Exhibit 10.5

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as
of May 6, 2006 (the “Effective Date”), by and among Bay Harbour MSV, Inc., a
Delaware corporation (“Bay Harbour”); Trophy Hunter Investments, Ltd. and Bay
Harbour 90-1, Ltd., each a Florida limited partnership, and Bay Harbour Master
Ltd., an exempt company with limited liability incorporated in the Cayman
Islands (collectively, “Bay Harbour Parent”); MSV Rollup LLC, a Delaware limited
liability company (“Holdings”); and SkyTerra Communications, Inc., a Delaware
corporation (“SkyTerra”).  Holdings and Bay Harbour are sometimes referred to
herein as the “Constituent Companies.”

 

WHEREAS, Holdings is a wholly-owned subsidiary of SkyTerra, and Bay Harbour is
wholly-owned by Bay Harbour Parent;

 

WHEREAS, SkyTerra, in its capacity as the sole member of Holdings, and Bay
Harbour Parent, in its capacity as the sole stockholder of Bay Harbour, have
each approved this Agreement and the transactions contemplated hereby;

 

WHEREAS, the manager of Holdings and the board of directors of Bay Harbour have,
by resolutions duly adopted, each approved this Agreement and the transactions
contemplated hereby;

 

WHEREAS, the parties intend that the merger of Bay Harbour with and into
Holdings will qualify as a “Reorganization” within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the “Code”) for federal income
tax purposes.

 

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises herein
contained and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby covenant and agree as follows:

 

1.             Merger.  Subject to the terms and conditions hereof, at the
Closing (as hereinafter defined), Bay Harbour shall be merged with and into
Holdings (the “Merger”), and the separate corporate existence of Bay Harbour
shall cease and, except as expressly provided herein, Holdings, as the surviving
entity (the “Surviving Entity”), shall succeed to and assume all of the rights
and obligations of Bay Harbour pursuant to Section 259 of the General
Corporation Law of the State of Delaware (the “DGCL”).

 

2.             Closing.  The Merger shall become effective upon the date and
time of the filing of a Certificate of Merger (the “Certificate of Merger”) 
with the Secretary of State of the State of Delaware pursuant to Section 264 of
the DGCL.  Holdings shall be responsible for the filing of the Certificate of
Merger.

 

3.             Certain Effects of Merger.  If at any time the Surviving Entity
shall consider or be advised that any further assignment or assurances in law or
any things are necessary or desirable to vest in the Surviving Entity, according
to the terms hereof, the title to any property or rights of Bay Harbour, the
last acting officers and directors of Bay Harbour shall and will execute and
make all such proper assignments and assurances and do all things

 

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necessary or proper to vest title to such property or rights in the Surviving
Entity, and otherwise carry out the purposes of this Agreement.

 

4.             Surviving Entity.  The Certificate of Formation of Holdings (the
“Certificate of Formation”) in effect on the Effective Date shall continue to be
the Certificate of Formation of the Surviving Entity until thereafter amended in
accordance with the provisions thereof and as provided by the DGCL.

 

5.             Terms of the Merger

 

(a)           Simultaneously with the execution of this Agreement, (i) MSV
Investors shall execute and deliver to Bay Harbour Parent Amendment No. 2 to the
TerreStar Networks Inc. Stockholders’ Agreement and the Amended and Restated
TerreStar Networks Inc. Stockholders’ Agreement, each to be effective in
accordance with its terms; and (ii) Bay Harbour Parent shall execute and deliver
to SkyTerra the Joinder Agreement to the TerreStar Networks Inc. Stockholders’
Agreement and Amendment No. 2 to the TerreStar Networks Inc. Stockholders’
Agreement and the Amended and Restated TerreStar Networks Inc. Stockholders’
Agreement (the “Joinder Agreement”), the form of which is attached hereto as
Exhibit D.

 

(b)           At the Closing, each of the outstanding shares of common stock,
par value $0.01 per share, of Bay Harbour (“Outstanding Bay Harbour Common
Shares”), which shall have 1,000 total outstanding shares of common stock at the
Closing, shall be converted into the right to receive 3,054.575 validly issued,
fully paid and nonassessable shares of common stock, par value $0.01 per share,
of SkyTerra (“SkyTerra Common Stock”), as appropriately adjusted for any stock
split, combination, reorganization, recapitalization, reclassification, stock
dividend, stock distribution or similar event declared or effected prior to the
Initial Closing (as defined in the MSV Exchange Agreement (as defined below));
provided, however, that no adjustment shall be made for the Rights Offering, as
such term is defined in the MSV Exchange Agreement; and the Outstanding Bay
Harbour Common Shares shall be canceled and cease to exist.

 

(c)           Each membership interest of Holdings outstanding immediately prior
to the Closing shall represent a membership interest in the Surviving Entity
following the Merger.

 

(d)           After the Closing, no transfer of Outstanding Bay Harbour Common
Shares outstanding immediately prior to the Closing shall be made on the stock
transfer books of Bay Harbour.

 

(e)           At the Closing, by virtue of the Merger and without any action on
the part of either of the Constituent Companies, the holders of the respective
shares, or any other person, the shares of SkyTerra Common Stock into which the
Outstanding Bay Harbour Common Shares shall have been converted pursuant to
Section 5(a) hereof shall be represented and evidenced by stock certificates
that shall be delivered promptly to Bay Harbour Parent.

 

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(f)            At the Closing, Bay Harbour Parent and Bay Harbour shall deliver
to SkyTerra an affidavit certifying as to their respective non-foreign status in
accordance with the requirements of Section 1.1445-2(b) of the Treasury
Regulations.

 

(g)           At the Closing, Bay Harbour Parent shall contribute $7.5 million
in cash to Bay Harbour with respect to Bay Harbour’s liability for tax with
respect to any gain recognized in (i) the distribution by MSV Investors of a
portion of the shares of TerreStar Networks Inc. (“TerreStar”) to Bay Harbour
(the “TerreStar Distribution”), and (ii) the distribution by Bay Harbour to Bay
Harbour Parent of the shares of TerreStar received by Bay Harbour pursuant to
the TerreStar Distribution (the “Bay Harbour Distribution”). SkyTerra shall be
responsible for preparing and filing all federal, state and local Tax Returns of
Bay Harbour that have not been filed on or prior to the Closing, and Bay Harbour
shall reimburse SkyTerra for any out of pocket costs incurred by SkyTerra in
connection with such preparation and filing. Ten days prior to the earliest due
date for the filing of Bay Harbour’s federal, state or local income Tax Return
for the period 1/1/06 through the Closing (without regard to extensions),
SkyTerra shall provide Bay Harbour Parent with a schedule calculating Bay
Harbour’s tax liability for such period. To the extent the aggregate liability
for Bay Harbour’s federal, state and local income Tax Returns for such period
exceeds $7.5 million, Bay Harbour Parent shall pay SkyTerra the amount of such
difference at least five days prior to the earliest due date for the filing of
Bay Harbour’s federal, state or local income Tax Returns (without regard to
extensions). If, after the filing of Bay Harbour’s federal, state and local
income Tax Returns, the aggregate liability for Bay Harbour’s federal, state and
local income Tax Returns for such period is less than $7.5 million, SkyTerra
shall pay Bay Harbour Parent such difference at least five days following the
final date on which Bay Harbour’s federal, state or local income Tax Return is
filed. Similar principles shall apply for any other Tax Returns of Bay Harbour
to be filed by SkyTerra after the Closing.

 

(h)           Bay Harbour hereby agrees that between the Effective Date and the
Closing, it shall not, directly or indirectly, sell, transfer, distribute,
pledge, dispose of, grant an option with respect to, assign, transfer, or
otherwise convey the Bay Harbour Interest (as defined below) to any person other
than Holdings or create or permit to exist any Lien on or in respect of the Bay
Harbour Interest, excluding liens for taxes not due or payable as of the
Effective Date.  As used herein, “Lien” means any claim, mortgage, pledge,
hypothecation, assignment, deposit arrangement, option, call contract,
commitment, demand, lien, tax, charge, security interest, encumbrance or
preference, priority or other security agreement of any kind or nature
whatsoever, including, without limitation, the filing of any financing statement
or similar instrument under the Uniform Commercial Code or comparable law of any
jurisdiction, domestic or foreign.

 

(i)            Upon Closing, Bay Harbour Parent waives any and all rights it
might have to contribution or reimbursement, or other rights to recovery that it
might otherwise have, against Bay Harbour, and any and all representations and
warranties made by Bay Harbour shall terminate.

 

(j)            Upon Closing, SkyTerra shall deliver to Bay Harbour Parent an
effective registration statement (the “Bay Harbour Registration Statement”) with
respect to

 

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the shares of SkyTerra Common Stock underlying the rights to be delivered to Bay
Harbour Parent upon Closing pursuant to Section 5(a).

 

6.             Representations and Warranties of Bay Harbour.  Bay Harbour
represents and warrants to Holdings and SkyTerra, as of the Effective Date and
as of the date of Closing, that:

 

(a)           Bay Harbour has all requisite corporate power and authority to
enter into this Agreement.  The consummation of the Merger pursuant to this
Agreement will not violate or conflict with any agreement or instrument binding
on Bay Harbour or to which it or any of its properties is subject or any
applicable law.  This Agreement has been duly executed and delivered by Bay
Harbour and constitutes the legal, valid and binding obligation of Bay Harbour,
enforceable against Bay Harbour in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors’ rights generally and by
general equitable principles.

 

(b)           Except in connection with the filing and recordation of the
Certificate of Merger as required by the DGCL, no consent, approval,
authorization or order of, or registration, qualification or filing with, any
court, regulatory authority, governmental body or any other third party, other
than the consent of Bay Harbour Parent as sole stockholder of Bay Harbour, as
has been heretofore obtained, is required for the execution, delivery and
performance by Bay Harbour of this Agreement or the consummation by Bay Harbour
of the transactions contemplated hereby.

 

(c)           Bay Harbour is the record and beneficial owner of, directly or
indirectly, and has good, valid and legal title to 1,203,000 units of limited
partnership interest in MSV Investors (the “Bay Harbour Interest”), free and
clear of all Liens.

 

(d)           The Bay Harbour Interest constitutes all the direct or indirect
equity interests of MSV Investors owned of record or beneficially by Bay
Harbour.

 

(e)           Bay Harbour is not under the jurisdiction of a court in a Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.

 

(f)            Bay Harbour was formed and incorporated in [month/year] solely to
hold the Bay Harbour Interest and not in contemplation of or in connection with
the Merger.

 

(g)           The fair market value of the assets of Bay Harbour exceed the sum
of its liabilities (including any liabilities to which the assets are subject).

 

(h)           Taxes.

 

(i)            Bay Harbour has timely filed all material Tax Returns required to
be filed by it (taking into account all applicable extensions) and all such Tax
Returns are true, correct and complete in all respects.

 

(ii)           Bay Harbour has paid all Taxes due and payable.

 

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(iii)          There is no pending or, to the knowledge of Bay Harbour,
threatened examination, investigation, audit, suit, action, claim or proceeding
relating to Taxes of Bay Harbour.

 

(iv)          Bay Harbour has not received notice of a determination by any
taxing or other Governmental Entity that Taxes are owed by Bay Harbour (such
determination being referred to as a “Tax Deficiency”) and, to the knowledge of
Bay Harbour, no Tax Deficiency is proposed or threatened.

 

(v)           All Tax Deficiencies asserted against Bay Harbour have been paid
or finally settled and all amounts asserted in any Tax Deficiency to be owed
have been paid.

 

(vi)          There are no Liens arising from or related to Taxes on or pending
against Bay Harbour or any of its properties other than statutory Liens for
Taxes that are not yet due and payable.

 

(vii)         As used in this Agreement:

 

(1)           “Tax” means any and all federal, state, local, foreign or other
tax of any kind (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any Tax
Authority, including taxes on or with respect to income, alternative minimum,
accumulated earnings, personal holding company, capital, transfer, stamp,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, unemployment, social security, workers’
compensation or net worth, and taxes in the nature of excise, withholding, ad
valorem or value added; and

 

(2)           “Tax Return” means any return, report or similar statement
(including any attached schedules) required to be filed with respect to Taxes
and any information return, claim for refund, amended return, or declaration of
estimated Taxes.

 

7.             Representations and Warranties of Bay Harbour Parent.  Bay
Harbour Parent represents and warrants to Holdings and SkyTerra, as of the
Effective Date and as of the date of Closing, that:

 

(a)           Bay Harbour Parent has all requisite corporate power and authority
to enter into this Agreement, the Joinder Agreement and the Registration Rights
Agreement in substantially the form attached as Exhibit A hereto (the
“Registration Rights Agreement”).  The consummation of the Merger pursuant to
this Agreement and the execution of the Joinder Agreement and the Registration
Rights Agreement will not violate or conflict with any agreement or instrument
binding on Bay Harbour Parent or to which it or any of its properties is subject
or any applicable law.  This Agreement, the Joinder Agreement and the
Registration

 

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Rights Agreement have been duly executed and delivered by Bay Harbour Parent and
constitute the legal, valid and binding obligation of Bay Harbour Parent,
enforceable against Bay Harbour Parent in accordance with their terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting enforcement of creditors’ rights generally and by
general equitable principles.

 

(b)           No consent, approval, authorization or order of, or registration,
qualification or filing with, any court, regulatory authority, governmental body
or any other third party is required for the execution, delivery and performance
by Bay Harbour Parent of this Agreement, the Joinder Agreement or the
Registration Rights Agreement or the consummation by Bay Harbour Parent of the
transactions contemplated hereby, except filings pursuant to the Registration
Rights Agreement under the Securities Act of 1933, as amended (the “Securities
Act”).

 

(c)           Bay Harbour Parent is the record and beneficial owner of, and has
good, valid and legal title to all the Outstanding Bay Harbour Common Shares,
free and clear of all Liens.

 

(d)           The Bay Harbour Interest constitutes all the direct or indirect
equity interests of MSV Investors owned of record or beneficially by Bay Harbour
Parent.

 

(e)           Upon the consummation of the Merger, Bay Harbour Parent shall not
own, of record or beneficially, or have, by conversion, warrant, option or
otherwise, any right to, interest in or agreement to acquire any equity interest
in MSV Investors, LLC, a Delaware limited liability company (“MSV Investors”),
whether issued or authorized but unissued, other than through the shares of
SkyTerra Common Stock to be received in the Merger.

 

(f)            Bay Harbour Parent is not under the jurisdiction of a court in a
Title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.

 

(g)           Bay Harbour Parent has had an opportunity to ask questions and
receive answers from SkyTerra regarding the terms and conditions of the offering
of shares of SkyTerra Common Stock and the business and financial condition of
SkyTerra and to obtain additional information (to the extent SkyTerra possessed
such information or could acquire it without unreasonable effort or expense)
necessary to verify the accuracy of any information furnished to it or which it
had access.  The fair market value of the assets of any entity holding the Bay
Harbour Interest on behalf of Bay Harbour Parent will exceed the sum of its
liabilities (including any liabilities to which its assets are subject).  The
foregoing, however, does not limit or modify the representations or warranties
of SkyTerra or Holdings in this Agreement or the right of Bay Harbour or Bay
Harbour Parent to rely upon such representations or warranties.

 

(h)           Bay Harbour Parent is an “accredited investor” as that term is
defined in Regulation D promulgated under the Securities Act.

 

8.             Representations and Warranties of Holdings.  Holdings represents
and warrants to Bay Harbour and Bay Harbour Parent that as of the Effective Date
and as of the date of Closing:

 

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(a)           Holdings has all requisite limited liability company power and
authority to enter into this Agreement. The consummation of the Merger pursuant
to this Agreement will not violate or conflict with any agreement or instrument
binding on Holdings or to which it or any of its properties is subject or any
applicable law.  This Agreement has been duly executed and delivered by Holdings
and constitutes the legal, valid and binding obligation of Holdings enforceable
against Holdings in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors’ rights generally and by general equitable
principles.

 

(b)           Except in connection with the filing and recordation of the
Certificate of Merger as required by the DGCL, no consent, approval,
authorization or order of, or registration, qualification or filing with, any
court, regulatory authority, governmental body or any other third party, other
than the consent of SkyTerra as sole member of Holdings, as has been heretofore
obtained is required for the execution, delivery and performance by Holdings of
this Agreement or the consummation by Holdings of the transactions contemplated
hereby, except filings pursuant to the Registration Rights Agreement under the
Securities Act.

 

(c)           Holdings is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Code.

 

(d)           Holdings believes it has received all the information it considers
necessary or appropriate for deciding whether to engage in the Merger.  Holdings
further represents that it has had an opportunity to ask questions and receive
answers from Bay Harbour regarding the terms and conditions of the Bay Harbour
Interest and the business and financial condition of MSV Investors and to obtain
additional information (to the extent Bay Harbour possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or which it had access.  The
foregoing, however, does not limit or modify the representations or warranties
of Bay Harbour or Bay Harbour Parent in this Agreement or the right of Holdings
or SkyTerra to rely upon such representations or warranties.

 

9.             Representations and Warranties of SkyTerra.  SkyTerra represents
and warrants to Bay Harbour and Bay Harbour Parent that as of the Effective Date
and as of the date of Closing:

 

(a)           SkyTerra has all requisite corporate power and authority to enter
into this Agreement and the Registration Rights Agreement. The consummation of
the Merger pursuant to this Agreement and the execution of the Registration
Rights Agreement will not violate or conflict with any agreement or instrument
binding on SkyTerra or to which it or any of its properties is subject or any
applicable law.   This Agreement and the Registration Rights Agreement have been
duly executed and delivered by SkyTerra and constitute the legal, valid and
binding obligation of SkyTerra enforceable against SkyTerra in accordance with
their terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting enforcement of creditors’
rights generally and by general equitable principles.

 

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(b)           No consent, approval, authorization or order of, or registration,
qualification or filing with, any court, regulatory authority, governmental body
or any other third party is required for the execution, delivery and performance
by SkyTerra of this Agreement or the Registration Rights Agreement or the
consummation by SkyTerra of the transactions contemplated hereby, except filings
pursuant to the Registration Rights Agreement under the Securities Act.

 

(c)           The shares of SkyTerra Common Stock to be issued to the Bay
Harbour Parent hereunder have been duly and validly authorized, and, when issued
and delivered pursuant to Section 5, will be fully paid and nonassessable.

 

(d)           Assuming the truth and accuracy of the representations and
warranties of Bay Harbour Parent contained in Sections 7 and 10 hereof, the
offer, sale, and issuance of the shares of SkyTerra Common Stock will be exempt
from the registration requirements of the Securities Act, and will have been
registered or qualified (or are exempt from registration and qualification)
under the registration, permit or qualification requirements of all applicable
state securities laws.

 

(e)           Neither SkyTerra, nor any of its affiliates or any other person
acting on SkyTerra’s behalf, has directly or indirectly engaged in any form of
general solicitation or general advertising with respect to the shares of
SkyTerra Common Stock nor have any of such persons made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would require registration of the shares of SkyTerra Common Stock under the
Securities Act or cause this offering of shares of SkyTerra Common Stock to be
integrated with any prior offering of securities of SkyTerra for purposes of the
Securities Act.

 

(f)            Attached as Exhibit B hereto is a true and correct copy of the
MSV Exchange Agreement (as defined herein).

 

10.           Acknowledgments. Bay Harbour and Bay Harbour Parent each
represent, warrant to, and agree with, Holdings and SkyTerra that:

 

(a)           Bay Harbour and Bay Harbour Parent each acknowledge that on May •,
2006, SkyTerra executed an exchange agreement (the “MSV Exchange Agreement”)
with Motient that will result in the consolidation (the “Consolidation”) of the
ownership of Mobile Satellite Ventures LP, a Delaware limited partnership
(“MSV”), including, among other things, the exchange of certain of the equity
interests of MSV currently owned, directly or indirectly, by Motient for
SkyTerra non-voting common stock (the “MSV Exchange”), exchangeable in certain
circumstances for shares of SkyTerra Common Stock.  Bay Harbour and Bay Harbour
Parent each acknowledge that SkyTerra may possess material, non-public
information that might be relevant in connection with the Merger (the
“Information”).  At the request of Bay Harbour and Bay Harbour Parent, Bay
Harbour and Bay Harbour Parent have not been provided with any of the
Information and Bay Harbour and Bay Harbour Parent each acknowledge that the
Information may be material to its decision to enter into this Agreement, or
otherwise materially adverse to each such party’s interests.  Bay Harbour and
Bay Harbour Parent each acknowledge that such party does not wish to receive any
of the Information,

 

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notwithstanding SkyTerra’s offer to disclose and discuss the same with Bay
Harbour and Bay Harbour Parent.

 

(b)           Notwithstanding not receiving the Information, Bay Harbour and Bay
Harbour Parent each believe that each such party has adequate information
concerning the business and financial condition of MSV Investors and SkyTerra
and the terms of the Consolidation to make an informed decision regarding
entering into the transactions contemplated by this Agreement.  Bay Harbour and
Bay Harbour Parent have each independently and without reliance upon the
Information or otherwise upon SkyTerra or Holdings (except for the
representations and warranties expressly set forth in Sections 8 and 9 of this
Agreement) or any agent of SkyTerra, made its own analysis and decision to enter
into the transactions contemplated by this Agreement.  Without limiting the
foregoing, neither SkyTerra nor Holdings nor any agent or affiliate of SkyTerra
or Holdings, respectively, shall be deemed to have made any representation or
warranty regarding the Information or any other representation or warranty with
respect to any other matter except to the extent set forth in Sections 8 and 9
of this Agreement.  Bay Harbour and Bay Harbour Parent each understand the
disadvantage to which such party may be subject on account of such party’s
express desire not to receive the Information.

 

(c)           Notwithstanding anything contained in this Agreement to the
contrary, Bay Harbour and Bay Harbour Parent each hereby irrevocably and forever
release and discharge SkyTerra, Holdings and their respective affiliates,
directors, officers, employees, representatives, agents, advisors and
controlling persons and their respective successors and assigns from any and all
claims, losses, liabilities, damages, deficiencies, judgments, assessments,
fines, settlements, costs or expenses (including interest, penalties and
reasonable fees, disbursements and other expenses of counsel), including, but
not limited to, any and all liabilities, claims or demands (legal, equitable or
otherwise), whether arising before or after the Closing, alleging violations of
federal or state securities laws, common law fraud or deceit, breach or
fiduciary duty, negligence, tort or any other theory, based upon, arising from,
relating to, or in connection with, directly or indirectly, the non-disclosure
of, in whole or in part, the Information.

 

(d)           Bay Harbour Parent acknowledges that the consideration it will
receive in the Merger represents a fair value negotiated in an arm’s length
transaction between Bay Harbour Parent and SkyTerra even though the
consideration may be less than the value negotiated in the MSV Exchange of the
indirect membership interest in MSV represented by the Bay Harbour Interest.

 

(e)           Bay Harbour and Bay Harbour Parent have each consulted legal, tax
and business advisors with respect to this Agreement and the transactions
contemplated hereby.

 

(f)            Bay Harbour and Bay Harbour Parent are relying solely upon the
advice of each such party’s respective legal, tax and business advisors and its
entering into this Agreement is the result of independent arm’s length
negotiations between the parties hereto.  Bay Harbour and Bay Harbour Parent
also each acknowledge that SkyTerra and Holdings are relying on the
representations and warranties contained in Sections 6 and 7 and

 

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this Section 10 and would not consummate the transactions contemplated by this
Agreement in the absence of the representations and warranties contained in
Sections 6 and 7 and this Section 10.

 

(g)           Bay Harbour Parent is acquiring the SkyTerra Common Stock for its
own account for investment purposes and not with a view to any distribution
thereof in violation of the Securities Act of 1933 or any state securities
laws.  Until the SkyTerra Common Stock received by Bay Harbour Parent pursuant
to this Agreement is transferred pursuant to an effective registration statement
or Rule 144 under the Securities Act, each certificate evidencing such SkyTerra
Common Stock issued to Bay Harbour Parent or to a subsequent transferee shall
include a legend in substantially the following form (in addition to any other
statements or legends required by law):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR UNDER STATE SECURITIES LAWS.  THESE SECURITIES MAY
NOT BE RESOLD OR TRANSFERRED UNLESS REGISTERED OR EXEMPT FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.

 

(h)           Bay Harbour Parent understands that no federal or state agency has
passed upon or made any recommendation or endorsement of an investment in, or
disposition of, SkyTerra Common Stock.

 

(i)            Bay Harbour Parent, Bay Harbour and their respective officers,
directors and employees, and their agents and representatives providing services
in respect of the transactions contemplated by this Agreement, will not trade in
the securities of SkyTerra prior to (i) the Closing or (ii) the termination of
this Agreement.

 

11.           Conditions to the Obligations of Bay Harbour and Bay Harbour
Parent.  The obligations of Bay Harbour and Bay Harbour Parent hereunder to
consummate the Merger are subject to the fulfillment, prior to or at the
Closing, of each of the following conditions, unless any such condition is
waived in writing by Bay Harbour or Bay Harbour Parent, as applicable:

 

(a)           The representations and warranties made by Holdings and SkyTerra
herein shall be true and correct as of the Closing with the same effect as
though made on such date.  SkyTerra and Holdings shall have performed and
complied with all agreements, covenants, and conditions required by this
Agreement to be performed and complied with by it prior to the Closing.

 

(b)           There shall be no effective injunction, writ or preliminary
restraining order of a court of competent jurisdiction directing that the
transactions provided for herein not be consummated.

 

(c)           The Initial Closing under, and as defined in, the MSV Exchange
Agreement shall have been consummated.

 

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(d)           SkyTerra shall have delivered at the Closing the shares of
SkyTerra Common Stock in accordance with Section 5 hereto.

 

(e)           SkyTerra shall have entered into the Registration Rights
Agreement, and shall have provided to Bay Harbour Parent such executed
Registration Rights Agreement and certified resolutions of the Board of
Directors of SkyTerra approving its entry into such Registration Rights
Agreement.

 

(f)            The Bay Harbour Registration Statement shall have become
effective and no stop order with respect thereto shall be in effect and no
proceedings for that purpose shall have been commenced or threatened by the
Securities and Exchange Commission.

 

12.           Conditions to the Obligations of Holdings and SkyTerra.  All
obligations of Holdings and SkyTerra hereunder are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions, unless any such
condition is waived in writing by Holdings or SkyTerra, as applicable:

 

(a)           The representations and warranties made by each of Bay Harbour and
Bay Harbour Parent herein shall be true and correct as of the Closing with the
same effect as though made on such date.  Bay Harbour and Bay Harbour Parent
each shall have performed and complied with all agreements, covenants, and
conditions required by this Agreement to be performed and complied with by such
party at or prior to the Closing.

 

(b)           There shall be no effective injunction, writ or preliminary
restraining order of a court of competent jurisdiction directing that the
transactions provided for herein not be consummated.

 

(c)           The Initial Closing under, and as defined in, the MSV Exchange
Agreement shall have been consummated.

 

(d)           Prior to the Closing, MSV Investors shall have distributed all of
the shares of common stock of TerreStar Networks, Inc. and TererStar Networks
Bermuda Ltd. that it owns (collectively, the “TerreStar Shares”), on a pro rata
basis, to the members of MSV Investors in the TerreStar Distribution, and Bay
Harbour shall have distributed such TerreStar Shares to Bay Harbour Parent in
the Bay Harbour Distribution.

 

(e)           Bay Harbour Parent and Bay Harbour shall have furnished SkyTerra
an affidavit certifying as to their respective non-foreign status in accordance
with the requirements of Section 1.1445-2(b) of the Internal Revenue Service
Regulations.

 

(f)            Bay Harbour Parent shall have entered into the Registration
Rights Agreement, and shall have provided to SkyTerra such executed Registration
Rights Agreement and certified resolutions of the Board of Directors of Bay
Harbour Parent approving its entry into such Registration Rights Agreement.

 

13.           Expenses.  Each party shall bear its own expenses in connection
with the transactions contemplated by this Agreement.

 

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14.           Indemnification.  Each of the parties hereto hereby shall defend,
indemnify and hold harmless the other against and in respect of:

 

(a)           Any and all losses and damages resulting from, relating or
incident to, or arising out of any misrepresentation or breach of warranty,
covenant or agreement by such party made or contained in this Agreement; and

 

(b)           Any and all actions, suits, proceedings, claims, demands,
judgments, costs and expenses (including reasonable legal fees) incident to the
foregoing, whether between the parties or between a party and any third party or
otherwise.

 

Further, Bay Harbour Parent shall defend, indemnify and hold harmless SkyTerra
and its affiliates (including Holdings) against and in respect of any and all
losses and damages, actions, suits, proceedings, claims, demands, judgments,
costs and expenses (including reasonable legal fees) resulting from or relating
or incident to Taxes attributable to or imposed on Bay Harbour, Holdings or any
successor for any taxable period or portion thereof ending on or prior to the
Closing (including, without limitation, all liabilities for Taxes relating to
the TerreStar Distribution, the Bay Harbour Distribution and the Merger).

 

If an indemnitee has a claim for indemnification under this Section 14, the
indemnitee shall promptly provide to the indemnitor a notice of such claim,
including a description of such claim and the amount of the indemnification
payment that is claimed, and the indemnitor shall make the claimed payment to
the indemnitee within 10 days after receiving such notice unless the indemnitor
elects to defend such claim.

 

15.           Consent and Waiver.

 

(a)           Bay Harbour and Bay Harbour Parent hereby waive any and all
“Tag-Along Rights,” as described in Section 13(c) of the Limited Liability
Company Agreement of MSV Investors, dated as of November 23, 2001 (the
“Investors LLC Agreement”), to which Bay Harbour or Bay Harbour Parent may be
entitled in connection with the Consolidation.

 

(b)           Holdings, in its capacity as Manager (as defined in the Investors
LLC Agreement), hereby consents to the Merger, pursuant to the terms contained
herein.

 

16.           Closing.  Unless this Agreement is terminated in accordance
herewith, the closing of the Merger (the “Closing”) shall take place immediately
after the Initial Closing under, and as defined in, the MSV Exchange Agreement
at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square,
New York, New York 10036 or at such other time and/or location as may be
mutually agreed upon by the parties hereto.

 

17.           Events of Termination.  This Agreement may be terminated and the
transactions contemplated hereby abandoned at any time by mutual written consent
of Holdings and Bay Harbour. This Agreement shall automatically terminate and
shall be of no further force or effect upon the earlier to occur of (a)
termination of the MSV Exchange Agreement and (b) December 31, 2006.

 

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18.           Effect of Termination.  In the event of termination of this
Agreement pursuant to Section 17 hereof:

 

(a)           Each party will upon request return all documents and other
materials of the other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same; and

 

(b)           Neither party shall have any liability or further obligation to
the other party to this Agreement.

 

19.           Governing Law.  This Agreement shall be construed in accordance
with the laws of the State of New York without giving effect to applicable
principles of conflicts of laws to the extent that the application of the laws
of another jurisdiction would be required thereby.

 

20.           Invalidity or Unenforceability.  In case any one or more of the
provisions contained in this Agreement shall, for any reason, be held to be
invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect the other provisions of this Agreement, and
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.

 

21.           Benefits and Burdens.  This Agreement is binding upon, and inures
to the benefit of, the parties hereto and their respective estates, executors,
administra­tors, legatees, heirs, and personal and legal representatives,
successors and permitted assigns.  Neither Bay Harbour nor Bay Harbour Parent
shall assign any of their respective rights or obligations hereunder without the
prior written consent of SkyTerra and Holdings.

 

22.           Change; Waiver.  No change or modification of or supplement to
this Agreement shall be valid unless the same is in writing and signed by the
parties hereto.  No waiver of any provision of this Agreement shall be valid
unless in writing and signed by the party waiving its rights.  The failure of
any party to this Agreement at any time to insist upon, or any delay by any
party to this Agreement at any time to insist upon, strict performance of any
condition, promise, agreement or understanding set forth herein shall not be
construed as a waiver or relinquishment of the right to insist upon strict
performance of the same condition, promise, agreement or understanding at a
future time.

 

23.           Further Cooperation.  Each party shall cooperate with the other,
at any other party’s request, to execute any and all documents or instruments,
or to obtain any consent, in order to assign, transfer, perfect, record,
maintain, enforce or otherwise carry out the intent of the terms of this
Agreement.

 

24.           Entire Agreement.  This Agreement sets forth all of the promises,
agreement, conditions, understandings representations, warranties and covenants
by and between the parties hereto with respect to the subject matter referred to
herein, and there are no promises, representations or warranties other than as
set forth herein.  Any and all prior agreements with respect to such subject
matter are hereby revoked.  This Agreement is, and is intended by the parties to
be, an integration of any and all prior agreements or understandings, oral or
written,

 

13

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with respect to such subject matter.  Without limiting the foregoing, no party
shall be deemed to have made any representation or warranty other than as
expressly made herein.

 

25.           Headings.  The headings and other captions in this Agreement are
for convenience and reference only and shall not be used in interpreting,
construing or enforcing any of the provisions of this Agreement.

 

26.           Counterparts.  This Agreement may be executed in any number of
counterparts, which may be by facsimile, all of which counterparts taken
together shall constitute one and the same instrument.

 

27.           Specific Performance. The parties to this Agreement agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached.  Accordingly, the parties to this Agreement hereby agree
that each party hereto shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court of the United States or any state
having jurisdiction, in addition to any other remedy to which such party may be
entitled at law or in equity.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

SKYTERRA COMMUNICATIONS,
INC.

 

 

 

 

 

By:

/s/ Jeffrey A. Leddy

 

 

Name: Jeffrey A. Leddy

 

 

Title: Chief Executive Officer

 

 

 

 

 

MSV ROLLUP LLC

 

 

 

 

 

By:

/s/ Robert Lewis

 

 

Name: Robert Lewis

 

 

Title:

 

 

 

 

 

BAY HARBOUR MSV, INC.

 

 

 

 

 

By:

/s/ Steven Van Dyke

 

 

Name: Steven Van Dyke

 

 

Title: Managing Principal

 

 

 

 

 

TROPHY HUNTER INVESTMENTS,
LTD.

 

 

 

 

 

By:

/s/ Steven Van Dyke

 

 

Name: Steven Van Dyke

 

 

Title: Managing Principal

 

15

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BAY HARBOUR 90-1, LTD.

 

 

 

 

 

By:

/s/ Steven Van Dyke

 

 

Name: Steven Van Dyke

 

 

Title: Managing Principal

 

 

 

 

 

BAY HARBOUR MASTER LTD.

 

 

 

 

 

By:

/s/ Steven Van Dyke

 

 

Name: Steven Van Dyke

 

 

Title: Managing Principal

 

16

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EXHIBIT A

 

Form of Registration Rights Agreement

 

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EXHIBIT B

 

MSV Exchange Agreement

 

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EXHIBIT C

 

Amended and Restated TerreStar Networks Inc. Stockholders’ Agreement

 

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EXHIBIT D

 

Form of Joinder Agreement

 

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