the
proceeds thereof.

        No provision of this Agreement or any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the transactions contemplated hereby or thereby
shall require the Administrative Agent to: (i) expend or risk its own funds or provide indemnities
in the performance of any of its duties hereunder or the exercise of any of its rights or power or


                                                39
(ii) otherwise incur any financial liability in the performance of its duties or the exercise of any
of its rights or powers.

         The Administrative Agent shall not be responsible for (i) perfecting, maintaining,
monitoring, preserving or protecting the security interest or lien granted under this Agreement,
any other Loan Document or any agreement or instrument contemplated hereby or thereby, (ii)
the filing, re-filing, recording, re-recording or continuing or any document, financing statement,
mortgage, assignment, notice, instrument of further assurance or other instrument in any public
office at any time or times or (iii) providing, maintaining, monitoring or preserving insurance on
or the payment of taxes with respect to any of the Collateral. The actions described in items (i)
through (iii) shall be the sole responsibility of the Loan Parties.

        The Administrative Agent shall not be required to qualify in any jurisdiction in which it
is not presently qualified to perform its obligations as Administrative Agent.

         The Administrative Agent has accepted and is bound by the Loan Documents executed
by the Administrative Agent as of the date of this Agreement and, as directed in writing by the
Required Lenders, the Administrative Agent shall execute additional Loan Documents delivered
to it after the date of this Agreement; provided, however, that such additional Loan Documents
do not adversely affect the rights, privileges, benefits and immunities of the Administrative
Agent. The Administrative Agent will not otherwise be bound by, or be held obligated by, the
provisions of any credit agreement, indenture or other agreement governing the Obligations
(other than this Agreement and the other Loan Documents to which the Administrative Agent is
a party).

         No written direction given to the Administrative Agent by the Required Lenders or the
Borrower that in the sole judgment of the Administrative Agent imposes, purports to impose or
might reasonably be expected to impose upon the Administrative Agent any obligation or
liability not set forth in or arising under this Agreement and the other Loan Documents will be
binding upon the Administrative Agent unless the Administrative Agent elects, at its sole option,
to accept such direction.

         The Administrative Agent shall not be responsible or liable for any failure or delay in the
performance of its obligations under this Agreement or the other Loan Documents arising out of
or caused, directly or indirectly, by circumstances beyond its reasonable control, including,
without limitation, acts of God; earthquakes; fire; flood; terrorism; wars and other military
disturbances; sabotage; epidemics; riots; business interruptions; loss or malfunctions of utilities,
computer (hardware or software) or communication services; accidents; labor disputes; acts of
civil or military authority and governmental action.

        Beyond the exercise of reasonable care in the custody of the Collateral in its possession,
the Administrative Agent will have no duty as to any Collateral in its possession or control or in
the possession or control of any agent or bailee or any income thereon or as to preservation of
rights against prior parties or any other rights pertaining thereto. The Administrative Agent will
be deemed to have exercised reasonable care in the custody of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which it accords its own property,
and the Administrative Agent will not be liable or responsible for any loss or diminution in the

                                                40
value of any of the Collateral by reason of the act or omission of any carrier, forwarding agency
or other agent or bailee selected by the Administrative Agent in good faith.

        The Administrative Agent will not be responsible for the existence, genuineness or value
of any of the Collateral or for the validity, perfection, priority or enforceability of the Liens in
any of the Collateral, whether impaired by operation of law or by reason of any action or
omission to act on its part hereunder, except to the extent such action or omission constitutes
gross negligence or willful misconduct on the part of the Administrative Agent, as determined by
a court of competent jurisdiction in a final, nonappealable order, for the validity or sufficiency of
the Collateral or any agreement or assignment contained therein, for the validity of the title of
any grantor to the Collateral, for insuring the Collateral or for the payment of taxes, charges,
assessments or Liens upon the Collateral or otherwise as to the maintenance of the Collateral.
The Administrative Agent hereby disclaims any representation or warranty to the present and
future holders of the Obligations concerning the perfection of the Liens granted hereunder or in
the value of any of the Collateral.

                 In the event that the Administrative Agent is required to acquire title to an asset
for any reason, or take any managerial action of any kind in regard thereto, in order to carry out
any fiduciary or trust obligation for the benefit of another, which in the Administrative Agent’s
sole discretion may cause the Administrative Agent to be considered an “owner or operator”
under any environmental laws or otherwise cause the Administrative Agent to incur, or be
exposed to, any environmental liability or any liability under any other federal, state or local law,
the Administrative Agent reserves the right, instead of taking such action, either to resign as
Administrative Agent or to arrange for the transfer of the title or control of the asset to a court
appointed receiver. The Administrative Agent will not be liable to any person for any
environmental liability or any environmental claims or contribution actions under any federal,
state or local law, rule or regulation by reason of the Administrative Agent’s actions and conduct
as authorized, empowered and directed hereunder or relating to any kind of discharge or Release
or threatened discharge or Release of any Hazardous Materials into the Environment.

        Section 8.04. Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order
or other document or conversation believed by it to be genuine and correct and to have been
signed, sent or made by the proper person or persons and upon advice and statements of legal
counsel (including counsel to the Borrower or counsel to any Lender), independent accountants
and other experts selected by the Administrative Agent. The Administrative Agent may deem
and treat the payee of any Note as the owner thereof for all purposes unless a written notice of
assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent.
The Administrative Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate and it shall receive such security or indemnity from the Lenders as it shall
require against any and all liability and expense that may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all cases be fully
protected in acting, or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (or, if so specified by this

                                                  41
Agreement, all Lenders), and such request and any action taken or failure to act pursuant thereto
shall be binding upon all of the Lenders and all future holders of the Loans.

        Section 8.05. Notice of Default. The Administrative Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless the
Administrative Agent has received notice from a Lender or the Borrower referring to this
Agreement, describing such Default or Event of Default and stating that such notice is a “notice
of default.” In the event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed by the Required
Lenders in accordance with the terms of this Agreement (or, if so specified by this Agreement,
all Lenders); provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default or Event of Default as it shall deem
advisable in the best interests of the Lenders. The Administrative Agent shall promptly provide
all notices received from the Borrower or any Loan Party to the Lenders.

         Section 8.06. Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any representations or
warranties to it and that no act by the Administrative Agent hereafter taken, including any review
of the affairs of a Loan Party or any affiliate of a Loan Party, shall be deemed to constitute any
representation or warranty by the Administrative Agent to any Lender. Each Lender represents
to the Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and information as it
has deemed appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the Loan Parties and
their affiliates and made its own decision to make its Loans hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without reliance upon
the Administrative Agent or any other Lender, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and the other Loan Documents, and
to make such investigation as it deems necessary to inform itself as to the business, operations,
property, financial and other condition and creditworthiness of the Loan Parties and their
Affiliates. Except for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent shall not have any
duty or responsibility to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or creditworthiness
of any Loan Party or any Affiliate of a Loan Party that may come into the possession of the
Administrative Agent-Related Persons.

       Section 8.07. Indemnification. The Lenders agree to (a) reimburse the Administrative
Agent upon demand for all expenses (provided, however, in no event shall the Administrative
Agent be required to front or go out of pocket for such expenses) incurred by the Administrative




                                                42
Agent (to the extent not reimbursed5 by any Loan Party and without limiting the obligation of the
Borrower to do so), and (b) indemnify the Administrative Agent-Related Persons (to the extent
not reimbursed by any Loan Party and without limiting the obligation of the Borrower to do so),
in each case in an amount equal to its pro rata share (based on the respective principal amount of
its applicable outstanding Loan) thereof, from and against any and all claims, liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever that may at any time (whether before or after the payment
of the Loans) be imposed on, incurred by or asserted against such Administrative Agent-Related
Person in any way relating to, or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by such
Administrative Agent-Related Person under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are
found by a final and non-appealable decision of a court of competent jurisdiction to have resulted
from the Administrative Agent’s gross negligence or willful misconduct. The agreements in this
Section shall survive the payment of the Loans and all other amounts payable hereunder and the
resignation or removal of the Administrative Agent.

        Section 8.08. Agent in Its Individual Capacity. The Administrative Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any kind of business
with any Loan Party as though the Administrative Agent were not an Administrative Agent.
With respect to its Loans made by it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may exercise the
same as though it were not an Administrative Agent, and the terms “Lender” and “Lenders” shall
include the Administrative Agent in its individual capacity. The Lenders acknowledge that,
pursuant to such activities, the Administrative Agent and its Affiliates may receive information
regarding the Loan Parties and their respective Affiliates or any other Person party to any Loan
Document that is subject to confidentiality obligations in favor of such Loan Party or such other
Person and that prohibit the disclosure of such information to the Lenders, and the Lenders
acknowledge that, in such circumstances, the Administrative Agent shall not be under any
obligation to provide such information to them.

        Section 8.09. Successor Administrative Agent.

                (a) The Administrative Agent may be removed upon vote of the Required
Lenders and such removal shall be effective when a successor is appointed and accepts the
appointment. The Required Lenders shall appoint a successor agent for the Lenders, whereupon
such successor agent shall succeed to the rights, powers and duties of the Administrative Agent,
and the term “Administrative Agent” shall mean such successor agent effective upon such
appointment and approval (and the payment of all outstanding fees and expenses (including, but
not limited to, attorneys’ fees and expenses) of the removed Administrative Agent), and the
former Administrative Agent’s rights, powers and duties as Administrative Agent shall be

5
 Loan Parties will not pay any expenses or fees unless amount of DIP is increased without affecting total purchase
price for assets.


                                                        43
terminated, without any other or further act or deed on the part of such former Administrative
Agent or any of the parties to this Agreement or any holders of the Loans.

                (b) The Administrative Agent may resign as Administrative Agent upon 45 days’
notice to the Lenders and the Borrower (unless the right to receive such notice is waived by the
Lenders and the Borrower), such resignation effective upon the later of the 45th day after
delivery of such notice and the date of the appointment of a successor agent. If the
Administrative Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint a successor agent for the Lenders,
whereupon such successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term “Administrative Agent” shall mean such successor agent
effective upon such appointment and approval (and the payment of all outstanding fees and
expenses (including, but not limited to, attorneys’ fees and expenses) of the resigning
Administrative Agent), and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any holders of the
Loans. If no successor agent has accepted appointment as Administrative Agent by the date that
is 45 days following a retiring Administrative Agent’s notice of resignation, the retiring
Administrative Agent shall be entitled to appoint an Administrative Agent at its choosing or shall
be entitled to petition a court of competent jurisdiction to appoint an Administrative Agent,
which Administrative Agent must be an entity that regularly performs agency duties in credit
facilities. After any retiring Administrative Agent’s resignation as Administrative Agent, the
provisions of this Article VIII shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was Administrative Agent under this Agreement and the other Loan
Documents.

        Section 8.10. Authority of Agent. Notwithstanding any provision in the Loan
Documents to the contrary, the Administrative Agent shall obtain the approval of, and shall act
solely at the direction of, the Required Lenders for all purposes herein other than those which are
purely ministerial.

                                          ARTICLE IX

                                       MISCELLANEOUS

       Section 9.01. Notices.

                (a) Notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopy, as follows:

                      (i) if to any Loan Party, to TerreStar Networks Inc., 12010 Sunset Hills
Road, 6th Floor, Reston, VA 20190, with a copy to Akin, Gump, Strauss Hauer & Feld LLP,
One Bryant Park, New York, NY 10036, Attention of Ira Dizengoff and Arik Preis (Facsimile
(212) 872-1002);

                      (ii) if to the Administrative Agent, to [•]; and


                                                44
                     (iii) if to the Statutory Committee of Unsecured Creditors, to Otterbourg,
Steindler, Houston & Rosen, P.C., 230 Park Avenue, New York, NY 10169-0075, Attention of
Scott Hazan and David Posner (Facsimile (917) 368-7147).

               (b) Notices and other communications to the Lenders hereunder may be delivered
or furnished by electronic communications pursuant to procedures approved by the
Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Article
II unless otherwise agreed by the Administrative Agent and the applicable Lender. Each of the
Administrative Agent and the Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to procedures approved
by it; provided, further, that approval of such procedures may be limited to particular notices or
communications.

                (c) All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the date of receipt
if delivered by hand or overnight courier service, sent by telecopy or (to the extent permitted by
paragraph (b) above) electronic means or on the date five (5) Business Days after dispatch by
certified or registered mail if mailed, in each case delivered, sent or mailed (properly addressed)
to such party as provided in this Section 9.01 or in accordance with the latest unrevoked
direction from such party given in accordance with this Section 9.01.

             (d) Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto.

        Section 9.02. Survival of Agreement. All covenants, agreements, representations and
warranties made by the Loan Parties herein, in the other Loan Documents and in the certificates
or other instruments prepared or delivered in connection with or pursuant to this Agreement or
any other Loan Document shall be considered to have been relied upon by the Lenders and shall
survive the making by the Lenders of the Loans and the execution and delivery of the Loan
Documents, regardless of any investigation made by such persons or on their behalf, and shall
continue in full force and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under this Agreement or any other Loan Document is
outstanding and unpaid. Without prejudice to the survival of any other agreements contained
herein, indemnification obligations contained herein shall survive the payment in full of the
principal and interest hereunder and the termination of this Agreement and the resignation or
removal of the Administrative Agent.

        Section 9.03. Binding Effect. This Agreement shall become effective when it shall have
been executed by the Loan Parties hereunder, the Lenders and the Administrative Agent and
when the Administrative Agent shall have received copies hereof which, when taken together,
bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and
inure to the benefit of the Loan Parties, the Administrative Agent and each Lender and their
respective permitted successors and assigns.

       Section 9.04. Successors and Assigns.




                                                 45
                (a) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns permitted hereby, except
that (i) the Borrower may not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void) and (ii) no Lender may
assign or otherwise transfer its rights or obligations hereunder except in accordance with this
Section 9.04. Nothing in this Agreement, expressed or implied, shall be construed to confer
upon any person (other than the parties hereto, their respective successors and assigns permitted
hereby, Participants (to the extent provided in paragraph (c) of this Section 9.04), and, to the
extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent
and the Lenders) any legal or equitable right, remedy or claim under or by reason of this
Agreement.

               (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender
may assign to one or more other entities (each, an “Assignee”) all or a portion of its rights, Loans
and obligations under this Agreement (including all or a portion of its Loans at the time owing to
it and its Commitments then outstanding) only with the prior consent of the Borrower (except for
any assignment to a Lender or an Affiliate of a Lender).

                      (ii) Assignments shall be subject to the parties to each assignment
executing and delivering to the Administrative Agent and the Borrower an Assignment and
Acceptance; and

                        (iii)Subject to acceptance and recording thereof pursuant to paragraph
(b)(iv) below, from and after the effective date specified in each Assignment and Acceptance, the
Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such
Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement (and, in the
case of an Assignment and Acceptance covering all of the assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.08, 2.09, 2.10 and 9.05). Any assignment or transfer
by a Lender of rights or obligations under this Agreement that does not comply with this Section
9.04 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (c) of this Section 9.04.

                        (iv) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses of the Lenders, and
the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive
absent manifest error, and the Borrower, the Administrative Agent and the Lenders shall treat
each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes of this Agreement, notwithstanding notice to the contrary; provided,
however, in the case of an assignment to an Affiliate of the assigning Lender, such assignment
shall be effective between such Lender and its Affiliate immediately without compliance with
the conditions for assignment under this Section 9.04, but shall not be effective with respect to

                                                 46
any other party hereto (including, but not limited to, the Administrative Agent), and each other
party hereto shall be entitled to deal solely with such assigning Lender under any such
assignment, in each case until the conditions for assignment under this Section 9.04 have been
satisfied. The Register shall be available for inspection by the Borrower and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

                        (v) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an Assignee, the processing and recordation fee (consisting
of the payment of a fee of $3,500 to the Administrative Agent) referred to in paragraph (b) of
this Section to such assignment required by paragraph (b) of this Section, the Administrative
Agent shall accept such Assignment and Acceptance and record the information contained
therein in the Register. No assignment, whether or not evidenced by a promissory note, shall be
effective for purposes of this Agreement unless it has been recorded in the Register as provided
in this paragraph (b)(v).

                  (c) (i) Any Lender may, with the consent of the Borrower or the Administrative
Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a
portion of such Lender’s rights and obligations under this Agreement (including all or a portion
of its Commitments and the Loans owing to it); provided that (A) such Lender’s obligations
under this Agreement shall remain unchanged, (B) such Lender shall remain solely responsible
to the other parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement pursuant to which a Lender sells such a participation shall provide that such Lender
shall retain the sole right to enforce this Agreement and the other Loan Documents and to
approve any amendment, modification or waiver of any provision of this Agreement and the
other Loan Documents; provided that (x) such agreement may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or waiver that (1)
requires the consent of each Lender directly affected thereby pursuant to this Section 9.04 or
clause (i), (ii), (iii), (iv), (v) or (vi) of the first proviso to Section 9.08(b) and (2) directly affects
such Participant and (y) no other agreement with respect to such Participant may exist between
such Lender and such Participant. Subject to the foregoing provisions of this paragraph (c)(i)
and to paragraph (c)(ii) of this Section 9.04, the Borrower agrees that each Participant shall be
entitled to the benefits of Sections 2.08, 2.09 and 2.10 (subject to the requirements of those
Sections as if it were a Lender) to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section 9.04. Subject to the foregoing
provisions of this paragraph (c)(i), to the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 9.06 as though it were a Lender.

                       (ii) A Participant shall not be entitled to receive any greater payment
under Section 2.08, 2.09 or 2.10 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such Participant, unless the sale of the participation to
such Participant is made with the Borrower’s prior written consent.

                (d) Any Lender may at any time, without the consent of or notice to the
Administrative Agent or the Borrower, pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including any pledge or

                                                    47
assignment to secure obligations to a Federal Reserve Bank, and this Section 9.04 shall not apply
to any such pledge or assignment of a security interest; provided that no such pledge or
assignment of a security interest shall release a Lender from any of its obligations hereunder or
substitute any such pledgee or Assignee for such Lender as a party hereto.

                (e) The Borrower, upon receipt of written notice from the relevant Lender, agrees
to issue Notes to any Lender requiring Notes to facilitate transactions of the type described in
paragraph (d) above.

       Section 9.05. Expenses; Indemnity.

               (a) [Reserved].

                  (b) Each Loan Party shall indemnify and hold harmless the Administrative Agent,
each Lender and each of their respective officers, directors, employees, agents, advisors,
attorneys and representatives of each (each, an “Indemnitee”) from and against any and all
claims, damages, losses, penalties, actions, judgments, suits, liabilities, costs, expenses and
disbursements of any funds whatsoever (including, without limitation, reasonable fees and
disbursements of counsel), joint or several, that may be incurred by or asserted or awarded
against any Indemnitee (including, without limitation, in connection with or relating to any
investigation, litigation or proceeding or the preparation of any defense in connection therewith),
in each case arising out of or in connection with or by reason of the Loans, the Loan Documents
or any of the transactions contemplated thereby (for the avoidance of doubt, excluding the
transactions contemplated in the Purchase Agreement), or any actual or proposed use of the
proceeds of the Loans, except to the extent such claim, damage, loss, penalty, action, judgment,
suit, liability, cost, expense or disbursement of any funds whatsoever is found in a final non-
appealable judgment by a court of competent jurisdiction to have resulted primarily from such
Indemnitee's gross negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this paragraph applies, such indemnity shall be
effective whether or not such investigation, litigation or proceeding is brought by any Loan
Party, any director, securityholder or creditor of any Loan Party, an Indemnitee or any other
person, or an Indemnitee is otherwise a party thereto and whether or not the transactions
contemplated hereby are consummated. Each Loan Party further agrees that no Indemnitee shall
have any liability (whether direct or indirect, in contract, tort or otherwise) to such Loan Party or
any of its securityholders or creditors for or in connection with the transactions contemplated
hereby (for the avoidance of doubt, excluding the transactions contemplated in the Purchase
Agreement), except for direct damages (as opposed to special, indirect, consequential or punitive
damages (including, without limitation, any loss of profits, business or anticipated savings))
determined in a final non-appealable judgment by a court of competent jurisdiction to have
resulted primarily from such Indemnitee's gross negligence or willful misconduct.

               (c) Except as expressly provided in Section 9.05(a) with respect to Other Taxes,
which shall not be duplicative with any amounts paid pursuant to Section 2.10, this Section 9.05
shall not apply to Taxes.

                (d) If, for the purposes of obtaining judgment in any court in any jurisdiction with
respect to this Agreement, any of the Loan Documents or any of the other related documents, it

                                                 48
becomes necessary to convert into the currency of such jurisdiction (the “Judgment Currency”)
any amount due under this Agreement, any of the Loan Documents or any of the other related
documents in any currency other than the Judgment Currency (the “Currency Due”), then
conversion shall be made at the Exchange Rate prevailing on the Business Day before the day on
which judgment is given. In the event that there is a change in the Exchange Rate prevailing
between the Business Day before the day on which the judgment is given and the date of receipt
by Administrative Agent of the amount due, the applicable Loan Party will, on the date of receipt
by Administrative Agent, pay such additional amounts, if any, or be entitled to receive
reimbursement of such amount, if any, as may be necessary to ensure that the amount received
by Administrative Agent on such date is the amount in the Judgment Currency which when
converted at the Exchange Rate prevailing on the date of receipt by Administrative Agent is the
amount then due under this Agreement, any of the Loan Documents or any of the other related
documents in the Currency Due. If the amount of the Currency Due which Administrative Agent
is able to purchase is less than the amount of the Currency Due originally due to it, such Loan
Party shall indemnify and save Administrative Agent harmless from and against loss or damage
arising as a result of such deficiency. The indemnity contained herein shall constitute an
obligation separate and independent from the other obligations contained in this Agreement, the
Loan Documents or any of the other related documents, shall give rise to a separate and
independent cause of action, shall apply irrespective of any indulgence granted by
Administrative Agent from time to time and shall continue in full force and effect
notwithstanding any judgment or order for a liquidated sum in respect of an amount due under
this Agreement, any of the Loan Documents, any of the other related documents or under any
judgment or order.

         Section 9.06. Right of Set-off. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other Indebtedness at any time owing by such
Lender to or for the credit or the account of the Borrower or any Subsidiary against any of and
all of the Obligations of the Borrower or the Subsidiary Loan Parties now or hereafter existing
under this Agreement or any other Loan Document held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such other Loan
Document and although the obligations may be unmatured. The rights of each Lender under this
Section 9.06 are in addition to other rights and remedies (including other rights of set-off) that
such Lender may have.

     Section 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK AND, AS APPLICABLE, THE BANKRUPTCY CODE, OR, WITH RESPECT TO
SECURITY DOCUMENTS, IF ANY, FROM THE CANADIAN GUARANTORS, OTHER
APPLICABLE LAW TO THE EXTENT SET FORTH IN SUCH SECURITY DOCUMENT.

       Section 9.08. Waivers; Amendment.



                                                49
                (a) No failure or delay of the Administrative Agent or any Lender in exercising
any right or power hereunder or under any Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of the
Administrative Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of this Agreement or any other Loan Document or consent to any
departure by any Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice or demand on any Loan Party
in any case shall entitle such person to any other or further notice or demand in similar or other
circumstances.

               (b) Neither this Agreement nor any other Loan Document nor any provision
hereof or thereof may be waived, amended or modified except (x) in the case of this Agreement,
pursuant to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders and (y) in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by each party thereto and the Administrative Agent and
consented to by the Required Lenders; provided, however, that no such agreement shall

                      (i) Except as permitted by Section 2.04, decrease or forgive the principal
amount of, extend the final maturity of, decrease the rate of interest on, extend any Interest
Payment Date for, reduce the amount of any fees payable in connection with or extend the date
of the payment of any fee relating to any Loan, without the prior written consent of the
Administrative Agent or each Lender directly affected thereby,

                      (ii) increase or extend the Commitment of any Lender without the prior
written consent of such Lender (it being understood that waivers or modifications of conditions
precedent, covenants, Defaults or Events of Default shall not constitute an increase in the
Commitment of any Lender),

                       (iii) amend or modify the provisions of Section 2.11 in a manner that
would by its terms alter the pro rata sharing of payments required thereby or revise the order of
the allocation of prepayments, without the prior written consent of each Lender adversely
affected thereby,

                       (iv) amend or modify the provisions of this Section 9.08 or the definition
of the term “Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or make any
determination or grant any consent hereunder, without the prior written consent of each Lender
adversely affected thereby,

                         (v) release all or substantially all of the Collateral or release the Borrower
or all or substantially all of the Loan Parties from their respective Guarantees hereunder, unless,
in the case of a Loan Party, all or substantially all of the Equity Interests of such Loan Party are



                                                  50
sold or otherwise disposed of in a transaction permitted by this Agreement, without the prior
written consent of each Lender,

                        (vi) effect any waiver, amendment or modification of any Loan Document
that would alter the relative priorities of the rights of the Secured Parties as against any other
Person without the consent of each Lender, or

                       (vii) amend or modify the provisions of Section 9.08(d) without the
prior written consent of each Lender.

provided, further, that no such agreement shall amend, modify or otherwise affect the rights or
duties of the Administrative Agent hereunder without the prior written consent of the
Administrative Agent acting as such at the effective date of such agreement, as applicable. Each
Lender shall be bound by any waiver, amendment or modification authorized by this Section
9.08 and any consent by any Lender pursuant to this Section 9.08 shall bind any successor or
assignee of such Lender.

                (c) Without the consent of any Lender, the Loan Parties and the Administrative
Agent may (in their respective sole discretion, or shall, to the extent required by any Loan
Document) enter into any amendment, modification or waiver of any Loan Document, or enter
into any new agreement or instrument, to effect the granting, perfection, protection, expansion or
enhancement of any security interest in any Collateral or additional property to become
Collateral for the benefit of the Secured Parties, or as required by local law to give effect to, or
protect any security interest for the benefit of the Secured Parties, in any property or so that the
security interests therein comply with applicable law.

              (d) No fee shall be payable to any Lender in consideration of the consent to any
waiver or amendment unless each Lender shall have the opportunity to so consent and earn such
fee.

            (e) Any consent, waiver or approval of Lenders or Required Lenders under any
Loan Document may be given or withheld by such Lenders in their sole discretion.

        Section 9.09. Interest Rate Limitation. Notwithstanding anything herein to the contrary,
if at any time the applicable interest rate, together with all fees and charges that are treated as
interest under applicable law (collectively, the “Charges”), as provided for herein or in any other
document executed in connection herewith, or otherwise contracted for, charged, received, taken
or reserved by any Lender, shall exceed the maximum lawful rate (the “Maximum Rate”) that
may be contracted for, charged, taken, received or reserved by such Lender in accordance with
applicable law, the rate of interest payable hereunder, together with all Charges payable to such
Lender, shall be limited to the Maximum Rate; provided that such excess amount shall be paid to
such Lender on subsequent payment dates to the extent not exceeding the legal limitation.

        Section 9.10. Entire Agreement. This Agreement and the other Loan Documents
constitute the entire contract between the parties relative to the subject matter hereof (other than
any agreements relating to the Purchase Agreement). Any previous agreement among or
representations from the parties or their Affiliates with respect to the subject matter hereof is
superseded by this Agreement and the other Loan Documents. Except as expressly set forth

                                                 51
herein, nothing in this Agreement or in the other Loan Documents, expressed or implied, is
intended to confer upon any party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the other Loan Documents.

      Section 9.11. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY
OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.

        Section 9.12. Severability. In the event any one or more of the provisions contained in
this Agreement or in any other Loan Document should be held invalid, illegal or unenforceable
in any respect, the validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the
invalid, illegal or unenforceable provisions.

        Section 9.13. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which, when taken together,
shall constitute but one contract, and shall become effective as provided in Section 9.03.
Delivery of an executed counterpart to this Agreement by facsimile transmission (or other
electronic transmission pursuant to procedures approved by the Administrative Agent) shall be as
effective as delivery of a manually signed original.

        Section 9.14. Headings. Article and Section headings and the Table of Contents used
herein are for convenience of reference only, are not part of this Agreement and are not to affect
the construction of, or to be taken into consideration in interpreting, this Agreement.

         Section 9.15. Confidentiality. Each of the Lenders and the Administrative Agent agrees
that it shall maintain in confidence any information relating to the Loan Parties furnished to it by
or on behalf of the Loan Parties (other than information that (a) has become generally available
to the public other than as a result of a disclosure by such party, (b) has been independently
developed by such Lender or the Administrative Agent, as applicable, without violating this
Section 9.15 or (c) was available to such Lender or the Administrative Agent, as applicable, from
a third party having, to such person’s knowledge, no obligations of confidentiality to any Loan
Party) and shall not reveal the same other than to its directors, trustees, officers, employees and
advisors with a need to know or to any person that approves or administers the Loans on behalf
of such Lender (so long as each such person shall have been instructed to keep the same

                                                 52
confidential in accordance with this Section 9.15 and shall have agreed to be bound by this
confidentiality clause), except: (A) to the extent necessary to comply with law or any legal
process or the requirements of any Governmental Authority, the National Association of
Insurance Commissioners or of any securities exchange on which securities of the disclosing
party or any Affiliate of the disclosing party are listed or traded, (B) as part of the reporting or
review procedures to, or examinations by, Governmental Authorities or self-regulatory
authorities, including the National Association of Insurance Commissioners or the National
Association of Securities Dealers, Inc., (C) to its parent companies, Affiliates or auditors (so long
as each such person shall have been instructed to keep the same confidential in accordance with
this Section 9.15 and shall have agreed to be bound by this confidentiality clause), (D) in order to
enforce its rights under any Loan Document in a legal proceeding, and (E) to any pledgee under
Section 9.04(d) or any other prospective assignee of, or prospective Participant in, any of its
rights under this Agreement (so long as such person shall have been instructed to keep the same
confidential in accordance with this Section 9.15 and shall have agreed in a writing delivered to
the Borrower prior to any disclosure of such confidential information to be bound by this
confidentiality clause).

       Section 9.16. Direct Website Communications.

                 (a) Delivery. (i) Each Loan Party hereby agrees that it will provide to the
Administrative Agent all information, documents and other materials that it is obligated to
furnish to the Administrative Agent pursuant to this Agreement and any other Loan Document,
including, without limitation, all notices, requests, financial statements, financial and other
reports, certificates and other information materials, but excluding any such communication that
(A) relates to the payment of any principal or other amount due under this Agreement prior to the
scheduled date therefor, (B) provides notice of any Default or Event of Default under this
Agreement or (C) is required to be delivered to satisfy any condition precedent to the
effectiveness of this Agreement and/or any borrowing hereunder (all such non-excluded
communications collectively, the “Communications”), by transmitting the Communications in an
electronic/soft medium in a format acceptable to the Administrative Agent. In addition, each
Loan Party agrees to continue to provide the Communications to the Administrative Agent in the
manner specified in this Agreement or any other Loan Document. Nothing in this Section 9.16
shall prejudice the right of the Administrative Agent or any Lender or any Loan Party to give any
notice or other communication pursuant to this Agreement or any other Loan Document in any
other manner specified in this Agreement or any other Loan Document.

                        (ii) The Administrative Agent agrees that receipt of the Communications
by the Administrative Agent at its email address set forth above shall constitute effective
delivery of the Communications to the Administrative Agent for purposes of the Loan
Documents. Each Lender agrees that notice to it (as provided in the next sentence) specifying
that the Communications have been posted to the Platform (as defined below) shall constitute
effective delivery of the Communications to such Lender for purposes of the Loan Documents.
Each Lender agrees (A) to notify the Administrative Agent in writing (including by electronic
communication) from time to time of such Lender’s email address to which the foregoing notice
may be sent by electronic transmission and (B) that the foregoing notice may be sent to such
email address.


                                                 53
                (b) Posting. Each Loan Party further agrees that the Administrative Agent may
make the Communications available to the Lenders by posting the Communications on Intralinks
or a substantially similar electronic transmission system (the “Platform”).

                (c) Platform. The Platform is provided “as is” and “as available.” The Agent
Parties (as defined below) do not warrant the accuracy or completeness of the Communications,
or the adequacy of the Platform and expressly disclaim liability for errors or omissions in the
Communications. No warranty of any kind, express, implied or statutory, including, without
limitation, any warranty of merchantability, fitness for a particular purpose, non-infringement of
third party rights or freedom from viruses or other code defects, is made by any Agent Party in
connection with the Communications or the Platform. In no event shall the Administrative
Agent or any of its Affiliates or any of their respective officers, directors, employees, agents,
advisors or representatives (collectively, “Agent Parties”) have any liability to the Loan Parties,
any Lender or any other person or entity for damages of any kind, including, without limitation,
direct or indirect, special, incidental or consequential damages, losses or expenses (whether in
tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s
transmission of communications through the internet, except to the extent the liability of any
Agent Party is found in a final non-appealable judgment by a court of competent jurisdiction to
have resulted primarily from such Agent Party’s gross negligence or willful misconduct.

        Section 9.17. Release of Liens. The Administrative Agent agrees to take such actions as
are reasonably requested by the Borrower (which shall be at the Lenders’ expense) to terminate
the Liens and security interests created by the Loan Documents when all Commitments are
terminated and the Obligations are indefeasibly paid in full pursuant to Section 2.04.

        Section 9.18. USA Patriot Act. Each Lender hereby notifies the Borrower that pursuant
to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October
26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the
Borrower, which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance with the Act.

      Section 9.19. Conflicts. In the event of any conflict between the terms of this
Agreement and the DIP Order, the DIP Order shall govern.

                                           ARTICLE X

                                SECURITY AND GUARANTEE

       Section 10.01. Security Interest.

               (a) As security for all Obligations, each Obligor hereby collaterally assigns and
grants to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders,
a continuing security interest in, Lien on and assignment of, all of the following property and
assets of such Obligor, whether now owned or existing or hereafter acquired or arising,
regardless of where located:

                       (i) all Accounts, including all credit enhancements therefor;


                                                 54
                       (ii) all contract rights, including, without limitation, all rights of such
Obligor as either lessor or lessee under any lease or rental agreement of real or personal property,
including, without limitation, each lease;

                       (iii) all chattel paper;

                       (iv) all documents;

                       (v) all instruments;

                       (vi) all supporting obligations and letter-of-credit rights;

                      (vii) all General Intangibles (including, without limitation, payment
intangibles, intercompany accounts, and software) (as defined in the UCC) and all IP Collateral;

                      (viii) all inventory and other goods (including satellites and spare
satellites and equipment used in ground stations);

                       (ix) all equipment and fixtures;

                       (x) all Investment Property;

                       (xi) all money, cash, cash equivalents, securities, and other property of
any kind;

                       (xii)   all deposit accounts and all other credits and balances with and
other claims against any financial institution;

                       (xiii) all notes, and all documents of title;

                        (xiv) all books, records, and other property related to or referring to any
of the foregoing, including, without limitation, books, records, account ledgers, data processing
records, computer software and other property, and General Intangibles at any time evidencing
or relating to any of the foregoing;

                     (xv) all commercial tort claims disclosed from time to time to the
Administrative Agent pursuant to the terms of this Agreement;

                       (xvi)   all real estate owned or leased by such Obligor;

                      (xvii) all other personal property of such Obligor, excluding Obligor’s
claims and causes of action arising under sections 542-553 of the Bankruptcy Code (“Avoidance
Actions”);

                        (xviii) all FCC License Rights and Industry Canada License Rights,
whether now owned or held or hereafter acquired or held by an Obligor, including all FCC
Licenses and Industry Canada Licenses, to the fullest extent permitted by applicable law; and the
right to receive monies, proceeds, or other consideration in connection with the sale, assignment,
transfer, or other disposition of any FCC Licenses or Industry Canada Licenses, the proceeds

                                                  55
from the sale of any FCC Licenses or any Industry Canada Licenses or any goodwill or other
intangible rights or benefits associated therewith, including without limitation all rights of each
Obligor to: (A) transfer, assign or otherwise dispose of its rights, title and interests, if any, under
or in respect of such FCC Licenses or such Industry Canada Licenses, subject to any and all
required FCC and/or Industry Canada approvals, (B) exercise any rights, demands and remedies
against the lessor, licensor or other parties thereto, and (C) all rights of such Obligor to receive
proceeds of any insurance, indemnities, warranties, guaranties or claims for damages in
connection therewith; provided, that such security interest does not include at any time any FCC
License or any Industry Canada License to the extent (but only to the extent) that at such time the
Administrative Agent may not validly possess a security interest directly in the FCC License or
Industry Canada License pursuant to applicable law, including the United States
Communications Act of 1934, as amended, and the rules, regulations and policies promulgated
thereunder, as in effect at such time, but such security interest does include at all times all
proceeds of the FCC Licenses and Industry Canada Licenses, and the right to receive all monies,
consideration and proceeds derived from or in connection with the sale, assignment, transfer, or
other disposition of the FCC Licenses and Industry Canada Licenses consistent with the
conditions thereof; and

                        (xix) all accessions to, substitutions for, and replacements, products, and
proceeds of any of the foregoing, including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or requisition payments with respect to
all or any of the foregoing.

All of the foregoing and all other property of such Obligor in which the Administrative Agent or
any Lender may at any time be granted a Lien, is herein collectively referred to as the
“Collateral.”

               (b) All of the Obligations shall be secured by all of the Collateral.

       Section 10.02. Perfection and Protection of Security Interest.

                 (a) Each Obligor shall, as applicable, at such Obligor’s expense, perform all steps
reasonably requested by the Administrative Agent (acting at the written request of the Required
Lenders) or the Required Lenders at any time to perfect, maintain, protect, and enforce the
Administrative Agent’s Liens, including: upon an Event of Default, delivering to the
Administrative Agent (1) the originals of all instruments, documents, and chattel paper, and all
other Collateral of which the Administrative Agent reasonably determines it should have
physical possession in order to perfect and protect the Administrative Agent’s security interest
therein, duly pledged, endorsed, or assigned to the Administrative Agent without restriction,
(2) warehouse receipts covering any portion of the Collateral located in warehouses and for
which warehouse receipts are issued, (3) certificates of title (excluding deeds for real estate)
covering any portion of the Collateral for which certificates of title have been issued and (4) all
letters of credit on which such Obligor is named beneficiary.

               (b) To the extent permitted by any legal requirement, the Administrative Agent
may file, without any Obligor’s signature, one or more financing statements or similar statements
disclosing the Administrative Agent’s Liens on the Collateral.

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                (c) To the extent any Obligor is or becomes the issuer of any investment property
that is Collateral (in such capacity, an “Issuer”), upon the request of the Administrative Agent
(acting at the written direction of the Required Lenders) each Obligor agrees as follows with
respect to such investment property, but subject to the terms of any documents or agreements
entered into prior to the Closing Date creating or evidencing any pre-petition Lien with respect to
such Investment Property:

                        (i) All such Investment Property issued by such Issuer, all warrants, and
all non-cash dividends and other non-cash distributions in respect thereof at any time registered
in the name of, or otherwise deliverable to, any Obligor, shall be delivered directly to the
Administrative Agent, for the account of such Obligor, at the Administrative Agent’s address for
notices set forth in herein.

                      (ii) Such Issuer will not acknowledge any transfer or encumbrance in
respect of such investment property to or in favor of any Person other than the Administrative
Agent or a Person designated by the Administrative Agent in writing.

        Section 10.03. Title to, Liens on, and Use of Collateral. Each Obligor represents and
warrants to the Administrative Agent and the Lenders and agrees with the Administrative Agent
and the Lenders that: (a) all of the Collateral owned by such Obligor is and will (subject to
dispositions permitted hereunder) continue to be owned by such Obligor free and clear of all
Liens whatsoever, except for Permitted Liens, (b) the Administrative Agent’s Liens in the
Collateral will not be junior in priority to any prior Lien other than the Carve-Out and the Prior
Liens and (c) such Obligor will use, store, and maintain the Collateral owned by such Obligor
with all reasonable care. The inclusion of proceeds in the Collateral shall not be deemed to
constitute the Administrative Agent’s or any Lender’s consent to any sale or other disposition of
the Collateral except as expressly permitted herein. The security interests and Liens in favor of
the Secured Parties in the Collateral shall not be subject to challenge and shall attach and become
valid, legal and perfected immediately upon the entry of the DIP Order, subject to the terms and
conditions set forth in the DIP Order.

        Section 10.04. Proceeds of Accounts. If so requested by the Administrative Agent
(acting at the written request of the Required Lenders) at any time after the occurrence and
during the continuance of an Event of Default, the Obligors shall instruct all account debtors in
respect of accounts, chattel paper and General Intangibles and all obligors on instruments to
make all payments in respect thereof either: (i) directly to the Administrative Agent (by
instructing that such payments be remitted to a post office box which shall be in the name and
under the control of the Administrative Agent), or (ii) to one or more other banks in the United
States of America (by instructing that such payments be remitted to a post office box which shall
be in the name and under the control of the Administrative Agent) under arrangements, in form
and substance satisfactory to the Required Lenders, pursuant to which the Obligors shall have
irrevocably instructed such other bank (and such other bank shall have agreed) to remit all
proceeds of such payments directly to the Administrative Agent.

       Section 10.05. Delivery and Other Perfection. Each Obligor shall:




                                                57
                (a) give, execute, deliver, file, record, authorize or obtain all such financing
statements, notices, instruments, documents, agreements or consents or other papers and take all
such other actions as may be necessary or desirable and reasonably requested by the
Administrative Agent (acting at the written request of the Required Lenders) to create, preserve,
perfect or validate the security interest in the Collateral granted pursuant hereto under the law of
Canada, the United States or a jurisdiction thereof or to enable the Administrative Agent to
exercise and enforce its rights hereunder with respect to such pledge and security interest,
including, without limitation, (i) (A) making filings, registrations and recordations with the U.S.
Patent and Trademark Office and the U.S. Copyright Office, (B) delivery of all original
certificates representing Investment Property, together with endorsements, stock powers or other
appropriate instruments of transfer, duly executed or endorsed in blank, and (C) taking all such
action as may be required by the PPSA or Uniform Commercial Code then in effect in any
applicable jurisdiction in order to effect the same, and (ii) following the occurrence and during
the continuance of an Event of Default, (A) causing any or all of the Pledged Equity to be
transferred of record into the name of the Administrative Agent or its nominee (and the
Administrative Agent agrees that if any Pledged Equity is transferred into its name or the name
of its nominee, the Administrative Agent will thereafter promptly give to the Obligors copies of
any notices and communications received by it with respect to the Pledged Equity pledged by the
Obligors hereunder) and (B) if requested by the Administrative Agent (acting at the written
request of the Required Lenders), using commercially reasonable efforts to obtain any consents,
authorization and approvals of the FCC and Industry Canada in connection with any transfer or
disposition of any FCC License or any Industry Canada License or the equity or any issuer that
owns or holds any rights with respect to any FCC License or any Industry Canada License;

               (b) keep full and accurate books and records relating to the Collateral;

                (c) if any Event of Default shall have occurred and be continuing, permit
representatives of the Administrative Agent, upon reasonable notice, at any time during normal
business hours to inspect and make abstracts from its books and records pertaining to the
Collateral, and permit representatives of the Administrative Agent to be present at the Obligors’
respective places of business to receive copies of all communications and remittances relating to
the Collateral, and forward copies of any notices or communications received by the Obligors
with respect to the Collateral, all in such manner as the Administrative Agent (acting at the
written direction of the Required Lenders) may require; and

               (d) execute and deliver and, subject to the execution thereof by the Administrative
Agent, cause to be filed, such continuation statements, and do such other acts and things as
necessary to maintain the perfection of the security interest granted pursuant hereto under the law
of Canada, the United States or a jurisdiction therein.

        Section 10.06. Other Financing Statements and Liens. Except as otherwise permitted
under this Agreement, no Obligor shall file or suffer to be on file, or authorize or permit to be
filed or to be on file, in any jurisdiction, any financing statement or like instrument with respect
to the Collateral in which the Administrative Agent is not named as the sole secured party for the
benefit of the Secured Parties.



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        Section 10.07. Preservation of Rights. The Administrative Agent shall not be required to
take steps necessary to preserve any rights against prior parties to any of the Collateral.

       Section 10.08. Special Provisions Relating to Certain Collateral.

                (a) So long as no Event of Default shall have occurred and be continuing, the
Obligors shall have the right to exercise all voting, consensual and other powers of ownership
pertaining to the Pledged Equity for all purposes not inconsistent with the terms of this
Agreement and the other Loan Documents. If any Event of Default shall have occurred and be
continuing, the Administrative Agent (acting at the written direction of the Required Lenders)
may exercise all voting, consensual and other powers of ownership pertaining to the Pledged
Equity.

                (b) If any Event of Default shall have occurred and be continuing, and whether or
not the Lenders or the Administrative Agent exercise any available right to declare any
Obligations due and payable or seek or pursue any other relief or remedy available to them under
applicable law or under this Agreement or the other Loan Documents, upon request by the
Administrative Agent (acting at the written request of the Required Lenders), all dividends and
other distributions on the Pledged Equity shall be paid directly to the Administrative Agent, and,
if the Administrative Agent shall so request in writing (acting at the written request of the
Required Lenders), the Obligors jointly and severally agree to execute and deliver to the
Administrative Agent appropriate additional dividend, distribution and other orders and
documents to that end, provided that if such Event of Default is cured, any such dividend or
distribution theretofore paid to the Lenders shall, upon request of any Obligor (except to the
extent theretofore applied to the Obligations), be returned by the Lenders (through the
Administrative Agent) to the Obligors.

                (c) For the purpose of enabling the Administrative Agent to exercise rights and
remedies under Section 7.02 at such time as the Administrative Agent shall be lawfully entitled
to exercise such rights and remedies, and for no other purpose, the Obligors hereby grant to the
Administrative Agent or its nominee, to the extent assignable, an irrevocable, non-exclusive
license (exercisable without payment of royalty or other compensation to the Obligors) to use,
assign, license or sublicense any of the intellectual property Collateral now owned or hereafter
acquired by the Obligors, wherever the same may be located, including in all cases with
reasonable access to all media in which any of the licensed items may be recorded or stored and
to all computer programs used for the compilation or printout thereof.

        Section 10.09. Additional Remedies During an Event of Default, Etc. During the period
during which an Event of Default shall have occurred and be continuing, without limiting the
rights otherwise provided in this Agreement, the other Loan Documents and applicable law:

              (a) the Obligors shall, at the request of the Administrative Agent, assemble the
Collateral owned by them at such place or places, reasonably convenient to the Administrative
Agent and the Obligors, designated in the Administrative Agent’s request;




                                                59
               (b) the Administrative Agent may make any reasonable compromise or settlement
deemed desirable with respect to any of the Collateral and may extend the time of payment,
arrange for payment in installments, or otherwise modify the terms of, any of the Collateral;

                (c) the Administrative Agent shall have all of the rights and remedies with respect
to the Collateral of a secured party under the New York Uniform Commercial Code and the
PPSA (whether or not in effect in the jurisdiction where the rights and remedies are asserted) and
such additional rights and remedies to which a secured party is entitled under the laws in effect
in any jurisdiction where any rights and remedies hereunder may be asserted, including, without
limitation, the right, to the maximum extent permitted by law, to exercise all voting, consensual
and other powers of ownership pertaining to the Collateral as if the Administrative Agent were
the sole and absolute owner thereof (and the Obligors agree to take all such action as may be
appropriate to give effect to such right);

               (d) the Administrative Agent (acting at the written direction of the Required
Lenders) may, in its name or in the name of the Obligors or otherwise, demand, sue for, collect
or receive any money or property at any time payable or receivable on account of or in exchange
for any of the Collateral, but shall be under no obligation to do so; and

                 (e) the Administrative Agent may, upon 30 Business Days’ prior written notice to
the Obligors of the time and place (which the Obligors agree constitutes reasonable prior notice),
with respect to the Collateral or any part thereof which shall then be or shall thereafter come into
the possession, custody or control of the Administrative Agent, the holders of the Obligations or
any of their respective agents, sell, lease, assign or otherwise dispose of all or any part of such
Collateral, at such place or places as the Administrative Agent (acting at the written direction of
the Required Lenders) deems best, and for cash or for credit or for future delivery (without
thereby assuming any credit risk), at public or private sale, without demand of performance or
notice of intention to effect any such disposition or of the time or place thereof (except such
notice as is required above or by applicable statute and cannot be waived), and the
Administrative Agent or its nominee or any holder of any Obligation or anyone else may be the
purchaser, lessee, assignee or recipient of any or all of the Collateral so disposed of at any public
sale (or, to the extent permitted by law, at any private sale) and thereafter hold the same
absolutely, free from any claim or right of whatsoever kind, including any right or equity of
redemption (statutory or otherwise), of the Obligors, any such demand, notice and right or equity
being hereby expressly waived and released. In the event of any sale, assignment, or other
disposition of any of the IP Collateral, the goodwill connected with and symbolized by the IP
Collateral subject to such disposition shall be included. The Administrative Agent may, without
notice or publication, adjourn any public or private sale or cause the same to be adjourned from
time to time by announcement at the time and place fixed for the sale, and such sale may be
made at any time or place to which the sale may be so adjourned. The proceeds of each
collection, sale or other disposition under this Section 10.09, including by virtue of the exercise
of the license granted to the Administrative Agent in Section 10.08(d), shall be applied in
accordance with Section 10.11. The Obligors recognize that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state securities laws, the
Administrative Agent may be compelled, with respect to any sale of all or any part of the
Collateral, to limit purchasers to those who will agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the distribution or resale

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thereof. The Obligors acknowledge that any such private sales may be at prices and on terms less
favorable to the Administrative Agent than those obtainable through a public sale without such
restrictions, and, notwithstanding such circumstances, agree that any such private sale shall be
deemed to have been made in a commercially reasonable manner and that the Administrative
Agent shall have no obligation to engage in public sales and no obligation to delay the sale of
any Collateral for the period of time necessary to permit the respective issuer thereof to register it
for public sale. The Administrative Agent shall not be required to marshal any present or future
collateral security (including, but not limited to, this Agreement and the Collateral) for, or other
assurances of payment of, the Obligations or any of them or to resort to such collateral security
or other assurances of payment in any particular order, and all of the Administrative Agent’s
rights hereunder and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising. To the extent that
each Obligor lawfully may, the Obligor hereby agrees that it will not invoke any law relating to
the marshalling of collateral which might cause delay in or impede the enforcement of the
Administrative Agent’s rights under this Agreement or under any other instrument creating or
evidencing any of the Obligations or under which any of the Obligations is outstanding or by
which any of the Obligations is secured or payment thereof is otherwise assured, and, to the
extent that it lawfully may, the Obligor hereby irrevocably waives the benefits of all such laws.
Each Obligor hereby acknowledges that if the Administrative Agent complies with any
applicable state, provincial, or federal law requirements in connection with a disposition of the
Collateral, such compliance will not adversely affect the commercial reasonableness of any sale
or other disposition of the Collateral.

         Section 10.10. Private Sale. The Administrative Agent and the Lenders shall incur no
liability as a result of the sale of the Collateral, or any part thereof, at any private sale conducted
in a commercially reasonable manner.

        Section 10.11. Application of Proceeds. Except as otherwise herein expressly provided
and except as provided below in this Section 10.11, the Proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto, and any other cash at the time held
by the Administrative Agent under Section 7.02 or this Article X, shall be applied by the
Administrative Agent:

                First, to the payment of the (a) reasonable costs and expenses of such collection,
sale or other realization, including reasonable out-of-pocket costs and expenses of the
Administrative Agent and the reasonable fees and expenses of its agents and counsel, and all out
-of-pocket expenses incurred and advances made by the Administrative Agent in connection
therewith and (b) any and all outstanding fees and expenses of the Administrative Agent
(including, but not limited to, attorneys’ fees and expenses);

              Next, to the payment in full of the Obligations, in each case equally and ratably in
accordance with the respective amounts thereof then due and owing or as the Lenders holding
the same may otherwise agree; and

                Finally, to the payment to the respective Obligors, or their respective successors
or assigns, or as a court of competent jurisdiction may direct, of any surplus then remaining.


                                                   61
        Section 10.12. Attorney-in-Fact. Without limiting any rights or powers granted by this
Agreement to the Administrative Agent while no Event of Default has occurred and is
continuing, the Administrative Agent is hereby appointed the attorney-in-fact of the Obligors to,
upon the occurrence and during the continuance of any Event of Default, carry out the provisions
of this Article X and take any action and execute any instruments that the Administrative Agent
(acting at the written direction of the Required Lenders) may deem necessary or advisable to
accomplish the purposes hereof, which appointment as attorney-in-fact is irrevocable and
coupled with an interest; provided that, Administrative Agent shall not execute on behalf of
Obligors any application or other instrument to be submitted to the FCC or Industry Canada
except to the extent permitted by applicable law. Without limiting the generality of the
foregoing, so long as the Administrative Agent shall be entitled under this Article X to make
collections in respect of the Collateral, the Administrative Agent shall have the right and power
to receive, endorse and collect all checks made payable to the order of the Obligors representing
any dividend, payment or other distribution in respect of the Collateral or any part thereof and to
give full discharge for the same.

                Without limiting the foregoing, the Obligors consent that UCC or PPSA financing
statements may be filed describing the Collateral as “all assets” or “all personal property” of the
Obligors (provided that no such description shall be deemed to modify the description of
Collateral set forth in Section 10.01).

         Section 10.13. Further Assurances. Each Obligor agrees that, from time to time upon the
written request of the Administrative Agent (acting at the written request of the Required
Lenders), at the expense of such Obligor and, subject to the terms hereof, such Obligor will
promptly execute and use commercially reasonable efforts to deliver, or otherwise authenticate,
all further instruments and documents, and take all further commercially reasonable action that
the Required Lenders may reasonably request in order to perfect and protect any pledge or
security interest granted or purported to be granted by such Obligor hereunder or to enable the
Administrative Agent to exercise and enforce its rights and remedies hereunder with respect to
any Collateral of such Obligor and do such other acts and things as the Administrative Agent
may reasonably request in order fully to effect the purposes of this Agreement, including,
without limitation, taking any other action contemplated by this Article X. In addition, each
Obligor will furnish to the Administrative Agent from time to time statements and schedules (or
update any schedules and annexes hereto) further identifying and describing the Collateral of
such Obligor and such other reports in connection with such Collateral as the Administrative
Agent may reasonably request (acting at the written request of the Required Lenders), all in
reasonable detail.

       Section 10.14. Certain Regulatory Requirements.

                (a) At any time after the occurrence and during the continuance of an Event of
Default, each Obligor shall take all lawful action that the Administrative Agent (acting at the
written direction of the Required Lenders) may reasonably request in the exercise of its rights
and remedies hereunder, which include the right to require such Obligor to transfer or assign any
FCC License Rights or Industry Canada License Rights held by it or any of its Subsidiaries to
any party or parties to facilitate an arms’-length public or private sale for the benefit of the
Lenders. In furtherance of this right, the Obligors shall (i) cooperate fully with the

                                                62
Administrative Agent in obtaining all approvals and consents from the FCC and Industry Canada
and each other Governmental Authority and from any third parties that the Administrative Agent
(acting at the written direction of the Required Lenders) may deem necessary or advisable to
accomplish any such transfer or assignment, and (ii) prepare, execute and file with the FCC,
Industry Canada and any other Governmental Authority any application, request for consent,
certificate or instrument that the Administrative Agent (acting at the written direction of the
Required Lenders) may deem necessary or advisable to accomplish any such transfer or
assignment. If the Obligors fail to execute such applications, requests for consent, certificates or
instruments, the clerk of any court that has jurisdiction over the Loan Documents may, upon an
ex parte request by the Administrative Agent (acting at the written direction of the Required
Lenders), execute and file the same on behalf of the Obligors for purposes of placing such
request before the FCC or Industry Canada, except to the extent as would not be permissible
under applicable law.

                (b) To enforce the provisions of Article X, the Administrative Agent is authorized
to request the consent or approval of the FCC, Industry Canada or any other Governmental
Authority to a voluntary or an involuntary transfer of control of the Obligors or the voluntary or
involuntary assignment of any FCC License Rights and any Industry Canada Rights held by the
Obligors. In connection with the exercise of its remedies under this Agreement, the
Administrative Agent may obtain the appointment of a trustee or receiver to assume control of
the Obligors, subject to any required prior approval of the FCC, Industry Canada or any other
Governmental Authority. Such trustee or receiver shall have all rights and powers provided to it
by law or by court order or provided to the Administrative Agent under this Agreement.

               (c) Notwithstanding anything to the contrary contained in this Agreement, to the
extent required by applicable law:

                        (i) the Administrative Agent will not take any action hereunder that
would constitute or result in any transfer of control or assignment of the FCC Licenses or
Industry Canada Licenses without obtaining all necessary FCC, Industry Canada and other
Governmental Authority approvals, and all voting rights in any Collateral representing control
rights in the holders of any FCC License or any Industry Canada License shall remain with the
Obligors notwithstanding the occurrence of any Event of Default until such required consents of
the FCC or Industry Canada, as applicable, shall have been obtained (and, in that connection, the
Administrative Agent and the Lenders shall be entitled to rely on the advice of FCC counsel or
Industry Canada counsel selected by the Administrative Agent (acting at the written direction of
the Required Lenders) to determine whether FCC approval, Industry Canada approval or other
Governmental Authority approvals are required), and

                       (ii) the Administrative Agent shall not foreclose on, sell, assign, transfer
or otherwise dispose of, or exercise any right to control the FCC Licenses or Industry Canada
Licenses as provided herein or take any other action that would affect the operational, voting, or
other control of the Obligors, unless such action is taken in accordance with the provisions of the
Communications Act of 1934, as from time to time amended, and the rules, regulations and
policies of the FCC, Industry Canada and any other Governmental Authority.



                                                 63
                (d) Each Obligor acknowledges that the approval of the FCC, Industry Canada
and each other appropriate Governmental Authority to the assignment of the FCC License Rights
and the Industry Canada License Rights is integral to the Administrative Agent’s realization of
the value of the Collateral, including, without limitation, the FCC Licenses and the Industry
Canada Licenses, that there is no adequate remedy at law for failure by the Obligor to comply
with the provisions of this Section 10.14 and that such failure could not be adequately
compensable in damages. Therefore, the Obligors agree that the provisions of this Section 10.14
may be specifically enforced, without any requirement to post bond (such rights being fully
waived by Obligors) and without regard to the adequacy of any remedies available at law (the
defense of the adequacy of remedies at law being fully waived by the Obligors).

       Section 10.15. Agents and Attorneys-in-Fact. The Administrative Agent may employ
agents and attorneys-in-fact in connection herewith and shall not be responsible for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it in good faith.

        Section 10.16. No Senior Liens. To the extent that, by reason of changes in law or
regulations or for any other reason Obligors may grant to Administrative Agent additional rights
with respect to the FCC Licenses or Industry Canada Licenses or rights facilitating
Administrative Agent’s ability to foreclose upon, acquire and/or dispose of such interests upon
the occurrence of an Event of Default, Obligors agree, upon notice from Administrative Agent
(acting at the written direction of the Required Lenders), to amend this agreement to provide
such rights or such assurance to Administrative Agent.

       Section 10.17. Guarantee.

                 (a) In order to induce the Lenders to enter into this Agreement and to provide
Loans hereunder and in recognition of the direct benefits to be received by the Guarantors from
the proceeds of the Loans, each Guarantor hereby unconditionally and irrevocably, jointly and
severally, guarantees as primary obligor and not merely as surety the due and punctual payment
in full of the principal of and interest on the Loans and of all of the Obligations to each of the
Lenders and the Administrative Agent, when and as due, whether at maturity, by acceleration or
otherwise. If any or all of the Obligations of the Borrower to the Lenders or the Administrative
Agent becomes due and payable hereunder, each Guarantor unconditionally promises on a joint
and several basis to pay such Obligations to the Lenders or the Administrative Agent, as the case
may be, or order, on demand, together with any and all expenses which may be incurred by the
Administrative Agent or the Lenders in collecting any of the Obligations.

               (b) Each Guarantor authorizes the Administrative Agent and the Lenders without
notice or demand (except as shall be required by applicable statute and which cannot be waived),
and without affecting or impairing its liability hereunder, from time to time to (a) renew,
compromise, extend, increase, accelerate or otherwise change the time for payment of, or
otherwise change the terms of, the Obligations or any part thereof in accordance with this
Agreement, including any increase or decrease of the rate of interest thereon, (b) take and hold
security from any Guarantor or any other party for the payment of this Guarantee or the
Obligations and exchange, enforce, waive and release any such security and (c) apply such
security and direct the order or manner of sale thereof as the Administrative Agent and the
Lenders in their discretion may determine.

                                                64
                (c) The Obligations of each Guarantor hereunder are independent of the
Obligations of any other Guarantor or the Borrower, and a separate action or actions may be
brought and prosecuted against each Guarantor whether or not action is brought against any other
Guarantor or the Borrower and whether or not any other Guarantor or the Borrower be joined in
any such action or actions. Each Guarantor waives, to the fullest extent permitted by law, the
benefit of any statute of limitations affecting its liability hereunder or the enforcement thereof.
Any payment by the Borrower or other circumstances which operate to toll any statute of
limitations as to the Borrower shall operate to toll the statute of limitations as to each Guarantor.

                 (d) Each Guarantor waives presentation to, demand for payment from and protest
to the Borrower or any other Guarantor, and also waives notice of protest for nonpayment. The
Obligations of the Guarantors hereunder shall not be affected by (i) the failure of the
Administrative Agent or any Lender to assert any claim or demand or to enforce any right or
remedy against the Borrower or any other Guarantor under the provisions of this Agreement or
any other Loan Document or otherwise, (ii) any extension or renewal of any provision hereof or
thereof, (iii) any rescission, waiver, compromise, acceleration, amendment or modification of
any of the terms or provisions of any of the Loan Documents, (iv) the release, exchange, waiver
or foreclosure of any security held by the Administrative Agent for the Obligations or any of
them, (v) the failure of the Administrative Agent or any Lender to exercise any right or remedy
against any other Guarantor, or (vi) the release or substitution of the Borrower or any other
Guarantor.

                (e) Each Guarantor further agrees that this Guarantee constitutes a Guarantee of
payment when due and not just of collection, and waives any right to require that any resort be
had by the Administrative Agent or any Lender to any security held for payment of the
Obligations, to any other Guarantee of the Obligations or to any balance of any deposit, account
or credit on the books of the Administrative Agent or any Lender in favor of the Borrower or any
other Guarantor, or to any other Person.

               (f) Each Guarantor hereby waives any defense that it might have based on a
failure to remain informed of the financial condition of the Borrower and of any other Guarantor
and any circumstances affecting the ability of the Borrower to perform under this Agreement.

                (g) Each Guarantor’s guarantee shall not be affected by the genuineness, validity,
regularity or enforceability of the Obligations or any other instrument evidencing any
Obligations, or by the existence, validity, enforceability, perfection, or extent of any collateral
therefor or by any other circumstance relating to the Obligations which might otherwise
constitute a defense to this Guarantee. Neither the Administrative Agent nor any of the Lenders
makes any representation or warranty in respect to any such circumstances or shall have any duty
or responsibility whatsoever to any Guarantor in respect of the management and maintenance of
the Obligations.

               (h) Subject to the provisions of Article VII, upon the Obligations becoming due
and payable (by acceleration or otherwise), the Lenders shall be entitled to immediate payment
of such Obligations by the Guarantors upon written demand by the Administrative Agent,
without further application to or order of the Bankruptcy Court.


                                                 65
                (i) The obligations of the Guarantors hereunder shall not be subject to any
reduction, limitation, impairment or termination for any reason, including any claim of waiver,
release, surrender, alteration or compromise, and shall not be subject to any defense or set-off,
counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations. Without limiting the generality of the foregoing, the
obligations of the Guarantors hereunder shall not be discharged or impaired or otherwise affected
by the failure of the Administrative Agent or any Lender to assert any claim or demand or to
enforce any remedy under this Agreement or any other agreement, by any waiver or modification
of any provision thereof, by any default, failure or delay, willful or otherwise, in the performance
of the Obligations, or by any other act or thing or omission or delay to do any other act or thing
which may or might in any manner or to any extent vary the risk of the Guarantors or would
otherwise operate as a discharge of the Guarantors as a matter of law, unless and until the
Obligations are paid in full.

                (j) Upon payment by any Guarantor of any sums to the Administrative Agent or
any Lender hereunder, all rights of such Guarantor against the Borrower arising as a result
thereof by way of right of subrogation or otherwise, shall in all respects be subordinate and
junior in right of payment to the prior final and indefeasible payment in full of all of the
Obligations. If any amount shall be paid to such Guarantor for the account of the Borrower, such
amount shall be held in trust for the benefit of the Administrative Agent and the Lenders and
shall forthwith be paid to the Administrative Agent and the Lenders to be credited and applied to
the Obligations, whether matured or unmatured.

       Section 10.18. Purchase Agreement.

                For the avoidance of doubt, any actions taken by the Borrower or the Purchaser or
any other person in connection with, related to, or contemplated by the Purchase Agreement shall
not be the basis of a Default, an Event of Default or the breach of any provision of this
Agreement, it being understood by the Lenders and the Administrative Agent that the
transactions contemplated by the Purchase Agreement are intended to and shall be construed as
superior in priority to the Loans made and transactions contemplated, by this Agreement.

                                     [Signature Pages Follow]




                                                66
              IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year first above written.


                                               TERRESTAR NETWORKS INC.,
                                               debtor and debtor-in-possession, as the Borrower


                                               By:
                                               Name:
                                               Title:




                        Signature Page to Debtor-in-Possession Credit Agreement
                       TERRESTAR NATIONAL SERVICES, INC.
                       TERRESTAR LICENSE INC.,
                       each a debtor and debtor-in-possession, as
                       Guarantors


                       By:
                       Name:
                       Title:



                       0887729 B.C. LTD.,
                       a debtor and debtor-in-possession, as Guarantor


                       By:
                       Name:
                       Title:



                       TERRESTAR NETWORKS HOLDINGS
                       (CANADA) INC.
                       TERRESTAR NETWORKS (CANADA) INC.
                       each a debtor and debtor-in-possession, as
                       Guarantors


                       By:
                       Name:
                       Title:




Signature Page to Debtor-in-Possession Credit Agreement
                       [•],
                       as Administrative Agent and Collateral Agent


                       By:
                               Name:
                               Title:

                       :




Signature Page to Debtor-in-Possession Credit Agreement
           Schedule 2

Form of Confidentiality Agreement
[Date]

[Name]
[Title]
[Address]
[Address]
[Address]


Ladies and Gentlemen:

       We understand that [Potential Buyer], or one or more of its affiliates (collectively, as the
case may be, “Recipient”) may be interested in investing in or acquiring assets of TerreStar
Networks Inc. and/or its subsidiaries (which together, for these purposes, will be referred to
herein as the “Company”) on a mutually agreeable basis (the “Proposed Transaction”). In
connection with Recipient’s possible interest in the Proposed Transaction, the Company and its
advisors and agents are prepared to make available to Recipient certain information which is
non-public, confidential or proprietary in nature. In consideration of the Company furnishing
Recipient with such information, and as a condition to such disclosure, Recipient agrees as
follows (the “Agreement”):

1.       As used herein “Confidential Information” means all information pertaining to or in
         possession of the Company, its employees, affiliates, officers, directors, agents, advisors
         and representatives (collectively, the “Company Representatives”) at any time, which is,
         or has been (whether prior to, on, or after the date hereof) disclosed (whether in writing,
         orally, visually, electronically or by any other means, and whether or not marked or
         indicated as being confidential) to Recipient, or any of its employees, affiliates, officers,
         directors, partners, members, managers, agents, advisors (including its attorneys,
         accountants and financial advisors), consultants or representatives (collectively, but
         subject to the limitations in Section 2 of this Agreement, its “Representatives”), which
         the Company considers proprietary, confidential or protectable and which includes, but is
         not limited to: (a) information pertaining to the Company and its past, present or future
         business, operations, business concepts and strategies, models, pricing methods, cost
         structure, products, services, customer and vendor information, intellectual property,
         transactions (whether prospective, ongoing or completed), prospects, licensing
         procedures and arrangements, and financial information that is non-public, confidential or
         proprietary in nature, (b) the terms, conditions or other information pertaining to the
         Proposed Transaction and any discussions in connection therewith, and (c) any
         memoranda, studies, reports, analyses, compilations, extracts or notes Recipient or its
         Representatives prepare or produce that are based on, in whole or in part, reflect or



                                                  1
     contain any Confidential Information (the items referred to in this clause (c) collectively
     referred to as “Notes”).

     Confidential Information does not include any information that (w) Recipient can clearly
     establish by written documentation was already known by Recipient or its
     Representatives prior to its disclosure by the Company or a Company representative
     hereunder, (x) is independently developed by Recipient or its Representatives without the
     use of or reference to any Confidential Information, (y) is, or becomes, generally
     available to the public other than as a result of a disclosure by Recipient, or any of its
     Representatives, in violation of this Agreement or (z) is, or becomes, available to
     Recipient, or its Representatives, on a non-confidential basis from a source other than the
     Company or any Company Representative, provided, however, that such source was not,
     and could not reasonably have been, known by Recipient, or its Representative, to be
     subject to an obligation not to disclose such information.

2.   Recipient shall take all measures practicable to keep the Confidential Information
     confidential and will not disclose the Confidential Information to anyone except (a) to its
     Representatives as permitted in Section 3 of this Agreement and (b) as permitted under
     Sections 4 and 5 of this Agreement. Without the Company’s prior written consent,
     Recipient’s Representatives shall not include any member or prospective member of a
     “group” (within the meaning of Rule 13d-5(b) under the Securities Exchange Act of
     1934, as amended) or other arrangement formed or to be formed to negotiate or
     participate in the Proposed Transaction, and Recipient shall not disclose any Confidential
     Information to any such person.

3.   Recipient recognizes and acknowledges the competitive value and confidential nature of
     the Confidential Information and the damage that could result to the Company if any
     information contained therein is disclosed to a third party. Recipient and its
     Representatives shall use the Confidential Information solely for the purpose of analyzing
     and evaluating the desirability of entering into the Proposed Transaction. Recipient will
     provide its Representatives with access to the Confidential Information only to the extent
     necessary to allow them to assist Recipient in such analysis and evaluation. Prior to
     granting any Representative access to the Confidential Information, Recipient will inform
     such Representative of its confidential nature and of the terms of this Agreement.
     Recipient shall be responsible for any breach of this Agreement by any of its
     Representatives. Recipient further shall reimburse, indemnify and hold harmless the
     Company and the Company Representatives from any damage, loss or expense incurred
     as a result of the use of the Confidential Information by (a) Recipient, (b) its
     Representatives or (c) any other recipients to whom Recipient has disclosed such
     Confidential Information in violation of this Agreement.

4.   Unless required by applicable law (in which case Recipient will promptly advise and
     consult with the Company and its counsel prior to any disclosure unless prohibited by
     applicable law), without the prior written consent of the Company, Recipient shall not,
     and shall cause its Representatives not to, disclose to any person (a) the fact that
     discussions or negotiations are taking place concerning the Proposed Transaction, (b) any
     of the terms, conditions or other facts with respect to the Proposed Transaction, including

                                              2
     the status thereof, or (c) the existence of this Agreement, the terms hereof or that
     Confidential Information has been made available pursuant to this Agreement.

5.   If Recipient or its Representatives are requested to disclose any Confidential Information
     (including but not limited to any Notes) in connection with any legal or administrative
     proceeding or investigation, Recipient shall, unless prohibited by applicable law, notify
     the Company promptly in writing of the existence, terms and circumstances surrounding
     such request so that the Company may seek a protective order or other appropriate
     remedy and/or take steps to resist or narrow the scope of the disclosure sought by such
     request. Recipient agrees to reasonably assist the Company in seeking a protective order
     or other remedy, if requested by the Company. If a protective order or other remedy is
     not obtained and, in the opinion of Recipient’s counsel, disclosure is required, Recipient
     may make such disclosure without liability under this Agreement, provided, however,
     that Recipient or its Representatives furnish only that portion of the Confidential
     Information which is legally required to be disclosed, Recipient (unless prohibited by
     applicable law) gives the Company notice of the information to be disclosed as far in
     advance of its disclosure as practicable and Recipient uses reasonable efforts to ensure
     that confidential treatment will be accorded to all such disclosed information.

6.   Recipient acknowledges and agrees that neither the Company nor any Company
     Representative nor any of its or their respective officers, directors, employees, agents or
     “controlling persons” (within the meaning of Section 20 of the Securities Exchange Act
     of 1934, as amended) (a) has made or makes any express or implied representation or
     warranty as to the accuracy or completeness of the Confidential Information, or (b) will
     have any liability whatsoever to Recipient or any of its Representatives or any third party
     to whom Recipient discloses any Confidential Information resulting from or relating to
     any use of the Confidential Information or any errors therein or omissions therefrom,
     except as may be provided in any definitive written agreement between the parties with
     respect to the Proposed Transaction. Recipient further acknowledges and agrees that it is
     not entitled to rely on the accuracy or completeness of the Confidential Information, and
     that Recipient will only be entitled to rely on such representations and warranties as the
     Company may provide in any definitive agreement entered into between the Company
     and Recipient with respect to the Proposed Transaction, subject to such limitations and
     restrictions as may be contained therein.

7.   All Confidential Information disclosed by the Company or the Company Representatives
     to Recipient or its Representatives pursuant to this Agreement shall be and remain the
     property of the Company. Nothing in this Agreement shall be construed as granting to
     Recipient any right, title or interest in or to any patent, trademark, license, copyright or
     other right of the Company.

8.   Upon the written request of the Company, Recipient and its Representatives shall
     (y) promptly delete all Confidential Information from any computer and backup storage
     system in which the Confidential Information has been stored and (z) either destroy or
     return to the Company all documents and other materials (including without limitation all
     copies or reproductions of such documents or materials, tapes, computer disks, backup
     copies, and other forms of electronic storage media) which constitute, contain or are

                                              3
      derived from the Confidential Information (including the Notes). Recipient shall deliver
      to the Company a certificate signed by an officer or a person holding a position of
      equivalent authority of Recipient confirming that Recipient and its Representatives have
      complied with the requirements of this Section 8. Notwithstanding the return, deletion or
      destruction of the Confidential Information, Recipient and its Representatives shall
      continue to be bound by the obligations of confidentiality and other obligations set forth
      in this Agreement.

9.    All inquiries for information about the Company and its subsidiaries and communications
      with the Company will be made through Blackstone Advisory Partners L.P. Neither
      Recipient nor any of its Representatives shall contact any other Company Representative
      or any third party with whom the Company or any of its subsidiaries has a business or
      other relationship (including without limitation any customer, supplier, stockholder or
      creditor of the Company or any of its subsidiaries) with regard to the Company or the
      Proposed Transaction, without the Company’s prior written consent, which consent shall
      not be unreasonably withheld or delayed.

10.   Neither the Company nor Recipient shall be under any legal obligation with respect to the
      Proposed Transaction, or any other transaction or undertaking, unless and until a
      definitive agreement between the parties hereto is executed and delivered by both of
      them. Recipient understands that (a) the Company shall conduct the process for the
      Proposed Transaction as it, in its sole discretion, shall determine (including without
      limitation negotiating with one or more prospective buyers and entering into definitive
      agreements with another party without prior notice to Recipient or any other person),
      (b) any procedures relating to the Proposed Transaction may be changed at any time
      without notice to Recipient or any other person, (c) the Company shall have the right to
      reject or accept any potential buyer, proposal or offer, for any reason whatsoever, in its
      sole discretion, and (d) neither Recipient nor any of its Representatives shall have any
      claims whatsoever against the Company, the Company Representatives or any of its
      stockholders arising out of or relating to the Proposed Transaction, including claims for
      reimbursement from the Company for any cost, fee or expense (including but not limited
      to any due diligence expenses or costs) incurred by Recipient or its Representatives in
      connection with pursuing or consummating the Proposed Transaction (other than claims
      which may arise against the parties to a definitive agreement to effect the Proposed
      Transaction with Recipient in accordance with the terms thereof).

11.   Recipient acknowledges and agrees that the Company may be damaged irreparably if any
      provision of this Agreement were not performed in accordance with its specific terms or
      were otherwise breached. Accordingly, the Company shall be entitled to seek equitable
      relief, including without limitation an injunction or injunctions to prevent breaches of the
      provisions of this Agreement and to enforce specifically this Agreement and its
      provisions in any action or proceeding instituted in any state or federal court of the
      United States or any state thereof having jurisdiction over Recipient and the matter, in
      addition to any other remedy to which the Company may be entitled, at law or in equity.
      Without limiting the foregoing, service of process on Recipient or its Representatives at
      its address on the first page of this Agreement will be deemed effective service of process
      on Recipient. Except as expressly provided herein, the rights, obligations and remedies

                                               4
      created by this Agreement are cumulative and in addition to any other rights, obligations
      or remedies otherwise available at law or in equity. Except as expressly provided herein,
      nothing herein shall be considered an election of remedies. In the event of litigation
      pertaining to this Agreement, the non-prevailing party shall reimburse the prevailing
      party for its reasonable costs incurred in connection with such litigation.

12.   This Agreement shall be governed by, and construed and enforced in accordance with,
      the laws of the State of New York applicable to contracts made and to be entirely
      performed therein. In the event of any controversy or claim arising out of or relating to
      this Agreement or the breach or alleged breach hereof, each of the parties hereto
      irrevocably (i) submits to the exclusive jurisdiction of the United States Bankruptcy
      Court for the Southern District of New York in which the chapter 11 proceedings of the
      Company and its affiliated debtors currently are pending (the “Bankruptcy Court”),
      (ii) waives any objection which it may have at any time to the laying of venue of any
      action or proceeding brought in the Bankruptcy Court, (iii) waives any claim that such
      action or proceeding has been brought in an inconvenient forum, and (iv) agrees that
      service of process or of any other papers upon such party by registered mail at the address
      to which notices are required to be sent to such party under Section 21 shall be deemed
      good, proper and effective service upon such party.

13.   The Company may in its sole discretion waive Recipient’s compliance with any of the
      obligations or conditions for the Company’s benefit contained herein. Any such waiver
      shall be valid only if set forth in a writing signed by the Company. No waiver by the
      Company of any default, misrepresentation or breach hereunder, whether intentional or
      not, may be deemed to extend to any prior or subsequent default, misrepresentation or
      breach hereunder or affect in any way any rights available with respect to any prior or
      subsequent such occurrence. Neither the failure nor any delay by any party hereto to
      exercise any right or remedy under this Agreement shall operate as a waiver thereof, nor
      shall any single or partial exercise of any right or remedy preclude any other or further
      exercise of the same or of any other right or remedy.

14.   The provisions of this Agreement shall be deemed severable and the invalidity or
      unenforceability of any provision shall not affect the validity or enforceability of the
      other provisions hereof. If any provision of this Agreement, as applied to any party or to
      any circumstance, is judicially determined not to be enforceable in accordance with its
      terms, each of the parties hereto agrees that the court judicially making such
      determination may modify the provision in a manner consistent with its objectives such
      that it is enforceable, and/or delete specific words or phrases, and in its modified form,
      such provision shall then be enforceable and shall be enforced.

15.   Except as otherwise expressly set forth herein, the obligations of the parties under this
      Agreement shall terminate on the second anniversary of the date of this Agreement;
      provided, however, that from and after the closing of a definitive agreement between the
      parties hereto relating to the Proposed Transaction, nothing herein shall apply to or
      restrict Recipient’s use of any Confidential Information that is included in the assets of
      the Company acquired by Recipient pursuant to the terms of the definitive agreement


                                               5
      (and regardless of whether such assets are acquired directly or indirectly by purchase,
      merger or otherwise).

16.   Recipient acknowledges that the Company is incurring and will continue to incur
      substantial costs and expenses in connection with its continued evaluation of whether to
      consummate the Proposed Transaction with Recipient. Recipient agrees that, except as
      expressly provided in this Agreement, for a period of two years from the date of this
      Agreement, unless such action shall have been specifically invited in writing by the
      Board of Directors of the Company (it being understood that execution of this Agreement
      by the Company does not constitute such an invitation), neither Recipient nor any of its
      Representatives on its behalf will in any manner, including but not limited to entering
      into communications to or discussions with the record or beneficial stockholders of the
      Company, directly or indirectly,

      (a) effect or seek, offer or propose (whether publicly or otherwise) to effect or seek, cause
         or in any way assist any other person to effect or seek, or offer or propose (whether
         publicly or otherwise) to effect or seek, or otherwise participate in (i) any acquisition
         of any outstanding shares of any class of securities (or beneficial ownership thereof) or
         rights or options to acquire any such securities (or beneficial ownership thereof) or any
         of the assets, indebtedness or businesses of the Company or any of its subsidiaries or
         affiliates, (ii) any tender or exchange offer or merger or other business combination
         involving the Company or any of its subsidiaries or affiliates, or assets of the
         Company or any of its subsidiaries or affiliates constituting a significant portion of the
         consolidated assets of the Company and its subsidiaries or affiliates, or (iii) any
         recapitalization, restructuring, liquidation, dissolution or other extraordinary
         transaction with respect to the Company or any of its subsidiaries or affiliates,

      (b) make, or become a participant in, any “solicitation” of “proxies” (as such terms are
         defined in Regulation 14A promulgated by the Securities and Exchange Commission)
         or consents to vote any voting securities of the Company or any of its subsidiaries or
         affiliates, or otherwise advise any person with respect to the voting of any voting
         securities of the Company or any of its subsidiaries or affiliates,

      (c) form, join, become a member or in any way participate in a “group” (within the
         meaning of Rule 13d-5(b) under the Securities Exchange Act of 1934, as amended)
         with respect to the securities of the Company or any of its subsidiaries or affiliates,

      (d) otherwise act, alone or in concert with others, to seek to control or influence the
         management, Board of Directors, stockholders, or policies of the Company or any of
         its subsidiaries or affiliates, or take any action to prevent or challenge any transaction
         to which the Company or any of its subsidiaries or affiliates is a party,

      (e) take any action, or make or permit its Representatives to take any action, which might
         force the Company or any of its subsidiaries or affiliates to make a public
         announcement or other public disclosure regarding any of the types of matters set forth
         in (a), (b), (c), or (d) above, or



                                               6
      (f) advise, assist, arrange, or otherwise enter into any discussions or arrangements with
          any third party with respect to any of the foregoing prohibited conduct.

      Recipient also agrees during such period not to request the Company (or any of its
      directors, officers, employees or other representatives), directly or indirectly, to amend or
      waive any provision of this Section 16 (including this sentence).

17.   Recipient agrees that, without the Company’s prior written consent, neither Recipient nor
      any of its Representatives acting on its behalf will for a period of one year from the date
      of this Agreement directly or indirectly (a) divert or attempt to divert any business or
      customer of the Company or any of its subsidiaries other than through normal
      commercial activities conducted in the ordinary course of business; or (b) solicit any
      employee at or above the level of officer of the Company or any of its subsidiaries (i) for
      employment by Recipient or by any of its affiliates, or (ii) to provide consulting or other
      services to or on behalf of Recipient or any of its affiliates; provided, however, that
      Recipient shall not be prohibited from employing any such person who contacts
      Recipient on his or her own initiative or who responds to a published general solicitation
      not specifically targeted at such person, in either case without any direct or indirect
      solicitation by Recipient or any of its affiliates or Representatives. For the avoidance of
      doubt, this provision shall not apply to any portfolio company held by an investment fund
      advised or sponsored by Recipient or its affiliates unless Confidential Information has
      been provided to that portfolio company or that portfolio company has acted at the
      direction or with the prior knowledge of Recipient or any of its Representatives who have
      received Confidential Information.

18.   The term “person” as used in this Agreement shall be broadly interpreted to include the
      media and any corporation, partnership (general or limited), limited liability company,
      unlimited liability company, joint venture, estate, trust, group, association, organization,
      labor union, individual or any other entity or governmental or quasi-governmental body.

19.   This Agreement constitutes the entire agreement and understanding of the parties in
      respect of the subject matter hereof and supersedes all prior understandings, agreements
      or representations by or among the parties, written or oral, to the extent they relate in any
      way to the subject matter hereof.

20.   No party hereto may assign either this Agreement or any of its rights, interests or
      obligations hereunder without the prior written approval of the other parties, and any such
      assignment by a party without prior written approval of the other parties shall be deemed
      invalid and not binding on such other parties; provided, however, that the Company may
      assign its rights hereunder, including the right to enforce the terms hereof, to any person
      with which it may enter into a definitive agreement to effect the Proposed Transaction.

21.   Unless otherwise specified herein, all notices permitted or required hereunder shall be in
      writing and delivered personally or sent by overnight express mail or courier or sent by
      facsimile to the other party at the address or facsimile number below (or at such other
      address or facsimile number as a party shall designate in writing to the other party in the
      manner specified herein) and shall be effective at the earlier of the date received or, if by

                                               7
      facsimile, upon sender’s receipt of electronic confirmation of receipt if within normal
      business hours at the place notice was sent or, if thereafter, on the following business day.

      If intended for the Company:

      TerreStar Networks Inc.
      c/o TerreStar Corporation
      12010 Sunset Hills Road, 6th Floor
      Reston, VA 20190
      Attention: General Counsel
      Facsimile: (703) 483-7800

      If intended for Recipient:

      [Company Name]
      [Address]
      [Address]
      [Address]
      Attention: [Contact Name]
      Facsimile: [(xxx) xxx-xxxx]

22.   This Agreement may be executed in two or more counterparts, each of which will be
      deemed an original but all of which together will constitute one and the same instrument.
      This Agreement will become effective when one or more counterparts have been signed
      by each of the parties and delivered to the other party, which delivery may be made by
      exchange of copies of the signature page by facsimile transmission.

                              [SIGNATURE PAGE FOLLOWS]




                                               8
         If Recipient is in agreement with the foregoing, please sign and return the enclosed copy
of this letter, which will then constitute the Agreement with respect to the subject matter of this
letter as of the date first above written.

                                             Very truly yours,

                                             TerreStar Networks Inc.



                                             By:
                                             Name:
                                             Title:

AGREED AND ACCEPTED:

[Recipient]



By:
Name:
Title:




                                                9
Exhibit B

Sale Notice
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

                                                           )
In re:                                                     ) Chapter 11
                                                           )
TERRESTAR NETWORKS INC., et al.,1                          ) Case No. 10-15446 (SHL)
                                                           )
                         Debtors.                          ) Jointly Administered
                                                           )

                       NOTICE OF (I) PROPOSED SALE OF ALL OR
                 SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS FREE
              AND CLEAR OF ALL LIENS, CLAIMS AND ENCUMBRANCES,
            (II) BID PROCEDURES, (III) AUCTION, AND (IV) SALE HEARING

        PLEASE TAKE NOTICE that on April 15, 2011, the above-captioned debtors and
debtors in possession (collectively, the “Debtors”), filed a motion (the “Sale Motion”) with the
United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”)
seeking entry of (i) an order, among other things, (a) approving certain procedures (the “Bid
Procedures”) for the solicitation of bids and the conduct of an auction (the “Auction”) in
connection with the sale of all or substantially all of the Debtors’ assets (the “Assets”) and related
transactions (the “Sale Transaction”), (b) approving the form and manner of notice with respect
to the proposed sale of the Assets, the Auction, and the Sale Hearing (as defined below),
(c) approving procedures for the assumption and assignment of contracts and leases (the
“Assumption Procedures”) to any purchaser of the Assets and/or to resolve any objections
thereto and related notices, (d) scheduling a hearing (the “Sale Hearing”) to approve any such
sale with respect to any bid accepted by the Debtors, and (ii) an order approving the Sale
Transaction contemplated in a purchase to be entered into by the Debtors and any Successful
Bidder(s) (as such term is defined in the Bid Procedures).

       PLEASE TAKE FURTHER NOTICE that the Auction is currently scheduled to be
conducted at the offices of Akin Gump Strauss Hauer & Feld LLP, One Bryant Park, New
York, New York 10036 on ______________, 2011 at 9:00 a.m. (prevailing Eastern Time), at
which time all Qualified Bidders (as such term is defined in the Bid Procedures) may bid
and participate pursuant to the terms of the Bid Procedures. As described in the Bid
Procedures, the Debtors are soliciting bids for all of the Assets. The Auction will continue until
such time as the highest or otherwise best offer is determined by the Debtors. The Debtors may
adopt rules for the Auction that will promote the goals of the Auction process and that are not
inconsistent with any of the provisions of the Bid Procedures. Only bidders who submit bids in
accordance with the Bid Procedures will be allowed to attend the Auction.


1
    The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal taxpayer
    identification number, are: TerreStar Networks Inc. (3931); TerreStar License Inc. (6537); TerreStar National
    Services Inc. (6319); TerreStar Networks Holdings (Canada) Inc. (1337); TerreStar Networks (Canada) Inc.
    (8766) and 0887729 B.C. Ltd. (1345).
        A copy of the Sale Motion, the form of purchase agreement, the Bid Procedures, and the
order approving the Bid Procedures (the “Bid Procedures Order”) may be obtained by
(i) contacting the attorneys for the Debtors, Akin Gump Strauss Hauer & Feld LLP at One Bryant
Park, New York, New York 10036 (Attn: Arik Preis, Esq.); (ii) accessing the Bankruptcy Court’s
website at http://www.nysb.uscourts.gov (please note that a PACER password is needed to access
documents on the Court’s website); (iii) viewing the docket of these cases at the Clerk of the
Court, United States Bankruptcy Court for the Southern District of New York, Alexander
Hamilton Custom House, One Bowling Green, New York, New York 10004; or (iv) accessing the
public website maintained by the Debtors’ court-appointed claims agent, Garden City Group, at
www.terrestarinfo.com. Copies of such documents may also be obtained by contacting Garden
City Group at (866) 682-1770.

       PLEASE TAKE FURTHER NOTICE that the Sale Hearing is currently scheduled
to be held on ____________, 2011 at 10:00 am (prevailing Eastern Time) at the United
States Bankruptcy Court for the Southern District of New York, Alexander Hamilton
Custom House, One Bowling Green, New York, New York 10004 before the Honorable Sean
H. Lane, United States Bankruptcy Court Judge, to consider the Debtors’ selection of the
highest or otherwise best bid and approval of the Sale Transaction. The Sale Hearing may be
adjourned, from time to time, without further notice to creditors or parties in interest other than
by announcement of the adjournment in open Court or on the Court’s docket.

       PLEASE TAKE FURTHER NOTICE THAT ANY OBJECTIONS TO ANY
RELIEF REQUESTED IN THE SALE MOTION, INCLUDING THE DEBTORS’
REQUEST TO APPROVE THE SALE OF ASSETS FREE AND CLEAR OF ALL LIENS,
CLAIMS, AND ENCUMBRANCES, MUST BE IN WRITING, FILED, AND SERVED SO
AS TO BE ACTUALLY RECEIVED BY _____________, 2011 AT 4:00 P.M. (NEW YORK
TIME) by the Bankruptcy Court and: (a) Akin Gump Strauss Hauer & Feld LLP, One Bryant
Park, New York, NY 10036-6745 (Attn: Ira S. Dizengoff, Esq., idizengoff@akingump.com; and
Arik Preis, apreis@akingump.com), counsel to the Debtors; (b) the Office of the United States
Trustee for the Southern District of New York, 33 Whitehall Street, New York, NY 10004 (Attn:
Susan D. Golden); (c) Otterbourg, Steindler, Houston & Rosen, P.C., 230 Park Avenue, New
York, NY 10169 (Attn: Scott L. Hazan, Esq.; shazan@oshr.com), counsel to the statutory
committee of unsecured creditors appointed in these chapter 11 cases; (d) Bank of New York
Mellon, 600 E Las Colinas Blvd, Ste 1300, Irving, TX 75039, (Attn Rhonda Tharp,
rhonda.tharp@bnymellon.com; asicompliance@bnymellon.com), agent for the Debtors’
postpetition debtor-in-possession financing; (e) Emmet, Marvin & Martin, LLP, 120 Broadway,
32nd Floor, New York, NY 10271 (Attn: Elizabeth M. Clark, Esq., eclark@emmetmarvin.com),
counsel to the agent for the Debtors’ postpetition debtor-in-possession financing; (f) U.S. Bank
National Association, 60 Livingston Ave, St. Paul, MN 55107 (Attn: Cindy Woodward,
cindy.woodward@usbank.com; David Johnson; david.johnson9@usbank.com), Collateral Agent
for the Debtors’ purchase money credit facility; (g) Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, NY 10153 (Attn: Debra A. Dandeneau, Esq., debra.dandeneau@weil.com;
and Ronit J. Berkovich, Esq., ronit.berkovich@weil.com), counsel to Harbinger Capital Partners
Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P.; (h) Willkie
Farr & Gallagher LLP, 787 Seventh Avenue, New York, NY 10019 (Attn: Rachel C. Strickland,
Esq., rstrickland@willkie.com; and Matthew A. Feldman, Esq.), counsel to EchoStar
Corporation in its capacity as Lender under the Debtors’ purchase money credit facility and

                                                2
Initial Lender under the Debtors’ postpetition debtor-in-possession financing;
(i) U.S. Bank National Association as Indenture Trustee for the Debtors’ 15% Senior
Secured Notes and Kelley Drye & Warren LLP, 101 Park Avenue, New York, NY 10178 (Attn:
James S. Carr, Esq., Kristin S. Elliott, Esq.; KDWBankruptcyDepartment@kelleydrye.com),
counsel to the Indenture Trustee; (j) Deutsche Bank National Trust Company as Indenture
Trustee for the Debtors’ 6.5% Senior Exchangeable Notes and Foley & Lardner LLP, 321 North
Clark Street, Suite 2800, Chicago, IL 60654 (Attn: Mark F. Hebbeln, Esq., mhebbeln@foley.com;
Harold L. Kaplan, Esq., hkaplan@foley.com), counsel to the Indenture Trustee; (k) Quinn
Emanuel Urquhart & Sullivan, LLP, 51 Madison Avenue, 22nd Floor, New York, NY 10010
(Attn: Susheel Kirpalani, Esq., susheelkirpalani@quinnemanuel.com; Scott C. Shelley, Esq.,
scottshelley@quinnemanuel.com; Daniel S. Holzman, Esq., danielholzman@quinnemanuel.com),
counsel to certain holders of the Debtors’ 6.5% Senior Exchangeable Notes; (l) the Internal
Revenue Service, 290 Broadway, New York, NY 10007; (m) the Securities and Exchange
Commission, New York Regional Office, 3 World Financial Center, Suite 400, New York, NY
10281 (Attn: George S. Canellos); (n) the United States Attorney for the Southern District of
New York, One St. Andrews Plaza, New York, NY 10007 (Attn: Preet Bharara); (o) the Federal
Communications Commission, 445 12th Street, SW, Washington, DC 20554 (Attn: Office of the
Secretary, fccinfo@fcc.gov; and Austin Schlick, General Counsel; austin.schlick@fcc.gov);
(p) Industry Canada, Office of the Superintendent of Bankruptcy Canada, 25 St. Clair Ave. E.,
Suite 600, Toronto, Ontario, M4T1M2, Canada (Attn: CCAA Team); (q) Kirkland & Ellis LLP,
601 Lexington Avenue, New York NY 10022 (Attn: Jonathan S. Henes, Esq.,
jonathan.henes@kirkland.com), and 300 North LaSalle, Chicago, IL 60654 (Attn: Patrick J.
Nash, Esq., patrick.nash@kirkland.com), counsel to certain holders of the Debtors’ 15% Senior
Secured Notes; and (r) parties in interest who have filed a notice of appearance in these cases
pursuant to Bankruptcy Rule 2002.

        This notice is qualified in its entirety by the Bid Procedures Order and the Sale Motion.
All persons and entities are urged to read the Bid Procedures Order and the Sale Motion and the
provisions thereof carefully. To the extent that this notice is inconsistent with the Bid Procedures
Order, the terms of the Bid Procedures Order shall govern.

PLEASE TAKE FURTHER NOTICE THAT THE FAILURE TO ABIDE BY THE
PROCEDURES AND DEADLINES SET FORTH IN THE BID PROCEDURES ORDER
AND THE BID PROCEDURES MAY RESULT IN THE FAILURE OF THE
BANKRUPTCY COURT TO CONSIDER A COMPETING BID OR AN OBJECTION TO
THE PROPOSED SALE TRANSACTION.




                                                 3
New York, New York
Dated:      , 2011

                     _
                     AKIN GUMP STRAUSS HAUER & FELD LLP
                     One Bryant Park
                     New York, New York 10036
                     Telephone: (212) 872-1000
                     Facsimile: (212) 872-1002
                     Ira S. Dizengoff
                     Arik Y. Preis
                     Ashleigh L. Blaylock

                     Counsel to the Debtors and Debtors in Possession




                         4
 Exhibit C

Cure Notice
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
                                                            )
In re:                                                      ) Chapter 11
                                                            )
TERRESTAR NETWORKS INC., et al.,1                           ) Case No. 10-15446 (SHL)
                                                            )
                          Debtors.                          ) Jointly Administered
                                                            )

       NOTICE OF PROPOSED ASSUMPTION, ASSIGNMENT AND CURE
    AMOUNT WITH RESPECT TO EXECUTORY CONTRACTS AND UNEXPIRED
      LEASES RELATED TO THE SALE OF THE ASSETS OF THE DEBTORS

TO:      ALL COUNTERPARTIES TO THE DEBTORS’ EXECUTORY CONTRACTS
         AND UNEXPIRED LEASES THAT ARE PROPOSED TO BE ASSUMED BY A
         QUALIFIED BIDDER:

        PLEASE TAKE NOTICE that, on April 15, 2011, the above-captioned debtors and
debtors in possession (collectively, the “Debtors”) filed a motion (the “Sale Motion”)2 to, among
other things, (a) establish auction and bid procedures (the “Bid Procedures”) with respect to the
sale (the “Sale Transaction”) of substantially all of their assets (the “Assets”), (b) schedule an
auction and sale hearing (the “Sale Hearing”) with respect to the Sale Transaction, and
(c) approve the sale of the Assets and the assumption and assignment of certain contracts and
leases relating thereto free and clear of all liens, claims, encumbrances and other interests.

        PLEASE TAKE NOTICE that, on _______________, 2011, the Court entered an order
[Docket No. ____] (the “Bid Procedures Order”) approving the Bid Procedures and setting a
date for the Sale Hearing. The Sale Hearing is currently scheduled to be held on ___________,
2011 at 10:00 am (prevailing Eastern Time) at the United States Bankruptcy Court for the
Southern District of New York, Alexander Hamilton Custom House, One Bowling Green, New
York, New York 10004, before the Honorable Sean H. Lane, United States Bankruptcy Court
Judge, to consider the Debtors’ selection of the highest or otherwise best bid and the approval of
Sale Transaction. The Sale Hearing may be adjourned from time to time without further notice
to creditors or parties in interest other than by announcement of the adjournment in open Court
or on the Court’s docket.

        PLEASE TAKE FURTHER NOTICE that, pursuant to the Sale Motion, the Debtors
have sought authorization to assume and assign certain executory contacts and unexpired leases
relating to the Assets (the “Designated Contracts”) upon consummation of the transactions

1
         The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal taxpayer
         identification number, are: TerreStar Networks Inc. (3931); TerreStar License Inc. (6537); TerreStar
         National Services Inc. (6319); TerreStar Networks Holdings (Canada) Inc. (1337); TerreStar Networks
         (Canada) Inc. (8766) and 0887729 B.C. Ltd. (1345).
2
         Capitalized terms used but not otherwise defined herein shall have the same meanings ascribed to them in
         the Sale Motion.
contemplated by the Sale Transaction. A list of the executory contracts and unexpired leases
proposed to be assumed by each Qualified Bidder is attached hereto as Exhibit A and is also
available on the internet at www.terrestarinfo.com (the “Website”), or upon request to the
Debtors’ noticing agent, The Garden City Group, at (866) 682-1770. If any executory contract or
unexpired lease is added to the schedule of Designated Contracts, a copy of the applicable Cure
Notice shall be served on the counterparty by overnight courier service within one (1) business
day of such addition (and in no event less than one (1) business day before the Sale Hearing) and
any counterparty may file an objection as aforesaid at any time that is two hours prior to the Sale
Hearing.

         PLEASE TAKE FURTHER NOTICE that Bankruptcy Code section 365(b)(1) requires
a chapter 11 debtor to cure, or provide adequate assurance that it will promptly cure, any defaults
under executory contracts and unexpired leases at the time of assumption. The required cure
amount (the “Cure Amount”) for each Designated Contract calculated by the Qualified Bidder(s)
is listed on Exhibit A hereto and on the Website. Please note that if no amount is stated for a
particular Designated Contract, the Qualified Bidder(s) believe that there is no Cure Amount
outstanding for such contract or lease.

                   YOU ARE RECEIVING THIS NOTICE BECAUSE
                YOU MAY BE A PARTY TO A DESIGNATED CONTRACT
              (OR REPRESENT A PARTY TO A DESIGNATED CONTRACT).

       PLEASE TAKE FURTHER NOTICE that, pending the outcome of the Auction, the
Debtors are proposing to assume the Designated Contract(s) listed below to which the Debtors
believe you are a counterparty:3

    Counterparty Name                Description of Contract                      Cure Amount, if any

                                                                                           $_____


       Pursuant to the Bid Procedures, you will receive notice of the Qualified Bidder that the
Debtors designate as the winning bidder (the “Successful Bidder”) no later than one (1) business
day after the conclusion of the Auction. To the extent that you object to (i) the assumption and
assignment of your respective Designated Contract to the Successful Bidder or (ii) the Cure
Amount, then you must file with the Bankruptcy Court and serve an objection upon the
following parties, so as to be actually received by no later than 5:00 p.m. (prevailing


3
        Neither the exclusion nor inclusion of any Designated Contract on the list of Designated Contracts attached
        as Exhibit A or published on the Website shall constitute an admission by the Debtors that any such
        contract or lease is in fact an executory contract or unexpired lease capable of assumption, that any
        Reorganized Debtor(s) has any liability thereunder or that such Designated Contract is necessarily a
        binding and enforceable agreement. Further, the Debtors expressly reserve the right to (i) remove any
        Designated Contract from the Designated Contracts list and reject such Designated Contract pursuant to the
        terms of a plan, up until the effective date and (ii) contest any claim (or claim amount) asserted in
        connection with assumption of any Designated Contract.
Eastern Time) on _____________, 2011 (the “Objection Deadline”)4: (a) Akin Gump Strauss
Hauer & Feld LLP, One Bryant Park, New York, NY 10036 (Attn: Ira S. Dizengoff, Esq.,
idizengoff@akingump.com; and Arik Preis, apreis@akingump.com), counsel to the Debtors;
(b) the Office of the United States Trustee for the Southern District of New York, 33 Whitehall
Street, New York, NY 10004 (Attn: Susan D. Golden); (c) Otterbourg, Steindler, Houston &
Rosen, P.C., 230 Park Avenue, New York, NY 10169 (Attn: Scott L. Hazan, Esq.,
shazan@oshr.com), counsel to the statutory committee of unsecured creditors appointed in these
chapter 11 cases; (d) Bank of New York Mellon, 600 E Las Colinas Blvd, Ste 1300, Irving, TX
75039, (Attn Rhonda Tharp, rhonda.tharp@bnymellon.com; asicompliance@bnymellon.com),
agent for the Debtors’ postpetition debtor-in-possession financing; (e) Emmet, Marvin & Martin,
LLP, 120 Broadway, 32nd Floor, New York, NY 10271 (Attn: Elizabeth M. Clark, Esq.,
eclark@emmetmarvin.com), counsel to the agent for the Debtors’ postpetition debtor-in-
possession financing; (f) U.S. Bank National Association, 60 Livingston Ave, St. Paul, MN
55107 (Attn: Cindy Woodward, cindy.woodward@usbank.com; David Johnson,
david.johnson9@usbank.com), Collateral Agent for the Debtors’ purchase money credit facility;
(g) Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, NY 10153 (Attn: Attention:
Debra A. Dandeneau, Esq., debra.dandeneau@weil.com; Ronit J. Berkovich, Esq.,
ronit.berkovich@weil.com), counsel to Harbinger Capital Partners Master Fund I, Ltd. and
Harbinger Capital Partners Special Situations Fund, L.P.; (h) Willkie Farr & Gallagher LLP, 787
Seventh Avenue, New York, NY 10019 (Attn: Rachel C. Strickland, Esq.,
rstrickland@willkie.com; Matthew A. Feldman, Esq.), counsel to EchoStar Corporation in its
capacity as Lender under the Debtors’ purchase money credit facility and Initial Lender under the
Debtors’ postpetition debtor-in-possession financing; (i) U.S. Bank National Association as
Indenture Trustee for the Debtors’ 15% Senior Secured Notes and Kelley Drye & Warren LLP,
101 Park Avenue, New York, NY 10178 (Attn: James S. Carr, Esq., and Kristin S. Elliott, Esq.
KDWBankruptcyDepartment@kelleydrye.com), counsel to the Indenture Trustee; (j) Deutsche
Bank National Trust Company as Indenture Trustee for the Debtors’ 6.5% Senior Exchangeable
Notes and Foley & Lardner LLP, 321 North Clark Street, Suite 2800, Chicago, IL 60654 (Attn:
Mark F. Hebbeln, Esq., mhebbeln@foley.com; Harold L. Kaplan, Esq., hkaplan@foley.com),
counsel to the Indenture Trustee; (k) Quinn Emanuel Urquhart & Sullivan, LLP, 51 Madison
Avenue, 22nd Floor, New York, NY 10010 (Attn: Susheel Kirpalani, Esq.,
susheelkirpalani@quinnemanuel.com; Scott C. Shelley, Esq., scottshelley@quinnemanuel.com;
Daniel S. Holzman, Esq., danielholzman@quinnemanuel.com), counsel to certain holders of the
Debtors’ 6.5% Senior Exchangeable Notes; (l) the Internal Revenue Service, 290 Broadway,
New York, NY 10007; (m) the Securities and Exchange Commission, New York Regional Office,
3 World Financial Center, Suite 400, New York, NY 10281 (Attn: George S. Canellos); (n) the
United States Attorney for the Southern District of New York, One St. Andrews Plaza, New York,
NY 10007 (Attn: Preet Bharara); (o) the Federal Communications Commission, 445 12th Street,
SW, Washington, DC 20554 (Attn: Office of the Secretary, fccinfo@fcc.gov; and Austin Schlick,
austin.schlick@fcc.gov); (p) Industry Canada, Office of the Superintendent of Bankruptcy
Canada, 25 St. Clair Ave. E., Suite 600, Toronto, Ontario, M4T1M2, Canada (Attn: CCAA Team);
(q) Kirkland & Ellis LLP, 601 Lexington Avenue, New York, NY 10022 (Attn: Jonathan S.
Henes, Esq.; jonathan.henes@kirkland.com), and 300 North LaSalle, Chicago, IL 60654 (Attn:
Patrick J. Nash, Esq.; patrick.nash@kirkland.com), counsel to certain holders of the Debtors’ 15%

4
       The Objection Deadline will be two (2) days before the Sale Hearing.
Senior Secured Notes; and (r) parties in interest who have filed a notice of appearance in these
cases pursuant to Bankruptcy Rule 2002. Any objection to the proposed assumption and
assignment must state with specificity the legal and factual basis on which the objection is
premised. Any objection to the Cure Amount must state with specificity what other Cure
Amount is required and provide appropriate documentation in support thereof.
       PLEASE TAKE FURTHER NOTICE that your objection, if any, will be heard and
determined at the Sale Hearing.

       PLEASE TAKE FURTHER NOTICE that, if an objection to a Cure Amount is filed,
the Successful Bidder reserves the right to delete the applicable contract or lease as a Designated
Contract if the Cure Amount is ultimately determined by order of the Court to be higher than the
Cure Amount set forth on Exhibit A hereto.

        PLEASE TAKE FURTHER NOTICE that, if no objection to the assumption and
assignment of a Designated Contract or Cure Amount is timely filed and served, (a) the
counterparty to such a Designated Contract shall be deemed to have consented to the assumption
and assignment of the Designated Contract in connection with the Sale Transaction and shall be
forever barred from asserting any objection with regard to such assumption or assignment, and
(b) the Cure Amount set forth on Exhibit A or on the Website shall be controlling,
notwithstanding anything to the contrary in any Designated Contract, or any other document, and
the counterparty to a Designated Contract shall be deemed to have consented to the Cure Amount
and shall be forever barred from asserting any other claims related to such Designated Contract
against the Debtors or the successful bidder, or the property of any of them.

     PLEASE TAKE FURTHER NOTICE THAT ASSUMPTION OF ANY
DESIGNATED CONTRACT SHALL RESULT IN THE FULL RELEASE AND
SATISFACTION OF ANY CLAIMS OR DEFAULTS, WHETHER MONETARY OR
NONMONETARY, INCLUDING DEFAULTS OF PROVISIONS RESTRICTING THE
CHANGE IN CONTROL OR OWNERSHIP INTEREST COMPOSITION OR OTHER
BANKRUPTCY-RELATED DEFAULTS, ARISING UNDER ANY ASSUMED
EXECUTORY CONTRACT AT ANY TIME BEFORE THE DEBTORS OR
REORGANIZED DEBTORS ASSUME SUCH EXECUTORY CONTRACT. ANY
PROOFS OF CLAIM FILED WITH RESPECT TO AN EXECUTORY CONTRACT
THAT HAS BEEN ASSUMED SHALL BE DEEMED DISALLOWED AND EXPUNGED,
WITHOUT FURTHER NOTICE TO OR ACTION, ORDER OR APPROVAL OF THE
BANKRUPTCY COURT.
New York, New York
Dated: ________, 2011


                        AKIN GUMP STRAUSS HAUER & FELD LLP
                        One Bryant Park
                        New York, New York 10036
                        Telephone: (212) 872-1000
                        Facsimile: (212) 872-1002
                        Ira S. Dizengoff
                        Arik Y. Preis
                        Ashleigh L. Blaylock

                        Counsel to the Debtors and Debtors in Possession
         EXHIBIT 2

Appendix of Unpublished Orders
          EXHIBIT 2-A

In re Adelphia Bus. Solutions, Inc.
WEIL, GOTSHAL & MANGES LLP
Attorneys for Debtors and
Debtors in Possession
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Judy G.Z. Liu, Esq. (JL 6449)

                         UNITED STATES BANKRUPTCY COURT
                          SOUTHERN DISTRICT OF NEW YORK

-----------------------------------------------------------------x
                                                            :
In re                                                       :     Chapter 11 Case No.
                                                            :
ADELPHIA BUSINESS SOLUTIONS, INC., et al., :                      02-11389 (REG)
                                                            :
                Debtors.                                    :     (Jointly Administered)
                                                            :
-----------------------------------------------------------------x

            ORDER (A) AUTHORIZING AND SCHEDULING AN
  AUCTION FOR THE SALE OF CERTAIN ASSETS RELATED TO DEBTOR’S
         CLOSED MARKETS, (B) APPROVING THE TERMS AND
         CONDITIONS OF SUCH AUCTION AND BREAK-UP FEE,
       (C) APPROVING FORM AND MANNER OF NOTICE OF THE
         (i) AUCTION AND SALE HEARING AND (ii) PROPOSED
      ASSUMPTION AND ASSIGNMENT OF CERTAIN EXECUTORY
        CONTRACTS, AND (D) ESTABLISHING DATE AND TIME
     FOR HEARING TO CONSIDER APPROVAL OF PROPOSED SALE

                 Upon the motion, dated November 25, 2002 (the “Motion”), of Adelphia

Business Solutions Operations, Inc., as debtor and debtor in possession (“ABSO” or the

“Debtor”), for orders (i) authorizing, pursuant to sections 105(a), 363(b) and (f), 365(a)

and 1146(c) of the Bankruptcy Code, ABSO to conduct an auction sale (the “Auction”)

of certain assets related to the Closed Markets, including the Sale Assets and the

Assumed Contracts, as set forth in the proposed Sale Agreement, (ii) scheduling a date

for the Auction, (iii) approving, pursuant to Bankruptcy Rule 6004(f)(1), the terms and


A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC
conditions of the Auction, including bidding procedures and the Break-Up Fee (the

“Bidding Procedures”), (iv) authorizing, pursuant to Bankruptcy Rule 2002, the form and

manner of notice for the Auction and for notifying contract parties of the assumption and

assignment to Gateway of the Assumed Contracts, (v) scheduling a date and time for a

hearing to consider approval of the proposed sale resulting from the Auction (the “Sale

Hearing”), (vi) establishing, pursuant to sections 105(a) and 365 of the Bankruptcy Code,

cure amounts, if any, with respect to the Assumed Contracts, (vii) authorizing ABSO to

assume and assign to the successful bidder the Assumed Contracts, (viii) approving the

Agreement and the escrow arrangements, to be effective upon a Closing of the Sale

Transaction, and (ix) granting other relief related to all of the foregoing; and a hearing

having been held (the “Procedures Hearing”) in respect of the Debtor’s request for an

order granting the relief requested in clauses (i) –(v) above (the “Preliminary Relief”);

and it appearing that notice of the hearing has been provided to (i) the Office of the

United States Trustee for the Southern District of New York, (ii) the attorneys for the

Debtor’s postpetition lender, (iii) the attorneys for the statutory committee of unsecured

creditors, (iv) the attorneys for Adelphia Communications Corporation (“ACC”), (v) the

attorneys for the Ad Hoc Committee of 12¼% bondholders, (vi) all nondebtor contract

parties to the Assumed Contracts, (vii) all appropriate federal, state and local taxing

authorities, and (viii) all parties having filed a notice of appearance in the Debtors’

chapter 11 cases pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure

(the “Bankruptcy Rules”); and it appearing that such notice constitutes good and

sufficient notice of the Motion and Preliminary Relief and that no other or further notice

need be provided; and upon the Motion and the record of the Procedures Hearing and all


A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   2
other proceedings had before the Court; and it appearing that an order granting the

Preliminary Relief is in the best interests of the Debtor and other parties in interest; and it

appearing that the Court has jurisdiction over this matter; and after due deliberation and

sufficient cause appearing therefore, it is hereby

                  ORDERED that pursuant to Bankruptcy Rule 6004(f)(1), the Debtor is

authorized to conduct the Auction of the Sale Assets and Assumed Contracts pertaining

to the Closed Markets at the offices of Weil, Gotshal & Manges, LLP, 767 Fifth Avenue,

New York, New York 10153 on January 6, 2003 at 10:00 a.m. (EST); and it is further

                  ORDERED that the Auction shall be conducted on the following terms

and conditions (the “Auction Terms”):

                  •         Initial bids for the Sale Assets must (a) be in writing; (b) at a
                            minimum, exceed the sum of (i) the Purchase Price and the
                            Aggregate Burn Reimbursement Amount plus (ii) the Minimum
                            Overbid Amount (collectively, the “Minimum Bid”); (c) be
                            received by (i) the attorneys for the Debtors, Weil, Gotshal &
                            Manges LLP (“WG&M”), 767 Fifth Avenue, New York, New
                            York 10153 (Attn: Judy G. Z. Liu, Esq.), (ii) the attorneys for the
                            Debtor’s postpetition lender, Jenkens & Glichrist Parker Chapin,
                            LLP, the Chrysler Building, 405 Lexington Avenue, New York,
                            New York 10174 (Attn: Hollace T. Cohen, Esq. and Jennifer
                            Saffer, Esq.); (iii) the attorneys for the statutory committee of
                            unsecured creditors, Kramer Levin Naftalis & Frankel, 919 Third
                            Avenue, New York, New York 10022 (Attn: Mitchell A. Seider,
                            Esq.); (iv) the attorneys for an ad hoc committee of holders of
                            12¼% bonds issued by Adelphia Business Solutions, Inc., Akin,
                            Gump, Strauss, Hauer & Feld, LLP, 590 Madison Avenue, New
                            York, New York 10022 (Attn: Ira S. Dizengoff, Esq. and Philip C.
                            Dublin, Esq.), by no later than 5:00 p.m. (EST) on January 2, 2003
                            (the “Bid Deadline”). Parties that do not submit written bids by
                            the Bid Deadline reflecting at least the Minimum Bid will not be
                            permitted to participate at the Auction. Bids must be accompanied
                            by an earnest money deposit equal to the amount of the Aggregate




A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   3
                            Burn Reimbursement Amount,1 the Earnest Money Deposit, and
                            the Minimum Overbid Amount (collectively, the “Bid Deposit
                            Amount”).

                  •         ABSO will only entertain bids that are on the same terms and
                            conditions as those terms set forth in the Agreement and the
                            documents set forth as exhibits thereto (and this Order).

                  •         All bids must constitute a good faith, bona fide offer to purchase
                            the Sale Assets for cash only (and the assumption of the Assumed
                            Liabilities), and shall not be conditioned on obtaining financing
                            and/or the outcome of due diligence by the bidder.

                  •         All bids are irrevocable until the earlier to occur of: (i) the Closing,
                            or (ii) thirty (30) days following the last date of the Auction (as the
                            same may be adjourned).

                  •         As a condition to making a competing bid, any competing bidder
                            must provide the Debtor, on or before the Bid Deadline, with
                            sufficient and adequate information to demonstrate, to the
                            satisfaction of the Debtor, that such competing bidder (i) has the
                            financial wherewithal and ability to consummate the Sale
                            Transaction, and (ii) can provide all nondebtor contracting parties
                            to the Assumed Contracts with adequate assurance of future
                            performance as contemplated by section 365 of the Bankruptcy
                            Code.

                  •         The Debtor shall, after the Bid Deadline and prior to the Auction,
                            evaluate all bids received, including Gateway’s bid, and determine
                            which bid reflects the highest or best offer for the Sale Assets (the
                            “Pre-Auction Successful Bid”). The Debtor shall announce such
                            determination at the outset of the Auction.

                  •         Subsequent bids (after taking into account the Minimum Bid) at
                            the Auction shall be made in increments of at least $25,000.00.

                  •         Except as otherwise provided in a written offer that has been
                            accepted by the Debtor, subject to satisfaction or waiver of the
                            conditions to Closing set forth in the Agreement, the Closing shall
                            take place at the offices of Weil, Gotshal & Manges LLP, promptly
                            following entry of an order by the Court, substantially in the form


1
  Solely for the purpose of calculating the Bid Deposit Amount, interested bidders should
assume that the Aggregate Burn Reimbursement Amount is $800,000.



A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   4
                            annexed as Exhibit “D” to the Motion authorizing the sale of the
                            Closed Markets to the Successful Bidder.

                  •         The purchase price less the Bid Deposit Amount shall be paid by
                            the Successful Bidder (if Gateway is not the Successful Bidder) by
                            wire transfer at Closing. If for any reason the Successful Bidder
                            fails to consummate the Sale Transaction, or any part thereof, the
                            offeror of the second highest or best bid at the Auction for the Sale
                            Assets will automatically be deemed to have submitted the highest
                            or best bid. To the extent such offeror and the Debtor consent, the
                            Debtor and such offeror are authorized to effect the Sale
                            Transaction as soon as is commercially reasonable without further
                            order of the Court.

                  •         All bids for the purchase of the Sale Assets shall be subject to
                            approval of the Court.

                  •         The Debtor, in its sole discretion, may reject any bid not in
                            conformity with these Bidding Procedures, the requirements of the
                            Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy
                            Rules of the Court, or contrary to the best interests of the Debtor
                            and parties in interest.

                  •         No bids shall be considered by the Court unless a party submitted a
                            competing bid in accordance with the Bidding Procedures and
                            participated in the Auction.

                  •         The Debtor reserves the right to change the location of the Auction
                            and/or adjourn the Auction by announcing such adjournment at the
                            Auction.

                  •         Any sale shall be subject to the Senior DIP Lender’s consent. The
                            Senior DIP Lender reserves all of its rights with respect to any
                            sale, including, without limitation, its right not to consent to any
                            sale, to condition such consent, and to object to any sale.

                  •         Such other terms and conditions as may be announced by the
                            Debtor at the outset of the Auction, provided, however, that such
                            terms and conditions are not inconsistent with the terms of the
                            Motion and this Order. To the extent that there is any ambiguity as
                            to what terms apply, the Motion and this Procedures Order shall
                            control.

                  ORDERED that pursuant to section 363(b) of title 11 of the United States

Code (the “Bankruptcy Code”), the Debtor is authorized to pay to Gateway a Break-Up


A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   5
Fee in the amount of $267,500 (the “Break-Up Fee”), plus reimbursement for the

Aggregate Burn Reimbursement Amount actually paid by Gateway, in the event that the

Court approves an alternative transaction and such alternative transaction actually closes;

and it is further

                    ORDERED that pursuant to Bankruptcy Rule 2002, notice of the proposed

Sale Transaction, Auction and Sale Hearing shall be given by overnight delivery in the

form annexed to the Sale Motion at Exhibit “E,” on or prior to December 20, 2002, to (i)

the United States Trustee, (ii) the attorneys for the Debtor’s postpetition lender, (iii) the

attorneys for the Creditors’ Committee, (iv) the attorneys for an ad hoc committee of

12¼% bondholders, (v) the attorneys for Adelphia Communications Corporation, (vi) all

nondebtor contracting parties with respect to the Assumed Contracts, (vii) all parties who

have made written expressions of interest in acquiring the Sale Assets within six (6)

months prior to the date of this Order, (viii) all appropriate federal, state and local taxing

authorities, (ix) all known persons holding a lien on any of the Sale Assets, (x) all parties

having filed a notice of appearance in the Debtor’s chapter 11 case pursuant to

Bankruptcy Rule 2002, shall constitute good and sufficient notice of the Sale Transaction,

Auction, and Sale Hearing; and it is further

                    ORDERED that pursuant to Bankruptcy Rule 2002(1), the Debtor is

authorized to publish, at least seven (7) days prior to the Auction, a notice of the Sale

Transaction, Auction and Sale Hearing, once, in the form annexed to the Sale Motion at

Exhibit “E,” in the national editions of the New York Times and the Wall Street Journal;

and it is further




A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   6
                  ORDERED that pursuant to Bankruptcy Rule 2002(a)(2), (a) the Sale

Hearing shall be held on January 7, 2002, before the United States Bankruptcy Court,

Honorable Robert E. Gerber at 2:00 p.m. (EST), and (b) objections to approval of the

relief requested in the Sale Motion (other than the Preliminary Relief provided herein), if

any, shall be in writing, shall state the name of the objecting party, shall state with

particularity the reasons and basis for the objection, and shall be filed with the Court and

served upon (i) the attorneys for the Debtor, Weil, Gotshal & Manges LLP, 767 Fifth

Avenue, New York, New York 10153 (Attn: Judy G. Z. Liu, Esq.); (ii) the attorneys for

the Debtor’s postpetition lender, Jenkens & Glichrist Parker Chapin, LLP, the Chrysler

Building, 405 Lexington Avenue, New York, New York 10174 (Attn: Hollace T. Cohen,

Esq. and Jennifer Saffer, Esq.); (iii) the attorneys for the statutory committee of

unsecured creditors, Kramer Levin Naftalis & Frankel, 919 Third Avenue, New York,

New York 10022 (Attn: Mitchell A. Seider, Esq.); (iv) the attorneys for an ad hoc

committee of holders of 12¼% bonds issued by Adelphia Business Solutions, Inc., Akin,

Gump, Strauss, Hauer & Feld, LLP, 590 Madison Avenue, New York, New York 10022

(Attn: Ira S. Dizengoff, Esq. and Philip C. Dublin, Esq.); (v) the attorneys for Gateway,

Inc., Purcell & Scott, Co., L.P.A., 6035 Memorial Drive, Dublin, Ohio 43017 (Attn:

David W. Babner, Esq.); and (vi) the Office of the United States Trustee, 33 Whitehall

Street, 21st floor, New York, New York 10004 (Attn: Tracy H. Davis, Esq.), so as to be

actually received by such persons no later than January 3, 2002 at 12:00 noon (EST).



Dated: New York, New York
       December 16, 2002




A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   7
                                          S/ Robert E. Gerber
                                          HONORABLE ROBERT E. GERBER
                                          UNITED STATES BANKRUPTCY JUDGE




A:\#1205658 V9 - ABIZ BIDDING PROCEDURES ORDER.DOC   8
               EXHIBIT 2-B

In re Bally Total Fitness of Greater N.Y., Inc.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
_______________________________________
In re:                                  )                           Chapter 11
                                        )
       BALLY TOTAL FITNESS OF           )
       GREATER NEW YORK, INC., et al.,  )                           Case No. 07-12395 (BRL)
                                        )
                        Debtors.        )                           Jointly Administered
                                        )



           ORDER (A) AUTHORIZING THE DEBTORS TO ENTER INTO
    THE INVESTMENT AGREEMENT AND THE NEW RESTRUCTURING SUPPORT
      AGREEMENT AND (B) BREAK-UP FEE AND EXPENSE REIMBURSEMENT

                     (“NEW RESTRUCTURING AGREEMENTS ORDER”)

        Upon consideration of the motion (the “Motion”)1 of the Debtors2 for entry of an order (i)

authorizing the Debtors to enter into (a) the Investment Agreement and (b) the New

Restructuring Support Agreement and (ii) approving the Break-Up Fee and Expense

Reimbursement provisions set forth in the Investment Agreement; and it appearing that the relief

requested is in the best interests of the Debtors’ estates, their creditors, and other parties in

interest; and it appearing that this Court has jurisdiction over this matter pursuant to 28 U.S.C. §§

157 and 1334; and it appearing that this Motion is a core proceeding pursuant to 28 U.S.C. §

1
    Capitalized terms used but not defined herein shall have the same meanings ascribed to them in the Motion.
2
    The Debtors in these proceedings are: Bally Total Fitness of Greater New York, Inc., Bally Total Fitness
    Holding Corporation, Bally Total Fitness Corporation, Bally ARA Corporation, Bally Fitness Franchising, Inc.,
    Bally Franchise RSC, Inc., Bally Franchising Holdings, Inc., Bally Real Estate I LLC, Bally REFS West
    Hartford, LLC, Bally Sports Clubs, Inc., Bally Total Fitness Franchising, Inc., Bally Total Fitness International,
    Inc., Bally Total Fitness of California, Inc., Bally Total Fitness of Colorado, Inc., Bally Total Fitness of
    Connecticut Coast, Inc., Bally Total Fitness of Connecticut Valley, Inc., Bally Total Fitness of Minnesota, Inc.,
    Bally Total Fitness of Missouri, Inc., Bally Total Fitness of Philadelphia, Inc., Bally Total Fitness of Rhode
    Island, Inc., Bally Total Fitness of the Mid-Atlantic, Inc., Bally Total Fitness of the Midwest, Inc., Bally Total
    Fitness of the Southeast, Inc., Bally Total Fitness of Toledo, Inc., Bally Total Fitness of Upstate New York,
    Inc., BTF Cincinnati Corporation, BTF Europe Corporation, BTF Indianapolis Corporation, BTF Minneapolis
    Corporation, BTF/CFI, Inc., BTFCC, Inc., BTFF Corporation, Greater Philly No. 1 Holding Company, Greater
    Philly No. 2 Holding Company, Health & Tennis Corporation of New York, Holiday Health Clubs of the East
    Coast, Inc., Holiday/Southeast Holding Corp., Jack La Lanne Holding Corp., New Fitness Holding Co., Inc.,
    Nycon Holding Co., Inc., Rhode Island Holding Company, Tidelands Holiday Health Clubs, Inc., and U.S.
    Health, Inc.


CH\965277.3
157; and adequate notice of the Motion and opportunity for objection having been given; and it

appearing that no other notice need be given; and after due deliberation and sufficient cause

therefor:

        NOW, THEREFORE, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED
THAT:

        1.     The Motion is granted in its entirety.

        2.     The Debtors are authorized to execute and deliver the Investment Agreement and

the New Restructuring Support Agreement, and to execute, deliver, implement and fully perform

any and all obligations, instruments, documents and papers contemplated under the Investment

Agreement and the New Restructuring Support Agreement.

        3.     The Investment Agreement and the New Restructuring Support Agreement, and

each of the terms and provisions thereof are hereby approved pursuant to section 363 of the

Bankruptcy Code.

        4.     The Breakup Fee of $10 million and the Expense Reimbursement provisions in

Section 8.2 of the Investment Agreement are approved in their entirety.

        5.     The No Solicitation/No Shop provision in Section 6.2 is approved in its entirety.

        6.     The Indemnification provision in Section 9.1 is approved in its entirety.

        7.     The Debtors are authorized and empowered to take all actions necessary or

appropriate to implement the relief granted in this Order.

        8.     Notwithstanding the possible applicability of Fed. R. Bankr. P. 6004(h), 7062,

9014, or otherwise, the terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.




                                                 2
CH\965277.3
        9.    The requirement set forth in Rule 9013-(b) of the Local Bankruptcy Rules for the

Southern District of New York that any motion or other request for relief be accompanied by a

memorandum of law is hereby deemed satisfied by the contents of the Motion or otherwise

waived.

        10.   This Court retains jurisdiction with respect to all matters arising from or related to

the implementation of this Order.



Dated: August 21, 2007
       New York, New York


                                             /s/Burton R. Lifland
                                             United States Bankruptcy Judge




                                                3
CH\965277.3
    EXHIBIT 2-C

In re BearingPoint, Inc.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
                                                               :
In re                                                          :   Chapter 11 Case No.
                                                               :
BEARINGPOINT, INC., et al.,                                    :   09 - 10691 (REG)
                                                               :
         Debtors.                                              :   (Jointly Administered)
                                                               :
---------------------------------------------------------------x

   ORDER PURSUANT TO SECTIONS 363(b), (f), AND (m), 365 AND 105(a) OF THE
   BANKRUPTCY CODE AND BANKRUPTCY RULES 2002, 6004, 6006, AND 9014 (i)
 APPROVING PROCEDURES IN CONNECTION WITH THE SALE OF CERTAIN OF
THE DEBTORS’ ASSETS FREE AND CLEAR OF LIENS, CLAIMS, ENCUMBRANCES,
AND INTERESTS, (ii) AUTHORIZING THE DEBTORS TO ENTER INTO A STALKING
    HORSE AGREEMENT IN CONNECTION THEREWITH, (iii) APPROVING THE
PAYMENT OF STALKING HORSE PROTECTIONS, (iv) APPROVING THE STALKING
  HORSE AGREEMENT, (v) AUTHORIZING THE DEBTORS TO SELL CERTAIN OF
THE THEIR ASSETS, (vi) SETTING RELATED AUCTION AND HEARING DATES, (vii)
 AUTHORIZING THE DEBTORS TO ENTER INTO AN ALLOCATION AGREEMENT,
             AND (viii) APPROVING PROCEDURES RELATED TO
        ASSUMPTION AND ASSIGNMENT OF EXECUTORY CONTRACTS
AND UNEXPIRED LEASES AND APPROVING THE FORM AND MANNER THEREOF

                    Upon the motion (the “Motion”), dated March 23, 2009, of BearingPoint, Inc.

(“BearingPoint”) and certain of its affiliates, as debtors and debtors in possession in the above-

captioned chapter 11 cases (collectively, the “Debtors”), pursuant to sections 105, 363 and 365

of chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) and Rules 6004 and

6006 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), for (i) approval

of procedures (the “Bidding Procedures”) in connection with the sale of BearingPoint’s public

services industry group, in whole or in part (the “Bid Assets”), (ii) authorization to enter into a

Stalking Horse Agreement (as defined below) in connection therewith, (iii) approval of the

payment of Stalking Horse Protections (as defined below), and (iv) the setting of related auction

and sale hearing dates, all as more fully described in the Motion; and the Court having held on

April 1, 2009 and April 2, 2009 a hearing to consider the relief requested herein (the “Bidding


NY2:\1984067\09\16$WZ09!.DOC\22638.0013
Procedures Hearing”) with the appearances of all interested parties noted in the record of the

Bidding Procedures Hearing; and upon the record of the Hearing, and all of the proceedings

before the Court, the Court finds and determines the following:

FOUND AND DETERMINED THAT:

                    A.         The Court has jurisdiction to consider the Motion and the relief requested

therein in accordance with 28 U.S.C. §§ 157 and 1334 and the Standing Order M-61 of the

United States District Court for the Southern District of New York, dated July 10, 1984 (Ward,

Acting C.J.). Venue of these cases and the Motion in this district is proper under 28 U.S.C.

§§ 1408 and 1409.

                    B.         The Debtors have provided due and proper notice of the Motion and

Hearing to the Notice Parties1 in accordance with the Order Pursuant to Section 105(a) of the

Bankruptcy Code and Bankruptcy Rules 1015(c) and 9007 Implementing Certain Notice and

Case Management Procedures, dated March 5, 2009 [Docket No. 117], and no further notice is

necessary. A reasonable opportunity to object or be heard regarding the relief requested in the

Motion (including, without limitation, with respect to the Bidding Procedures and Stalking Horse

Protections (as defined below)) has been afforded to all interested persons and entities, including

but not limited to the Notice Parties.

                    C.         The Debtors’ proposed notice of the Bidding Procedures, the Auction and

the hearing to approve any sale of the Debtors’ Bid Assets (the “Sale Approval Hearing”) is

appropriate and reasonably calculated to provide all interested parties with timely and proper

notice, and no other or further notice is required.




1
    Capitalized terms used, but not defined, herein shall have the meaning ascribed to them in the Motion.



NY2:\1984067\09\16$WZ09!.DOC\22638.0013                        2
                    D.         The Bidding Procedures substantially in the form attached hereto as

Exhibit A are fair, reasonable, and appropriate and are designed to maximize the recovery from

any sale of the Debtors’ Bid Assets (the “Sale”). The Bidding Procedures were negotiated in

good faith between the Debtors and the Stalking Horse Bidder (as defined below).

                    E.         The Debtors have demonstrated a compelling and sound business

justification for authorization to (i) enter into the agreement, as amended as of April 3, 2009

which amendment shall be filed with the Court, (the “Stalking Horse Agreement”) with Deloitte

LLP (“Deloitte” or the “Stalking Horse Bidder”), attached as Exhibit C to the Motion, for the

sale of the Bid Assets and (ii) pay the fee (the “Break-Up Fee”) and expense reimbursement (the

“Expense Reimbursement,” and together with the Break-Up Fee, the “Stalking Horse

Protections”), under the terms and conditions set forth in Section 7 of the Stalking Horse

Agreement, as approved by this Order.

                    F.         The Stalking Horse Protections, as approved by this Order, are fair and

reasonable and provide a benefit to the Debtors’ estates and creditors.

                    G.         The Debtors’ payment of either or both (i) the Break-Up Fee and/or

(ii) the Expense Reimbursement, under this Order and upon the conditions set forth in Section 7

of the Stalking Horse Agreement is (a) an actual and necessary cost of preserving the Debtors’

estates, within the meaning of section 503(b) and 507(a) of the Bankruptcy Code, (b) of

substantial benefit to the Debtors’ estates and creditors and all parties in interest herein, (c)

reasonable and appropriate and (d) material inducements for, and conditions necessary to ensure

that the Stalking Horse Bidder will continue to pursue its proposed agreement to undertake any

Sale.




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                        3
                    H.         On or about April 6, 2009, the Debtors will serve notice of the Auction

and the Sale Approval Hearing (the “Sale Notice”) on (i) the Notice Parties in accordance with

the Order Pursuant to Section 105(a) of the Bankruptcy Code and Bankruptcy Rules 1015(c) and

9007 Implementing Certain Notice and Case Management Procedures, dated March 5, 2009

[Docket No. 117], and (ii) all interested bidders for the Bid Assets that have executed

confidentiality agreements.

                    I.         Entry of this Order is in the best interests of the Debtors and their estates,

creditors, and interest holders and all other parties-in-interest herein.

                    J.         The findings and conclusions set forth herein and as supplemented by the

Court’s decision at the conclusion of the Hearing on April 2, 2009 constitute the Court’s findings

of fact and conclusions of law pursuant to Bankruptcy Rule 7052, made applicable to this

proceeding pursuant to Bankruptcy Rule 9014.

                    K.         To the extent any of the following findings of fact constitute conclusions

of law, they are adopted as such. To the extent any of the following conclusions of law

constitute findings of fact, they are adopted as such.

ORDERED, ADJUDGED AND DECREED THAT:

                    1.         The Bidding Procedures attached hereto as Exhibit A are APPROVED,

fully incorporated into this Order and the Debtors are authorized and directed to act in

accordance therewith. The failure to specifically include a reference to any particular provision

of the Bidding Procedures in this Order shall not diminish or impair the effectiveness of such

provision.

                    2.         The objections of the Official Committee of Unsecured Creditors, Law

Debenture Trust Company of New York, as Indenture Trustee and any other objections to the




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                          4
Motion or the relief requested therein that have not been withdrawn, waived, settled, or

specifically addressed in this Order or on the record at the conclusion of the hearing on April 2,

2009, and all reservations of rights included in such objections, are overruled in all respects on

the merits.

                    3.         The form of Sale Notice attached to the Motion as Exhibit E is approved.

                    4.         Service of the Sale Notice on the Notice Parties in the manner described

herein and in the Motion constitutes good and sufficient notice of the Auction and the Sale

Approval Hearing. No other or further notice is required.

                    5.         To constitute a “Qualified Bid,” a bid (other than the Stalking Horse

Agreement) must be received by the Bid Deadline (as defined in the Bidding Procedures) and

comply with the applicable provisions of the Bidding Procedures; provided, however, that if any

such Qualified Bid is conditioned upon the assumption and assignment of Contracts (as defined

below) or Leases (as defined below), then such offeror must identify such Contracts and/or

Leases to be assumed and assigned and provide evidence of its ability to provide adequate

assurance of future performance of such Contracts or Leases along with such Qualified Bid (an

“Adequate Assurance Package”). The Stalking Horse Agreement is a Qualified Bid. The

Stalking Horse Bidder shall be deemed to be a Qualified Bidder.

                    6.         The Auction shall be conducted at the offices of Weil, Gotshal & Manges

LLP, 767 Fifth Avenue, New York, New York 10153 on April 15, 2009 at 10:00 a.m. (Eastern

Time).

                    7.         Objection Deadline to Sale Order(s). Objections to the relief sought in the

Sale Order shall be in writing, filed and served in accordance with the Case Management Order

#2, so as to be actually received by (i) Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                        5
York, New York 10153, (Attn: Marcia L. Goldstein, Esq. and Alfredo R. Pérez , Esq.), as

counsel to the Debtors, (ii) the Office of the United States Trustee for the Southern District of

New York, 33 Whitehall St., 21st Floor, New York, New York 10004 (Attn: Serene Nakano,

Esq.), (iii) Paul, Hastings, Janofsky & Walker LLP, Park Avenue Tower, 75 East 55th Street,

First Floor, New York, New York 10022 (Attn: Luc Despins, Esq. and Leslie A. Plaskon, Esq.),

as counsel for Wells Fargo Bank, N.A., the administrative agent for the Debtors’ prepetition

secured lenders (the “Agent”), (iv) Bingham McCutchen LLP, 299 Park Avenue, New York,

New York 10022 (Attn: Jeffrey Sabin, Esq., Neil W. Townsend, Esq. and Sabin Willett, Esq.),

as counsel for the Official Committee of Unsecured Creditors appointed in these chapter 11 cases

(the “Creditors’ Committee”), (v) Kramer Levin Naftalis & Frankel LLP, 1177 Avenue of the

Americas, New York, NY 10036 (Attn: Robert T. Schmidt, Esq. and Thomas E. Molner, Esq.),

as counsel to the Stalking Horse Bidder, and (vi) all parties on the Master Service List pursuant

to the Case Management Order #2 (collectively, the “Objection Notice Parties”) by April 10,

2009 at 12:00 p.m. (Eastern Time) by the Objection Notice Parties; provided, however, that

objections as to the Auction or the selection of the highest or otherwise best bid shall be in

writing, filed and served in accordance with the Case Management Order #2, so as to be actually

received by the Objection Notice Parties by April 16, 2009 at 12:00 p.m. (Eastern Time).

                    8.         The Sale Approval Hearing shall be held in the United States Bankruptcy

Court for the Southern District of New York, Courtroom 621, One Bowling Green, New York,

NY 10004, on April 17, 2009 at 9:00 a.m. (Eastern Time) or such other date and time that the

Court may later direct; provided, however, that the Sale Approval Hearing may be adjourned,

from time to time, without further notice to creditors or parties in interest other than by

announcement of the adjournment in open Court or on the Court’s docket.




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                       6
                    9.         April 2, 2009 at 8:00 p.m. shall be deemed the date of entry of the Bidding

Procedures Order for the purpose of section 3.06 of the Stalking Horse Agreement.

                    10.        As soon as practicable upon entry of this Order, to the extent that such

actions have not already been taken, the Debtors shall: (a) post a complete copy of the Stalking

Horse Agreement, including all schedules, exhibits and amendments thereto except exhibits

2.12(r), 6.01(e)(1), 6.01(e)(2), and 6.01(e)(3) in the Debtors’ virtual data room; and (b) notify

any employee who has signed an agreement for future employment with the Stalking Horse

Bidder (a “Future Employment Agreement”) that such employee is not bound by the Future

Employment Agreement until a Sale to the Stalking Horse Bidder is approved by the Court and

closes and the Future Employment Agreement does not prevent the employee from engaging in

discussions about future employment with other potential bidders for the Bid Assets.

                    11.        As soon as practicable after the conclusion of the Auction, but no later

than before the Sale Approval Hearing, the Debtors shall file a final form of order approving the

Sale as agreed upon between the Debtors and the Successful Bidder(s).

                    12.        Stalking Horse Agreement. The Debtors are authorized to enter into the

Stalking Horse Agreement.

                    13.        The Stalking Horse Bidder shall be entitled to receive the Expense

Reimbursement and/or the Break-Up Fee in accordance with the terms and conditions of the

Stalking Horse Agreement, provided, however that under no circumstances will the Stalking

Horse Bidder receive the Break-Up Fee if it is the Successful Bidder and the transaction

contemplated by the Stalking Horse Agreement closes. The Expense Reimbursement and Break-

Up Fee, once earned in accordance with Section 7 of the Stalking Horse Agreement, shall (i) be

administrative expenses in the Debtors’ chapter 11 cases pursuant to sections 503(b), 507(a)(1)




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                        7
and 507(b) of the Bankruptcy Code until paid to the Stalking Horse Bidder, provided, however,

that (A) all such amounts shall have the priority and be paid solely in the manner set forth in

Section 7 of the Stalking Horse Agreement and (B) payment of the Expense Reimbursement

shall be subject to the Objection Rights as defined below.

                    14.        In the event that an Expense Reimbursement is to be paid pursuant to the

Stalking Horse Agreement, the Debtors and/or the Stalking Horse Bidder shall provide the

Creditors Committee and Agent with the documentation supporting the expenses that make up

the Expense Reimbursement and an itemized statement as to the amount requested (subject to

redaction for confidentiality and privilege) (the “Expense Reimbursement Documentation”).

Upon their receipt of the Expense Reimbursement Documentation, the Creditors Committee and

the Agent shall have five days to object to any portion of the requested Expense Reimbursement

on the basis that such expenses are not payable pursuant to the terms of the Stalking Horse

Agreement (the “Objection Rights”). If no objection is filed within five days of receipt of the

Expense Reimbursement Documentation, the requested Expense Reimbursement shall be paid

pursuant to the terms of the Stalking Horse Agreement. If an objection is filed by the Creditors

Committee or the Agent within five days of their receipt of the Expense Reimbursement

Documentation (an “Objection”), the Debtors shall pay that portion of the Expense

Reimbursement not subject to the Objection pursuant to the terms of the Stalking Horse

Agreement. The Court will decide any Objection, after the Debtors and the Stalking Horse

Bidder have been provided an opportunity to respond to same.

                    15.        Assignment Procedures. The assignment procedures set forth in the

Motion (the “Assignment Procedures”) are hereby approved. As soon as practicable after the

date this Order is entered, the Debtors will file with the Court an assignment schedule (the




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                       8
“Assignment Schedule”) identifying the Contracts and Leases that will be assumed and assigned

pursuant to the Stalking Horse Agreement, under seal, and in the form and substance reasonably

acceptable to the Stalking Horse Bidder. The Assignment Schedule may be supplemented at the

request of the Stalking Horse Bidder. The Debtors will serve each of the non-debtor

counterparties to the Contracts and Leases a notice, which shall be in form and substance

reasonably acceptable to the Stalking Horse Bidder (the “Notice of Assignment and Cure”), by

first class mail, that will include (i) the title of the Contract or Lease to be assumed, (ii) the name

of the counterparty to the Contract or Lease, (iii) any applicable cure amounts, (iv) the identity of

the assignee, and (v) the deadline by which any such Contract or Lease counterparty must object.

                    16.        Any objections to the assumption and/or assignment of any Contract or

Lease identified on the Notice of Assignment and Cure, including to the cure amount set forth on

such notice, must be in writing, filed with the Court, and be actually received by the Notice

Parties in accordance with the Case Management Order #2 no later than ten (10) days after the

Assignment Schedule is mailed to the affected party (the “Assignment and Cure Objection

Deadline”), and must set forth a specific default under the Contract or Lease and claim a specific

monetary amount that differs from the amount, if any, specified by the Debtors in the Notice of

Assignment of Cure.

                    17.        Resolution of Objections to Assumption and/or Assignment of Contracts

and Leases. If no objections are received by the Assignment and Cure Objection Deadline, then

the assumption and assignment are authorized and the cure amounts set forth on the Notice of

Assignment and Cure shall be binding upon the nondebtor party to the Contract or Lease for all

purposes and will constitute a final determination of total cure amounts required to be paid to the

contract or lease counterparty in connection with any potential assignment of such Contract or




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                       9
Lease to the Successful Bidder. In addition, each non-debtor party to such unexpired Contract or

Lease shall be forever barred from objecting to the cure information set forth in the Notice of

Assignment and Cure, including, without limitation, the right to assert any additional cure or

other amounts with respect to the Contract or Lease arising or relating to any period prior to such

assumption or assignment. If no objections to the assumption or assumption and assignment are

received by the Assignment and Cure Objection Deadline, counsel for the Debtors may submit to

the Court a declaration of no objection and a form of order (collectively, the “Declaration of No

Objection”) granting the requested assumption and/or assignment of the Contract or Lease, and

serve such Declaration of No Objection on the counterparty to the Contract or Lease. The order

approving such assumption and/or assignment may then be entered by the Court twenty-four (24)

hours after the Declaration of No Objection is filed.

                    18.        If a timely objection is received and such objection cannot otherwise be

resolved by the parties, the Court may hear such objection at a later date set by the Court. The

pendency of a dispute relating to cure amounts will not prevent or delay the assumption and

assignment of any Contracts or Leases. If an objection is filed only with respect to the cure

amount listed on the Notice of Assignment and Cure, the Debtors may file a Declaration of No

Objection as to assumption and assignment only and the dispute with respect to the cure amount

will be resolved consensually, if possible, or, if the parties are unable to resolve their dispute,

before the Court. The Debtors intend to cooperate with the counterparties to Contracts or Leases

to attempt to reconcile any difference in a particular cure amount.

                    19.        Nothing in Paragraphs 15 through 18 of this Order shall interfere with the

applicability of the Anti-Assignment Act, 41 U.S.C. § 15 (the “Act”) or otherwise affect the

rights of the United States under the Act.




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                       10
                    20.        No agreement entered into by the Debtors concerning the allocation of the

proceeds of the Sale to the assets purchased shall be binding on the Creditors’ Committee, the

Court or any other person not party to such agreement. The Court shall retain final authority to

resolve any dispute as to the allocation of proceeds of the sale for the purposes of (a) the

distribution of such proceeds to the creditors’ of the Debtors; and (b) the attachment of liens to

such proceeds, and the rights of all parties with respect to these issues are expressly reserved.

                    21.        Notwithstanding Bankruptcy Rules 6004, 6006 or otherwise, this Order

shall be effective and enforceable immediately upon entry and its provisions shall be self-

executing.

                    22.        All time periods set forth in this Order shall be calculated in accordance

with Bankruptcy Rule 9006(a).

                    23.        To the extent this Order is inconsistent with any prior order or pleading

with respect to the Motion in these cases, the terms of this Order shall govern.

                    24.        This Court shall retain jurisdiction over any matters related to or arising

from the implementation or interpretation of this Order. To the extent any provisions of this

Order shall be inconsistent with the Motion, the terms of this Order shall control.

Dated: New York, New York
       April 7, 2009

                                                      s/ Robert E. Gerber
                                                      UNITED STATES BANKRUPTCY JUDGE




NY2:\1984067\09\16$WZ09!.DOC\22638.0013                        11
                                            Exhibit A
                                          Bidding Procedures




NY2:\1984067\09\16$WZ09!.DOC\22638.0013
                                          BIDDING PROCEDURES

               Set forth below are the bidding procedures (the “Bidding Procedures”) to be
employed in connection with an auction (the “Auction”) for the sale (the “Sale”) of (i) the assets
included in the Stalking Horse Agreement (as defined below) (the “Deloitte Bid Assets”)
between Deloitte LLP (“Deloitte” or the “Stalking Horse Bidder”) and BearingPoint, Inc.
(“BE,” and together with its debtor and non-debtor affiliates, “BearingPoint”); or (ii) all or any
portion of the Deloitte Bid Assets plus any of the Debtors’ assets not included in the Stalking
Horse Agreement (together with the Deloitte Bid Assets, the “Bid Assets”). At a hearing
following the Auction (the “Sale Approval Hearing”), the Debtors will seek entry of an order
(the “Sale Order”) from the United States Bankruptcy Court for the Southern District of New
York (the “Bankruptcy Court”) authorizing and approving the Sale to the Qualified Bidder (as
defined below) that the Debtors1 determine to have made the highest or otherwise best bid (the
“Successful Bidder”).

Assets to be Sold

                 By Motion dated March 23, 2009, the Debtors have requested authority to sell the
Bid Assets, which are comprised in whole or in part of assets of BearingPoint’s public services
industry group. Except as otherwise provided in definitive documentation with respect to the
Sale, all of the Debtors’ rights, title and interest in and to any Bid Assets sold in connection with,
or as a result of, the Sale shall be sold free and clear of all pledges, liens, security interests,
encumbrances, claims, charges, options and interests thereon and against in accordance with
section 363 of the Bankruptcy Code.

The Bidding Process

                After consultation with the Agent and the Creditors’ Committee, the Debtors
shall: (i) determine whether any person is a Qualified Bidder (as defined below); (ii) provide
reasonable assistance to Interested Parties in conducting their due diligence investigations
subject to the provisions below; (iii) receive offers from proposed bidders; and (iv) negotiate any
offers made to purchase the Bid Assets. Any person who wishes to participate in the Auction
must be a Qualified Bidder. Neither the Debtors nor their representatives shall be obligated to
furnish any information of any kind to any person who has not executed a confidentiality
agreement as provided for below. Notwithstanding the foregoing or anything else in these
Bidding Procedures, the Stalking Horse Bidder is hereby deemed to be a Qualified Bidder for all

1
  Capitalized terms not defined herein shall have the meanings ascribed to them in the Debtors’ Motion
for Orders pursuant to Sections 363(b), (f), and (m), 365 and 105(a) of the Bankruptcy Code and
Bankruptcy Rules 2002, 6004, 6006, and 9014 For (i) Approval of Procedures in Connection with the
Sale of Certain of the Debtors’ Assets Free and Clear of Liens, Claims, Encumbrances, and Interests, (ii)
Authorization to Enter Into a Stalking Horse Agreement in Connection Therewith, (iii) Approval of the
Payment of Stalking Horse Protections, (iv) Approval of the Stalking Horse Agreement, (v) Authorization
to Sell Certain of the Debtors’ Assets, (vi) the Setting of Related Auction and Hearing Dates, (vii)
Authorization to Enter into an Allocation Agreement, (viii) Approval of Procedures Related to
Assumption and Assignment of Executory Contracts and Unexpired Leases and Form and Manner
Thereof.



NY2:\1984067\09\16$WZ09!.DOC\22638.0013
purposes and at all times, and the bid embodied in the Stalking Horse Agreement (including any
subsequent bids at the Auction) is hereby deemed to be a Qualified Bid (as defined herein) for
the Bid Assets, for all purposes and at all times.

               BE has entered into an agreement as amended (the “Stalking Horse Agreement”)
with Deloitte for the sale of the Deloitte Bid Assets, as described in the Motion and the Stalking
Horse Agreement. The Stalking Horse Agreement is attached as Exhibit E to the Motion and has
been filed on the main docket of these cases. Pursuant to the Stalking Horse Agreement and
these Bidding Procedures, the Debtors have agreed to provide the Stalking Horse Bidder with the
following bid protections: (i) a breakup fee in the amount of $10,500,000 (the “Breakup Fee”);
and (ii) reimbursement of reasonable, documented out of pocket costs and expenses (including
fees and expenses of counsel, financial advisors and other professionals and consultants, and
Deloitte’s share of the HSR Act filing fee) incurred by the Stalking Horse Bidder in connection
with the Stalking Horse Agreement and the transactions contemplated thereby, in an amount not
to exceed $1,500,000 (the “Expense Reimbursement”); provided, however, that in certain
circumstances as set forth in the Stalking Horse Agreement where the Breakup Fee is not due
and owing, the amount of the Expense Reimbursement may be up to $12,000,000. The Breakup
Fee and the Expense Reimbursement will be paid as, when and to the extent provided in the
Stalking Horse Agreement, and as approved by the Bankruptcy Court in the bidding procedures
order.

                To facilitate the Auction and assist the Debtors and other interested parties in
assessing the terms of each bid, those prospective bidders who are interested in bidding on the
Bid Assets must utilize the Stalking Horse Agreement and the Schedules and Exhibits thereto to
prepare their bids and mark all proposed changes to such agreement and schedules as part of
their bid.

Bid Deadline

                Any person or entity wanting to participate in the Auction, other than the Stalking
Horse Bidder, must submit a Qualified Bid (as defined below) for the Bid Assets on or before
April 13, 2009 at 4:00 p.m. (Eastern Time) (the “Bid Deadline”) in writing to (i) Greenhill &
Co., LLC, 300 Park Avenue, New York, NY 10022 (Attn: Dhiren Shah, Bradley A. Robins, and
Birger Kuno Berendes), investment bankers and financial advisors to the Debtors, and (ii) Paul,
Hastings, Janofsky & Walker LLP, Park Avenue Tower, 75 East 55th Street, First Floor, New
York, New York 10022 (Attn: Luc Despins, Esq. and Leslie A. Plaskon, Esq.), attorneys to the
Agent. The Debtors shall deliver to the Stalking Horse Bidder and to counsel for the Creditors’
Committee, Bingham McCutchen LLP, 399 Parke Avenue, New York, NY 10022 (Attn: Jeffrey
Sabin, Esq. and Neil Townsend, Esq.) copies of all bids submitted to them for the purchase of
any of their assets, in each case substantially contemporaneously with the Debtors’ receipt
thereof.

Qualified Bids

              To qualify as a “Qualified Bidder” with respect to bids on the Bid Assets, a bidder
must submit a “Qualified Bid” (as described below) by the Bid Deadline and: (i) offer to
purchase the Bid Assets and assume some or all of the Assumed Liabilities (as defined in the


NY2:\1984067\09\16$WZ09!.DOC\22638.0013      2
Stalking Horse Agreement); (ii) provide a copy of the Qualified Bidder’s proposed Asset
Purchase Agreement and the Schedules and Exhibits thereto, which shall be modified by the
Qualified Bidder from the form of the Stalking Horse Agreement only to the extent necessary to
reflect proposed changes, together with a marked copy of the Stalking Horse Agreement and
Schedules and Exhibits thereto reflecting such changes; (iii) must not subject its bid to any
conditions less favorable to the Debtors than those provided for in the Stalking Horse
Agreement; (iv) agree to not revoke its bid until the closing of a purchase of the Bid Assets by
the Successful Bidder and agree to serve as a Backup Bidder (as defined below); (v) stipulate or
otherwise provide evidence that such Qualified Bidder’s submission, execution, delivery and
closing of the marked up versions of the Stalking Horse Agreement and the Schedules and
Exhibits thereto has been authorized and approved by the Qualified Bidder’s board of directors
(or comparable governing body); (vi) state that such Qualified Bidder is financially capable of
consummating the transactions contemplated by the Stalking Horse Agreement, and otherwise
provide such other information that will allow the Debtors and their advisors to make a
reasonable determination as to the Qualified Bidder’s ability to consummate the transactions
contemplated by the Stalking Horse Agreement, including the Adequate Assurance Package (as
defined below); (vii) not seek any transaction or breakup fee, expense reimbursement, or similar
type of payment; and (viii) be accompanied by a Good Faith Deposit (as defined below).


                A Qualified Bid with respect to the Bid Assets is one that: (i) is a proposal
determined by the Debtors, in the good faith opinion of its board of directors, as the case may be,
after consultation with the Debtors’ investment bankers and financial advisors, the Agent, and
counsel to the Creditors’ Committee not to be materially more burdensome or conditional than
the terms of the Stalking Horse Agreement and one that has a value greater than or equal to the
sum of (x) the value, as reasonably determined by the Debtors’ financial advisor, of the Stalking
Horse Agreement plus (y) Twelve Million Dollars ($12,000,000) (i.e., the sum of the Breakup
Fee and the maximum amount (in certain circumstances) of the Expense Reimbursement) plus
(z) at least Two Million Five Hundred Thousand Dollars ($2,500,000); and (ii) is accompanied
by such Qualified Bidder’s Good Faith Deposit (by means of a certified bank check from a U.S.
bank or by wire transfer of immediately available funds).

                    Overbids above the initial $2,500,000 bid increment will be at the Debtors’
discretion.

                If no timely Qualified Bid is submitted, the Debtors shall not hold the Auction,
and instead shall request at the Sale Approval Hearing that the Bankruptcy Court approve the
sale of the Bid Assets to the Stalking Horse Bidder pursuant to the Stalking Horse Agreement.



               All Qualified Bids will be considered but the Debtors reserve the right to reject
any and all bids other than the highest or otherwise best bid. Bids will be evaluated on numerous
grounds.

               Each bidder shall be deemed to acknowledge and represent that it has had an
opportunity to conduct any and all due diligence regarding the Bid Assets that are the subject of


NY2:\1984067\09\16$WZ09!.DOC\22638.0013          3
the Auction prior to making any such bids; that it has relied solely upon its own independent
review, investigation and/or inspection of any documents and/or the assets in making its bid; and
that it did not rely upon any written or oral statements, representations, promises, warranties or
guaranties whatsoever, whether express, implied, by operation of law or otherwise, regarding the
Bid Assets, or the completeness of any information provided in connection therewith, except as
expressly stated in these Bidding Procedures or, as to the Successful Bidder, the asset purchase
agreement with such Successful Bidder.

Good Faith Deposits

                In addition to all other provisions hereof, in order to become a Qualified Bidder,
all Bidders will be required to submit a good faith deposit (the “Good Faith Deposit”) with the
Debtors on or before the Bid Deadline. Such Good Faith Deposits shall be equal to five percent
(5%) of the Qualified Bidder’s proposed purchase price and should be payable to an Escrow
Agent to be designated by the Debtors. Good Faith Deposits of all Qualified Bidders shall be
held in a separate interest-bearing account for the Debtors’ benefit until consummation of a
transaction involving any other bidder for the Bid Assets. If a Successful Bidder fails to
consummate an approved sale of the Bid Assets because of a breach or failure to perform on the
part of such Successful Bidder, such bidder’s deposit will be held by the Debtor subject to a
ruling by the Bankruptcy Court that the Debtor should be permitted to retain such deposit on
account of any damages caused by such bidder’s breach. All other deposits will be returned
promptly after the closing of the sale of the Bid Assets to the Successful Bidder (or, in the case
of Deloitte, in accordance with the terms of the Stalking Horse Agreement). Notwithstanding
anything herein to the contrary, the terms under which Deloitte provided a Good Faith Deposit
and the terms of its use, release and return to Deloitte shall be governed by the Stalking Horse
Agreement.

Due Diligence

              The Debtors may afford any potential bidder the opportunity to conduct a
reasonable due diligence review in the manner determined by the Debtors in their discretion.
The Debtors shall not be obligated to furnish any due diligence information after the Bid
Deadline.

                 The Debtors either have provided or intend to use reasonable efforts to provide to
all parties that have either expressed an interest in purchasing the Bid Assets or who the Debtors
believe may have a legitimate interest in purchasing the Bid Assets (each an “Interested Party”
and, collectively, the “Interested Parties”), certain information in connection with the proposed
Sale, including, among other things, these proposed Bidding Procedures and the Stalking Horse
Agreement, but the failure to deliver any such information to any Interested Parties shall not
affect the validity, effectiveness or finality of the Auction or this sale process. Should any
Interested Party desire additional or further information, such Interested Party will be required to
enter into a confidentiality agreement satisfactory to the Debtors in their business judgment.
Upon execution of the confidentiality agreement, the Interested Party will be given access
(through a virtual data room or otherwise the “Data Room”) to various financial data and other
relevant and confidential information, subject to the Debtors right to exclude such access for
competitive concerns. The Debtors may also permit Interested Parties who have entered


NY2:\1984067\09\16$WZ09!.DOC\22638.0013      4
confidentiality agreements satisfactory to the Debtors to have reasonable access to employees to
discuss the terms of future employment, and no prior agreements between any such employees
and the Stalking Horse Bidder shall prevent any such discussions; provided, however, that no
employee shall enter into any agreement for future employment with an Interested Party prior to
the closing of the Sale that would prevent such employee from engaging in discussions with
other Interested Parties or accepting offers of employment from any Successful Bidder.

The Auction

                In the event that the Debtors timely receive more than one Qualified Bid, the
Debtors shall conduct an Auction. The Auction will be conducted at the offices of Weil, Gotshal
& Manges LLP, 767 Fifth Avenue, New York, New York 10153 on April 15, 2009,
commencing at 10:00 a.m. (prevailing Eastern Time) to determine the highest or otherwise
best bid with respect to the Bid Assets. Any bidder submitting a Qualified Bid may appear and
submit its highest or best bid at the Auction. The Auction may be adjourned by announcement at
the Auction without further notice.

Auction Procedures

               By 5:00 p.m. on the day preceding the start of the Auction, the Debtors will give
all Qualified Bidders a copy of what they believe to be the highest or otherwise best Qualified
Bid and will inform each Qualified Bidder who has expressed its intent to participate in the
Auction the identity of all Qualified Bidders that may participate in the Auction. Only Qualified
Bidders are eligible to participate in the Auction. The following parties shall be permitted to
attend the Auction: (i) the Creditors’ Committee and their respective counsel and advisors;(ii)
the Agent and its professionals; and (iii) the Prepetition Secured Lenders and their professionals.
Bidding at the Auction shall begin initially with the highest or otherwise best bid announced by
the Debtors, after consultation with the Agent and consultation with the Creditors’ Committee,
and shall subsequently continue in such minimum increments as the Debtors determine after
consultation with the Agent and the Creditors’ Committee.

                Bidding will continue with respect to the Auction until the Debtors (after
consultation with the Agent and consultation with the Creditors’ Committee) determine that they
have received the highest or otherwise best bid for the Bid Assets. Any subsequent bids by
Deloitte will be credited with the full amount of the Breakup Fee and the Expense
Reimbursement. After the Debtors so determine, the Auction will be closed. The bidding at the
Auction will be transcribed by a court reporter. Each Qualified Bidder shall be required to
confirm that it has not engaged in any collusive behavior with respect to the bidding, the Auction
or the Sale.

               The Debtors, after consultation with the Agent (at the direction of the required
Prepetition Secured Lenders) and the Creditors’ Committee, will then determine and announce
which Qualified Bid has been determined to be the highest or otherwise best bid. In determining
which Qualified Bid is the Successful Bid, the Debtors will consider, at each stage of the
Auction, the net economic effect upon the Debtors’ estates after the payment of the Breakup Fee
or Expense Reimbursement, if applicable; provided, however, that economic considerations shall




NY2:\1984067\09\16$WZ09!.DOC\22638.0013      5
not be the sole criteria upon which the Debtors may base their decision and the Debtors shall
take into account all factors they believe to be relevant in an exercise of their business judgment.

Breakup Fee and Expense Reimbursement

              In the event that the Stalking Horse Agreement is terminated under the
circumstances described in the Stalking Horse Agreement to the extent approved in the bidding
procedures order, the Debtors shall promptly, and in any event within one (1) Business Day, pay
the Stalking Horse Bidder the Breakup Fee and the Expense Reimbursement as, when and to the
extent provided in the Stalking Horse Agreement as approved by the bidding procedures order.

                The Debtors’ obligation to pay the Breakup Fee and the Expense Reimbursement
shall be the joint and several obligation of the Debtors, shall survive termination of the Stalking
Horse Agreement, dismissal or conversion of any of the Bankruptcy Cases, and confirmation of
any plan of reorganization or liquidation, and shall constitute an administrative expense of the
Debtors under Sections 503(b) and 507(a) of the Bankruptcy Code.

Adequate Assurance Package

                            If any Qualified Bid other than the Stalking Horse Bid requires the
assumption and assignment of Contracts, then such offeror must identify such Contracts to be
assumed and assigned and provide evidence of its ability to provide adequate assurance of future
performance of such Contracts along with the Qualified Bid (an “Adequate Assurance
Package”).

Reservation Of Rights

                               a.         Determination of Highest and Best Bid

                 The Debtors reserve the right to: (i) determine in their reasonable discretion (after
consultation with the Agent and the Creditors’ Committee), which bid is the highest or best bid;
and (ii) reject at any time prior to entry of a Court order approving an offer other than the
Stalking Horse Bid, without liability, any offer that the Debtors in their reasonable discretion
(after consultation with the Agent and the Creditors’ Committee) deem to be (w) inadequate or
insufficient, (x) not in conformity with the requirements of the Bankruptcy Code, the Bankruptcy
Rules, the Local Rules, or procedures set forth therein or herein, (y) not a Qualified Bid, or (z)
contrary to the best interests of the Debtors and their estates.

               The selection of a Successful Bidder shall be within the reasonable business
judgment of the Debtors (after consultation with the Agent (at the direction of the required
Prepetition Secured Lenders) and the Creditors’ Committee) and subject to the approval of the
Bankruptcy Court. Economic considerations shall not be the sole criteria upon which the
Debtors may base their decision. The presentation of a particular bid to the Bankruptcy Court
for approval does not constitute the Debtors’ acceptance of the bid. The Debtors will be deemed
to have accepted a bid only when the bid has been approved by the Bankruptcy Court at the Sale
Approval Hearing. At or before the Sale Approval Hearing, the Debtors, after consultation with
the Agent and the Creditors’ Committee, may impose such other terms and conditions on the



NY2:\1984067\09\16$WZ09!.DOC\22638.0013               6
Qualified Bidders, other than the Stalking Horse Bidder, as the Debtors may determine to be in
the best interests of the Debtors, their estates, their creditors, and other parties in interest.

                               b.         Modification of Bidding Procedures

                The Debtors, in consultation with the Agent and the Creditors’ Committee,
reserve the right to (i) extend the deadlines set forth in these Bidding Procedures and/or adjourn
the Auction and/or the Sale Approval Hearing in open court without further notice, (ii) withdraw
any asset(s) (the “Withdrawn Assets”) from the Sale at any time prior to or during the Auction to
make subsequent attempts to market the same, and to request separate hearing(s) by this Court to
approve the sale(s) of some or all of the Withdrawn Assets, (iii) reject any or all bids if, in the
Debtors’ reasonable business judgment, no bid is for a fair and adequate price, and (iv) seek
approval of any separate agreement to sell some or all of the Withdrawn Assets at the Sale
Approval Hearing, and (v) modify the Auction and the Bidding Procedures set forth herein, as
may be determined to be in the best interests of the Debtors’ estates or creditors; provided
however, that no such action by the Debtors pursuant to this paragraph shall effect the economic
interests, timing or other benefits to Deloitte under the Stalking Horse Agreement. Any such
modification shall be announced prior to the start of the Auction. The Auction, the Bidding
Procedures and all bids are subject to such other terms and conditions as are announced by the
Debtors during the course of the Auction.

                               c.         Closing with Stalking Horse or Backup Bidder

                 If for any reason the entity or entities that submit(s) the highest or otherwise best
bid(s) fails to consummate the purchase of the Bid Assets, or any part thereof, the offeror of the
second highest or best bid will automatically be deemed to have submitted the highest or best bid
(the “Backup Bidder”) and to the extent the Debtors consent (after consultation with the Agent
(at the direction of the required Prepetition Secured Lenders) and the Creditors’ Committee), the
Debtors and such offeror are authorized to effect the sale of the Bid Assets to such offeror(s) as
soon as is commercially reasonable. If such failure to consummate the purchase is the result of a
breach by the winning offeror, the Debtors reserve the right to seek all available damages from
the defaulting offeror, including, but not limited to, with respect to the Good Faith Deposit. To
the extent the Stalking Horse Bidder has terminated the Stalking Horse Agreement as provided
therein, the Stalking Horse Bidder shall not be obligated to be a Backup Bidder.

                               d.         Debtors’ Secured Creditors

                                Nothing in these Bid Procedures shall or shall be deemed to (i)
amend or modify the Interim Cash Collateral Stipulation, or the rights and remedies of the parties
therunder or under applicable bankruptcy law, or (ii) except for their consent to the Stalking
Horse Agreement or a topping bid thereunder, constitute the consent of the secured lenders to
any other sale or disposition of their respective collateral. All rights under section 363(k) of the
Bankruptcy Code are preserved; provided, however, that (i) if the secured lenders exercise such
rights, the Stalking Horse Bidders shall be entitled to the Breakup Fee and the Expense
Reimbursement pursuant to the Stalking Horse Agreement as approved by the bidding
procedures order, and (ii) the secured lenders shall not have the right to (x) assign any such
rights, (y) transfer or otherwise assign any interest in or any economic benefit from any such


NY2:\1984067\09\16$WZ09!.DOC\22638.0013               7
rights to any person or entity, or (z) exercise any such rights in connection with or in anticipation
of any transfer, disposal or other assignment of any of the Bid Assets or any interest therein.

Sale Approval Hearing

                The Sale Approval Hearing will be held on April 17, 2009 at 9:00 a.m. at the
United States Bankruptcy Court for the Southern District of New York, One Bowling Green,
New York, New York 10004, before the Honorable Robert E. Gerber, United States Bankruptcy
Judge. The Sale Approval Hearing may be adjourned, from time to time, without further notice
to creditors or parties in interest other than by announcement of the adjournment in open Court
or on the Court’s docket.

Dated: April 3, 2009




NY2:\1984067\09\16$WZ09!.DOC\22638.0013       8
     EXHIBIT 2-D

In re Extended Stay, Inc.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
                                                               :
In re                                                          :         Chapter 11 Case No.
                                                               :
EXTENDED STAY INC., et al.,                                    :         09-13764 (JMP)
                                                               :
                  Debtors.                                     :         (Jointly Administered)
                                                               :
---------------------------------------------------------------x

             ORDER PURSUANT TO SECTIONS 105(a), 363 AND 503(b)
                OF THE BANKRUPTCY CODE AND BANKRUPTCY
          RULE 6004(h) APPROVING BIDDING PROCEDURES AND NOTICE
     OF THE AUCTION RELATING THERETO AND GRANTING RELATED RELIEF

                    Upon the motion, dated April 15, 2010 (the “Motion”), of Extended Stay Inc. and

its debtor affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases

(collectively, the “Debtors”), pursuant to sections 105(a) and 363 of chapter 11 of title 11 of the

United States Code (the “Bankruptcy Code”), seeking approval of the Bidding Procedures,1 all as

more fully described in the Motion; and the Court having jurisdiction to consider the Motion and

the relief requested therein in accordance with 28 U.S.C. §§ 157 and 1334 and the Standing

Order M-61 Referring to Bankruptcy Judges for the Southern District of New York And All

Proceedings Under Title 11, dated July 10, 1984 (Ward, Acting C.J.); and consideration of the

Motion and the relief requested therein being a core proceeding pursuant to 28 U.S.C. § 157(b);

and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409; and due and

proper notice of the Motion having been provided in accordance with the procedures set forth in

the order entered on July 17, 2009 governing case management and administrative procedures

for these cases [Docket No. 176] on (i) the U.S. Trustee; (ii) the attorneys for the Creditors’


1
    Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion.
Committee; (iii) the attorneys for the Special Servicer and the Successor Trustee; and (iv) all

parties who have requested notice in these chapter 11 cases, and the Order to Show Cause to

Shorten Notice Period to Consider Debtors’ Motion for Entry of an Order Pursuant to Sections

105(a) and 363 of the Bankruptcy Code Approving Bidding Procedures and Notice of the

Auction Relating Thereto and Granting Related Relief, dated April 16, 2010 [Docket No. 948],

and it appearing that no other or further notice need be provided; and the Debtors having filed

with the Court revised Bidding Procedures (the “Revised Bidding Procedures”) on April 21,

2010; and a hearing having been held to consider the relief requested in the Motion (the

“Hearing”); and the appearances of all interested parties having been noted in the record of the

Hearing; and upon the record of the Hearing, and all of the proceedings had before the Court;

and the Court having found and determined that the relief sought in the Motion is in the best

interests of the Debtors, their estates and creditors, and all parties in interest and that the legal

and factual bases set forth in the Motion establish just cause for the relief granted herein; and

after due deliberation and sufficient cause appearing therefor, it is

                ORDERED that the Motion is granted and the Revised Bidding Procedures

attached hereto as “Exhibit 1” are approved and are fully incorporated into this Order as if fully

set forth herein; and it is further

                ORDERED that the Debtors are authorized to conduct the Auction as set forth in

the Revised Bidding Procedures; and it is further

                ORDERED that the Notice of Auction, the form of which is attached hereto as

“Exhibit 2,” is hereby approved and the Debtors’ publication of such Notice of Auction on or

before April 28, 2010, with any modifications necessary for ease of publication, once in The




                                               2
Wall Street Journal (National Edition) constitutes proper notice of the Auction and the relief

provided for herein to all parties in interest; and it is further

                ORDERED that as set forth in the Revised Bidding Procedures, any party that

does not submit a Proposal by the Proposal Deadline of May 17, 2010 at 3:00 p.m. (prevailing

Eastern Time), except with respect to the Credit Bid as set forth in the Revised Bidding

Procedures, will not be allowed to (1) participate in the Auction under any circumstance or (2)

submit any offer after the Proposal Deadline; and it is further

                ORDERED that, subject to the statements made by the Court on the record of the

Hearing, the Debtors are authorized to pay the Expense Reimbursement to the Successful Bidder

in the amount and subject to the occurrence of the events set forth in the Revised Bidding

Procedures; and it is further

                ORDERED that the Debtors’ obligation to pay the Expense Reimbursement shall

constitute an allowed administrative expense of the Debtors pursuant to section 503(b) of the

Bankruptcy Code; and it is further

                ORDERED that as set forth in the Revised Bidding Procedures, following the

selection of the Successful Bid, (A) the Auction shall be closed, (B) the Debtors shall (i)

immediately cease and cause to be terminated any ongoing solicitation, discussions and

negotiations with respect to any other bids or proposals for their assets and (ii) not solicit any

inquiries or proposals, or enter into any discussions, negotiations, understandings, arrangements

or agreements, relating to any other bid or proposal, and (C) no additional bids or proposals will

be accepted or considered by the Debtors, unless and until the earlier of (1) the termination of the

applicable transaction documents with respect to the Successful Bid, by and among the

Successful Bidder and the Debtors and (2) entry of an order of the Bankruptcy Court denying




                                                3
confirmation of the plan sponsored by the Successful Bidder or denying approval of the related

disclosure statement based on the non-confirmability of the Plan; and it is further

                ORDERED that as set forth in the Revised Bidding Procedures, after the

conclusion of the Auction until the Outside Date (as defined in the Revised Bidding Procedures):

(a) the Successor Trustee’s right to Credit Bid shall be suspended, and (b) the Successor Trustee

forbears from the right to foreclose upon or exercise any other enforcement remedies with

respect to its collateral; provided, however, that the Successor Trustee shall have the right to

request that the Bankruptcy Court determine that its Credit Bid should have been the Successful

Bid, until the disclosure statement relating to the Plan is approved by final order of the

Bankruptcy Court; and it is further

                ORDERED that the Debtors are authorized to execute and deliver all instruments

and documents and take any other actions as may be necessary or appropriate to implement and

effectuate the transactions contemplated by the Revised Bidding Procedures and this Order; and

is it further

                ORDERED that all objections to the Motion or the relief requested therein that

have not been withdrawn, waived, settled, or specifically addressed in this Order, are overruled

in all respects; and it is further

                ORDERED that nothing in this Order or the Revised Bidding Procedures shall

modify the Final Order (A) Authorizing the Use of Cash Collateral, (B) Granting Adequate

Protection, and (C) Modifying the Automatic Stay, dated July 23, 2009 (as amended through the

date hereof, the “Cash Collateral Order”), except as expressly set forth in the Revised Bidding

Procedures;




                                              4
               ORDERED that neither this Order nor the Revised Bidding Procedures shall be

deemed to be an amendment, modification, waiver, or any similar action of or with respect to

any term or provision of the Mortgage Loan Documents (as such term is defined in the Cash

Collateral Order) or the Trust and Servicing Agreement (as such term is defined in the Cash

Collateral Order);

               ORDERED that the Mortgage Debt Parties (as such term is defined in the Cash

Collateral Order) expressly reserve all of their rights and remedies under the Cash Collateral

Order and the Mortgage Loan Documents, except as expressly set forth in the Revised Bidding

Procedures;

               ORDERED that notwithstanding Bankruptcy Rule 6004(h), this Order shall be

effective and enforceable immediately upon entry; and it is further

               ORDERED that this Court shall retain jurisdiction over any matters related to or

arising from the implementation or interpretation of this Order, including the Revised Bidding

Procedures.

Dated: April 23, 2010
       New York, New York

                                            s/ James M. Peck
                                            THE HONORABLE JAMES M. PECK
                                            UNITED STATES BANKRUPTCY JUDGE




                                             5
Exhibit 1
                                   BIDDING PROCEDURES

                 The following procedures (the “Bidding Procedures”) will govern the competitive
process run by Extended Stay Inc. and its debtor affiliates (Extended Stay, Inc. and its debtor
affiliates, collectively, “ESH” or the “Debtors”) to solicit proposals for the sponsorship and
funding of a plan of reorganization for certain of the Debtors (the “Investment”), which may
include the purchase of (i) all or a portion of the Debtors’ assets including, without limitation, the
equity ownership interests of the Debtors, and (ii) none, a portion, or all of the related assets or
ownership of interests in HVM Manager L.L.C., HVM L.L.C. and BHAC Capital IV, L.L.C.
(collectively, the “Acquired Assets”).

               Following completion of the competitive process, the applicable Debtors will seek
approval of their restructuring or sale pursuant to the plan of reorganization (the “Plan”).

              The Bidding Procedures provided herein shall be the exclusive mechanism
governing the auction process related to the Investment and Plan.

The Existing Plan of Reorganization

              On March 24, 2010, all of the Debtors, except Extended Stay Inc., filed a Third
Amended Plan of Reorganization Under Chapter 11 of the Bankruptcy Code (the “Third
Amended Plan”), which was supported by Starwood ESH, L.L.C. (the “Starwood Investor”), the
indirect members of which are (a) Starwood Global Opportunity Fund VIII, L.P., Starwood U.S.
Opportunity Fund VIII-1, L.P., Starwood U.S. Opportunity Fund VIII-2, L.P., Starwood Capital
Hospitality Fund II Global, L.P. and Starwood Capital Hospitality Fund II U.S., L.P., (b) Five
Mile Capital Partners II LP, FMCP II Principals LP and Five Mile Capital Partners II (AIV), LP
and (c) TPG Partners V, L.P. and TPG Partners VI, L.P.

                 On March 29, 2010, the Debtors received an offer and proposal letter (the “March
29 Letter”) from Centerbridge Partners, L.P. and Paulson & Co. Inc. (together, the “C/P
Investors”). Pursuant to the March 29 Letter, the C/P Investors agreed to commit, pending an
executed agreement in writing with the Debtors that was consistent with the March 29 Letter, to
at least step into the shoes of the Starwood Investor and be bound by the terms of (i) the
Commitment Letter, dated March 15, 2010, with the Starwood Investor, (ii) the Investment and
Standby Purchase Agreement (which includes the Third Amended Plan), dated March 15, 2010,
with the Starwood Investor, and (iii) the Membership Interest Purchase Agreement, dated March
15, 2010, pursuant to which David Lichtenstein has agreed to sell HVM Manager L.L.C. to the
Starwood Investor (collectively, the “Starwood Agreements”).

                On April 2, 2010, the Debtors executed a commitment letter with the C/P
Investors (the “C/P Investors’ Commitment Letter”), which contemplates the C/P Investors
sponsoring and funding a plan of reorganization based on the Starwood Agreements, as modified
by the C/P Investors’ Commitment Letter. Pursuant to the C/P Investors’ Commitment Letter,
the Debtors will file the Fourth Amended Plan of Reorganization Under Chapter 11 of the
Bankruptcy Code (the “Existing Plan”) and the related Disclosure Statement on or before April
23, 2010 (the Existing Plan and the related Disclosure Statement together with the C/P Investors’
Commitment Letter, the “Existing Plan Related Agreements”).

              The C/P Investors’ Commitment Letter contemplated the commencement of an
auction process pursuant to which the Debtors would solicit the highest or best proposals for the
sponsorship and funding of a plan of reorganization.

Bidding Process

       A.      Due Diligence

                The Debtors may afford any prospective acquirers and/or investors the
opportunity to conduct a reasonable due diligence review in the manner determined by the
Debtors, in their reasonable discretion after consultation with the Creditors’ Committee and the
Mortgage Debt Parties (as each such term is defined below). Prospective acquirers and/or
investors will be afforded the opportunity to conduct due diligence in a manner no less favorable
than that provided to the C/P Investors.

               The Debtors, the Creditors’ Committee and the Special Servicer (as defined
below) have reached out to certain parties who have either expressed an interest in making a
proposal or who the Debtors believe may have an interest in making a proposal with a request for
a non-binding written indication of interest to sponsor a plan of reorganization for the Debtors.
The Debtors shall also contact such other parties as suggested by the Creditors’ Committee and
the Mortgage Debt Parties (as such term is defined below), provided the Debtors have not
already contacted such parties.

                In addition, the Debtors have executed confidentiality agreements with interested
parties who have requested further information. Upon the execution of an appropriate
confidentiality agreement, those interested parties have been or shall be provided with access to
certain information, through a virtual data room or otherwise. Interested parties should contact
Lazard Freres & Co. LLC if they want to discuss their due diligence or any Proposal (as defined
below) that they are considering or will be making with the Creditors’ Committee or the
Mortgage Debt Parties, provided that the Debtors will make the necessary arrangements and may
participate in any such discussions.

                The Debtors shall coordinate all reasonable requests for additional information
and due diligence access from interested parties. All due diligence requests by the interested
parties shall be directed to Lazard Freres & Co. LLC, Attn: Phillip T. Summers, 30 Rockefeller
Plaza, 63rd Floor, New York, New York 10020, Tel: (212) 632-6396, Email:
Phillip.Summers@lazard.com.

              The Debtors shall provide the Creditors’ Committee and the Special Servicer with
weekly updates regarding the due diligence efforts by interested parties.




                                            2
       B.      Public Announcement of Auction and Funding of Deposits

               On or before April 28, 2010, the Debtors shall (i) issue a press release that
contains a notice (the “Notice of Auction”) of an auction for the Acquired Assets (the
“Auction”), which Notice of Auction will include all deadlines related thereto and (ii) serve the
Notice of Auction on all parties in interest and those parties who request notice.

               The Notice of Auction shall provide notice to all interested parties that, other than
with respect to a Credit Bid (as defined below), in order to participate in the bidding process and
the Auction and be deemed a Qualified Bidder (as defined below), each potential bidder (each,
an “Interested Party”) must provide a deposit in the amount of $150,000,000 (the “Deposit”) on
or before May 17, 2010, with the Escrow Agent (as defined below) pursuant to an Escrow
Agreement (as defined below) to be provided by the Debtors to the Interested Parties.

       C.      Proposals

               Each Interested Party, other than the C/P Investors, must deliver a written and
duly executed offer (a “Proposal”), so as to be received by no later than 3:00 p.m. (Prevailing
Eastern Time) on May 17, 2010 (“Proposal Deadline”) to the following address (the “Proposal
Notice Party”):

                                   Attn: Phillip T. Summers
                                   Lazard Freres & Co. LLC
                               30 Rockefeller Plaza, 63rd Floor
                                 New York, New York 10020
                                     Tel: (212) 632-6296
                                     Fax: (212) 830-2680
                              Email: Phillip.Summers@lazard.com

               All forms of Proposals are permitted, whether as a plan sponsor/equity investor or
as a purchaser of some or all of the Acquired Assets for cash or other consideration; provided,
however, that each Proposal must be premised on confirmation of a Plan. Any Plan may contain
provisions specifically applicable to the Proposal and need not necessarily require substantive
consolidation of the Debtors’ estates or provide for confirmation of the Plan pursuant to section
1129(b) of the Bankruptcy Code. The Debtors and their professionals will deliver the Proposals
received no later than one (1) business day following receipt of the Proposal to (i) advisors to the
official committee of unsecured creditors (the “Creditors’ Committee”), (ii) advisors for TriMont
Real Estate Advisors, Inc. (the “Special Servicer”) and U.S. Bank National Association, as
successor in interest to Wells Fargo Bank, N.A., as successor trustee in trust for the holders of
Wachovia Bank Commercial Mortgage Trust Commercial Mortgage Pass-Through Certificates,
Series 2007-ESH (the “Trust,” and the current trustee thereof, the “Successor Trustee,”), (iii)
advisors for the operating advisor (the “Operating Advisor,” collectively with the Trust, the
Successor Trustee and the Special Servicer, the “Mortgage Debt Parties”) appointed under the
Trust and Servicing Agreement dated as of August 1, 2007 (the “Trust and Servicing
Agreement”) and (iv) advisors to the C/P Investors, as follows:




                                             3
To the Creditors’ Committee:

              Hahn & Hessen LLP
              488 Madison Avenue
              New York, New York 10022
              Attn: Mark T. Power, Esq., Christopher A. Jarvinen, Esq.
              Tel: (212) 478-7200
              Fax: (212) 478-7400
              Email: mpower@hahnhessen.com; cjarvinen@hahnhessen.com

To the Mortgage Debt Parties:

              McKenna, Long & Aldridge LLP
              230 Park Avenue, Suite 1700
              New York, NY 10169
              Attn: Christopher F. Graham, Esq.
              Tel: (212) 905-8328
              Fax: (212) 922-1819
              Email: cgraham@mckennalong.com

              303 Peachtree Street, NE
              Suite 5300
              Atlanta, GA 30308-3265
              Attn: Gary Marsh, Esq.; Patrick McGeehan, Esq.
              Tel: (404) 527-4150
              Fax: (404) 527-4198
              Email: gmarsh@mckennalong.com; pmcgeehan@mckennalong.com

              Latham & Watkins, LLP
              885 Third Avenue
              New York, NY 10167
              Attn: Mitchell A. Seider, Esq.; Keith A. Simon, Esq.
              Tel: (212) 906-1200
              Fax: (212) 751-4864
              Email: mitchell.seider@lw.com; keith.simon@lw.com

              Kaye Scholer LLP
              425 Park Avenue
              New York, NY 10022
              Attn: Margot B. Schonholtz, Esq.; Scott D. Talmadge, Esq.
              Tel: (212) 836-8000
              Fax: (212) 836-6540
              Email: mschonholtz@kayescholer.com; stalmadge@kayescholer.com




                                         4
              Schulte Roth & Zabel LLP
              919 Third Avenue
              New York, NY 10022
              Attn: Adam Harris, Esq.
              Tel: (212) 756-2253
              Fax: (212) 593-5955
              Email: adam.harris@srz.com

              Henry H. Chung
              Executive Director
              UBS Securities LLC
              480 Washington Boulevard
              12th Floor
              Jersey City, New Jersey 07310.
              Tel: (212-713-1167
              Fax: 212-821-2943
              Email: henry.chung@ubs.com

To the C/P Investors:

              Fried, Frank, Harris, Shriver & Jacobson LLP
              One New York Plaza
              New York, New York 10004
              Attn: Brad Eric Scheler, Esq., Jennifer L. Rodburg, Esq.
              Tel: (212) 859-8000
              Fax: (212) 859-4000
              Email: Brad.Eric.Scheler@friedfrank.com; Jennifer.Rodburg@friedfrank.com

              and

              Gibson, Dunn & Crutcher LLP
              200 Park Avenue
              New York, NY 10166-0193
              Attn: David M. Feldman, Esq.
              Tel: (212) 351-4000
              Fax: (212) 351-4035
              Email: DFeldman@gibsondunn.com

Each Proposal must:

              1.        state that such Interested Party offers to purchase the Acquired Assets and
                        fund a Plan;

              2.        state that such Interested Party’s Proposal is not subject to any further due
                        diligence and that such Interested Party has obtained all necessary
                        financing and approvals, and include evidence of authorization and
                        approval from the Interested Party’s board of directors (or comparable


                                              5
     governing body) with respect to the submission, execution, delivery and
     closing of the Proposal and transactions contemplated thereby, including
     evidence of a binding commitment to provide financing, subject only to
     customary conditions and conditions in the Form Investment Agreement
     (as defined below) (which shall not include diligence, credit approvals, or
     syndication);

3.   fully disclose the identity of each party that will be participating in
     connection with such Proposal, and the complete terms of any such
     participation and confirm that the Interested Party has not engaged in any
     collusion with respect to the bidding at or prior to the Auction;

4.   contain a detailed overview of the terms of the Interested Party’s
     sponsorship of a Plan for the applicable ESH entities, which terms must
     include, to the extent applicable to the Interested Party’s Proposal, a
     detailed pro forma capitalization, ownership, amount of a new money
     investment and all sources of recovery to the holder of the Mortgage Debt
     and the Debtors’ other creditors and contain as much detail as possible on
     proposed structure, including a list of the relevant entities to be included in
     any alternative plan;

5.   not include (i) a right to request or entitlement to any commitment
     payment, break-up fee or similar type of payment or (ii) reimbursement of
     fees and expenses other than in connection with the implementation of the
     Proposal if the Interested Party is the Successful Bidder (as defined
     below);

6.   contain a description of the financial assumptions and any other
     assumptions utilized in each Interested Party’s Proposal, including
     estimated transaction costs, and any major underwriting assumption(s)
     upon which each Interested Party may have based its Proposal, including
     working capital, capital expenditure requirements and impact of proposed
     structure;

7.   contain evidence of the source(s) of equity and/or debt financing for the
     Interested Party’s Proposal, including the parties to provide financing,
     their contact information, and a description of each sponsor and any
     additional party or parties funding the Plan and such party’s financial
     position;

8.   contain confirmation that the Proposal has received any necessary internal
     approvals to make a binding Proposal;

9.   state each Interested Party’s and any other sponsor’s experience in the
     lodging industry, including ownership and management of hospitality
     assets, as well as any other information that it thinks could be important to
     the Debtors in their decision-making process regarding the Proposal;



                            6
               10.    state the specific person(s) whom the Debtors’ financial advisors, Lazard
                      Frères & Co. LLC, should contact in the event that the Debtors have any
                      questions or wish to discuss the Proposal; and

               11.    include a mark-up of the Existing Plan and, if applicable, a mark-up of the
                      form of an investment and standby purchase agreement to be entered into
                      by the Debtors and an affiliate of the C/P Investors, which will be filed
                      with the Bankruptcy Court on or before April 23, 2010 and provided by
                      the Debtors to the Interested Parties (such form, the “Form Investment
                      Agreement”), as well as the other plan-related documents, including the
                      HVM Manager Purchase Agreement and the BHAC Intellectual Property
                      Transfer Agreement.

               For the avoidance of doubt, the C/P Investors have already satisfied the conditions
described in subparagraphs (1) to (11) of this paragraph C.

                Each Interested Party providing a Proposal shall be deemed to acknowledge and
represent that it has had an opportunity to conduct due diligence on the Debtors prior to making
its Proposal; that it has relied solely upon its own independent review, investigation and/or
inspection of any documents and/or the assets in making its Proposal; and that it did not rely
upon any written or oral statement, representations, promises, warranties or guaranties
whatsoever, whether express, implied, by operation of law or otherwise, regarding the Debtors,
or the completeness of any information provided in connection therewith.

               Within one (1) business day following entry by the Bankruptcy Court of an order
approving the Bidding Procedures contained herein, the Debtors shall provide copies of all
proposals or other indications of interest for the Acquired Assets received by the Debtors prior to
entry of such order to the professionals for the Creditors’ Committee, the Mortgage Debt Parties
and the C/P Investors.

FOR THE AVOIDANCE OF DOUBT, ANY AND ALL PARTIES SHOULD BE
AWARE THAT ANY PARTY THAT DOES NOT SUBMIT A PROPOSAL BY THE
PROPOSAL DEADLINE (EXCEPT WITH RESPECT TO THE CREDIT BID AS
PROVIDED BELOW) WILL NOT BE ALLOWED TO (1) PARTICIPATE IN THE
AUCTION UNDER ANY CIRCUMSTANCES OR (2) SUBMIT ANY OFFER AFTER
THE PROPOSAL DEADLINE OR THE AUCTION.

       D.      Deposits

                The submission of a Proposal by the Proposal Deadline shall and must be
accompanied by the $150,000,000 cash Deposit with an escrow agent selected by the Debtors
(the “Escrow Agent”) pursuant to the escrow agreement to be provided by the Debtors to the
Interested Parties (the “Escrow Agreement”). Alternatively, in the Debtors’ discretion, the
Deposit may be in the form of a letter of credit acceptable to the Debtors in the amount of
$150,000,000, as determined by the Debtors in the exercise of their business judgment, after
consultation with the Creditors’ Committee and the Mortgage Debt Parties. The submission of a



                                             7
Proposal and a Deposit by the Proposal Deadline shall constitute a binding and irrevocable offer.
A Deposit shall not be required in respect of any Credit Bid.

       E.      Review of Proposals

                The Debtors will review those Proposals timely submitted and engage in
negotiations with those prospective acquirers and/or investors that submitted Proposals
complying with the preceding paragraphs and as they deem appropriate in the exercise of their
business judgment, based upon the Debtors’ evaluation of the content of each Proposal as well as
other commercial and competitive considerations. The Debtors will provide copies of the
Proposals within one (1) business day of the Proposal Deadline to the Creditors’ Committee, the
Mortgage Debt Parties, the C/P Investors, and each Interested Party that has submitted a Proposal
and a Deposit, and will consult with the Creditors’ Committee and the Mortgage Debt Parties in
the Debtors’ review and analysis of the Proposals. The Debtors retain the exclusive right, in the
exercise of their business judgment, to determine whether an Interested Party that submitted a
Proposal may participate in the Auction and will notify the Creditors’ Committee, the Mortgage
Debt Parties and the C/P Investors of their determination as to which Interested Parties may
participate in the Auction on or before May 21, 2010. In the event that the Debtors determine
that an Interested Party is not a Qualified Bidder, the Debtors shall notify the Creditors’
Committee, the Mortgage Debt Parties and the C/P Investors of the reasons for excluding such
Interested Party on or before May 21, 2010. If the Debtors determine that an Interested Party
that submitted a Proposal may not participate in the Auction, the Creditors’ Committee and the
Mortgage Debt Parties retain the right to object to the Bankruptcy Court on an emergency basis
regarding such determination.

                The Debtors will select, in the exercise of their business judgment, after
consultation with the Creditors’ Committee and the Mortgage Debt Parties, those Proposals
qualifying to proceed in the process on or before May 24, 2010. In evaluating the Proposals, the
Debtors will take into consideration, among other factors, the form of consideration, value and
certainty of recovery provided to the holder of the Mortgage Debt and the Debtors’ other
creditors, transaction structure and execution risk, including conditions to closing, availability of
financing and financial wherewithal to meet all commitments under the Proposal, approvals
required, and the Interested Party’s ability to manage the Debtors’ business. On or before May
24, 2010, the Debtors shall provide the Creditors’ Committee and the Mortgage Debt Parties
with an oral presentation of their analysis of all of the Proposals and their rationale for
determining that any Proposal either qualified or did not qualify to participate in the Auction.

               On or prior to May 21, 2010, the Debtors shall determine, in the exercise of their
business judgment, after consultation with the Creditors’ Committee, the Mortgage Debt Parties,
the C/P Investors, and all other Interested Parties who request the right to participate, the
methodology (the “Valuation Methodology”) to be used by the Debtors in connection with
valuing all Proposals, Qualified Proposals (as such term is defined below) and Subsequent Bids
(as such term is defined below), submitted prior to and at the Auction, including the valuation
methodology to be used for valuing total consideration and for converting any non-cash portion
of any such Proposals, Qualified Proposals and Subsequent Bids to a cash equivalent and shall
notify the Creditors’ Committee, the Mortgage Debt Parties and the Qualified Bidders of such
Valuation Methodology and the basis for its formulation. The Debtors shall determine which


                                              8
Qualified Proposal is highest or best based on the Valuation Methodology, subject, however, to
taking into account the provisions of the second sentence of the second paragraph in this
subsection E of the Bidding Procedures, but only to the extent such items are not already
contemplated by the Valuation Methodology. For the avoidance of doubt, a Credit Bid (as
defined below) shall be valued as a cash bid in the amount of such Credit Bid.

                After review of the timely submitted Proposals, the Debtors shall determine in the
exercise of their business judgment, after consultation with the Creditors’ Committee and the
Mortgage Debt Parties, if any such Interested Parties has submitted a Proposal that qualifies to
participate in the Auction (each such party, a “Qualified Bidder” and a “Qualified Proposal,”
respectively). After determining that an Interested Party is a Qualified Bidder and qualifies to
participate in the Auction in accordance with these Bid Procedures, the Debtors will notify the
party in writing, on or before May 25, 2010, with a copy to the Creditors’ Committee, the
Mortgage Debt Parties, and the C/P Investors.

               Only those Proposals that (i) were submitted on or before the Proposal
Deadline, (ii) provide incremental value to the holder of the Mortgage Debt and creditors
as compared to the Existing Plan Related Agreements, (iii) state that they are binding and
irrevocable offers and (iv) are accompanied by a $150,000,000 Deposit that was submitted
on or before May 17, 2010 (other than in respect of a Credit Bid), may be deemed Qualified
Proposals.

          FOR THE AVOIDANCE OF DOUBT, ANY AND ALL PARTIES SHOULD
BE AWARE THAT ANY PARTY THAT IS NOT DETERMINED TO BE A QUALIFIED
BIDDER BY MAY 25, 2010 (EXCEPT WITH RESPECT TO THE CREDIT BID AS
PROVIDED BELOW) WILL NOT BE ALLOWED TO (1) PARTICIPATE IN THE
AUCTION UNDER ANY CIRCUMSTANCES OR (2) SUBMIT ANY OFFER AFTER
THE PROPOSAL DEADLINE.

                The Debtors reserve the right, in the exercise of their business judgment, after
consultation with the Creditors’ Committee and the Mortgage Debt Parties, to reject any
Proposal if the Debtors determine that such Proposal does not constitute a Qualified Proposal or
is otherwise inadequate or insufficient or is otherwise contrary to the best interests of the
Debtors.

               Notwithstanding anything in these Bidding Procedures, (i) the C/P Investors are
deemed Qualified Bidders, and the Existing Plan Related Agreements shall be deemed a
Qualified Proposal for all applicable purposes under these Bidding Procedures with respect to the
Auction and otherwise and (ii) the Successor Trustee, subject to applicable terms and conditions
of the Trust and Servicing Agreement, shall have the right to credit bid all or any portion of the
claims (the “Mortgage Debt”) held by the Successor Trustee (the “Credit Bid”) at the Auction
and the Successor Trustee is deemed a Qualified Bidder and the Credit Bid shall be deemed a
Qualified Proposal.

              It is understood, however, that after the conclusion of the Auction until the
Outside Date (as defined below): (a) the Successor Trustee’s right to Credit Bid shall be



                                             9
suspended, and (b) the Successor Trustee forbears from the right to foreclose upon or exercise
any other enforcement remedies with respect to its collateral; provided, however, that the
Successor Trustee shall have the right to request that the Bankruptcy Court determine that its
Credit Bid should have been the Successful Bid, until the disclosure statement relating to the
Plan is approved by final order of the Bankruptcy Court. As used herein, the term “Outside
Date” means the earliest to occur of any of the following: (i) the termination of the applicable
transaction documents with respect to the Successful Bid by and among the Successful Bidder
and the Debtors; (ii) the entry of an order of the Bankruptcy Court denying confirmation of the
Plan sponsored by the Successful Bidder or denying approval of the related disclosure statement
based on the non-confirmability of the Plan; (iii) the occurrence and continuance beyond any
applicable cure period of an Event of Default under the Final Cash Collateral Order; (iv) the
termination or expiration of the Debtors’ exclusive periods under section 1121(d) of the
Bankruptcy Code, or (v) September 30, 2010.

                Any Proposal of the Successor Trustee must qualify as a Qualified Proposal in
accordance with these Bidding Procedures, except that the Successor Trustee (1) does not have
to post a Deposit, (2) does not have to set forth the amount of the Credit Bid prior to the Auction,
(3) does not have to provide its Proposal to the Debtors until May 25, 2010 at 3:00 p.m.
(prevailing Eastern Time), and (4) does not have to provide the information set forth in
subsections (4), (6), and (9) of the list of requirements for all Proposals. Nothing contained in
these Bidding Procedures (or the making of, or failure to make, any Proposal by the Successor
Trustee) shall affect or impair the Successor Trustee’s right to make an election under section
1111(b) of the Bankruptcy Code, if applicable, or any right of the Successor Trustee with respect
to the approval of the disclosure statement, or voting on or confirmation of the Plan (or the
making of any Credit Bid or exercise of any other rights or remedies after the Outside Date).

               Between the date the Debtors notify an Interested Party that it is a Qualified
Bidder and the Auction, the Debtors may discuss, negotiate or seek clarification of any Qualified
Proposal from a Qualified Bidder; provided, however, the Debtors shall consult with the
Creditors’ Committee and the Mortgage Debt Parties with respect to such actions. Without the
written consent of the Debtors, a Qualified Bidder may not modify, amend or withdraw its
Qualified Proposal, except for proposed amendments to increase the purchase price or otherwise
improve the terms of the Qualified Proposal for the Debtors, during the period that such
Qualified Proposal remains binding as specified herein; provided, however, that any Qualified
Proposal may be improved at the Auction as set forth herein. The determination of the Qualified
Bidders shall become irrevocable and unreviewable once the Auction has commenced.

The Auction

       A.      Notice of Auction

                If the Debtors determine in the exercise of their business judgment, after
consultation with the Creditors’ Committee and the Mortgage Debt Parties, that they have
received a Qualified Proposal in addition to the Existing Plan Related Agreements by the C/P
Investors, the Auction will be held on May 27, 2010 at 10:00 a.m. (prevailing Eastern Time) at
the offices of Weil, Gotshal and Manges LLP, 767 Fifth Avenue, New York, New York 10153.
On or before May 25, 2010 at 5:00 p.m. (prevailing Eastern Time), the Debtors shall provide


                                             10
each Qualified Bidder (including the C/P Investors), the Creditors’ Committee and the Mortgage
Debt Parties with the following: (1) written notice that the Auction is proceeding in accordance
with the Notice of Auction previously published by the Debtors, (2) a copy of the Qualified
Proposal the Debtors have determined constitutes the highest or otherwise best offer among the
Qualified Proposals and with which they intend to commence the Auction (the “Pre-Auction
Successful Bid”), (3) the Valuation Methodology, and (4) a copy of each of the Qualified
Proposals, including any Proposal submitted by the Successor Trustee (including a proposal
premised on a Credit Bid).

                The Auction may be adjourned as the Debtors deem appropriate, in the exercise of
their business judgment, after consultation with the Creditors’ Committee and the Mortgage Debt
Parties. Reasonable notice of such adjournment and the time and place for resumption of the
Auction shall be given to all of the Qualified Bidders.

       B.     Attendance and Participation in the Auction

                      a.     In addition to the Debtors and their advisors, the only parties
                             eligible to participate in the Auction shall be: (i) the C/P Investors
                             and their representatives and advisors; (ii) representatives and
                             advisors of the Creditors’ Committee; (iii) representatives and
                             advisors of the Mortgage Debt Parties; (iv) those Qualified Bidders
                             who have submitted a Qualified Proposal to the Debtors (as well as
                             such Qualified Bidder’s advisors and representatives); and (v) the
                             Office of the United States Trustee for the Southern District of
                             New York. The C/P Investors and the Qualified Bidders shall
                             appear in person at the Auction, or through a duly authorized
                             representative.

                      b.     Each Qualified Bidder shall be required to confirm that it has not
                             engaged in any collusion with respect to the bidding or the
                             Auction.

                      c.     Each Qualified Bidder shall have provided the Deposit (other than
                             in respect of a Credit Bid).

       C.     The Auction Process

The Auction shall run in accordance with the following procedures:

                      a.     The Debtors and their respective professionals shall direct and
                             preside over the Auction, provided that the Debtors shall consult
                             with the Creditors’ Committee and the Mortgage Debt Parties
                             during the Auction.

                      b.     On or before May 26, 2010, each Qualified Bidder who has timely
                             submitted a Qualified Proposal (as determined by the Debtors in
                             accordance with these Bidding Procedures) must inform the


                                           11
     Debtors whether it intends to attend the Auction; provided that in
     the event a Qualified Bidder does not attend the Auction, such
     Qualified Bidder’s Qualified Proposal shall nevertheless remain
     fully enforceable against such Qualified Bidder until the date of the
     selection of the Successful Bid (as defined below) at the
     conclusion of the Auction. The Debtors shall promptly inform the
     Creditors’ Committee and the Mortgage Debt Parties of the names
     of the Qualified Bidders who have informed the Debtors that they
     will be attending the Auction.

c.   All Qualified Bidders who have timely submitted Qualified
     Proposals will be entitled to be present for all Subsequent Bids (as
     defined below) at the Auction with the understanding that the
     identity of each Qualified Bidder at the Auction will be fully
     disclosed to all other Qualified Bidders at the Auction and that all
     material terms of each Subsequent Bid will be fully disclosed to all
     other Qualified Bidders throughout the entire Auction; provided
     that all Qualified Bidders wishing to attend the Auction must have
     at least one individual representative with authority to bind such
     Qualified Bidder attending the Auction in person. All proceedings
     at the Auction shall be conducted before and transcribed by a court
     stenographer.

d.   At the commencement of the Auction, the Debtors shall announce
     and describe the terms of the Pre-Auction Successful Bid,
     previously identified by the Debtors on May 25, 2010, as
     determined by the Debtors in accordance with these Bidding
     Procedures.

e.   The Debtors may employ and announce at the Auction in the
     exercise of their business judgment, after consultation with the
     Creditors’ Committee and the Mortgage Debt Parties, additional
     procedural rules that are reasonable under the circumstances to
     obtain the highest or best Successful Bid (e.g., the amount of time
     allotted to make Subsequent Bids (as defined below)) for
     conducting the Auction, provided that such rules are (i) not
     materially inconsistent with these Bidding Procedures, or
     inconsistent with the Bankruptcy Code or any order of the
     Bankruptcy Court, and (ii) disclosed to each Qualified Bidder at
     the Auction.

f.   Bidding at the Auction will begin with the Pre-Auction Successful
     Bid and continue, in one or more rounds of bidding, so long as
     during each round at least one subsequent bid (a “Subsequent
     Bid”) is submitted by a Qualified Bidder that the Debtors
     determine, in the exercise of their business judgment, after
     consultation with the Creditors’ Committee and the Mortgage Debt


                   12
                             Parties, (i) in the case of the first round, is a higher or otherwise
                             better bid than the Pre-Auction Successful Bid by an amount to be
                             determined by the Debtors and (ii) in the case of subsequent
                             rounds, is a higher or otherwise better bid by the minimum bid
                             increment set by the Debtors for each such round than the best bid
                             of the previous round. Each Qualified Bidder must submit a
                             Subsequent Bid that satisfies the minimum bid increment in each
                             round of bidding to continue participating in the Auction.
                             Qualified Bidders shall not be allowed to skip rounds; provided,
                             however, the Successor Trustee is allowed to skip rounds with
                             respect to the Credit Bid.

                      g.     The Debtors shall announce the material terms of each Subsequent
                             Bid at the Auction, and shall disclose their valuation of the total
                             consideration offered in each such Subsequent Bid (and the basis
                             for its determination) in order to (a) confirm that each Subsequent
                             Bid meets the minimum bid increment set by the Debtors for the
                             round in which such Subsequent Bid was submitted and (b) to
                             provide a floor for further Subsequent Bids.

       D.     Identification of the Successful Bidder

                At the close of the Auction, the Debtors, in their reasonable discretion and in
exercise of their business judgment after consultation with the Creditors’ Committee and the
Mortgage Debt Parties, shall identify which Qualified Bidder has the highest or otherwise best
bid (the “Successful Bid,” and such bidder, the “Successful Bidder”), which will be determined
by considering, among other things:

              1.      The Qualified Proposal that is preferred by the Creditors’ Committee and
                      the Mortgage Debt Parties, other than with respect to the Credit Bid.

              2.      The extent to which any requested modifications to the Existing Plan and
                      the Form Investment Agreement are likely to impact (either positively or
                      negatively) the likelihood of confirmation of the Plan and/or expected date
                      for the closing, and the likely cost or cost savings to the Debtors of any
                      such modifications.

              3.      The total consideration (as valued based upon the Valuation Methodology)
                      to be received by the holder of the Mortgage Debt and the Debtors’ other
                      creditors under the terms of each Qualified Proposal.

              4.      Each Qualified Bidder’s ability to timely close a transaction and make any
                      deferred payments, if applicable.

              5.      The net benefit to the holder of the Mortgage Debt and the Debtors’ other
                      creditors and the likely timing and amount of distributions to the holder of




                                           13
                       the Mortgage Debt and the Debtors’ other creditors resulting from each
                       proposal.

                In announcing the Successful Bid, the Debtors shall announce the material terms
of such bid, the basis for determining the total consideration offered pursuant to the Valuation
Methodology and the resulting calculated benefit of such bid to the holder of the Mortgage Debt
and the Debtors’ other creditors. Upon the close of the Auction, the Debtors shall announce the
Successful Bidder, and such Successful Bidder shall promptly thereafter submit fully executed
revised documentation memorializing the terms of the Successful Bid to the Debtors, the
Creditors’ Committee and the Mortgage Debt Parties. The Successful Bid may not be assigned
to any party without the consent of the Debtors, after consultation with the Creditors’ Committee
and the Mortgage Debt Parties.

                 If no Auction is held, then the proposal of the C/P Investors as represented by the
Existing Plan shall be deemed to be the Successful Bid and the C/P Investors shall be deemed to
be the Successful Bidder and the Debtors will proceed to effectuate the transactions as set forth
in the Existing Plan Related Agreements; provided, however, that nothing in these Bidding
Procedures in any way limits the ability of the Debtors and the C/P Investors to mutually agree
on improvements, after consultation with the Creditors’ Committee and the Mortgage Debt
Parties, in the terms of the Existing Plan Related Agreements.

Return of Deposits

                Any Deposits submitted by Qualified Bidders will be held in escrow by the
Debtors’ Escrow Agent. Each Deposit will be forfeited to the Debtors if (a) the applicable
Qualified Bidder attempts to modify, amend or withdraw its Qualified Proposal, except for
proposed amendments to increase the purchase price or otherwise improve the terms of the
Qualified Proposal for the Debtors, during the time the Qualified Proposal remains binding and
irrevocable under these Bidding Procedures or (b) the Qualified Bidder is selected as the
Successful Bidder and fails to consummate the Plan according to these Bidding Procedures and
the terms of its applicable transaction documents with respect to the Successful Bid. The Escrow
Agent shall release the Deposit by wire transfer of immediately available funds to an account
designated by the Debtors two (2) Business Days after the receipt by the Escrow Agent of a joint
written notice by a Debtor Authorized Officer and the Qualified Bidder stating that the Qualified
Bidder has breached or failed to satisfy its obligations or undertakings.

               The Debtors shall promptly return to the applicable Qualified Bidder any Deposit,
plus any interest accrued thereon, accompanying (a) a Proposal that the Debtors determine in
accordance with these Bidding Procedures not to be a Qualified Proposal, and (b) any Qualified
Proposal that the Debtors do not select as the Successful Bid at the Auction, two (2) Business
Days after the close of the Auction, but in no event later than seven (7) Business Days after the
commencement of the Auction.

               The Deposit of the Successful Bidder shall be applied against the cash investment
of the Successful Bidder upon the consummation of the plan proposed in the Successful Bid.




                                             14
               The Debtors and the Qualified Bidder agree to execute an appropriate joint notice
to the Escrow Agent for the release of the Qualified Bidder’s Deposit, in accordance with the
terms of these Bidding Procedures. If either party fails to execute such written notice, the
Deposit may be released by an order of the Bankruptcy Court.

Plan Process

               After selecting the Successful Bid, the Debtors, in consultation with the entity or
entities which submitted the Successful Bid, and with the Creditors’ Committee and the
Mortgage Debt Parties, will prepare and file a revised plan and related disclosure statement with
the United States Bankruptcy Court for the Southern District of New York to effectuate the terms
of the Successful Bid. The hearing to consider the adequacy of the Disclosure Statement for the
Successful Bid shall occur not later than June 17, 2010, unless otherwise agreed by the Debtors
and the Successful Bidder.

Reimbursement of Expenses

                The Successful Bidder shall be entitled to reimbursement of reasonable, actual
out-of-pocket expenses, including without limitation, financing costs and fees, paid by or due
and payable by the Successful Bidder up to $20,000,000 (collectively, the “Expense
Reimbursement”), in the event that the disclosure statement relating to the Plan is approved, but
the Plan is not confirmed or consummated other than due to a breach by the Successful Bidder;
provided, however, that if the Bankruptcy Court determines that another Qualified Bidder is the
Successful Bidder, this provision shall only apply to the Successful Bidder as determined by
final order of the Bankruptcy Court.

Reservation of Rights

        The Debtors reserve the right, in their reasonable discretion and subject to the exercise of
their business judgment, and after consultation with the Creditors’ Committee and the Mortgage
Debt Parties, to alter or terminate these Bidding Procedures, to alter the assumptions set forth
herein, and/or to terminate discussions with any and all prospective acquirers and investors at
any time and without specifying the reasons therefore, to the extent not materially inconsistent
with the Bidding Procedures set forth herein.

End of Auction Process

        Following the selection of the Successful Bid, (A) the Auction shall be closed, (B) the
Debtors shall (i) immediately cease and cause to be terminated any ongoing solicitation,
discussions and negotiations with respect to any other bids or proposals for the Acquired Assets
and (ii) not solicit any inquiries or proposals, or enter into any discussions, negotiations,
understandings, arrangements or agreements, relating to any other bid or proposal for the
Acquired Assets, and (C) no additional bids or proposals for the Acquired Assets will be
accepted or considered by the Debtors, unless and until the earlier of (1) the termination of the
applicable transaction documents with respect to the Successful Bid by and among the
Successful Bidder and the Debtors and (2) entry of an order of the Bankruptcy Court denying



                                             15
confirmation of the Plan sponsored by the Successful Bidder or denying approval of the related
disclosure statement based on the non-confirmability of the Plan.

Dated: April __, 2010




                                           16
Exhibit 2
WEIL, GOTSHAL & MANGES LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Facsimile: (212) 310-8007
Marcia L. Goldstein
Jacqueline Marcus

Attorneys for Debtors and
Debtors in Possession

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------x
                                                               :
In re                                                          :   Chapter 11 Case No.
                                                               :
EXTENDED STAY INC., et al.,                                    :   09-13764 (JMP)
                                                               :
                  Debtors.                                     :   (Jointly Administered)
                                                               :
---------------------------------------------------------------x

                                          NOTICE OF AUCTION

                 PLEASE TAKE NOTICE that on April [__], 2010, the United States
Bankruptcy Court for the Southern District of New York (the “Court”) entered an order [Docket
No. __] (the “Bidding Procedures Order”) authorizing Extended Stay Inc. and its debtor
affiliates, as debtors and debtors in possession in the above-captioned chapter 11 cases (the
“Debtors”) to conduct an auction (the “Auction”) to select an investor to sponsor the Debtors’
proposed plan of reorganization, such Auction to be governed by approved bidding procedures
(the “Bidding Procedures”). Copies of the Bidding Procedures Order can be accessed on
Kurtzman Carson Consultant LLC’s website at http://www.kccllc.net/extendedstay. Copies of
the Bidding Procedures may be obtained by contacting Lazard Freres & Co. LLC at the email
address or telephone number set forth below.

              PLEASE TAKE FURTHER NOTICE that the Debtors intend to conduct the
Auction, at which they will consider proposals submitted to the Debtors and their professionals,
by and pursuant to the Bidding Procedures as set forth in the Bidding Procedures Order, on May
27, 2010 at 10:00 a.m., at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New
York, New York 10153.

                PLEASE TAKE FURTHER NOTICE that any person or entity who wishes to
participate in the Auction must submit a binding and committed proposal in writing (the
“Proposal”), with a $150,000,000 deposit (the “Deposit”), on or before May 17, 2010 at 3:00
p.m. (Eastern Time) (the “Proposal Deadline”), as set forth in the Bidding Procedures, in
writing to:
                                  Attn: Phillip T. Summers
                                  Lazard Freres & Co. LLC
                              30 Rockefeller Plaza, 63rd Floor
                                New York, New York 10020
                                    Tel: (212) 632-6296
                                    Fax: (212) 830-2680
                             Email: Phillip.Summers@lazard.com

                 PLEASE TAKE FURTHER NOTICE that the submission of a Proposal and
a Deposit by the Proposal Deadline shall constitute binding and irrevocable offers. The
Debtors reserve the right, in their reasonable discretion and subject to the exercise of their
business judgment, and after consultation with the Creditors’ Committee and the Mortgage Debt
Parties, to alter or terminate the Bidding Procedures, to alter the assumptions set forth in the
Bidding Procedures, and/or to terminate discussions with any and all prospective acquirers and
investors at any time and without specifying the reasons therefore, to the extent not materially
inconsistent with the Bidding Procedures.


Dates: April [__], 2010
       New York, New York
  EXHIBIT 2-E

In re Footstar, Inc.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

----------------------------------------------------------    x
In re                                                         :
                                                              : Chapter 11 Case No.
FOOTSTAR, INC., et al.,                                       : 04-22350 (ASH)
                                                              :
                                                              : (Jointly Administered)
                                      Debtors.                :
----------------------------------------------------------x

              ORDER PURSUANT TO SECTIONS 105(a) AND 363 OF THE
         BANKRUPTCY CODE AND BANKRUPTCY RULES 6004 AND 9014
         AUTHORIZING AND APPROVING (i) AUCTION PROCEDURES IN
     CONNECTION WITH THE RECEIPT, ANALYSIS, AND IMPROVEMENT
        OF BIDS FOR SALE OF DEBTORS ATHLETIC BUSINESS, (ii) TIME,
         DATE, AND PLACE OF THE AUCTION AND THE SALE HEARING,
      (iii) FORM OF NOTICE OF THE AUCTION AND THE SALE HEARING,
              (iv) FORM OF ASSET PURCHASE AGREEMENT, AGENCY
            AGREEMENT AND LEASE PURCHASE AGREEMENT TO BE
        USED IN CONNECTION WITH THE SOLICITATION OF BIDS, AND
          (v) DEBTORS’ ENTRY INTO A BREAK-UP FEE ARRANGEMENT
                             [Related to Doc. No. 218]

                    Upon the Motion, dated March 26, 2004 (the “Sale Motion”), of Footstar,

Inc. and certain of its direct and indirect subsidiaries, as debtors and debtors in possession

(collectively, the “Debtors”), pursuant to sections 105, 363, 365 and 1146 of title 11 of

the United States Code (the “Bankruptcy Code”) and Rules 2002, 6004 and 6006 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), requesting (A) entry of

an order (the “Procedures Order”) authorizing and approving (i) certain proposed auction

procedures (the “Auction Procedures”) in connection with the receipt, analysis, and

improvement of bids on the assets of the Debtors’ Athletic business (the “Bids”), (ii) the

time, date, and place of the auction (the “Auction”) and the hearing (the “Sale Hearing”)

to consider entry of the Sale Order (as defined below), (iii) the form of notice of the

Auction and the Sale Hearing (the “Auction and Hearing Notice”), (iv) the form of asset

purchase agreement, agency agreement, and lease purchase agreement to be used in


NY2:\1384786\07\T_$@07!.DOC\45878.0003
connection with the solicitation of Bids, and (v) the Debtors’ entry into customary

“break-up fee” arrangement(s) with “stalking horse” bidder(s) that may be identified

prior to or during the Auction and (B) following the Auction and the Sale Hearing, entry

of an order (the “Sale Order”), authorizing and approving (i) the Debtors’ entry into (1)

an asset purchase agreement(s), (2) an agency agreement(s) and/or (3) a lease purchase

agreement(s), (ii) the sale(s) of any assets under such asset purchase agreement, agency

agreement and/or lease purchase agreement free and clear of all liens, claims, and

encumbrances to the party or parties submitting the highest or otherwise best Bid(s) at the

Auction, and (iii) the assumption(s) and assignment(s) of any executory contracts and

unexpired leases (the “Contracts and Leases”) related to the Debtors’ Athletic division

stores (the “Stores”), and other related relief,1 all as more fully set forth in the Sale

Motion; and the Court having subject matter jurisdiction to consider the Sale Motion and

the relief requested therein pursuant to 28 U.S.C. § 1334 and the Standing Order of

Referral of Cases to Bankruptcy Court Judges of the District Court for the Southern

District of New York, dated July 19, 1984 (Ward, Acting C.J.); and consideration of the

Sale Motion and the relief requested therein being a core proceeding pursuant to 28

U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408

and 1409; and due and proper notice of the Sale Motion having been provided; and it

appearing that no other notice need be provided; and a hearing on the Sale Motion having

been held before the Court on April 5, 2004; and upon the record of the Hearing and the

evidence adduced at the Hearing before this Court relating to the procedural relief

requested in the Sale Motion; and such relief being in the best interest of the Debtors,
1
    The Debtors reserve the right to reject any agreement not to be assumed or assigned.



NY2:\1384786\07\T_$@07!.DOC\45878.0003             2
their estates and creditors; and any objections to the Sale Motion having been resolved,

withdrawn or otherwise overruled by this Order; and an ad hoc committee of equity

holders (the “Ad Hoc Equity Committee”) having requested consultation rights as set

forth herein and the Debtors having agreed to provide such consultation rights; and after

due deliberation, and sufficient cause appearing therefor, it is hereby

                    ORDERED, that the Debtors may sell the assets of their Athletic segment

by Auction in accordance with the Auction Procedures, which procedures are hereby

approved in their entirety; and it is further

                    ORDERED that the Auction shall be held on April 16, 2004 at 11:00 a.m.

(Eastern Time) at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New

York, New York 10153, for consideration of qualifying bids in connection with the sale

of the assets of the Debtors’ Athletic business; and it is further

                    ORDERED that the following Auction Procedures are hereby approved

and shall govern the submission and acceptance of competing bids at the Auction:

                    •         On or before March 30, 2004, the Debtors distributed to all parties
                              that the Debtors believe will be interested, or that have expressed
                              interests in purchasing Stores on a going concern basis, acting as
                              liquidation agent with respect to any of the Stores, or in purchasing
                              any of the Contracts and Leases (collectively, the “Interested
                              Parties”), a due diligence package consisting of various financial
                              data and other relevant information in connection with the Stores,
                              as well as an applicable Form Agreement. In addition, the Debtors
                              will provide Interested Parties with an opportunity to visit a certain
                              number of the Stores to obtain information regarding the Stores
                              and/or the Merchandise located therein.2



2
 It is expressly understood that some of the Fixtures (as defined in the Motion) located at
certain of the Stores may be subject to a Master Lease Agreement between one or more
of the Debtors and General Electric Capital Corporation (“GECC”) and, if so, are owned
by GECC and the Debtors are not seeking to sell such Fixtures. GECC will be provided


NY2:\1384786\07\T_$@07!.DOC\45878.0003                3
                    •         Bids and Adequate Assurance Packages (as defined below) must
                              be submitted so that they are actually received by no later than
                              12:00 noon (Eastern Time) on April 12, 2004 by Footstar, Inc.,
                              One Crosfield Avenue, West Nyack, New York 10994 (Attn:
                              Maureen Richards, Esq.), with copies to (i) Weil, Gotshal &
                              Manges LLP, 767 Fifth Avenue, New York, New York, 10153-
                              0119 (Attn: Martin J. Bienenstock, Esq. and Paul M. Basta, Esq.),
                              (ii) Abacus Advisors Group, LLC, 745 Fifth Avenue Suite 1506
                              New York, NY 10151 (Attn: Alan Cohen) (iii) Credit Suisse First
                              Boston LLC, Eleven Madison Avenue, New York, NY 10010
                              (Attn: Philippe L. Jacob), (iv) Bingham McCutchen LLP, 399 Park
                              Avenue New York, New York 10022 (Attn: Tina L. Brozman,
                              Esq.), (v) Riemer & Braunstein LLP, Three Center Plaza, 6th Floor
                              Boston, Massachusetts 02108 (Attn: David S. Berman, Esq.) and
                              (vi) Kronish Lieb Weiner & Hellman LLP, 1114 Avenue of the
                              Americas New York, New York 10036-7798 (Attn: Cathy
                              Hershcopf, Esq. and Jay R. Indyke, Esq.). Any party submitting a
                              Bid must submit an executed “clean” version of the applicable
                              Form Agreement, together with a blackline to reflect any proposed
                              changes to the terms and conditions of the Bids.3 If any Bid is
                              conditioned upon the assumption and assignment of Contracts
                              and/or Leases, then such bidder shall be required to identify such
                              Contracts and/or Leases to be assumed and assigned and provide
                              evidence of its ability to provide adequate assurance of future
                              performance of such Contracts and/or Leases along with the Bid
                              (an “Adequate Assurance Package”).

                    •         Bids must be unconditional and not contingent upon any event,
                              including, without limitation, any due diligence investigation, the
                              receipt of financing and further bidding approval, including from
                              any board of directors, shareholders or otherwise. Bids will not be
                              shared among bidders. All Bids are irrevocable until seven (7)
                              days after the Sale Hearing. All Bids will be accompanied by an
                              earnest money deposit (the “Earnest Money Down Payment”)
                              equal to 2.5% of the total proposed purchase price in the form of a
                              certified check or wire transfer payable to Footstar, Inc. Within 24
                              hours after the Auction, any successful bidder and any party


with a copy of the final bid(s) selected pursuant to the Auction to the extent such bid(s)
involve stores at which GECC’s Fixtures are located.
3
 While bidders may suggest modifications to the Form Agreements, any such
modifications deemed by the Debtors to increase the obligations or burdens upon the
Debtors (such as additional conditions) will be considered by the Debtors in determining
whether to accept such Bid.



NY2:\1384786\07\T_$@07!.DOC\45878.0003               4
                              submitting the second highest or otherwise best bid must
                              supplement the initial Earnest Money Down Payment (through
                              certified check or wire transfer), so that the total deposit equals 5%
                              of their winning or second highest Bid. Such deposit will be held
                              by the Debtors, without interest, until the earlier to occur of (i) the
                              time such Bid is officially rejected by the Debtors and (ii) seven
                              (7) days after the Sale Hearing. Such deposit will be forfeited in
                              the event that any bidder for an accepted Bid defaults. Bids that
                              meet the foregoing conditions shall be deemed “Qualified Bids.”

                    •         The Assets may be sold in a single sale to a single bidder or in
                              parts to different bidders free and clear of liens, claims and
                              encumbrances.

                    •         Prior to the Auction and following the submission of the Bids, the
                              Debtors, in consultation with the DIP Lenders, the Creditors’
                              Committee, and the Ad Hoc Equity Committee, may enter into an
                              Asset Purchase Agreement, Agency Agreement and/or Lease
                              Purchase Agreement subject to higher or otherwise better offers at
                              the Auction, with one or more entities that submit Qualified Bids
                              (the “Stalking Horse Bidder(s)”) to establish a minimum Bid (the
                              “Stalking Horse Agreement”) for some or all of the Debtors’
                              assets. The Stalking Horse Agreement(s) may contain certain
                              customary terms and conditions, including a break-up fee
                              (inclusive of any expense reimbursement) of up to 2% of the
                              proposed purchase price of the assets (or, in the case of an Agency
                              Agreement, the estimated amount attributable to the Merchandise
                              that will be sold pursuant to such agreement) that are subject to the
                              applicable Stalking Horse Agreement(s) (the “Purchase Price”), or
                              with the consent of the DIP Lenders and the Creditors’ Committee,
                              up to 3% of the Purchase Price. Prior to the Auction, the Debtors
                              will distribute the appropriate Stalking Horse Agreement(s), if any,
                              to the parties submitting the other Qualified Bids.

                    •         The Auction will be conducted at the offices of Weil, Gotshal &
                              Manges LLP, 767 Fifth Avenue, New York, New York 10153 on
                              April 16, 2004 at 11:00 a.m. Bidding at the Auction will continue
                              until such time as the highest or otherwise best offer is determined.
                              The Debtors may adopt rules for the bidding process that, in their
                              judgment, in consultation with the DIP Lenders, the Creditors’
                              Committee, and the Ad Hoc Equity Committee will better promote
                              the goals of the bidding process and that are not inconsistent with
                              any of the provisions of the Procedures Order. The Debtors will
                              select the highest or otherwise best Bid(s) after consultation with
                              the DIP Lenders, the Creditors’ Committee, and the Ad Hoc Equity



NY2:\1384786\07\T_$@07!.DOC\45878.0003                5
                              Committee at the conclusion of the Auction, subject to Court
                              approval, and the winning bidder(s) will be required to enter into
                              definitive agreements (as modified by the Bids submitted at the
                              Auction) before the Auction is adjourned. Upon conclusion of the
                              Auction, the Debtors will file a notice with the Court identifying
                              the winning bidder(s).

                    •         The Sale Hearing will be held before the Honorable Adlai S.
                              Hardin, United States Bankruptcy Judge, at the United States
                              Bankruptcy Court for the Southern District of New York, 300
                              Quarropas Street, White Plains, New York 10601, on the
                              following dates, as applicable:

                                    o on April 21, 2004 at 10:00 a.m., but only if the Auction
                                      results in the Debtors’ entry into an Agency Agreement(s)
                                      to liquidate the Merchandise in any or all of the Stores; and

                                    o on April 26, 2004 at 10:00 a.m. in respect of approval of
                                      the sale(s) of all other assets, including Contracts and
                                      Leases.

                    •         The Debtors, in consultation with the Creditors’ Committee, the
                              DIP Lenders, and the Ad Hoc Equity Committee, reserve the right
                              to (i) extend the deadlines set forth in the Auction Procedures
                              and/or adjourn the Auction at the Auction and/or the Sale Hearing
                              in open court without further notice, (ii) withdraw any asset(s),
                              including any Leases (the “Withdrawn Assets”), from the sale at
                              any time prior to or during the Auction, to make subsequent
                              attempts to market the same, and to request separate hearing(s) by
                              this Court to approve the sale(s) of some or all of the Withdrawn
                              Assets, (iii) reject any or all Bids if, in the Debtors’ reasonable
                              judgment, no Bid is for a fair and adequate price, and (iv) seek
                              approval of any separate agreement to sell some or all of the
                              Withdrawn Assets at the Sale Hearing.

                    •         If for any reason the entity or entities that submit(s) the highest or
                              otherwise best Bid(s) fails to consummate the purchase of the
                              Assets, or any part thereof, the offeror of the second highest or
                              otherwise best Bid will automatically be deemed to have submitted
                              the highest or otherwise best Bid and to the extent such offeror and
                              the Debtors consent, the Debtors and such offeror are authorized to
                              effect the sale of the assets, or any part thereof, to such offeror(s)
                              as soon as is commercially reasonable without further order of the
                              Bankruptcy Court. If such failure to consummate the purchase is
                              the result of a breach by the winning bidder, the Earnest Money
                              Down Payment shall be forfeited to the Debtors and the Debtors


NY2:\1384786\07\T_$@07!.DOC\45878.0003                 6
                              specifically reserve the right to seek all available damages from the
                              defaulting bidder.

                    •         THE BID OF ANY BIDDER FAILING TO COMPLY WITH
                              THESE REQUIREMENTS MAY NOT BE CONSIDERED
                              BY THE DEBTORS, IN THEIR REASONABLE
                              DISCRETION, AFTER CONSULTATION WITH THE DIP
                              LENDERS, THE CREDITORS’ COMMITTEE, AND THE
                              AD HOC EQUITY COMMITTEE.

and it is further

                    ORDERED that the Debtors shall provide all counterparties to Contracts

and Leases (the “Counterparties”) with no less than seven (7) days’ notice to object (the

“Cure Amount Objections”) to cure amounts (the “Cure Amounts”) associated with the

assumption of any Contracts and Leases; and it is further

                    ORDERED that the Debtors shall provide the Counterparties with no less

than seven (7) days’ notice to object to an Adequate Assurance Package (the “Adequate

Assurance Objections”), but only to the extent that the Adequate Assurance Packages

relate to a Counterparty’s Contract or Lease; and it is further

                    ORDERED that in no event shall the Cure Amount Objections and the

Adequate Assurance Objections be due less than six (6) days prior to the Sale Hearing

scheduled on April 26, 2004; and it is further

                    ORDERED that nothing herein shall prevent any Counterparty to a Lease

(each a “Landlord” and collectively, the “Landlords”) from submitting a credit bid (a

“Credit Bid”) for such Landlord’s Lease(s); provided, however, that the Landlords shall

only be entitled to Credit Bid up to the amount that the Debtors assert or agree is the Cure

Amount with respect to any Lease; provided further, however, that, to the extent a

Landlord is the winning bidder and the Debtors consummate a sale with such Landlord,



NY2:\1384786\07\T_$@07!.DOC\45878.0003                7
such Landlord may apply to the purchase price the Cure Amount agreed to by the

Debtors or established by the Court; and it is further

                    ORDERED that nothing herein shall disqualify a Credit Bid as a Qualified

Bid if such Landlord uses the Cure Amount asserted or agreed to by the Debtors in lieu of

an Earnest Money Deposit; and it is further

                    ORDERED that a Landlord’s Credit Bid shall be treated as an Earnest

Money Down Payment and shall be subject to all provisions of the Auction Procedures,

including, but not limited to, forfeiture if a Landlord defaults on its Bid; and it is further

                    ORDERED that payment of the Break-Up Fee, if any, paid in accordance

with the terms of the Auction Procedures is hereby authorized; and it is further

                    ORDERED that notice of the Auction and proposed sale shall be deemed

good and sufficient notice if on March 26, 2004, the Debtors serve a copy of (A) this Sale

Motion, by first class mail, upon (i) all Interested Parties, (ii) the office of the United

States Trustee for the Southern District of New York, (iii) the Creditors’ Committee,

(iv) the DIP Lenders, (v) the Debtors’ secured creditors, and (vi) all other parties that

have requested notice pursuant to Bankruptcy Rule 2002 and (B) the Auction and

Hearing Notice upon (i) all parties to executory contracts and unexpired leases that the

Debtors believe will or may be assumed and assigned, (ii) all taxing authorities whose

rights may be affected by the sale of assets, (iii) all government agencies entitled to

receive notice of proceedings, and (iv) the Ad Hoc Equity Committee; and it is further

                    ORDERED that all other objections to the entry of the Sale Order must

(a) be in writing, (b) conform to the Federal Rules of Bankruptcy Procedure and the

Local Rules of the Bankruptcy Court, (c) be filed with the Bankruptcy Court


NY2:\1384786\07\T_$@07!.DOC\45878.0003              8
electronically in accordance with General Order M-242 (General Order M-242 and the

User’s Manual for the Electronic Case Filing System can be found at

http://www.nysb.ucourts.gov, the official website for the Bankruptcy Court), by

registered users of the Bankruptcy Court’s case filing system and, by all other parties in

interest, on a 3.5 inch disk, preferably in Portable Document Format (PDF), WordPerfect

or any other Windows-based word processing format (with a hard-copy delivered directly

to Chambers), and (d) be served in accordance with General Order M-242, upon (i) Weil,

Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 (Attn: Martin

J. Bienenstock, Esq. and Paul M. Basta, Esq.); (ii) Footstar, Inc., One Crosfield Avenue,

West Nyack, New York 10994 (Attn: Maureen Richards, Esq.); (iii) the Office of the

United States Trustee for the Southern District of New York, 33 Whitehall Street, 21st

Floor, New York, New York 10004 (Attn: Richard Morrissey, Esq.); (iv) Bingham

McCutchen LLP, 150 Federal Street, Boston, Massachusetts 02110 (Attn: Robert A.J.

Barry, Esq.) and Bingham McCutchen LLP, 399 Park Avenue, New York, New York

10022 (Attn: Tina Brozman, Esq. and Jennifer MacKay, Esq.); (v) Riemer & Braunstein

LLP, Three Center Plaza, 6th Floor, Boston, Massachusetts 02108 (Attn: David S.

Berman, Esq.), and (vi) Kronish Lieb Weiner & Hellman LLP, 1114 Avenue of the

Americas, New York, New York 10036 (Attn: Cathy Hershcopf, Esq. and Jay R. Indyke,

Esq.), so as to be received no later than April 19, 2004, at 12:00 Noon (Eastern Time);

and it is further

                    ORDERED that the Auction and/or Sale Hearing may be adjourned, from

time to time, without further notice to creditors or parties in interest other than by




NY2:\1384786\07\T_$@07!.DOC\45878.0003            9
announcement of the adjournment in open Court or on the Court’s calendar; and it is

further

                    ORDERED that the Debtors, in consultation with the DIP Lenders, the

Creditors’ Committee, and the Ad Hoc Equity Committee are hereby authorized to take

such steps and incur such expenses as may be reasonably necessary or appropriate to

effectuate the terms of this Procedures Order; and it is further

                    ORDERED, that this Order shall become effective immediately upon its

entry; and it is further

                    ORDERED that the requirement pursuant to Local Rule 9013-1(b) that the

Debtors file a memorandum of law in support of the Application is hereby waived.

Dated: White Plains, New York
       April 5, 2004



                                          /s/ Adlai S. Hardin, Jr.
                                          UNITED STATES BANKRUPTCY JUDGE




NY2:\1384786\07\T_$@07!.DOC\45878.0003           10
         EXHIBIT 2-F

In re Lehman Bros. Holdings Inc.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
                                      x
In re:                                                      Chapter 11
                                      :
LEHMAN BROTHERS HOLDINGS INC., et al. :                     Case No. 08-13555 (JMP)
                                      :
              Debtors.                :                     (Jointly Administered)
                                      :
                                      x


                   ORDER (I) APPROVING THE BIDDING PROCEDURES,
               (II) APPROVING THE SELLER TERMINATION FEE AND THE
         REIMBURSEMENT AMOUNT, (III) APPROVING THE FORM AND MANNER
         OF SALE NOTICES AND (IV) SETTING THE AUCTION AND SALE HEARING
          DATE IN CONNECTION WITH THE SALE OF CERTAIN DEBTOR ASSETS

                                    (The “Bid Procedures Order”)

          Upon the motion, dated October 6, 2008 (the “Motion”),1 of Lehman Brothers Holdings

Inc. (the “Debtor” and collectively with its affiliated debtors in the above-referenced chapter 11

cases, the “Debtors”), for orders pursuant to 11 U.S.C. §§ 105, 363, 364, 365 and 503 and Fed.

R. Bankr. P. 2002, 6004, 6006 and 9014 (I) authorizing and approving, among other things,

(A) the bidding procedures set forth herein and attached hereto as Exhibit A (the “Bidding

Procedures”), (B) the Seller Termination Fee and the Reimbursement Amount as set forth in the

Amended and Restated Purchase Agreement by and between IMD Parent LLC, the Debtor and

certain of its subsidiaries, dated as of October 3, 2008 (as it may be amended, the “Purchase

Agreement”), (C) the form and manner of sale notices in connection with the Auction and Sale

Hearing (each as defined below) and (D) a date for the Auction and Sale Hearing, and (II)

(A) authorizing and approving the sale and related transactions contemplated by the Purchase

Agreement (the “Transaction”) of the Debtors’ assets free and clear of all liens, claims and


1
  Capitalized terms used herein but not defined herein shall have the meaning ascribed to such
terms in the Motion or the Purchase Agreement, as applicable.
encumbrances, (B) authorizing and approving the assumption and assignment of certain

Purchased Contacts and Transferred Real Property Leases (each as defined in the Purchase

Agreement) to IMD Parent LLC (together with any of its designees, the “Purchaser”) or the

Successful Bidder(s) and (C) granting related relief; and upon the Court’s consideration of the

Motion, the record of the hearing held on October 16, 2008 with respect to the Motion (the

“Hearing”), including the testimony and evidence admitted at the Hearing and the objections

filed and raised at the Hearing; and upon all of the proceedings had before the Court; and after

due deliberation thereon, and sufficient cause appearing therefor,

        IT IS HEREBY FOUND AND DETERMINED THAT:2

        A.       The Court has jurisdiction over this matter and over the property of the Debtors

and their respective bankruptcy estates pursuant to 28 U.S.C. §§ 157(a) and 1334. This matter is

a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(A), (N), and (O). The statutory predicates

for the relief sought herein are 11 U.S.C. §§ 105, 363, 364, 365 and 503 and Fed. R. Bankr. P.

2002, 6004, 6006 and 9014. Venue of this case and the Motion is proper pursuant to 28 U.S.C.

§§ 1408 and 1409.

        B.       The relief requested in the Motion is in the best interests of the Debtors, their

estates, their stakeholders, and other parties-in-interest.

        C.       The notice of the Motion and the Hearing given by the Sellers constitutes due and

sufficient notice thereof.

        D.       The Debtors have articulated good and sufficient reasons for the Court to

(i) approve the Bidding Procedures, (ii) approve the Seller Termination Fee and the

Reimbursement Amount, (iii) approve certain matters relating to competing bids, (iv) approve
2
 Findings of fact shall be construed as conclusions of law and conclusions of law shall be
construed as findings of fact to the fullest extent of the law. See Fed. R. Bankr. P. 7052.



                                                  2
the form and manner of notice of the Motion, the Sale Hearing, and the assumption and/or

assignment of the Purchased Contracts and Transferred Real Property Leases and (v) set the date

of the Auction and the Sale Hearing, all as provided in the Motion or the Purchase Agreement

and as modified by this Order.

        E.      The Seller Termination Fee and the Reimbursement Amount shall be payable in

accordance with the terms, conditions, and limitations of the Purchase Agreement or this Order.

The Seller Termination Fee and the Reimbursement Amount (i) if triggered, shall be deemed

actual and necessary costs and expenses of preserving the Debtors’ estates, (ii) are of substantial

benefit to the Sellers and the Debtors’ estates, (iii) are reasonable and appropriate, including in

light of the size and nature of the Transaction, the necessity to announce a sale transaction for

IMD, and the efforts that have been and will be expended by the Purchaser, (iv) have been

negotiated by the parties and their respective advisors at arms’ length and in good faith and

(v) are necessary to ensure that the Purchaser will continue to pursue the Transaction. Each of

the Seller Termination Fee and the Reimbursement Amount, individually and collectively, is a

material inducement for, and condition of, the Purchaser’s entry into the Purchase Agreement.

The Purchaser is unwilling to commit to purchase the Purchased Assets under the terms of the

Purchase Agreement unless the Purchaser is assured of payment of the Seller Termination Fee

and the Reimbursement Amount. Assurance to the Purchaser of payment of the Seller

Termination Fee and the Reimbursement Amount promotes more competitive bidding. Further,

because the Seller Termination Fee and the Reimbursement Amount induced the Purchaser to

submit a bid that will serve as a minimum or floor bid for other bidders, the Purchaser has

provided a benefit to the Debtors’ estates by increasing the likelihood that the price at which the

Purchased Assets are sold will reflect their true worth. Finally, absent authorization of the Seller




                                                 3
Termination Fee and the Reimbursement Amount, the Debtors may lose the opportunity to

obtain the highest or otherwise best available offer for the Purchased Assets.

        F.      The Bidding Procedures are reasonable and appropriate and represent the best

method for maximizing the realizable value of the Purchased Assets.

        G.      The Purchaser consents to the form and timing of the entry of this Order and shall

be estopped from terminating the Purchase Agreement pursuant to Section 3.3(g)(i) of the

Purchase Agreement on account of the form or timing of the entry of this Order.

        THEREFORE, IT IS ORDERED, ADJUDGED, AND DECREED THAT:

        1.      The Motion is granted, as provided herein.

        2.      All objections filed in response to the Motion, to the extent not resolved as set

forth herein, are hereby overruled.

                                          The Stalking Horse Bid

        3.      The Transaction contemplated by the Purchase Agreement is designated as the

“Stalking Horse Bid.”

                                            Bidding Procedures

        4.      The bidding procedures, as set forth on Exhibit A attached hereto and

incorporated herein by reference (the “Bidding Procedures”), are hereby approved and shall

govern all proceedings relating to the Transaction.

        5.      The Sellers, after consultation with the Creditors’ Committee, (a) may determine

which Qualified Bid (as defined in the Bidding Procedures), if any, is the highest or otherwise

best offer and (b) may reject, at any time, any bid (other than the Stalking Horse Bid, which is

found and determined to be a Qualified Bid) that is (i) inadequate and insufficient, (ii) not in

conformity with the requirements of the Bankruptcy Code, the Bidding Procedures or the terms




                                                  4
and conditions of the Transaction or (iii) contrary to the best interests of the Debtors, their estates

and their constituencies, as determined by the Debtors in their sole discretion.

         6.     The failure specifically to include or reference a particular provision of the

Bidding Procedures in this Order shall not diminish or impair the effectiveness of such provision.

The Bidding Procedures are hereby authorized and approved in their entirety as modified by this

Order.

                                         Auction and Sale Hearing

         7.     The Auction shall be held on December 3, 2008 at the offices of Weil, Gotshal &

Manges LLP, 767 Fifth Avenue, New York, New York 10153 at 10:00 a.m. (New York time).

The Court shall hold a hearing on December 22, 2008 at 10:00 a.m. (New York time) (the

“Sale Hearing”) in the United States Bankruptcy Court for the Southern District of New York,

One Bowling Green, New York, New York 10004, at which time the Court shall consider the

approval of the sale as set forth in the Motion, approve the Successful Bidder(s), and confirm the

results of the Auction, if any. Objections to the Motion, if any, shall be filed and served on each

of the Notice Parties (defined below) no later than 4:00 p.m. (New York time) on December

17, 2008 (the “Sale Objection Deadline”).

         8.     The failure of any person or entity to file and serve an objection to the Motion by

the Sale Objection Deadline shall be a bar to the assertion by such creditor, contract counterparty

or other party in interest in these chapter 11 cases, at the Sale Hearing or thereafter, of any

objection to the Motion, the Sale Order, the Transaction, or the Debtors’ consummation and

performance of the Purchase Agreement and Ancillary Agreements (as defined in the Purchase

Agreement) (including, without limitation, the Debtors’ transfer of the Purchased Assets, the

Purchased Contracts and the Transferred Real Property Leases, and assumption and sublease of

the Subleased Real Property Leases free and clear of liens, claims, and encumbrances).


                                                  5
        9.      The Sale Hearing may be adjourned by the Debtors from time to time without

further notice to creditors or parties-in-interest other than by announcement of the adjournment

in open court or an entry of a notice on the Court’s docket; provided, however, that any such

adjournment shall be without prejudice to Purchaser’s rights under Section 3.3 of the Purchase

Agreement.

                           Seller Termination Fee and Reimbursement Amount

        10.     The Debtors are authorized and directed to pay the Seller Termination Fee and the

Reimbursement Amount as provided under the Purchase Agreement without further order of the

Court. Notwithstanding anything in the Purchase Agreement to the contrary, the Seller

Termination Fee shall be equal to $52,500,000, and shall be paid in the manner provided in the

Purchase Agreement upon the occurrence of any of the conditions set forth in Sections 3.3 and

3.5 of the Purchase Agreement. In addition, the Debtors are authorized and directed to pay the

Reimbursement Amount after the occurrence of the conditions set forth in Sections 3.3 and 3.5

of the Purchase Agreement, and no later than two (2) business days after delivery to the Debtors

of an invoice documenting such reasonable and customary out-of-pocket expenses.

        11.     The Debtors’ obligation to pay the Seller Termination Fee upon the occurrence of

the conditions set forth in Sections 3.3 and 3.5 of the Purchase Agreement and to pay the

Reimbursement Amount, as provided by the Purchase Agreement, shall be joint and several with

the other Sellers, shall survive termination of the Purchase Agreement, shall constitute a

superpriority administrative claim against the Debtors pursuant to sections 105(a), 503( b) and

364(c)(1) of the Bankruptcy Code and shall be senior to, and have priority over, all other claims

against the Debtors; provided, however, that the Debtors and the Sellers shall allocate (without

affecting the joint and several obligations of the Debtors and the Sellers to the Purchaser of the

Seller Termination Fee and the Reimbursement Amount) the liability for any such amounts paid


                                                 6
in accordance with the allocation of the Purchase Price. Without limiting the foregoing, in the

event that the Seller Termination Fee or the Reimbursement Amount is payable pursuant to

Sections 3.3 and 3.5 of the Purchase Agreement and a Competing Transaction is consummated

prior to the payment of the Seller Termination Fee or the Reimbursement Amount, the proceeds

in an amount equal to the unpaid portion of the Seller Termination Fee or the Reimbursement

Amount shall be remitted directly to the benefit of the Purchaser or held in trust for the Purchaser

and shall not become property of such Debtors’ estates until all obligations under the Purchase

Agreement are paid in full pursuant to this Order and the Purchase Agreement.

                                               Authorization

        12.     The Debtors, after consultation with the Creditors’ Committee, are authorized to

take such actions as contemplated by the Purchase Agreement prior to the Auction and the Sale

Hearing, including, without limitation, actions to notify creditors, customers, regulators or other

interested parties regarding the Transaction and to obtain any necessary consents or approvals

regarding the Transaction. In addition, the Debtors are authorized to amend the Purchase

Agreement to conform to this Order and the agreements stated on the record at the Hearing.

Notwithstanding anything in the Purchase Agreement to the contrary, the Debtors and the Sellers

shall not be required to take any actions in response to a Designation Notice prior to the

completion of the Auction.

        13.     Until the completion of the Auction, the Sellers shall be authorized to (i) afford

(or cause to be afforded) to the Purchaser and any bidder that executes a Bidder Confidentiality

Agreement (as defined in the Bid Procedures) (a “Bidder”) and requests such access, reasonable

access to the books, records, financial records, contracts, leases, other information or data,

properties, leased properties and personnel of each of the Sellers related to the Business (as

defined in the Purchase Agreement), including the Purchased Assets, and information related to


                                                 7
each of the foregoing, including, without limitation, information concerning accounts receivable,

operations, production, financial performance and capacity on a per business basis; (ii) furnish

(or cause to be furnished) to the Purchaser and any Bidder that request such documents copies of

all such books, records, employment and human resource files, financial and accounting records,

contracts and leases and other existing documents, data and information as the Purchaser and

such Bidder may reasonably request; (ii) furnish (or cause to be furnished) to the Purchaser or

any Bidder reasonable access to personnel, including management and portfolio managers,

during normal business hours and with advanced notice as may be reasonably requested by the

Purchaser or Bidder; and (iv) furnish (or cause to be furnished) reasonable access to any and all

executed (or otherwise finalized) agreements or term sheets or similar executed or otherwise

finalized documents between the Purchaser or any Bidder and personnel, including management

and portfolio managers; provided, however, that in no event shall the Sellers be required to

provide to any Bidder any information or documents that are subject to attorney-client, work

product or similar privileges or protections; provided further, however, that if the Debtors refuse

to provide or furnish information or access to a Bidder or refuse to enter into a Bidder

Confidentiality Agreement with a party, and the Creditors’ Committee requests that such

information or access be provided or a Bidder Confidentiality Agreement be entered into, then (i)

the Debtors may provide such information and access as the Creditors’ Committee requests or

(ii) the Debtors and the Creditors’ Committee shall promptly seek a determination of the Court to

resolve any outstanding conflicts.

                                                  Notice

        14.     Notwithstanding anything in the Purchase Agreement to the contrary, notice of (a)

the Motion, (b) the Auction, (c) Sale Hearing and (d) the proposed assumption and/or assignment

of the Purchased Contracts, Transferred Real Property Leases and Subleased Real Property


                                                8
Leases to the Purchaser pursuant to the Purchase Agreement or to a Successful Bidder shall be

good and sufficient, and no other or further notice shall be required, if given as follows:

              (a)      Notice of Sale Hearing: Within five (5) days after entry of the Bid
Procedures Order, the Sellers (or their agents) shall:

                                  1.        provide notice, in substantially the form attached to
        this Order (the “Sale Notice”), of the Transaction, this Order, the Motion, the
        Purchase Agreement and the proposed Sale Order by email, mail, facsimile or
        overnight delivery service, upon (i) the U.S. Trustee, (ii) counsel for the
        Purchaser, (iii) counsel for the Creditors’ Committee, (iv) to the extent possible,
        all entities known to have asserted any lien, claim, interest or encumbrance in or
        upon LBHI, (v) the Office of the United States Attorney for the Southern District
        of New York, (vi) the United States Department of Justice, (vii) the Securities and
        Exchange Commission, (viii) the Federal Reserve Bank of New York, (ix) the
        Securities Investor Protection Corporation, (x) the Internal Revenue Service and
        applicable federal and state taxing authorities, (xi) the U.S. Commodities Futures
        Trading Commission, (xii) the Pension Benefit Guaranty Corporation and all
        regulatory authorities of the Debtors’ foreign pension plans, including the U.K.
        Pension Regulator, (xiii) all persons, if any, who have filed objections to the
        Motion, (xiv) all persons who have filed a notice of appearance in the Debtors’
        bankruptcy cases, and (xv) all persons who Purchaser may reasonably request;
        provided, however, that, in the event that any Seller or any member of the
        Company Group becomes subject to a Bankruptcy Case prior to the Sale Hearing,
        such entity shall provide a Sale Notice, to the extent not already provided and to
        the extent possible, to all entities known to have asserted any lien, claim, interest
        or encumbrance against the new debtor or its property; and

                                2.     cause the Sale Notice to be published on
        http://chapter11.epiqsystems.com/lehman (the “Website”).

                 (b)     Assumption, Assignment and Cure Notice. If the Purchaser is selected as
the Successful Bidder, within two (2) Business Days after the conclusion of the Auction, the
Debtors shall file with this Court and serve on each counterparty to a Purchased Contract,
Transferred Real Property Lease or Subleased Real Property Lease by email, mail, facsimile or
overnight delivery service, a notice of assumption, assignment and cure substantially in the form
attached hereto as Exhibit C (the “Assumption, Assignment and Cure Notice”) for any Purchased
Contract, Transferred Real Property Lease or Subleased Real Property Lease that has been
designated, as of the date of such notice, as a Purchased Contract, Transferred Real Property
Lease or Subleased Real Property Lease to be assumed and subleased or assumed and assigned
to the Purchaser at Closing (collectively, the “Designated Contracts”). The Assumption,
Assignment and Cure Notice shall inform parties of the Debtors’ calculation of the cure amount
(the “Cure Amount”) for each such Designated Contract. A list of the Designated Contracts,
including Cure Amounts with respect thereto, will be posted on the Website and updated as
modified.



                                                  9
                 (c)      Any counterparty to a Designated Contract shall file and serve on the
Notice Parties any objections to (i) the proposed assumption and sublease or assumption and
assignment to the Purchaser (and must state in its objection, with specificity, the legal and factual
basis of its objection) and (ii) if applicable, the proposed Cure Amount (and must state in its
objection, with specificity, what Cure Amount is required with appropriate documentation in
support thereof), no later than 4:00 p.m. (New York time) on December 17, 2008 (the
“Contract Objection Deadline ”). If no objection is timely received, (x) the counterparty to a
Designated Contract shall be deemed to have consented to the assumption and sublease or
assumption and assignment of the Designated Contract to the Purchaser and shall be forever
barred from asserting any objection with regard to such assumption or assignment, and (y) the
Cure Amount set forth in the Assumption, Assignment and Cure Notice shall be controlling,
notwithstanding anything to the contrary in any Designated Contract, or any other document, and
the counterparty to a Designated Contract shall be deemed to have consented to the Cure
Amount and shall be forever barred from asserting any other claims related to such Designated
Contract against the Debtors or the Purchaser, or the property of any of them. Notwithstanding
anything in this paragraph, this Order does not affect the right of any counterparty that is a
governmental entity to object to the assignment of a Designated Contract on the basis that any
necessary governmental approvals have not been obtained or that any necessary governmental
procedures have not been followed.

                 (d)    Successful Bidder Other Than Purchaser. If the Purchaser is not the
Successful Bidder at the Auction, the Debtors shall send an Assumption, Assignment and Cure
Notice to each non-Debtor party to a Purchased Contract as soon as practical after the Auction.
In such a case, the Contract Objection Deadline would be no earlier than ten days after the
Assumption, Assignment and Cure Notice is provided.

                 (e)      Notice of Objections. All objections shall be filed with the Court and be
served so as to be received by the following persons no later than the Sale Objection Deadline or
the Contract Objection Deadline, as applicable: (i) the chambers of the Honorable James M.
Peck, One Bowling Green, New York, New York 10004, Courtroom 601; (ii) Weil Gotshal &
Manges, LLP, 767 Fifth Avenue, New York, New York 10153, (Attn: Lori R. Fife, Esq., and
Garrett A. Fail, Esq.), attorneys for the Debtors; (iii) the Office of the United States Trustee for
the Southern District of New York, 33 Whitehall Street, 21st Floor, New York, New York 10004
(Attn: Andy Velez-Rivera, Paul Schwartzberg, Brian Masumoto, Linda Riffkin, and Tracy Hope
Davis); (iv) Milbank, Tweed, Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York,
New York 10005, (Attn: Abhilash M. Raval, Esq., and Evan Fleck, Esq.), attorneys for the
official committee of unsecured creditors appointed in these cases; (v) the attorneys for any other
official committee(s) appointed in these chapter cases; (vi) Hughes Hubbard & Reed LLP, One
Battery Park Plaza, New York, NY 10004 (Attn: James B. Kobak, David Wiltenburg, and Jeff
Margolin), attorneys for James Giddens as SIPA Trustee for Lehman Brothers Inc.; and (vii)
Ropes & Gray, LLP, 1211 Avenue of the Americas, New York, NY 10036 (Attn: Mark I. Bane,
Esq. and Steven T. Hoort, Esq.) and Cleary Gottlieb Steen & Hamilton LLP, One Liberty Plaza,
New York, NY 10006 (Attn: James L. Bromley, Esq. and Sean A. O’Neal, Esq.), attorneys for
the Purchaser (collectively, the “Notice Parties”).




                                                10
        15.     This Order shall be binding on each Debtor and its successors, including, without

limitation, any Seller that becomes subject to a bankruptcy or insolvency proceeding following

entry of this Order. In the event that any Seller becomes subject to any proceeding under the

Bankruptcy Code or the Securities Investor Protection Act following entry of this Order, such

debtor or any successor shall be authorized and directed to comply with the Bidding Procedures

as set forth herein to the maximum extent permitted by law.

        16.     Subject to certain restrictions and the provisions in the Bidder Confidentiality

Agreement, joint bids shall be allowed. Nothing herein shall prohibit any bids by management

or employees of the Debtors or Sellers; provided, however, that such bids comply with the

Bidding Procedures. If the Creditors’ Committee requests that the Sellers waive or modify

restrictions or provisions in any Bidder Confidentiality Agreement with respect to joint bids

and/or information sharing between one or more bidders then (i) the Sellers may agree to such

waivers or modifications or (ii) the Sellers and the Creditors’ Committee shall promptly seek a

determination of the Court to resolve any outstanding conflicts.

        17.     This Court shall retain jurisdiction to hear and determine all matters arising from

the implementation of this Order.


Dated: New York, New York
       October 22, 2008


                                                       s/ James M. Peck
                                                      HONORABLE JAMES M. PECK
                                                      UNITED STATES BANKRUPTCY JUDGE




                                                11
Exhibit A
                            BIDDING PROCEDURES FOR THE SALE
                                          OF
                            LEHMAN BROTHERS HOLDINGS INC.
                           INVESTMENT MANAGEMENT DIVISION

         The Bidding Procedures set forth herein govern the proposed sale by Lehman Brothers
Holdings Inc. (the “Debtor,” together with certain of its debtor affiliates, the “Debtors,” and
together with its selling affiliates, the “Sellers”) of the assets owned, held, or used primarily in
connection with the Sellers’ investment management business, including certain partnerships,
limited liability companies, and investment vehicles to which a Seller or its affiliate provides
investment advisory services or serves as the general partner, managing member, or any similar
capacity.

         A more complete listing of the assets available for sale is included in that certain
Amended and Restated Purchase Agreement, dated October 3, 2008 (as it may be amended, the
“Purchase Agreement” or the “Stalking Horse Bid”), among IMD Parent LLC (the “Purchaser”)
and the Sellers, a copy of which is available on the internet at
http://chapter11.epiqsystems.com/lehman or by request to the Debtor’s noticing agent at 1-866-
841-7868.

       Any interested bidder should contact Barry W. Ridings, Vice Chairman of US
Investment Banking, Lazard Freres & Co. LLC, 30 Rockefeller Plaza, New York, New
York 10020, t: 212-632-6896, f: 212-332-1757).

         The Bidding Procedures set forth herein describe, among other things, the manner in
which bidders and bids become Qualified Bidders and Qualified Bids (each as defined below),
the receipt and negotiation of bids received, the conduct of any subsequent Auction (as defined
below), the ultimate selection of the Successful Bidder(s) (as defined below), and Court approval
thereof (collectively, the “Bidding Process”).

                                        Participation Requirements

         Any party who wishes to participate in the Bidding Process must submit a bid that
satisfies each of the requirements set forth herein.

         Any party who wishes to conduct diligence in connection with the Bidding Process must
enter into a confidentiality agreement (a “Bidder Confidentiality Agreement”), which shall inure
to the benefit of any purchaser of the Purchased Assets, and shall be on terms that are not less
favorable to the Sellers or more favorable to such potential bidder than the terms of the
Confidentiality Agreement (as defined in the Purchase Agreement).

                                               Bid Deadline

       A party who desires to make a bid must deliver the Required Bid Documents (as defined
below) so as to be received not later than 12 noon (New York time) on December 1, 2008 (the
“Bid Deadline”) to Lazard Freres & Co. LLC, 30 Rockefeller Plaza, New York, New York
10020, Attention: Barry W. Ridings, with copies to (a) Sellers’ counsel: Weil, Gotshal &
Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attention: Lori R. Fife, Esq. and
Michael E. Lubowitz, Esq., and (b) counsel to the Creditors’ Committee: Milbank, Tweed,
Hadley & McCloy LLP, 1 Chase Manhattan Plaza, New York, New York 10005, Attention:
Abhilash M. Raval, Esq., and Evan Fleck, Esq. The Sellers may extend the Bid Deadline. If the
Sellers extend the Bid Deadline, the Sellers will promptly notify all Qualified Bidders of such
extension.

        The Sellers will promptly provide written notice to the Purchaser of any bids in addition
to the Stalking Horse Bid and shall provide copies of each such bid to the Purchaser.

                                                 Bid Requirements

          All bids must include the following (the “Required Bid Documents”):

          (a)        a letter stating that the bidder’s offer is irrevocable until the conclusion of the Sale
                     Hearing;
          (b)        a duly authorized and executed purchase agreement, including the purchase price
                     for the Purchased Assets, together with all exhibits and schedules marked to show
                     those amendments and modifications to the Purchase Agreement (a “Marked
                     Agreement”) and the proposed Sale Order;
          (c)        written evidence of a firm commitment for financing, or other evidence of ability
                     to consummate the proposed transaction without financing, that is satisfactory to
                     the Sellers after consultation with the Creditors’ Committee; and
          (d)        a list of any entities that would be required to commence bankruptcy cases to
                     accomplish the sale.

          A bid will be considered only if the bid:

          (a)        identifies the assets to be purchased and the contracts and leases to be assumed;
          (b)        is not conditioned on obtaining financing or on the outcome of unperformed due
                     diligence or corporate, stockholder or internal approval;
          (c)        provides evidence, satisfactory to the Sellers, in their reasonable discretion (after
                     consultation with the Creditors’ Committee) of the bidder’s financial wherewithal
                     and operational ability to consummate the transaction; and
          (d)        is received on or before the Bid Deadline.

         A party who submits a bid that includes all of the Required Bid Documents and that
satisfies each of the requirements set forth herein shall be a “Qualified Bidder” and such bid will
constitute a “Qualified Bid.” Notwithstanding the foregoing, the Purchaser shall be deemed a
Qualified Bidder and the Purchase Agreement shall be deemed a Qualified Bid for all purposes
in connection with the Bidding Process.

        A Qualified Bid will be valued based upon several factors including, without limitation,
items such as the net value and recovery to constituents provided by such bid after pre- and post-
closing adjustments, the amount and availability of distributions to stakeholders, consideration
for any Seller Termination Fee and the Reimbursement Amount payable to the Purchaser under
the Purchase Agreement, the number of transactions that would be required to consummate the


NY2:\1928303\05\15BVZ05!.DOC \58399.0003             A-2
bid, the number of counterparties to such transactions, the amount of assets included or excluded
from the bid, and the likelihood and timing of consummating such transactions, each as
determined by the Sellers with the assistance of their financial and legal advisors.

        Debtors will promptly advise Purchaser orally and in writing of (a) any offer or proposal
for a Competing Transaction (as defined in the Stalking Horse Bid), (b) any request for
nonpublic information relating to the Purchased Assets or access to the properties, books or
records with respect to the Purchased Assets, other than requests in the ordinary course of
business and unrelated to an offer or proposal relating to a Competing Transaction, or (c) any
inquiry or request for discussions or negotiations regarding an offer or proposal relating to a
Competing Transaction.

                                                      Auction

        Sellers will conduct an auction in accordance with these Bidding Procedures (the
“Auction”) of the Purchased Assets upon notice to all Qualified Bidders who have submitted
Qualified Bids at 10:00, a.m. (New York time) on December 3, 2008, at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153.

           (a)       Only the Sellers, the Purchaser, any representative of the Creditors’ Committee,
                     and any Qualified Bidder which has submitted a Qualified Bid (and the legal and
                     financial advisers to each of the foregoing), will be entitled to attend the Auction,
                     and only the Purchaser and Qualified Bidders who have submitted a Qualified Bid
                     will be entitled to make any subsequent bids at the Auction.
          (b)        Prior to the Auction, the Sellers will provide copies of the Qualified Bid or
                     combination of Qualified Bids which the Sellers believe is the highest or
                     otherwise best offer (the “Starting Bid”) to all Qualified Bidders which have
                     informed the Sellers of their intent to participate in the Auction. In order for a
                     Qualified Bid (other than the Stalking Horse Bid) to be the Starting Bid, such
                     Qualified Bid shall have a value to the Sellers, either individually or, in
                     conjunction with any other Qualified Bid, greater than or equal to net amount the
                     Sellers would receive under the Purchase Agreement, plus the amount of the
                     Seller Termination Fee (as defined in the Purchase Agreement), plus the amount
                     of the Reimbursement Amount (as defined in the Purchase Agreement and, for
                     purposes of this provision, limited to the reasonable and customary out-of-pocket
                     fees and expenses as documented by Purchaser and reasonably estimated by the
                     Purchaser through the date of the Auction), plus $25 million, as determined by the
                     Sellers in their sole discretion, after consultation with the Creditors’ Committee.
          (c)        Purchaser and other Qualified Bidders shall have the opportunity to modify the
                     terms of their offers prior to the beginning of the Auction.
          (d)        The Sellers, after consultation with the Creditors Committee, may employ and
                     announce at the Auction additional procedural rules that are reasonable under the
                     circumstances (e.g., the amount of time allotted to make Subsequent Bids) for
                     conducting the Auction, provided that such rules are (i) not inconsistent with the
                     Bid Procedures Order, the Bankruptcy Code, or any order of the Bankruptcy
                     Court entered in connection herewith, and (ii) disclosed to each Qualified Bidder.



NY2:\1928303\05\15BVZ05!.DOC \58399.0003            A-3
          (e)        Bidding at the Auction will begin with the Starting Bid and continue, in one or
                     more rounds of bidding, so long as during each round at least one subsequent bid
                     is submitted by a Qualified Bidder that (i) improves upon such Qualified Bidder’s
                     immediately prior Qualified Bid (a “Subsequent Bid”) and (ii) the Sellers
                     determine, after consultation with the Creditors Committee, that such Subsequent
                     Bid is (a) for the first round, a higher or otherwise better offer than the Starting
                     Bid, and (b) for subsequent rounds, a higher or otherwise better offer than the
                     Leading Bid (defined below). The first minimum incremental bid at the Auction
                     shall have a purchase price of at least $5 million over the Starting Bid, with any
                     subsequent bid increases of bids to be made in minimum increments of at least $5
                     million. After the first round of bidding and between each subsequent round of
                     bidding, the Sellers shall announce the bid (and the value of such bid) that it
                     believes to be the highest or otherwise better offer (the “Leading Bid”). A round
                     of bidding will conclude after each participating Qualified Bidder has had the
                     opportunity to submit a Subsequent Bid with full knowledge and written
                     confirmation of the Leading Bid. For the purpose of evaluating the value of the
                     consideration provided by Subsequent Bids (including any Subsequent Bid by the
                     Purchaser), the Sellers will give effect to the Seller Termination Fee and the
                     Reimbursement Amount (for purposes of this provision, limited to the reasonable
                     and customary out-of-pocket fees and expenses as documented by Purchaser and
                     reasonably estimated by the Purchaser through the date of the Auction) that may
                     be payable to the Purchaser under the Purchase Agreement. Any Subsequent Bid
                     submitted by the Purchaser shall be credited in full with the amount of the Seller
                     Termination Fee and such Reimbursement Amount.
          (f)        If Sellers do not receive any Qualified Bid other than the Purchaser’s Qualified
                     Bid at the conclusion of the Auction, Sellers shall seek approval of the Purchase
                     Agreement at the Sale Hearing.

                                           Selection Of Successful Bid

        The Sellers reserve the right, after consultation with the Creditors Committee, to (i)
determine in their reasonable discretion which bid is the highest or best (the “Successful Bid(s)”
and the bidder(s) making such bid(s), the “Successful Bidder(s)”) and (ii) reject at any time prior
to entry of a Court order approving an offer, without liability, any offer, other than the Stalking
Horse Bid, that the Sellers in their reasonable discretion (after consultation with the Creditors’
Committee) deem to be (x) inadequate or insufficient, (y) not in conformity with the
requirements of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, the Bid
Procedures Order, or procedures set forth therein or herein, or (z) contrary to the best interests of
the Sellers, the Debtors, and their estates.

        The Sellers will sell the Purchased Assets for the highest or otherwise best Qualified Bid
to the Successful Bidder(s) upon the approval of such Qualified Bid by the Court after the Sale
Hearing. The Sellers’ presentation of a particular Qualified Bid to the Court for approval does
not constitute the Sellers’ acceptance of the bid. The Sellers will be deemed to have accepted a
bid only when the bid has been approved by the Bankruptcy Court at the Sale Hearing.




NY2:\1928303\05\15BVZ05!.DOC \58399.0003           A-4
                                            The Sale Hearing

         The Sale Hearing will be held before the Honorable Judge James M. Peck on December
22, 2008 at 10:00 a.m. (New York time) in the United States Bankruptcy Court for the Southern
District of New York, One Bowling Green, New York, New York 10004. The Sale Hearing may
be adjourned without further notice by an announcement of the adjourned date at the Sale
Hearing. If the Sellers do not receive any Qualified Bids (other than the Qualified Bid of the
Purchaser), the Sellers will report the same to the Bankruptcy Court at the Sale Hearing and will
proceed with a sale of the Purchased Assets to the Purchaser following entry of the Sale Order in
accordance with the terms of the Purchase Agreement. If the Sellers do receive additional
Qualified Bids, then, at the Sale Hearing, the Sellers will seek approval of the Successful Bid(s),
and, at the Sellers’ election, one or more next highest or best Qualified Bid(s) (the “Alternate
Bid(s),” and such bidder(s), the “Alternate Bidder(s)”); provided, however, the Sellers may only
designate the Stalking Horse Bid as an Alternative Bid with the express written consent of the
Purchaser.

          Following approval of the Sale to the Successful Bidder(s), if the Successful Bidder(s)
fail(s) to consummate the sale because of (a) failure of a condition precedent beyond the control
of either the Sellers or the Successful Bidder(s) upon which occurrence the Sellers have filed a
notice with the Bankruptcy Court advising of such failure or (b) a breach or failure to perform on
the part of such Successful Bidder(s) upon which occurrence the Sellers have filed a notice with
the Bankruptcy Court advising of such breach or failure to perform, then the Alternate Bid(s)
will be deemed to be the Successful Bid(s) and the Sellers will be authorized, but not directed, to
effectuate a sale to the Alternate Bidder(s) subject to the terms of the Alternate Bid(s) of such
Alternate Bidder(s) without further order of the Bankruptcy Court.




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EXHIBIT B
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
                                      x
In re:                                                  Chapter 11
                                      :
LEHMAN BROTHERS HOLDINGS INC., et al. :                 Case No. 08-13555 (JMP)
                                      :
              Debtors.                :                 (Jointly Administered)
                                      :
                                      x

        NOTICE OF SALE OF CERTAIN EQUITY INTERESTS AND ASSETS
   RELATED TO LEHMAN BROTHERS’ INVESTMENT MANAGEMENT DIVISION

On September 29, 2008, Lehman Brothers Holdings Inc. (“LBHI”) and its affiliates listed on
Schedule I to the Agreement (as defined below) (collectively with LBHI, “    Lehman”) entered into
a Purchase Agreement, (as amended, the “    Agreement”) with IMD Parent LLC (the “      Purchaser”),
under which Lehman has agreed to sell to Purchaser (or subsidiaries of the Purchaser) certain
assets, and Purchaser has agreed to assume (or cause certain of its subsidiaries to assume) certain
liabilities, related to Lehman’s investment management business (the “Business”).               The
Purchaser is jointly controlled by private investment funds sponsored by Bain Capital Partners,
LLC and Hellman & Friedman, which have agreed to provide all of the funding required to close
the transaction.

A more complete listing of the assets available for sale is included in the Agreement.

Because LBHI, as a debtor-in-possession under chapter 11 of the Bankruptcy Code, is a party to
the Agreement, the Agreement must be approved by the United States Bankruptcy Court for the
Southern District of New York (the “Bankruptcy Court”) in which LBHI’s above-captioned
chapter 11 case is pending. The sale is subject to higher or better offers. By order, dated
October [__], 2008 (the “Bid Procedures Order”), the Bankruptcy Court approved certain
“Bidding Procedures” that govern the sale of the Purchased Assets.

LBHI has requested the Bankruptcy Court enter a “Sale Order,” which provides, among other
things, for the sale of assets free and clear of liens, claims, encumbrances and other interests, to
the extent permissible by law, and the assumption by Purchaser of certain assumed liabilities of
the Sellers. A separate notice will be provided to counterparties to executory contracts and
unexpired leases with the Sellers.

Copies of the Agreement, the Bid Procedures Order, the Bidding Procedures, and the
proposed Sale Order are available upon request to LBHI’s noticing agent at 1-866-841-
7867 on the internet at http://chapter11.epiqsystems.com/lehman (the “Website”).

ANY INTERESTED BIDDER SHOULD CONTACT Barry W. Ridings, Vice Chairman of
US Investment Banking, Lazard Freres & Co. LLC, 30 Rockefeller Plaza, New York, New
York 10020, t: 212-632-6896, f: 212-332-1757).
PLEASE TAKE NOTE OF THE FOLLOWING IMPORTANT DEADLINES:

The deadline to submit a Qualified Bid (as defined in the Bidding Procedures) is December
1, 2008 at 12:00 noon. The failure to abide by the procedures and deadlines set forth in the
Bid Procedures Order and the Bidding Procedures may result in the failure of the
Bankruptcy Court to consider a competing bid.

An auction for the assets of the Purchased Assets has been scheduled for December 3, 2008
at 10:00 a.m. (New York time).

The deadline to lodge an objection with the Bankruptcy Court to the proposed sale is
December 17, 2008] at 4:00 p.m. (New York time) (the “Sale Objection Deadline ”).
Objections must be filed and served in accordance with the Bid Procedures Order.

The Bankruptcy Court will conduct a hearing to consider the proposed sale on December
22, 2008 at 10:00 a.m. (the “Sale Hearing”).

THE FAILURE OF ANY PERSON OR ENTITY TO FILE AND SERVE AN
OBJECTION BY THE SALE OBJECTION DEADLINE SHALL BE A BAR TO THE
ASSERTION BY SUCH PERSON OR ENTITY, AT THE SALE HEARING OR
THEREAFTER, OF ANY O BJECTION TO THE SALE MOTION, SALE ORDER, THE
PROPOSED TRANSACTION, OR THE DEBTORS’ CONSUMMATION AND
PERFORMANCE OF THE PURCHASE AGREEMENT AND ANCILLARY
AGREEMENTS (INCLUDING, WITHOUT LIMITATION, THE DEBTORS’
TRANSFER OF THE PURCHASED ASSETS, THE P  URCHASED CONTRACTS A  ND
THE TRANSFERRED REAL PROPERTY LEASES, AND ASSUMPTION AND
SUBLEASE OF THE SUBLEASED REAL PROPERTY LEASES FREE AND CLEAR
OF LIENS, CLAIMS, ENCUMBRANCES AND OTHER INTERESTS) (ALL AS
DEFINED IN THE PURCHASE AGREEMENT).

Dated: October __, 2008
       New York, New York


                                          Harvey R. Miller
                                          Richard P. Krasnow
                                          Lori R. Fife
                                          Shai Y. Waisman
                                          Jacqueline Marcus
                                          WEIL, GOTSHAL & MANGES LLP
                                          767 Fifth Avenue
                                          New York, New York 10153
                                          Telephone: (212) 310-8000
                                          Facsimile: (212) 310-8007

                                          Attorneys for the Sellers
Exhibit C
 UNITED STATES BANKRUPTCY COURT
 SOUTHERN DISTRICT OF NEW YORK
                                      x Chapter 11
In re:                                :
                                      : Case No. 08-13555 (JMP)
                                      :
LEHMAN BROTHERS HOLDINGS INC., et al. : (Jointly Administered)
                                      :
             Debtors.                 x

          NOTICE OF ASSUMPTION, ASSIGNMENT AND CURE AMOUNT
       WITH RESPECT TO EXECUTORY CONTRACTS AND UNEXPIRED LEASES
     RELATED TO LEHMAN BROTHERS’ INVESTMENT MANAGEMENT DIVISION

 On September 29, 2008, Lehman Brothers Holdings Inc. (“LBHI”) and its affiliates listed on
 Schedule I to the Purchase Agreement (as defined below) (collectively with LBHI, “Lehman”)
 entered into a Purchase Agreement (as amended, the “Agreement”) with IMD Parent LLC
 (together with any of its designees, the “Purchaser”), under which Lehman has agreed to sell to
 Purchaser (or subsidiaries of the Purchaser) certain assets (as defined in the Agreement, the
 “Purchased Assets”), and Purchaser has agreed to assume (or cause certain of its subsidiaries to
 assume) certain liabilities, related to Lehman’s investment management business. IMD Parent
 LLC is jointly controlled by private investment funds sponsored by Bain Capital Partners, LLC
 and Hellman & Friedman, which have agreed to provide all of the funding required to close the
 transaction.

 On October 6, 2008, LBHI and its affiliated debtors in the above-referenced chapter 11 cases
 (collectively, the “Debtors”) filed a motion (the “Motion”) to (a) establish sales procedures, (b)
 approve certain stalking horse bidder protections, and (c) approve the sale of the Purchased
 Assets and the assumption and sublease or assumption and assignment of certain contracts and
 leases relating thereto free and clear of all liens, claims, encumbrances and other interests.

 Pursuant to the Motion, the Debtors sought authorization to assume and sublease or assume and
 assign certain executory contacts and unexpired leases relating to the Purchased Assets upon
 consummation of the transaction contemplated in the Agreement. A list of the Purchased
 Contracts, Transferred Real Property Leases and Subleased Real Property Leases (each as
 defined in the Agreement and collectively, the “Designated Contracts”) is available on the
 internet at http://chapter11.epiqsystems.com/lehman (the “Website”), or upon request to
 LBHI’s n  oticing agent at 1-866-841-7868. The Debtors and the Purchaser reserve the right to
 remove any Designated Contracts prior to consummation of the transaction contemplated in the
 Agreement.

 You are receiving this Notice because you may be a party to a Designated Contract (or represent
 a party to a Designated Contract).

 The Debtors have determined the appropriate cure amount (the “Cure Amount”) for each
 Designated Contract and have listed such Cure Amounts on the Website.



 NY2:\1928303\05\15BVZ05!.DOC\58399.0003
To the extent that a non-Debtor counterparty objects to (i) the assumption and sublease or
assumption and assignment to the Purchaser of such party’s respective Designated
Contract or (ii) the Cure Amount, the non-Debtor counterparty must file and serve an
objection in accordance with the Bid Procedures Order, so as to be received by the parties
specified therein no later than December 17, 2008, 2008, at 4:00 p.m. (New York Time).

If an objection challenges a Cure Amount, the Debtors have requested that they nonetheless be
authorized to move forward to assume, assume and sublease, or assume and assign the contract
or lease that is the subject of a Cure Amount objection, provided that the Cure Amount asserted
by the objector is held in reserve. If the Debtors receive an objection to a Cure Amount, the
Debtors reserve the right to decide to reject the contract or lease at issue if the Cure Amount is
ultimately determined by order of the Court to be higher than the Cure Amount set forth in this
Notice.

If no objection is timely received, (i) the counterparty to a Designated Contract shall be
deemed to have consented to the assumption and sublease or assumption and assignment of
the Designated Contract to the Purchaser and shall be forever barred from asserting any
objection with regard to such assumption or assignment, and (ii) the Cure Amount set
forth on [Exhibit A / the Website] shall be controlling, notwithstanding anything to the
contrary in any Designated Contract, or any other document, and the counterparty to a
Designated Contract shall be deemed to have consented to the Cure Amount and shall be
forever barred from asserting any other claims related to such Designated Contract against
the Debtors or the Purchaser, or the property of any of them.

Dated: New York, New York
                   , 2008

                                                _______________________________
                                                Harvey R. Miller
                                                Richard P. Krasnow
                                                Lori R. Fife
                                                Shai Y. Waisman
                                                Jacqueline Marcus
                                                WEIL, GOTSHAL & MANGES LLP
                                                767 Fifth Avenue
                                                New York, New York 10153
                                                Telephone: (212) 310-8000
                                                Facsimile: (212) 310-8007

                                                Attorneys for Debtors and
                                                 Debtors In Possession




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         EXHIBIT 2-G

In re Leiner Health Products Inc.
                                                                                             ORIGINAL
                          IN THE UNITED STATES BANKRUPTCY COURT
                               FOR THE DISTRICT OF DELAWARE

In re:                                                        )   Chapter 11
                                                              )
LEINER HEALTH PRODUCTS INC., et al.I                          )   Case No. 08-10446 (KJC)
                                                              )
                                      Debtors.                )   Jointly Administered
                                                              )
                                                              )   Interim Hearing Date: May 14, 2008 at 1 :30 p.rn.
                                                              )
                                                              )   Re: Docket Nos. 273 and 282
                           -------------------
         INTERIM ORDER AUTHORIZING THE SELLING DEBTORS TO
            DESIGNATE A STALKING HORSE BIDDER AND ENTER
  INTO A BREAK-UP FEE ARRANGEMENT UNDER CERTAIN CIRCUMSTANCES

         Upon the motion (the "Motion")" of the above-captioned debtors and debtors in

possession (collectively, the "Debtors") for entry of an interim order (the "Interim Order")

authorizing the Selling Debtors to: (a) designate one or more entities that submit qualified bids

(the "Stalking Horse Bidder") to establish a minimum bid (the "Stalking Horse APA") for some

or all of the Selling Debtors' assets, and (b) enter into a break-up fee arrangement under certain

circumstances, and it appearing that the relief requested is in the best interests of the Debtors'

estates, their creditors and other parties in interest; and the Court having jurisdiction to consider

the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157 and 1334; and

consideration of the Motion and the reliefrequested therein being a core proceeding pursuant to

28 U.S.C. § 1S7(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and

1409; and notice of the Motion having been adequate and appropriate under the circumstances;

and after due deliberation and sufficient cause appearing therefor, it is hereby


         , The Debtors in these cases, along with the last four digits of each Debtor's federal tax identification
number, are: Leiner Health Products Inc. (1709), LHP Holding Corp. (7947), Leiner Health Products, LLC (6283)
and Leiner Health Services Corp. (4464). The address for all Debtors is: 901 E. 233rd Street, Carson, California
90745.
          2   Capitalized terms not defined herein shall have the meanings ascribed to them in the Motion.


RLF1·3283223·'
                    ORDERED, that if the Debtors d)etennine it is in the best interests of the estates to
                                                      ,


designate a Stalking Horse Bidder, the Debtors may schedule a telephonic hearing with the Court

during the period between May 19, 2008 and May 30, 2008 on one business day's notice (the

"Telephonic Hearing") to obtain authorization pursuant to a final order to:             (a) designate a

Stalking Horse Bidder; (b) cnter into a Stalking Horse APA; and (e) grant such Stalking Horse

Bidder (i) a     break~up   fee (the "Break-up Fee") (inclusive of any expense reimbursement) in an

amount to be determined by the Selling Debtors, with the consent of the DIP Facility Agent and

the Bank Group Agent and after consultation with the Committee, which shall be a percentage of

the purchase price set forth in such bidder's Stalking Horse APA, and (ii) initial overbid

protection in an amount to be determined by the Selling Debtors with the consent of the DIP

Facility Agent and the Bank Group Agent and after consultation with the Committee; and it is

further

                    ORDERED, that notice of the Telephonic Hearing will be provided by facsimile

and/or electronic mail to all parties who havc filed a request for notice in these Chapter II Cases

pursuant to Bankruptcy Rule 2002; and it is further

                   ORDERED, that the obligations of the Debtors, if any, to pay the Break-up Fcc

will he satisfied directly out of the sale proceeds; and it is further

                  ORDERED, that the Debtors are authorized to take all actions necessary or

appropriate to effectuate the relief granted pursuant to this order in accordance with the Motion;

and it is further




RLFJ.J28JZ2J-l
                                                     2
               ORDERED, that the tenns and conditions of this lnterim Order shall be

immediately errective and enforeeable upon entry of (he Interim Order; and it is further




Dated: May 14, 2008
       Wilmington, Delaware                      The .onorable Ke
                                                 Unit d States B\IIlil1ru1




                                                3
EXHIBIT 2-H

In re Neff Corp.
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK

                                                              )
In re:                                                        )        Chapter 11
                                                              )
NEFF CORP., et al.,1                                          )        Case No. 10-12610 (SCC)
                                                              )
                                   Debtors.                   )        Jointly Administered
                                                              )

             ORDER APPROVING THE DEBTORS’ AMENDED DISCLOSURE
                 STATEMENT AND GRANTING RELATED RELIEF

         Upon the motion (the “Motion”) of the above-captioned debtors and debtors in

possession (collectively, the “Debtors”)2 for the entry of an order (this “Order”): (a) approving

the Amended Disclosure Statement for the Debtors’ Amended Joint Plan Pursuant to Chapter 11

of the Bankruptcy Code as filed on July 13, 2010 [Docket No. 266] (as may be amended from

time to time, the “Disclosure Statement”) in support of the Debtors’ Amended Joint Plan

Pursuant to Chapter 11 of the Bankruptcy Code (as may be amended from time to time, the

“Plan”); (b) approving the Plan Confirmation Schedule; (c) approving the Solicitation

Procedures and the Solicitation Package; (d) approving the Cash Election and Rights Offering

Procedures; (e) approving the Payout Event Procedures; (f) approving the Backstop Unit

Purchase Agreement and the Break Up Fee and authorizing the Debtors to honor their

obligations thereunder (including payment of the Breakup Fee and Transaction Expenses as

provided therein); and (g) approving the Commitment Letter and effectuate the transactions


1   The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification
    number, are: Neff Holdings LLC (0571); Neff Corp. (6400); Neff Finance Corp. (3639); Neff Holdings Corp.
    (0431); Neff Rental, Inc. (0403); and Neff Rental LLC (3649). The location of the Debtors’ corporate
    headquarters and the service address for all the Debtors except Neff Holdings LLC is: 3750 N.W. 87th Ave.,
    Suite 400, Miami, Florida 33178. The service address for Neff Holdings LLC is: 375 Park Avenue, New York,
    New York 10152.
2   Capitalized terms used but not otherwise defined herein shall have the meanings ascribed to them in the Motion.
contemplated thereunder, all as more fully set forth in the Motion; and the Court having

jurisdiction to consider the Motion and the relief requested therein pursuant to 28 U.S.C. §§ 157

and 1334; and consideration of the Motion and the relief requested therein being a core

proceeding pursuant to 28 U.S.C. § 157(b) (2); and venue being proper before the Court pursuant

to 28 U.S.C. §§ 1408 and 1409; and the Court having reviewed the Objection of Wilmington

Trust FSB to Debtors’ Motion for Entry of an Order Approving the Debtors’ Disclosure

Statement and Granting Related Relief [Docket No. 220], the Official Committee of Unsecured

Creditors’ Objection to Motion of the Debtors for Entry of an Order Approving the Debtors’

Disclosure Statement and Granting Related Relief [Docket No. 227], the Debtors’ Omnibus

Reply to Objections to Motion of the Debtors for Entry of an Order Approving the Debtors’

Disclosure Statement and Granting Related Relief [Docket No. 226], the Response of Wayzata

Investment Partners and Apollo Capital Management to Objection of Official Committee of

Unsecured Creditors to Motion of the Debtors for Entry of an Order Approving the Debtors’

Disclosure Statement and Granting Related Relief [Docket No. 247]; and the Court having heard

the testimony of Ronen Bojmel of Miller Buckfire & Co. LLC, the testimony of Mark Irion, the

Debtors’ chief financial officer, and the arguments presented at the hearing before the Court held

on July 12, 2010; and it appearing that the relief requested in the Motion is in the best interests of

the Debtors’ estates, their creditors, and other parties in interest; and the Debtors having provided

adequate and appropriate notice of the         Motion under the circumstances; and after due

deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:

       1.      The Motion is granted to the extent provided herein.
       2.      The Debtors have provided adequate notice of the time fixed for filing objections

and the hearing to consider approval of the Disclosure Statement in accordance with Bankruptcy

Rules 2002 and 3017 and Local Bankruptcy Rules 2002-1 and 3017-1.

       3.      The Disclosure Statement is approved pursuant to section 1125(a)(1) of the

Bankruptcy Code and Bankruptcy Rule 3017(b) and contains adequate information (as defined

by section 1125(a) of the Bankruptcy Code). To the extent not withdrawn, settled or otherwise

resolved, any objections to the approval of the Disclosure Statement are overruled.

       4.      The schedule of events set forth below relating to confirmation of the Plan (the

“Revised Plan Confirmation Schedule”) is approved in its entirety, and the Court hereby finds

the Revised Plan Confirmation Schedule is consistent with the applicable provisions of the

Bankruptcy Code and the Bankruptcy Rules:

                   EVENT                                                  DATE
Disclosure Statement Hearing                      July 12, 2010 at 2:00 p.m. prevailing Eastern Time
Voting Record Date                                July 12, 2010
Solicitation Date                                 July 16, 2010
Cash Election/Rights Offering Commencement Date   July 16, 2010
Payout Event Deadline                             July 26, 2010 at 5:00 p.m. prevailing Eastern Time
Auction                                           August 5, 2010 at 10:00 a.m. prevailing Eastern Time
Cash Election/Rights Offering Expiration Date     September 1, 2010 at 5:00 p.m. prevailing Eastern Time
Voting Deadline                                   September 1, 2010 at 5:00 p.m. prevailing Pacific Time
Plan Objection Deadline                           September 1, 2010 at 5:00 p.m. prevailing Eastern Time
Confirmation Hearing                              September 14, 2010 at 11:00 a.m. prevailing Eastern Time


       5.      The Debtors are authorized to make non-substantive or immaterial changes to the

Disclosure Statement, the Plan, the Solicitation Package, and related documents without further

order of the Court, including changes to correct typographical and grammatical errors and to

make conforming changes among the Disclosure Statement, the Plan, and related documents

(including the appendices thereto).
       6.      Pursuant     to   Bankruptcy     Rule    3018(a),   July 12,    2010    shall   be   the

Voting Record Date for determining: (a) which Holders of Claims are entitled to vote on the

Plan; (b) whether Claims have been properly transferred to an assignee pursuant to

Bankruptcy Rule 3001(e) such that the assignee can vote as the Holder of the Claim; and

(c) which Eligible Holders may participate in the Rights Offering.

       7.      The Solicitation Procedures, substantially in the form attached hereto as

Exhibit A and incorporated by reference herein, are hereby approved in their entirety.

       8.      The Debtors’ letter to the Voting Classes, substantially in the form attached hereto

as Exhibit B, is hereby approved.

       9.      The form of the Confirmation Hearing Notice, substantially in the form attached

hereto as Exhibit C, complies with the requirements of Bankruptcy Rules 2002(b), 2002(d), and

3017(d) and is approved.

       10.     The procedures for distributing the Solicitation Packages as set forth in the

Motion satisfy the requirements of the Bankruptcy Code, the Bankruptcy Rules, and the Local

Bankruptcy Rules. The Debtors shall distribute or cause to be distributed Solicitation Packages

to all Entities entitled to vote to accept or reject the Plan by the Solicitation Date, July 16, 2010.

       11.     The forms of Ballots (including the voting instructions), substantially in the forms

attached hereto as Exhibit D, are hereby approved.

       12.     The form of Master Ballot (including the voting instructions), substantially in the

form attached hereto as Exhibit E, is hereby approved.

       13.     All votes to accept or reject the Plan must be cast by using the appropriate Ballot

or Master Ballot.
       14.     The Voting Deadline shall be on September 1, 2010 at 5:00 p.m. prevailing

Pacific Time, unless otherwise extended by the Debtors. All votes to accept or reject the Plan

must be cast by using the appropriate Ballot or the Master Ballot. All Ballots and Master Ballots

must be properly executed, completed, and delivered according to their applicable voting

instructions by: (a) first class mail, in the return envelope provided with each Ballot or Master

Ballot; (b) overnight delivery; or (c) personal delivery, so that the Ballots and Master Ballots are

actually received by the Notice, Claims, and Solicitation Agent no later than the Voting

Deadline at the return address set forth in the applicable Ballot or Master Ballot.

       15.     The Debtors shall publish the Confirmation Hearing Notice (in a format modified

for publication) in The Wall Street Journal and The Miami Herald on a date no fewer than fifteen

(15) calendar days prior to the Voting Deadline.

       16.     The form of Non–Voting Status Notice–Deemed to Accept, substantially in the

form attached hereto as Exhibit F, is hereby approved.

       17.     The form of Non-Voting Status Notice–Deemed to Reject, substantially in the

form attached hereto as Exhibit G, is hereby approved.

       18.     The Debtors shall cause the Notice of Non-Voting Status-Deemed to Accept and

the Notice of Non-Voting Status-Deemed to Reject to be served as set forth in the Motion.

       19.     The Disclosure Statement, the Plan, the Confirmation Hearing Notice, the Ballots,

the Master Ballots, the Non-Voting Status Notice—Deemed to Reject and the Non-Voting Status

Notice—Deemed to Accept provide all parties in interest with sufficient notice regarding the

settlement, release, exculpation, and injunction provisions contained in the Plan in compliance

with Bankruptcy Rule 3016(c).
       20.     The Debtors shall not be required to solicit the following:        (a) Holders of

DIP Credit Facility Claims, Administrative Claims, Priority Tax Claims (each in their capacities

as such) because such claims are Unimpaired under the Plan and are conclusively presumed to

have accepted the Plan; (b) Classes 1, 2, 3, 4, 10, and 12 because such Classes are Unimpaired

under the Plan and are conclusively presumed to have accepted the Plan; and (c) Classes 11 and

13 because such Classes are Impaired under the Plan, entitled to no recovery under the Plan, and

are therefore deemed to have rejected the Plan. In lieu of distributing a Solicitation Package to

such Holders of Claims, the Debtors shall cause the Non-Voting Status Notice–Deemed to Reject

and/or the Non-Voting Status Notice–Deemed to Accept as applicable, to be served on such

Holders of Claims that are not entitled to vote, each as applicable.

       21.     The form of the Contract and Lease Counterparties Notice, substantially in the

form attached hereto as Exhibit H, is hereby approved.

       22.     The Debtors shall cause the Contract and Lease Counterparties Notice to be

served on all counterparties to executory contracts and unexpired leases on or before the latest

date by which the Debtors may file (a) a notice or motion to reject an Executory Contract or

Unexpired Lease or (b) the schedule of Executory Contracts or Unexpired Leases to be rejected

pursuant to Plan as part of the Plan Supplement (the “Contract Rejection Deadline”).

       23.     All Allowed Claims arising from the rejection of Executory Contracts and

Unexpired Leases shall be classified as Class 9 General Unsecured Claims against the Debtors

and shall be treated in accordance with Article III.B of the Plan. As such, if any counterparty to

an Executory Contract or Unexpired Lease is a Holder of a Class 9 General Unsecured Claim as

of August 16, 2010 (the “Rejection Claims Record Date”), such counterparty shall receive a

Solicitation Package (with an appropriate Ballot) in accordance with the Solicitation Procedures.
       24.    The form of the Disputed Claim Notice, substantially in the form attached hereto

as Exhibit I, is hereby approved.

       25.    The Debtors shall be excused from mailing Solicitation Packages to those Entities

to whom the Debtors caused a notice regarding the Disclosure Statement Hearing to be mailed

and received a notice from the United States Postal Service or other carrier that such notice was

undeliverable unless such Entity provides the Debtors, through the Notice, Claims, and

Solicitation Agent, an accurate address not less than ten calendar days prior to the Solicitation

Date. If an Entity has changed its mailing address after the Petition Date, the burden is on such

Entity, not the Debtors, to advise the Debtors and the Notice, Claims, and Solicitation Agent of

the new address.

       26.    The Cash Election and Rights Offering Procedures, substantially in the form

attached hereto as Exhibit J, are hereby approved.

       27.    The First Lien Election Form, substantially in the form attached hereto as

Exhibit K, is approved.

       28.    The Second Lien Election Form, substantially in the form attached hereto as

Exhibit L, is approved.

       29.    The Debtors shall cause Solicitation Packages provided to Holders of Class 6 First

Lien Term Loan Claims and Class 7 Second Lien Term Loan Claims as of the Voting Record

Date to include (a) a copy of the Cash Election and Rights Offering Procedures and (b) the

applicable Election Form.

       30.    The Payout Event Procedures, substantially in the form attached hereto as

Exhibit M, are approved in their entirety. The Debtors are authorized to implement the Payout
Event Procedures and to make such modifications thereto as may be reasonably necessary in the

Debtors’ business judgment.

       31.     Pursuant to 1127(a) of the Bankruptcy Code and Bankruptcy Rule 3019(a), the

Debtors are authorized to make such conforming changes to the Plan as may be reasonably

necessary to reflect the occurrence or non-occurrence of a Payout Event as set forth in the

Motion. The Debtors shall not be required to resolicit Holders of claims against or interest in the

Debtors on account of such modifications.

       32.     The Backstop Unit Purchase Agreement by and between the Debtors and the

Backstop Parties, substantially in the form attached hereto as Exhibit N, is hereby approved,

including with respect to the Breakup Fee, the Transaction Expenses, and the Indemnification

Provisions.

       33.     The Debtors are authorized to honor their obligations under the Backstop Unit

Purchase Agreement, including with respect to payment of:          (a) the Break-Up Fee; (b) the

Transaction Expenses; and (c) the Indemnification Provisions as provided by the Backstop Unit

Purchase Agreement.

       34.     The terms and conditions of the Commitment Letter, attached hereto as

Exhibit O, including the Breakup Fee, are hereby approved, and the Debtors are authorized to

effectuate the transactions contemplated thereunder.

       35.     The Plan Objection Deadline shall be on September 1, 2010 at 5:00 p.m.

prevailing Eastern Time.

       36.     Any objections to the Plan must be filed by the Plan Objection Deadline and

must: (a) be in writing; (b) conform to the Bankruptcy Rules and the Local Bankruptcy Rules;

(c) state the name and address of the objecting party and the amount and nature of the Claim or
Interest; (d) state with particularity the basis and nature of any objection to the Plan; (e) propose

a modification to the Plan that would resolve such objection (if applicable); and (f) be filed,

contemporaneously with a proof of service, with the Court and served so that it is actually

received by each of the notice parties identified in the Confirmation Hearing Notice by the Plan

Objection Deadline.

       37.     The Confirmation Hearing shall commence on September 14, 2010 at 11:00 a.m.

prevailing Eastern Time, which hearing may be continued from time to time by the Court or the

Debtors without further notice other than by such adjournment being announced in open court or

by a notice of adjournment filed with the Court and served on (a) all entities that have filed a

request for service of filings in the chapter 11 cases pursuant to Bankruptcy Rule 2002 and

(b) each of the notice parties identified in the Confirmation Hearing Notice.

       38.     To the extent not already authorized by the Court, the Debtors’ Notice and Claims

Agent shall be authorized to assist the Debtors in (a) distributing the Solicitation Packages and

soliciting votes on the Plan; (b) receiving, tabulating, and reporting on Ballots and Master Ballots

and decisions to opt-out of the third party release provisions within Article VIII.E of the Plan;

(c) responding to inquiries relating to the solicitation and voting process, including, all matters

related thereto; and (d) conducting all aspects of the Rights Offering, including, among other

things, distributing and collecting eligibility questionnaires and Elections Forms and maintaining

an escrow account for holding funds deposited on account of Rights Offering Units.

       39.     The Debtors are authorized to take all actions necessary to effectuate the relief

granted pursuant to this Order in accordance with the Motion.

       40.     The terms and conditions of this Order shall be immediately effective and

enforceable upon its entry.
       41.    The Court retains jurisdiction with respect to all matters arising from or related to

the implementation of this Order.

New York, New York                               /s/Shelley C. Chapman
Date: July 13, 2010                              Honorable Shelley C. Chapman
          EXHIBIT 2-I

In re Rhythms NetConnections Inc.
                            UNITED STATES BANKRUPTCY COURT
                             SOUTHERN DISTRICT OF NEW YORK

---------------------------------------------------------------x
In re                                                   :
                                                        :       Chapter 11 Case Nos.
                                                        :
RHYTHMS NETCONNECTIONS INC., et al.,                    :       01- 14283 (BRL) through
                                                        :       01- 14287 (BRL)
                                                        :
                Debtors.                                :       (Jointly Administered)
                                                        :
--------------------------------------------------------------x

       ORDER GRANTING MOTION OF DEBTORS FOR AN ORDER
   AUTHORIZING (A) PROCEDURES FOR PROPOSED AUCTION SALE OF
 ALL OR SUBSTANTIALLY ALL OF THE DEBTORS’ ASSETS, (B) NOTICE OF
  DATE, TIME AND PLACE FOR SALE HEARING, AND (C) CUSTOMARY
     “BREAK-UP FEE” ARRANGEMENTS WITH “STALKING HORSE”
     BIDDER(S) THAT MAY BE IDENTIFIED PRIOR TO THE AUCTION

                  Upon consideration of the motion dated August 1, 2001 (the “Sale

Motion”) of Rhythms NetConnections Inc. and certain of its direct and indirect

subsidiaries, debtors and debtors in possession (collectively, the “Company” or

“Debtors”), for the entry of an order pursuant to sections 105, 363, 365 and 1146 of title

11, United States Code (the “Bankruptcy Code”), and Rules 2002, 6004 and 6006 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), (A) approving the

auction procedures annexed hereto as Exhibit A (the “Auction Procedures”) in

connection with the proposed sale by the Debtors of the Company or all or substantially

all of their Assets (the “Assets”) to the highest or best qualified bidder, (B) approving

notice of the auction and of the hearing in the form substantially annexed hereto as

Exhibit B1 and B2 (the “Auction and Hearing Notice”) establishing the dates, times and

places of an auction and of a hearing to consider the approval of (i) (a) an investment




A:\#1064107 V4 - RHYTHMS - BIDDING PROCEDURES ORDER.DOC
necessary to accomplish a stand-alone reorganization of the Company (the

"Reorganization Bid"), (b) a sale of the Company or all or substantially all of the assets

(the “Assets”) of the Company (the "Going Concern Assets Bid") or (c) a sale of select

assets of the Company (the “Select Assets Bid”, free and clear of liens, claims and

encumbrances, and (ii) the exemption of such sale(s) from stamp or similar taxes, (C)

authorizing the Debtors to enter into customary “break-up fee” arrangements with

“stalking horse” bidder(s) (a “Stalking Horse Agreement”) that may be identified prior to

the Auction (as defined below), and (D) authorizing, if no interest in a Reorganization

Bid or Going Concern Assets Bid is received by August 1