UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-K /A


( Amendment No.1
)




ý
            
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For
      the fiscal year ended December 31, 2008ORo
            
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from ______ to ______


Commission
file number: 001-33546





TERRESTAR
CORPORATION


(Exact
name of Registrant as Specified in Its Charter)





Delaware
            
            93-0976127(State
      or Other Jurisdiction of
            
            (I.R.S.
      EmployerIncorporation
      or Organization)
            
            Identification
      No.)12010
      Sunset Hills Road,  Reston, VA
            
            20190(Address
      of Principal Executive Offices)
            
            (Zip
      Code)





(Registrant’s
telephone number, including area code):(703) 483-7800





Securities
registered pursuant to Section 12(b) of the Act:


Common
      Stock, $0.01 par value
            
            The
      NASDAQ Global Market(Title
      of Each Class)
            
            (Name
      of Each Exchange on Which
Registered)




Securities
registered pursuant to Section 12(g) of the Act:  None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.   ̈
Yes   þ  No





Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Exchange Act.   ̈  Yes     þ  No





Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.


þ Yes ̈ No





Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  þ




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




Large
      accelerated filer   ̈
            Accelerated
      filer  þNon-accelerated
      filer   ̈
            Smaller
      reporting company   ̈(Do
      not check if smaller reporting company)




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





The
aggregate market value of TerreStar Corporation Common Stock held by
non-affiliates as of June 30, 2008 (the last business day of the most recently
completed second quarter) was approximately $217.2 million.  For
purposes of this calculation, affiliates represent only holders of more than 10%
of TerreStar Corporation Common Stock and Common Stock held by Directors and
Officers.





There
were 122,576,588 shares of TerreStar Corporation Common Stock outstanding as of
March 25, 2009.










EXPLANATORY NOTE




TerreStar
Corporation (“TerreStar” or the “Company”) is filing this Amendment No. 1
to Annual Report on Form 10-K for the year ended December 31, 2008 to
include the information required to be contained in Part III, Items 10, 11, 12,
13 and 14 of Form 10-K.  TerreStar had previously reported that such
information would be incorporated by reference to its definitive proxy statement
to be filed pursuant to Regulation 14A.   However, TerreStar’s
definitive proxy statement will not be filed prior to April 30, 2009, and,
according to General Instruction G(3) to Form 10-K, it hereby amends its
previously filed Annual Report on Form 10-K (filed on March 12, 2009) to include
the required information.  Amendment No. 1 to Annual Report on Form
10-K includes only Items 10, 11, 12, 13 and 14 of Form 10-K, and TerreStar is
not amending or supplementing any other information in such previously filed
Annual Report on Form 10-K.




PART
III




Item
10.  Directors, Executive Officers and Corporation
Governance.




Directors
of TerreStar





The
following table sets forth, for each of our directors as of March 25, 2009, his
name, title, age and the year in which he first became our
director.  The directors have furnished the information set forth
below and elsewhere in this Annual Report concerning them and their security
holdings of TerreStar.





Name
            Title
            Age
            Began
      ServiceWilliam
      Freeman
            Chairman
      of the Board
            56
            2007David
      Andonian
            Director
            52
            2006Eugene
      I. Davis
            Director
            54
            2008Jacques
      Leduc
            Director
            46
            2006David
      Meltzer
            Director
            49
            2006Dean
      Olmstead
            Director
            53
            2008David
      J. Rayner
            Director
            52
            2008





William M. Freeman. Mr.
Freeman has served as Chairman of the Board since March 2007 and has served on
the Board of Directors since February 2007.  Mr. Freeman served as
President and CEO of Arbinet--theexchange, Inc. from November 2007 to September
2008.  From May 2004 to February 2005, Mr. Freeman was the Chief
Executive Officer of Leap Wireless International, Inc. From January 1994 to
January 2004, Mr. Freeman was a senior executive, most recently
President—Public Communications Group, at Verizon.  Mr. Freeman also
serves on the board of directors of the CIT Group, Inc., Arbinet–theexchange,
Inc. and Value Added Communications, Inc.  Mr. Freeman holds a B.A. in
Economics from Drew University and an MBA in Finance and Management from
Rutgers University.  In addition, Mr. Freeman also participated
in advanced management programs at Harvard, the Brookings Institute and
Rutgers.





David
Andonian.   Mr. Andonian has served on our Board of
Directors since May 2006.  Currently, Mr. Andonian is the Founder and
managing Partner at Dace Ventures, where he has served since August
2006.  Prior to August 2006, Mr. Andonian served as  the
Chairman of Affinnova, Inc., a marketing services company.  From May
2003 to December 2004, Mr. Andonian served as Executive Chairman of the board of
directors, and from January 2004 to January 2006, Mr. Andonian served as the
Chief Executive Officer of Affinnova, Inc.  From December 2002 to
April 2003, Mr. Andonian served as an Executive in Residence at Flagship
Ventures.  From July 2001 to September 2002, Mr. Andonian served as
President and Chief Operating Officer at CMGI, an internet marketing and
infrastructure provider.  At CMGI, he managed domestic and international
operations.  Prior to joining CMGI, Mr. Andonian held several
executive level positions from January, 1996 to November, 1997 with PictureTel
Corporation including General Manager of its Personal Systems Division and Vice
President of Worldwide Marketing.  He began his career in sales at IBM
where he spent over fifteen years in various sales, marketing and general
management positions including VP of Worldwide Marketing and Brand Management
for IBM’s PC Company.  Mr. Andonian holds a B.A in Business Management
from the Isenberg School of Management at the University of
Massachusetts.





Eugene I. Davis. Mr. Davis
has served on our Board of Directors since February
2008.  Mr. Davis has served as the Chairman and Chief Executive
Officer of PIRINATE Consulting Group, L.L.C., a consulting firm specializing in
turn-around management, mergers and acquisitions and strategic planning advisory
services, since 1999. He served as Chief Operating Officer of Total-Tel USA
Communications, Inc., an integrated telecommunications provider, from 1998 to
1999. Mr. Davis served in various capacities including as director,
Executive Vice President, President and Vice Chairman of Emerson Radio Corp., a
distributor of consumer electronics products, from 1990 to 1997. He served in
various capacities including as a director, Chief Executive Officer and Vice
Chairman of Sports Supply Chain, Inc., a distributor of sporting goods and
athletic equipment, from 1996 to 1997. Prior to such time, Mr. Davis was an
attorney in private practice. Mr. Davis presently serves as Chairman of the
Board of Atlas Air Worldwide Holdings, Inc., Atari, Inc. and Foamex
International, Inc. Mr. Davis also serves as a Director of American
Commercial Lines, Inc., Delta Air Lines, Inc., Knology, Inc., Medicor Ltd.,
Oglebay Norton Company, Rural/Metro Corporation, Silicon Graphics, Inc.,
Footstar Inc. and Pliant Corporation.  Mr. Davis received B.A. in
International Politics from Columbia University, Columbia College, a
Masters in International Affairs, International Law and Organization from
Columbia University's School of International Affairs, and a J.D. from
Columbia University's School of Law.





2


Jacques Leduc.  Mr.
Leduc has served on our Board of Directors since April 2006.  He is a
co-founder and managing partner of Trio Capital Inc., a private equity and
venture capital firm that he started in January 2006, which invests primarily in
telecommunications and new media.  He served as Chief Financial
Officer of Microcell Telecommunications Inc., a nationwide wireless operator in
Canada from February 2001 through November 2004, and as Vice President Finance
and Director Corporate Planning from January 1995 to February
2001.  Mr. Leduc holds a Masters degree in Business Administration
from Ecole des Hautes Etudes Commercials de Montreal and a Bachelors degree in
Business Administration from the Universite du Quebec a Montreal.  Mr.
Leduc has also served as a member of the Board of Directors of Rural Cellular
Corporation, Inc., a wireless communications service provider, since May
2005.





David Meltzer.  Mr.
Meltzer has served on our Board of Directors since February 2006.  Mr.
Meltzer has served as Senior Vice President for International Services for the
American Red Cross since July 2005, with overall responsibility for
international disaster response activities, international development programs
and various international policy matters.  From January 2002 to
February 2005, Mr. Meltzer served as the General Counsel and Executive Vice
President for Regulatory Affairs for Intelsat Global Service Corporation, a
wholly-owned subsidiary of Intelsat, Ltd.  From July 2001 to September
2001, he served as Vice President and General Counsel of Intelsat Global
Services Corporation.  From December 1999 to September 2001 he served
as Vice President and General Counsel for Intelsat, Ltd.  From 1989 to
December 1999, Mr. Meltzer served in various other positions with Intelsat,
including as Senior Director in the Corporate Restructuring
Division.  Mr. Meltzer holds a B.A. in International Relations from
the University of Pennsylvania and a J.D. from
George Washington University National Law Center.




Dean Olmstead.  Mr.
Olmstead has served on our Board of Directors since February
2008.  Mr. Olmstead is the President of Satellite Services for
EchoStar Corporation. Before joining EchoStar in January 2008, Mr. Olmstead
served as an advisor to Loral Space & Communications on strategic and growth
opportunities for its satellite service businesses and served on its board of
directors. Additionally, he was President of Arrowhead Global Solutions,
President and CEO of SES Americom and held leadership positions with DirecTV
Japan, NASA and the U.S. State Department. Mr. Olmstead holds a B.S. in
Economics-Mathematics from Western Washington University, a M.A. from
Stanford University's Terman School of Engineering, and also completed
Ph.D. studies in Economics at The American University.





David J.
Rayner.  Mr. Rayner has served on our Board of Directors since
February 2008.Mr.
Rayner is Chief Administrative Officer of EchoStar Corporation. Prior to that,
Mr. Rayner served as Executive Vice President of Installation Services and had
previously held the position of Chief Financial Officer of EchoStar
Communications Corporation. Before joining EchoStar in December 2004, Mr. Rayner
served as Senior Vice President and Chief Financial Officer of Time Warner
Telecom in Denver. From February 1997 to May 1998, Rayner served as Vice
President of Finance for Time Warner Telecom, and he was Controller for that
company from May 1994 to February 1997. From 1982 to 1994, Rayner also held
various financial and operational management positions with Time Warner Cable.
He received his bachelor's degree in Accountancy from
Northern Illinois University.





Communications
with Directors





The
Board of Directors maintains a process for stockholders to communicate with the
Board of Directors or with individual directors.  Stockholders who
wish to communicate with the Board of Directors or with individual directors
should direct written correspondence to our General Counsel at our principal
executive offices located at 12010 Sunset Hills Road, Reston,
Virginia 20190.  Any such communication must contain (i) a
representation that the stockholder is a holder of record of stock of the
Company, (ii) the name and address, as they appear on the Company’s books, of
the stockholder sending such communication, and (iii) the class and number of
shares of TerreStar that are beneficially owned by such
stockholder.  The General Counsel will forward such communications to
the Board of Directors or the specified individual director to whom the
communication is directed unless such communication is unduly hostile,
threatening, illegal or similarly inappropriate, in which case the General
Counsel has the authority to discard the communication or to take appropriate
legal action regarding such communication.




Executive
Officers





The
following sets forth the biographical information for each of TerreStar’s
executive officers as of March 25, 2009.





Jeffrey W.
Epstein.  Mr. Epstein has served as our President and principal
executive officer since April 2008.  Mr. Epstein also served as our
Senior Vice President, General Counsel and Secretary from September 2006 until
December 2008.  In addition, Mr. Epstein served as the General Counsel
and Secretary since October 2006 and the Associate General Counsel and Secretary
from July 2006 to December 2006 of TerreStar Networks Inc. From October 2003 to
July 2006, Mr. Epstein served as Director, Assistant General Counsel,
Transactions, for Capital One Financial Corporation. From March 2000 to
September 2003, he was an associate at the law firm Piper Rudnick LLP.
Mr. Epstein earned a B.A. in Business Administration from the University of
Florida, a J.D. from St. Thomas University School of Law and a L.L.M. in
Securities and Financial Regulation from
Georgetown University Law Center.




3


DennisW. Matheson.Mr.
Matheson has served asTerreStar Network’s Chief Technology Officer, Senior Vice
President—Satellite Operations since January 2006.  Mr. Matheson also
has served as a Senior Vice President of TerreStar Global since February
2006.  From August 1993 to January 2006, Mr. Matheson served as
Chief Technical Officer of Motient Corporation. Mr. Matheson was an
executive officer of Motient Corporation at the time it filed for Chapter 11
protection.  Mr. Matheson holds a B.S. in Electrical Engineering
from Clemson University and an M.S. in Electrical Engineering from the
University of Tennessee.




Vincent Loiacono.Mr.
Loiacono has served as TerreStar’s Chief Accounting Officer and Principal
Financial Officer for TerreStar  since November 2008. Mr. Loiacono
served as Senior Vice President and Corporate Controller of WorldSpace, Inc.
from May 2005 to October 2008.  Mr. Loiacono served in senior
financial management roles in AT&T Government Solutions and Nextel
Communications from May 1996 to May 2005.  Mr. Loiacono also held
senior manager and manager roles at public accounting firms KPMG and Deloitte
and Touche.  Mr. Loiacono earned a bachelor of business degree in
accounting from Bernard Baruch College and is a Certified Public
Accountant.





Douglas
Brandon.  Mr. Brandon was appointed as TerreStar’s General
Counsel and Secretary  in December 2008.  He is responsible
for the management of all legal matters for the Company. Prior to joining
TerreStar, Mr. Brandon was Vice President of External Affairs & Law, Chief
Counsel for Federal Affairs, and Associate General Counsel at AT&T Wireless
Services, Inc. Prior to AT&T Wireless, Mr. Brandon had been a Vice President
of McCaw Cellular Communications, Inc. Mr. Brandon is a member of the New York,
District of Columbia and Virginia (Corporate Counsel) Bars. He is also admitted
to appear before the Supreme Court of the United States and the U.S. Court of
Appeals for the Second, Ninth and District of Columbia Circuits. He was a law
clerk to the Honorable William H. Timbers of the U.S. Court of Appeals for the
Second Circuit. Mr. Brandon received his bachelor's degree from the University
of Virginia and his law degree from Vanderbilt University.




On
April 18, 2008, TerreStar announced the resignations of Robert Brumley,
President and CEO, Michael Reedy, Chief Operating Officer, and Doug Sobieski and
the appointment of Jeffrey Epstein as President and Principal Executive
Officer.  On November 26, 2008, TerreStar announced the resignation of
Neil L. Hazard, Executive Vice President and Chief Financial Officer, and the
appointment of Vincent Loiacono as Chief Accounting Officer and Principal
Financial Officer.  Each of these former executive officers were among
our most highly compensated executive officers in 2008 and information regarding
these former executive officers is included in Item 11 “Executive Compensation”
below.




Board
Committees and Meetings





The
Board of Directors conducts its business through meetings and through its
committees.   The Board of Directors consisted of five directors
at the beginning of 2008 and was expanded to eight members in February 2008 with
the additions of Messrs. Davis, Olmstead and Rayner.  Robert Brumley,
our former President and Chief Executive Officer, resigned from our Board of
Directors in April 2008.




Each
director is expected to devote sufficient time, energy and attention to ensure
diligent performance of his or her duties and to attend all Board, applicable
committee and stockholders’ meetings. The Board of Directors met 19 times during
2008.  During 2008, each director attended or participated in at least
75% of the aggregate of the meetings held by our Board of Directors and each
committee of the Board of Directors on which he served during the period for
which he served.




In
February 2008 in connection with entering into certain agreements with
affiliates of Harbinger Capital Partners and EchoStar Corporation, we agreed to
expand the size of the Board of Directors from five to eight members through the
additions of Messrs. Davis, Olmstead and Rayner.  For more information
regarding these transactions please see our Form 8-K filed with the Securities
and Exchange Commission (the “SEC”) on February 21, 2008.




The
Board has three standing committees to facilitate and assist the Board in the
execution of its responsibilities. The standing committees of the Board of
Directors are: the Audit Committee, the Compensation and Stock Option Committee
and the Nominating Committee. In accordance with best practice, all the
committees are comprised solely of non-employee, independent directors, as
defined by the Marketplace Rules of The Nasdaq Stock Market, Inc.  The
charter of each committee is available on our website at www.terrestarcorp.com
and free of charge in print to any stockholder who requests it. The table below
shows membership of each of the standing Board committees as of December 31,
2008.  In January 2009 Mr. Leduc resigned from the Audit Committee and
Mr. Davis was named Chairman.





4


Audit
      Committee
            Compensation
      and
              Stock Option
      Committee
            Nominating
      CommitteeJacques
      Leduc *
            David
      Meltzer*
            David
      Andonian*David
      Andonian
            David
      Andonian
            Jacques
      LeducDavid
      J. Rayner
            William
      Freeman
            David
      MeltzerEugene
      I. Davis
            Dean
      Olmstead
            William
      Freeman*
      Denotes Committee Chairman





Audit
Committee




Each
member of the Audit Committee is “independent” as defined under the applicable
Marketplace Rules of The Nasdaq Stock Market, Inc.  The Audit
Committee is responsible for reviewing our internal auditing procedures and
accounting controls and will consider the selection and independence of our
outside auditors. During 2008, the Audit Committee met seven
times.




During
2008, our Board of Directors determined that Jacques Leduc was the “Audit
Committee financial expert” as such term is defined under Item 407 of Regulation
S-K and a “financially sophisticated audit committee member” under Rule
4350(d)(A) of the Marketplace Rules of The Nasdaq Stock Market
Inc.  Stockholders should understand that this designation is a
disclosure requirement of the SEC related to Mr. Leduc’s experience and
understanding with respect to certain accounting and auditing matters. The
designation does not impose on Mr. Leduc any duties, obligations or liability
that are greater than are generally imposed on him as a member of the Audit
Committee and Board of Directors, and his designation as the Audit Committee
financial expert pursuant to this SEC requirement does not affect the duties,
obligations or liability of any other member of the Audit Committee or Board of
Directors.  In making this determination, the Board of Directors
considered Mr. Leduc’s educational background, and business experience, which is
described above.  Our Audit Committee charter is available on our
website at www.terrestarcorp.com. Jacques Leduc served as Chairman of the
Audit Committee until January 2009.  Eugene I. Davis was named
Chairman of the Audit Committee on February 10, 2009 and has been designated as
the “Audit Committee financial expert.”




Compensation
and Stock Option Committee





The
Compensation and Stock Option Committee consisted of Mr. Meltzer, Mr. Andonian
and Mr. Friedman until March 2008 and in April 2008 Mr. Olmstead was added to
the committee.  The Compensation and Stock Option Committee is
responsible for reviewing certain of TerreStar’s compensation programs, making
recommendations to the Board of Directors with respect to compensation, and
administering our stock option plan.  During 2008, the Compensation
and Stock Option Committee met four times.  Our Compensation and Stock
Option Committee charter is available on our website at
www.terrestarcorp.com.




Nominating
Committee




The
Nominating Committee consisted of Messrs. Andonian, Leduc, Freeman and
Meltzer.  Each member of the Nominating Committee is “independent” as
defined under the applicable Marketplace Rules of The Nasdaq Stock Market,
Inc.  The Nominating Committee is responsible for selecting candidates
to stand for election as directors. During 2008, the Nominating Committee met
one time.  Our Nominating Committee charter is available on our
website at www.terrestarcorp.com.




Director
Nominations





The
Nominating Committee is responsible for selecting candidates to stand for
election as directors.  The Nominating Committee actively seeks
individuals who meet the qualifications established by the Nominating Committee
to become members of our Board of Directors, including evaluating persons
suggested by stockholders or others, and conducting appropriate inquiries into
the backgrounds and qualifications of possible nominees.  The
Nominating Committee selects those nominees whose attributes it believes would
be most beneficial to TerreStar. This assessment includes such issues as
experience, integrity, competence, diversity, skills, and dedication in the
context of the needs of the Board of Directors.  Any stockholder that
wishes to propose a candidate should send such candidate to the attention of the
Nominating Committee at the address given in the section entitled
“Communications with Directors” above.




In
February 2008 in connection with entering into certain agreements with
affiliates of Harbinger Capital Partners and EchoStar Corporation, we agreed to
expand the size of the Board of Directors from five to eight members through the
additions of Messrs. Davis, Olmstead and Rayner.  For more information
regarding these transactions please see our Form 8-K filed with the SEC on
February 21, 2008.




5


Section
16(a) Beneficial Ownership Reporting Compliance





Under
the securities laws of the United States, our directors, executive officers and
any persons holding more than ten percent of our common stock are required to
report their ownership of the common stock and any changes in that ownership to
the SEC.  Specific due dates for these reports have been established
by the SEC, and we are required to report in this Annual Report any failure to
file by these dates.  Based on our review of these reports filed
during and in connection with the year ended December 31, 2008, and on
certain written representations, we do not believe that any of our directors,
officers or beneficial owners of more than ten percent of our common stock
failed to file a form or report a transaction on a timely
basis.





Code
of Ethics





We
have adopted a code of ethics that applies to our principal executive officer,
principal financial officer and principal accounting officer. This code of
ethics has been approved by our Board of Directors, and has been designed to
deter wrongdoing among directors, officers and employees and promote honest and
ethical conduct, full, fair, accurate and timely disclosure, compliance with
applicable laws, rules and regulations, prompt internal reporting of code
violations, and accountability for adherence to our code.  Our code of
ethics is available on our website at www.terrestarcorp.com.




Item
11.  Executive Compensation.




COMPENSATION
DISCUSSION AND ANALYSIS





This
Compensation Discussion and Analysis provides an overview of the combined
TerreStar Corporation, or TerreStar,  and TerreStar Networks Inc., or
Networks,  compensation philosophy.  For purposes of the
following section, except where the context otherwise requires or unless
otherwise indicated, the terms “we,” “our” and “us” refer to TerreStar
Corporation and its subsidiaries, including Networks.




The
following discussion and analysis of compensation arrangements of our named
executive officers should be read together with the compensation tables and
related disclosures set forth above.  This discussion contains forward
looking statements that are based on our current plans and expectations
regarding future compensation programs.  Actual compensation programs
that we adopt may differ materially from currently planned programs as
summarized in this discussion.




Overview





Our
primary business is our ownership of Networks and, as of March 25, 2009, we
owned approximately 88% of Networks’ outstanding common stock.  Over
the past year, we continued to refine and implement a revised compensation
system that we adopted in May 2007.




In
April 2008, we announced a corporate restructuring that led to the departure of
three of our executive officers who were among the five most highly compensated
executive officers in 2008.  In addition, in October 2008 our Chief
Financial Officer resigned from his position and we hired a Chief Accounting
Officer.




Compensation
Committee Members





The
Compensation and Stock Option Committee, or the Compensation Committee, is
responsible for establishing basic principles related to our compensation
programs and for providing oversight of compensation programs and policies for
senior executive officers.  The Compensation Committee is currently
comprised of David Meltzer, David Andonian, Dean Olmstead and William Freeman,
all of whom are independent, non-employee directors.  The Compensation
Committee maintains a practice of meeting prior to regularly scheduled meetings
of the Board of Directors and generally holds executive sessions without
management present.  Mr. Meltzer serves as the Chairman of the
Compensation Committee and sets the meetings and
agendas.




On May
23, 2007, the Board of Directors approved a Compensation Committee Charter which
delegated to the Compensation Committee the responsibilities of reviewing and
approving compensation granted to our executive officers and
directors.  The Compensation Committee has the authority to retain its
own compensation consultant and to obtain advice and assistance from internal or
external legal, accounting or other advisers as it sees fit.  For
example, in 2006, the Compensation Committee engaged Strategic Compensation
Research Associates, or SCRA, an independent, third-party compensation
consultant, to review and assess our compensation practices for our executives
and directors.  Specifically, SCRA provided recommendations to the
Compensation Committee in 2006 with respect to the adoption of the Company’s
2006 Equity Incentive Plan and compensation for the Board of Directors,
including the Chairman of the Board.  In addition, from time to time
the Compensation Committee uses Mercer, an independent, third-party consultant,
to review and provide compensation benchmark analysis and
studies.




6


At the
request of the Compensation Committee, our President and General Counsel and
Secretary regularly participate in Compensation Committee meetings with respect
to compensation matters.  In addition, the President was actively
involved in discussions relating to setting the compensation levels for his
direct reports, including each of the other executive officers named in the
Summary Compensation table below as well as assisting in the formation and
design of our compensation programs and policies.  The President was
present in Compensation Committee meetings where compensation was determined for
other executive officers but he was not present when the Compensation Committee
considered and set his compensation.  The Compensation Committee
reviews and approves compensation components for the President and other
executive officers including the following components:




·
            Annual
      base salary;·
            Cash
      and equity bonuses, including target amounts;·
            Other
      equity or cash compensation;·
            Employment
      agreements, severance arrangements, and change in control
      agreements/provisions, as applicable; and·
            Any
      other material benefits, compensation or arrangements.





During
2008, the Compensation Committee met four times and acted on the following
matters:




·
                  Employee
      bonuses for 2008;·
                  Negotiate
      and enter into employment agreements with executive
      officers.





Compensation
Philosophy




We
design our compensation programs to enable us to attract, retain and motivate
executive officers to support and achieve our short-term and long-term strategic
goals, and to complement our efforts to develop our integrated next-generation
communications system.  To the extent possible, the Compensation
Committee also believes it is important to seek to foster a stockholder
perspective in management by awarding stock options and other equity based
awards to align the interests of our executives with those of our
stockholders.




The
Compensation Committee determines executive officer compensation with respect to
each element set forth below based upon an independently conducted analysis of
publicly-available compensation data and compensation survey data of comparable
companies.  The President delivers a performance evaluation for each
of the other executive officers to the members of the Compensation Committee and
makes recommendations on compensation arrangements, including adjustments in
base salary, changes in target bonus awards and/or metrics for earning cash
incentives and equity grants. Such recommendation is based on competitive market
data and a variety of other factors, including individual performance, market
competitive pressures, business conditions, the vesting and value of current
equity grants, our overall performance and the potential financial impact of
implementing the recommendations. The Compensation Committee considers, but is
not bound to and does not always accept, the recommendations of the President
with respect to executive officer compensation.  In addition, the
Compensation Committee regularly seeks input from independent compensation
consultants prior to making any final determinations.




To
determine the compensation of our President and other executive officers, the
Compensation Committee, through consultation with the remaining independent
members of the Board of Directors, assesses each officer’s performance and
considers competitive market data and other factors described
herein.




We
believe it is in our stockholders’ best interests to ensure that our executive
compensation is competitive with those of other companies of similar size and
complexity. The Compensation Committee seeks independent professional assistance
and advice from outside consulting firms from time to time in the development
and utilization of the competitive market data and the establishment of its
executive compensation programs.




Based
upon the compensation survey data and publicly-available information, we
produced an overall range of competitive market data for the compensation of
each of our executive officers.




7


Elements
of Compensation




Base
Salary




We
target base salary at the median level of the compensation survey data and
publicly-available information mentioned above in order to retain and reward
executive talent.  However, to better support our objective to retain
and properly reward executive officers, we also consider other factors, such as
duties and responsibilities not typically found in similar positions with
comparable companies, prior experience, job performance, tenure, any distinctive
value to the organization, and general market conditions.  On April
18, 2008, TerreStar announced the resignations of Robert Brumley, President and
CEO, Michael Reedy, Chief Operating Officer, and Doug Sobieski and the
appointment of Jeffrey Epstein as President.  On November 26, 2008,
TerreStar announced the resignation of Neil L. Hazard, Executive Vice President
and Chief Financial Officer and the appointment of Vincent Loiacono as Chief
Accounting Officer.  Each of these former executive officers were
among our most highly compensated executive officers in 2008.




During
2008, the Compensation Committee set each named executive officer’s base salary
as follows:





Name
            2008
      Base Salary ($)
            2009
      Base Salary ($)Jeffrey
      Epstein
            364,000
            425,000Vincent
      Loiacono(1)
            N/A
            250,000Dennis
      Matheson(2)
            364,000
            364,000Douglas
      Brandon
            200,000
            235,000Robert
      Brumley
            572,000
            N/ANeil
      Hazard
            416,000
            N/AMichael
      Reedy
            364,000
            N/ADoug
      Sobieski
            364,000
            N/A





(1)
            Mr.
      Loiacono was hired on October 31,
2008.


(2)
            Mr.
      Matheson is an executive officer of our subsidiary TerreStar
      Networks.





Cash
Incentives




We
structure a cash incentive plan, our Bonus Plan, to align the financial
incentives of our employees and executive officers with our short-term and
long-term operating goals and interests of our stockholders, and to reward
exceptional performance.  Some of our executive officers currently
have employment agreements with Networks and have cash bonus target amounts set
forth in such contracts.  Each fiscal year, the Compensation Committee
approves the structure, performance metrics as well as each metric’s relative
weighting under our Bonus Plan.





For
2008, the Compensation Committee considered the various goals and milestones
established and achieved by TerreStar Networks and its executive officers and
decided to award the bonus targets for achieving these goals.  These
goals included closing on a series of significant financings; ensuring satellite
and launch readiness for meeting regulatory milestones and business needs;
continued development of integrated satellite/terrestrial user devices,
including the introduction of the first-ever dual mode satellite/terrestrial
smartphone reference design; and the continued development of a universal
chipset for integrated S Band applications, including the execution of a
contract with Qualcomm Incorporated.  For 2009, the Compensation
Committee has set various goals and milestones, including:  launching
our satellite in the second quarter; securing all material regulatory
authorizations; ensuring the availability of a commercial user device; and
achieving certain other financial milestones.  Prior to awarding any
bonus for 2009 the Compensation Committee will review each named executive
officers and the Company’s performance with respect to the stated goals and
milestones and make bonus determinations for such officers.




In
2008, the President’s annual target bonus was approximately 75% of his annual
base salary, or $318,750 and the annual target bonus for our General Counsel and
Secretary was 40% of his annual base salary, or $80,000. The fiscal 2008 bonus
for our President was based on targets established in his employment
agreement.  Bonus and severance payments were made for those
executives that resigned in 2008 based on their contractual
agreements.  Similar calculations were used for other executive and
employee bonuses and were paid out in 2008.




For
2008, the Compensation Committee set each named executive officers target cash
bonus and actual cash bonus paid as follows:





Name
            2008
      Target Bonus (% of Base)
            2008
      Cash Bonus Earned ($)Jeffrey
      Epstein
            75%
            318,750Vincent
      Loiacono
            N/A
            N/A (1)Dennis
      Matheson(2)
            60%
            218,400Douglas
      Brandon
            40%
            40,000Robert
      Brumley
            85%
            583,535 (3)Neil
      Hazard
            60%
            216,000 (3)Michael
      Reedy
            60%
            42,000 (3)Doug
      Sobieski
            60%
            42,000 (3)





(1)
            Mr.
      Loiacono was hired on October 31, 2008 and was not eligible for a 2008
      bonus.


(2)
            Mr.
      Matheson is an executive officer of our subsidiary TerreStar
      Networks.


(3)
            Includes
      cash bonuses paid to Messrs. Brumley, Hazard, Reedy and Sobieski in 2008
      as part of their separation
agreements.




8


For
2009, the Compensation Committee has set target cash bonus amounts as a
percentage of each named executives base salary.  While these amounts
are subject to change by the Compensation Committee the target bonus amounts for
Messrs. Epstein, Loiacono, Matheson and Brandon are 75%, 50%, 60%, and 50% of
their respective 2009 base salaries.





Equity
Incentives




We
provide long-term incentive compensation through the award of stock options
under our 2006 Equity Incentive Plan.  In connection with the new
compensation structure, on May 1, 2007, the Compensation Committee and Board of
Directors approved the issuance of approximately 3.8 million non-qualified
options to purchase TerreStar common stock to Networks employees and to
executive officers of Networks who also serve as officers of
TerreStar.  One-third of these options vest each year over three years
starting from January 1, 2008 and expiring on January 1, 2017.




In
addition, the Board of Directors approved a modification to the TerreStar
Corporation Option plan, and on May 23, 2007, we cancelled approximately 2.5
million fully vested non-qualified options to purchase Networks common stock in
exchange for the issuance of approximately 5.3 million fully vested
non-qualified options to purchase TerreStar Corporation common stock to Networks
employees and to executive officers of Networks who also serve as officers of
TerreStar.  These options vested on May 23, 2007, and the options
became exercisable in two equal annual installments on January 1, 2008 and
January 1, 2009, respectively.




During
2008, we issued approximately 0.6 million shares of restricted stock awards
to our employees under the 2006 Equity Incentive Plan. Fifty percent of the
shares vest ninety days following the successful launch and in orbit test
check-in of TerreStar-1 satellite and the remaining fifty percent vest upon the
first anniversary of the initial vesting date. We also issued 0.1 million
shares of restricted stock to certain TerreStar executives.  These
shares vest in three equal tranches on the anniversary of their
grant.  The fair value of restricted stock awards is based on the
stock price at the date of grant. Restricted stock awards are settled in our
shares of common stock after the vesting period.




The
Compensation Committee regularly reviews our long-term incentive compensation
practices. Potential changes include adjusting the mix of equity awards granted,
adjusting the vesting schedule of the equity awards, and using other forms of
equity and/or non-equity long term incentive compensation with vesting based
upon the achievement of performance metrics. Consistent with our philosophy of
paying for performance, no executive is entitled to an automatic equity grant.
In determining the proper amount and mixture of equity awards granted to each
executive officer, we consider a variety of factors, including such executive
officer’s contribution to our performance, current equity holdings, ability to
influence future performance and relative position within our organization, the
competitive market data described above, the relative value of each equity
award, the financial impact on our profitability and the dilutive impact to our
stockholders.




In
addition to the above, the stock options generally have change in control
vesting acceleration, forfeiture, transfer restrictions and other customary
provisions.  In determining which elements of compensation are to be
paid, and how they are weighted, we also take into account our compliance with
Internal Revenue Code Section 162(m). Section 162(m) of the Internal Revenue
Code precludes us from taking a deduction for compensation in excess of $1
million for our executive officers named in the Summary Compensation Table.
Certain performance-based compensation is specifically excluded from the
deduction limit. Our policy is to qualify, to the extent reasonable, the
compensation of our executive officers for deductibility under applicable tax
laws.  However, the Compensation Committee believes that its primary
responsibility is to provide a compensation program to meet our stated
objectives and that the loss of a tax deduction may be necessary in some
circumstances.




Generally
Available Benefit Plans and Executive Perquisites




We do
not provide significant perquisites or personal benefits to our named executive
officers.  In 2008, we provided each of our executive officers health
care coverage and life insurance coverage that is generally available to all of
our salaried employees.  Also, we maintain a 401(k) Plan for our
employees, including our executive officers, because we wish to encourage our
employees to save a portion of their cash compensation, through voluntary
deferrals, for their eventual retirement.  The executive officers are
entitled to participate in the company-sponsored 401(k) Plan on the same terms
as all employees.  Under our 401(k) Plan, we provide all employees
with matching contributions, subject to certain limitations imposed by the
Internal Revenue Code of 1986, as amended. Our executive officers do not receive
any retirement benefits beyond those generally available to our salaried
employees.




9


Employment
Agreements and Change in Control Agreements




We
maintain employment agreements with Messrs. Epstein and Matheson.
  For more information on these employment agreements, please read
“Executive Compensation — Narrative to Summary Compensation Table and Plan-Based
Awards Table — Employment Agreements” and “Executive Compensation – Potential
Payments upon Termination or Change-in-Control” below.  These
agreements provide for severance compensation to be paid if the employment of
the executives is terminated under certain conditions, including, without
limitation, his death or disability, following a change in control or for “good
reason” or termination by us for any reason other than upon his death or
disability, including for “cause,” each as defined in the
agreements.  We have entered into a change in control arrangement with
Mr. Loiacono that is described in “Executive Compensation – Potential Payments
upon Termination or Change-in-Control” below.





Compensation
and Stock Option Committee Interlocks and Insider Participation





In
2008, Messrs. Meltzer, Andonian, Freeman and Olmstead served as members of our
Compensation and Stock Option Committee.  None of Messrs. Meltzer,
Andonian, Freeman or Olmstead were at any time during 2008, or at any other
time, an officer or employee of TerreStar Corporation or any of its
subsidiaries.  Further, none of our executive officers served as a
member of the board of directors or compensation committee, or other committee
serving an equivalent function, of another entity that has one or more of its
executive officers serving as a member of our Board of Directors or Compensation
and Stock Option Committee, or other committee performing a similar function, at
any time during 2008.




COMPENSATION
AND STOCK OPTION COMMITTEE REPORT ON EXECUTIVE COMPENSATION




We,
the Compensation Committee of the Board of Directors, have reviewed and
discussed this Compensation Discussion and Analysis, or CD&A, as required by
Item 402(b) of Regulation S-K with the management of the Company. Based on such
review and discussion, we are of the opinion that the executive compensation
policies and plans provide appropriate compensation to properly align TerreStar
Corporations’ performance and the interests of its stockholders through the use
of competitive and equitable executive compensation in a balanced and reasonable
manner, for both the short and long-term. Accordingly, we have recommended to
the Board of Directors that the CD&A be included as part of this Annual
Report on Form 10-K/A.




Submitted
by the Compensation and Stock Option Committee of the Board of
Directors:




David
Meltzer, Chairman


David
Andonian


William
Freeman


Dean
Olmstead




10





EXECUTIVE
COMPENSATION





Summary
Compensation Table




The
following table shows the compensation earned for the fiscal year ended December
31, 2008 to our named executive officers for the year-ended December 31,
2008.




SUMMARY
COMPENSATION TABLE





Name
      and
                                      Principal
      Position
                                    Year
                                    Salary
                                      ($)
                                    Bonus
                                      ($)
                                    Stock
                                      Awards
                                      ($)
                                    Option
                                      Awards
                                      ($)(1)
                                    Non-Equity
                                      Incentive
      Plan Compensation
                                      ($)(2)
                                    Change
      in
                                      Pension
      Value
                                      and
                                      Nonqualified
                                      Deferred
                                      Compensation
                                      Earnings
                                      ($)
                                    All
      Other
                                      Compensation
                                      ($)(3)
                                    Total
                                      ($)Jeffrey
      Epstein
                                      President
      (4)
                                    2008
                                    406,123
                                    ----
                                    145,652
                                    470,599
                                    318,750
                                    ----
                                    162
                                    1,341,2862007
                                    275,000
                                    ----
                                    ----
                                    228,996
                                    151,666
                                    ----
                                    150
                                    655,8122006
                                    69,231
                                    ----
                                    ---
                                    ---
                                    75,000
                                    ----
                                    50
                                    144,281Douglas
      Brandon
                                      General
      Counsel and Secretary (5)
                                    2008
                                    200,000
                                    ---
                                    24,972
                                    ----
                                    40,000
                                    ----
                                    414
                                    265,3862007
                                    116,154
                                    ----
                                    ---
                                    ---
                                    37,331
                                    ----
                                    166
                                    153,485Vincent
      Loiacono
                                      Chief
      Accounting Officer (6)
                                    2008
                                    39,423
                                    ----
                                    835
                                    ----
                                    ----
                                    ----
                                    42
                                    40,300Dennis
      Matheson Chief Technology Officer(7)
                                    2008
                                    363,946
                                    ---
                                    37,423
                                    634,596
                                    218,400
                                    ---
                                    270
                                    1,254,6352007
                                    350,000
                                    ---
                                    ---
                                    310,882
                                    168,000
                                    ---
                                    280
                                    829,1622006
                                    200,000
                                    ---
                                    ---
                                    2,401,500
                                    150,000
                                    ---
                                    140
                                    2,751,640Robert
      Brumley
                                      Former
      President and CEO (10)
                                    2008
                                    175,915
                                    ---
                                    ---
                                    392,517
                                    585,535(8)
                                    ---
                                    1,815,289(9)
                                    2,969,2562007
                                    550,000
                                    83,333
                                    ---
                                    3,419,388
                                    420,750
                                    ---
                                    43,455
                                    4,516,9262006
                                    300,000
                                    ---
                                    ---
                                    3,201,232
                                    216,000
                                    ---
                                    6,965
                                    3,724.197Neil
      Hazard
                                      Former
      Executive Vice President, CFO (11)
                                    2008
                                    399,938
                                    ---
                                    ---
                                    16,045
                                    216,000(8)
                                    ---
                                    669,515(9)
                                    1,301,4982007
                                    400,000
                                    41,666
                                    ---
                                    1,326,713
                                    216,000
                                    ---
                                    804
                                    1,985,1832006
                                    131,154
                                    ---
                                    ---
                                    474,000
                                    103,125
                                    ---
                                    20
                                    708,299Michael
      Reedy Former Chief Operating Officer (12)
                                    2008
                                    111,946
                                    ---
                                    ---
                                    240,970
                                    42,000(8)
                                    ---
                                    597,856(9)
                                    992,7722007
                                    350,000
                                    ---
                                    ---
                                    2,428,816
                                    168,000
                                    ---
                                    168
                                    2,946,9842006
                                    200,000
                                    ---
                                    ---
                                    2,198,478
                                    150,000
                                    ---
                                    ---
                                    2,548,478Doug
      Sobieski Former Chief Marketing Officer (13)
                                    2008
                                    111,946
                                    ---
                                    ---
                                    163,540
                                    42,000(8)
                                    ---
                                    596,543(9)
                                    914,0292007
                                    350,000
                                    ---
                                    ---
                                    310,882
                                    168,000
                                    ---
                                    430
                                    829,3122006
                                    200,000
                                    ---
                                    ---
                                    2,401,500
                                    150,000
                                    ---
                                    200
                                    2,751,700




(1)
            Each
      amount reflected in this column is the compensation cost recognized by
      TerreStar during the applicable year under Statement of Financial
      Accounting Standard No. 123R (Share-Based Payment)
      for grants made in 2008 and prior years, disregarding forfeitures. The
      fair value is estimated on the date of grant using the Black-Scholes
      option-pricing model. For a discussion of the assumptions underlying the
      calculation under SFAS 123R see Note 10, Employee Stock Benefit Plans in
      our Form 10-K for the year ended December 31, 2008.(2)
            Represents
      amounts earned under the Company’s Cash Bonus
  Plans.


(3)
            Includes
      group term life insurance
premiums.


(4)
            Mr.
      Epstein’s employment as President began in April
  2008.


(5)
            Mr.
      Brandon’s employment as General Counsel and Secretary began in December
      2008.


(6)
            Mr.
      Loiacono’s employment began in November
  2008.


(7)
            Mr.
      Matheson is the Chief Technology Officer of our subsidiary TerreStar
      Networks Inc.


(8)
            Messrs.  Brumley,
      Hazard, Reedy and Sobieski  were issued cash bonuses as part of
      their separation agreements.





(9)
              In
      connection with their separation from TerreStar in 2008, we were obligated
      to pay certain severance amounts to Messrs. Brumley, Hazard, Reedy
      and   Sobieski..  Severance payments in the
      amounts of $1,139,493, $25,600, $425,600 and $425,600 were paid in 2008 to
      Messrs. Brumley, Hazard, Reedy and Sobieski, respectively, and $651,139,
      $614,400, $156,800 and $136,500 will be paid in
  2009.(10)
              Mr.
      Brumley’s employment with TerreStar terminated in April
      2008.




11





(11)
            Mr.
      Hazard’s employment was terminated in November
  2008.


(12)
            Mr.
      Reedy’s employment was terminated in April
  2008.


(13)
            Mr.
      Sobieski’s employment was terminated in April
  2008.








GRANTS
OF PLAN-BASED AWARDS FOR FISCAL YEAR 2008





Estimated
      Future Payouts Under Non-
                          Equity
      Incentive Plan Awards(1)Name
                          (a)
                        Grant
                          Date
                          (b)
                        Threshold
                          ($)
                          (c)
                        Target
                          ($)
                          (d)
                        Max.
                          ($)
                          (e)
                        All
                          Other
                          Stock
                          Awards:
                          Number
                          of
      Shares
                          of
      Stock
                          or
      Units
                          (#)
                          (i)
                        All
      Other
                          Option
                          Awards:
                          Number
      of
                          Securities
                          Underlying
                          Options
                          (#)
                          (j)
                        Exercise
                          or
      Base
                          Price
      of
                          Option
                          Awards
                          ($/Sh)
                          (k)
                        Grant
                          Date
                          Fair
                          Value
      of
                          Stock
                          and
                          Option
                          Awards
                          (2)
                          (l)Jeffrey
      Epstein
                        
                        
                        318,750
                        (3)5/8/2008
                        
                        
                        
                        94,444
                        
                        
                        424,998Douglas
      Brandon
                        
                        
                        40,000
                        (3)6/27/2008
                        
                        
                        
                        20,000
                        
                        
                        84,40012/26/2008
                        
                        
                        
                        50,000
                        
                        
                        22,500Vincent
      Loiacono
                        11/24/2008
                        
                        
                        
                        50,000
                        
                        
                        14,000Dennis
      Matheson(4)
                        
                        
                        218,400
                        (3)5/8/2008
                        
                        
                        
                        24,266
                        
                        
                        109,197Robert
      Brumley
                        4/15/2008
                        
                        
                        
                        
                        145,175
                        11.30
                        81,298





(1)
            Represents
      amounts available under 2008 Cash Incentive Plan.  Actual
      amounts paid under the 2008 Cash Incentive Plan to the executive officers
      are set forth in the Summary Compensation Table under the column
      “Non-Equity Incentive Plan
Compensation.”


(2)
            For
      a discussion of the assumptions underlying the calculation under SFAS 123R
      see Note 10 Employee Stock Benefit Plans in our Form 10-K for the year
      ended December 31, 2008.


(3)
            The
      Compensation Committee may elect to award bonus amounts in amounts in
      excess of target bonus amounts.


(4)
            Mr.
      Matheson is an executive officer of our subsidiary TerreStar
      Networks.







12


OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END 2008





Option
      Awards
                                      Stock
      AwardsName
                                        (a)
                                      Number
      of
                                        Securities
                                        Underlying
      Unexercised
                                        Options
                                        (#)
                                        Exercisable
                                        (b)
                                      Number
      of
                                        Securities
                                        Underlying
                                        Unexercised
                                        Options
                                        (#)
                                        Unexercisable
                                        (c)
                                      Equity
                                        Incentive
                                        Plan
      Awards:
                                        Number
      of
                                        Securities
                                        Underlying
                                        Unexercised
                                        Unearned
                                        Options
                                        (#)
                                        (d)
                                      Option
                                        Exercise
                                        Price
                                        ($)
                                        (e)
                                      Option
                                        Expiration
                                        Date
                                        (f)
                                      Number
                                        of
      Shares
                                        or
      Units
                                        of
      Stock
                                        that
                                        Have
                                        Not
                                        Vested
                                        (g)
                                      Market
                                        Value
                                        of
                                        Shares
                                        or
      Units
                                        of
                                        Stock
                                        that
                                        Have
                                        Not
                                        Vested
                                        ($)
                                        (h)
                                      Equity
                                        Incentive
                                        Plan
                                        Awards:
                                        Number
                                        of
                                        Unearned
                                        Shares,
                                        Units
      or
                                        Other
                                        Rights
                                        that
      Have
                                        Not
      Vested
                                        (#)
                                        (i)
                                      Equity
                                        Incentive
                                        Plan
                                        Awards:
                                        Market
      or
                                        Payout
                                        Value
      of Unearned
                                        Shares,
                                        Units
      or
                                        Other
                                        Rights
                                        that
      Have
                                        Not
      Vested
                                        ($)
                                        (j)Jeffrey
      Epstein
                                      34,375
                                      68,750
                                      
                                      11.30
                                      4/30/201726,700
                                      26,700(1)
                                      
                                      11.35
                                      5/23/20175/08/2018
                                      94,444Douglas
      Brandon
                                      
                                      
                                      
                                      
                                      6/27/2018
                                      20,00012/26/2018
                                      50,000Vincent
      Loiacono
                                      
                                      
                                      
                                      
                                      11/24/2018
                                      50,000Dennis
      Matheson(1)
                                      46,666
                                      93,334
                                      
                                      11.30
                                      4/30/2017133,500
                                      133,500(2)
                                      
                                      11.35
                                      5/23/20175/8/2018
                                      24,266Robert
      Brumley
                                      349,500
                                      
                                      
                                      11.30
                                      4/30/2017400,500(2)
                                      
                                      
                                      11.35
                                      5/23/2017145,175
                                      
                                      
                                      11.30
                                      4/15/2018Neil
      Hazard
                                      160,000
                                      
                                      
                                      11.30
                                      4/30/2017356,000(2)
                                      
                                      
                                      11.35
                                      5/23/2017Michael
      Reedy
                                      300,200
                                      
                                      
                                      11.30
                                      4/30/2017267,000(2)
                                      
                                      
                                      11.35
                                      5/23/2017Doug
      Sobieski
                                      140,000
                                      
                                      
                                      11.30
                                      4/30/2017267,000(2)
                                      
                                      
                                      11.35
                                      5/23/2017





(1)
            Mr.
      Matheson is an executive officer of our subsidiary TerreStar
      Networks.


(2)
            These
      options were vested as of December 31, 2008 but were subject to
      contractual restrictions with respect to their exercise and the sale of
      the underlying shares of common stock.  Those restrictions
      lapsed with respect to 50% of the shares underlying the option on January
      1, 2008 and lapsed as to the remaining 50% of the shares on January 1,
      2009.





13




OPTION
EXERCISES AND STOCK VESTED FOR FISCAL YEAR 2008





None
of our named executive officers exercised stock options or acquired shares of
restricted stock in 2008.




Potential
Payments Upon Termination or Change in Control




Consistent
with practices within our industry, we also provide certain post-employment
termination benefits to our executive officers.  We have implemented
these programs in order to ensure that we are able to continue to attract and
retain top talent, as well as ensure that during the uncertainty associated with
a potential change in control the executive officers remain focused on their
responsibilities and ensure a maximum return for our
stockholders.




On
April 16, 2008, we announced the departure of two of our executive officer’s,
Robert Brumley and Michael Reedy.  On November 26, 2008, we announced
the departure of Neil Hazard, Chief Financial Officer.  Please see the
information in the Summary Compensation Table above for a description of the
payments made to each of these former executive officers in connection with
their departure.




The
following summaries set forth potential payments payable to Jeffrey Epstein, our
President, and Dennis Matheson, our Chief Technology Officer, Senior Vice
President—Satellite Operations upon termination of employment or a Change in
Control of us under their current employment agreements and our stock plans and
other compensation programs.





Termination and Change of
Control. Both Mr. Epstein and Mr. Matheson are entitled to certain
benefits under his employment agreement upon any of the
following:




·
            we
      terminate his employment for Cause (as defined in each Employment
      Agreement);·
            we
      terminate his employment as a result of his death or Permanent Disability
      (as defined in each Employment Agreement);·
            we
      terminate the his employment for reason other than
    Cause;·
            The
      executive terminates his employment for Good Reason (as defined in each
      Employment Agreement); and·
            the
      executive experiences a Change in Control Position Modification (as
      defined in each Employment Agreement) within 3 months following a Change
      of Control.




If
either Mr. Epstein or Mr. Matheson’s employment is terminated for Cause, he
shall be entitled to all salary and expense reimbursements due to him through
the date of his termination.




If
either Mr. Epstein or Mr. Matheson’s employment is terminated as a result of his
death or Permanent Disability, he shall be entitled to (i) all salary and
expense reimbursements due to him through the date of his termination, (ii) an
aggregate amount equal to one-half of his then-current annual base salary and
target bonus and (iii) all then unvested options held by him shall immediately
vest.




If we
terminate Mr. Epstein or Mr. Matheson’s employment for reason other than Cause
or if the Mr. Epstein or Mr. Matheson terminates his employment for Good
Reason, he shall be entitled to (i) all salary and expense reimbursements due to
him through the date of his termination, (ii) an aggregate amount equal to his
base salary and target bonus, (iii) all then unvested options held by him
shall immediately vest and (iv) we shall pay COBRA premiums on behalf of him for
a period of not more than 18 months.




In the
event Mr. Epstein or Mr. Matheson’s experiences a Change of Control Position
Modification within three months of a Change of Control, he shall be entitled to
(i) all salary and expense reimbursements due to him through the date of his
termination, (ii) an aggregate amount equal to two times his base salary and
target bonus, (iii) all then unvested options held by him shall immediately vest
and (iv) we shall pay COBRA premiums on behalf of him for a period of not more
than 18 months.





Jeffrey
Epstein




Assuming  that
Mr. Epstein’s employment with TerreStar was terminated under each of these
circumstances, or a change of control occurred on December 31, 2008, such
payments and benefits have an estimated value as follows (less applicable
withholding taxes):




14





Scenario
                Cash
                  Severance
      ($)
                Value
      of Equity
                  Awards
      Received
                  or
      to be
                  Received($)Termination
      for Cause
                0
                0Death
      or Disability
                637,500(2)
                (1)Termination
      for Good Reason by Mr. Epstein or without Cause by
      TerreStar
                771,650(3)
                (1)Change
      of Control Position Modification within 3 months of a Change of
      Control
                1,515,400(4)
                (1)




(1)
            As
      of December 31, 2008, Mr. Epstein held unvested stock options and
      restricted stock awards to purchase 95,450 and 94,444 shares of our common
      stock, respectively.  As of December 31, 2008 the exercise price
      of his unvested stock options and restricted stock awards exceeded the
      fair market value of our common stock on that date and therefore the
      unvested stock options and restricted stock awards were determined to not
      have any value for purposes of this
  calculation.


(2)
            Cash
      severance is equal to the sum of 75% of Mr. Epstein’s base salary
      ($318,750) and 100% of Mr. Epstein’s target bonus
      ($318,750).


(3)
            Cash
      severance is equal to the sum of Mr. Epstein’s base salary ($425,000), Mr.
      Epstein’s target bonus ($318,750) and estimated COBRA premiums for 18
      months ($27,900).


(4)
            Cash
      severance is equal to the sum of two times Mr. Epstein’s base salary
      ($850,000), two times Mr. Epstein’s target bonus ($637,500) and estimated
      COBRA premiums for a period of 18
    months ($27,900).





Dennis
Matheson




Assuming  that
Mr. Matheson’s employment with TerreStar Networks was terminated under each of
these circumstances, or a change of control occurred on December 31, 2008, such
payments and benefits have an estimated value as follows (less applicable
withholding taxes):








Scenario
                Cash
                  Severance
      ($)
                Value
      of Equity
                  Awards
      Received
                  or
      to be
                  Received($)Termination
      for Cause
                0
                0Death
      or Disability
                291,200(2)
                (1)Termination
      for Good Reason by Mr. Matheson or without Cause by
      TerreStar
                610,300(3)
                (1)Change
      of Control Position Modification within 3 months of a Change of
      Control
                1,192,700(4)
                (1)





(1)
            As
      of December 31, 2008, Mr. Matheson held unvested stock options and
      restricted stock awards to purchase 226,834 and 24,266 shares of our
      common stock, respectively.  As of December 31, 2008 the
      exercise price of his unvested stock options and restricted stock awards
      exceeded the fair market value of our common stock on that date and
      therefore the unvested stock options and restricted stock awards were
      determined to not have any value for purposes of this
      calculation.


(2)
            Cash
      severance is equal to the sum of 50% of Mr. Matheson’s base salary
      ($182,000) and 50% of Mr. Matheson’s target bonus
      ($109,200).


(3)
            Cash
      severance is equal to the sum of Mr. Matheson’s base salary ($364,000),
      Mr. Matheson’s target bonus ($218,400) and estimated COBRA premiums for 18
      months ($27,900).


(4)
            Cash
      severance is equal to the sum of two times Mr. Matheson’s base salary
      ($728,000), two times Mr. Matheson’s target bonus ($436,800) and estimated
      COBRA premiums for a period of 18
    months ($27,900).





15


Vincent
Loiacono





In
connection with Mr. Loiacono’s employment, TerreStar has agreed to pay Mr.
Loiacono an amount equal to 50% of his annual salary in the event his employment
with us is terminated other than for Cause in connection with a change of
control.  Mr. Loiacono’s base salary for 2009 is $250,000 therefore in
the event Mr. Loiacono’s employment is terminated other than for Cause in
connection with a change of control he would be paid $125,000.





DIRECTOR
COMPENSATION




The
following chart shows the cash amounts and the value of other compensation paid
to each non-employee member of the Board of Directors for their service in
2008.  We did not grant non-equity incentive plan awards, restricted
stock or any compensation other than the payment of fees and the grant of stock
options as shown below.




Name
                (a)
              Fees
                Earned
      or
                Paid
      in
                Cash
                ($)
                (b)
              Option
                Awards
                ($)
                (d)
              Total
                ($)
                (h)David
      Andonian
              71,500
              192,000
              255,300William
      Freeman
              100,500
              203,450
              287,450Eugene
      Davis(1)
              40,000
              11,550
              74,850Jacques
      Leduc
              69,000
              192,000
              255,300David
      Meltzer
              58,500
              192,000
              255,300David
      Rayner(1)
              --
              11,550
              11,550Dean
      Olmstead(1)
              --
              11,550
              11,550





(1)
            Messrs.
      Davis, Rayner and Olmstead joined the Board of Directors in February
      2008.





In
February 2006, the Compensation and Stock Option Committee engaged a
compensation consultant to review our Board of Directors
compensation.  Based on that review, effective January 1, 2006, each
non-employee member of the Board of Director was entitled to an annual retainer
of $30,000, each member of the Compensation and Stock Option Committee and the
Nominating Committee was entitled to an additional retainer of $5,000 per year,
and each member of the Audit Committee was entitled to an additional retainer of
$10,000 per year.  In addition, the Chairperson of the Compensation
and Stock Option Committee and the Nominating Committee received an additional
retainer of $10,000 per year and the Chairperson of the Audit Committee received
an additional retainer of $15,000 per year.  In addition, non-employee
members of the Board receive meeting fees of $1,500 for each Board meeting in
excess of six per year.  Each member of the Compensation and Stock
Option Committee or the Nominating Committee receives meeting fees of $2,000 for
each committee meeting in excess of three per year and each member of the Audit
Committee receives meeting fees of $2,500 for each meeting in excess of four per
year.




Members
of the Board of Directors receive an initial grant of 20,000 restricted shares
upon joining the Board of Directors and annual grants of 15,000 stock options
upon re-election.  In 2008, director annual grants which were deferred
from 2007 were issued on  June 25, 2008.  On October 16,
2008, director annual grants for 2008 were issued.




Item
12.  Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters.




The
following table sets forth certain information known to us with respect to the
beneficial ownership of our common stock as of March 25, 2009  (unless
otherwise indicated) by:





●
            each
      person known by us to be a beneficial owner of five percent (5%) or more
      of our common stock;●
            each
      current director●
            each
      executive officer named in the summary compensation table in Item 11 of
      this Annual Report;●
            each
      current executive officer; and●
            all
      current directors and executive officers as a group.




As
used in this table, “beneficial ownership” means the sole or shared power to
vote, or to direct the voting of, a security, or the sole or shared investment
power with respect to a security (that is, the power to dispose of, or to direct
the disposition of, a security).  In addition, a person is deemed, as
of any date, to have “beneficial ownership” of any security that such person has
the right to acquire within 60 days after such date.  The number of
shares beneficially owned by each stockholder is determined according to the
rules of the SEC, and the information is not necessarily indicative of
beneficial ownership for any other purpose. Under current rules,
“beneficial ownership” includes any shares as to which the individual or entity
has sole or shared voting power or investment power. As a consequence,
several persons may be deemed to be the “beneficial owners” of the same
securities.





16


Each
of the stockholders named in this table has sole voting and investment power
with respect to the Common Shares shown as “beneficially owned.”  The
percentage ownership of each stockholder is calculated based on
122,576,588shares of common stock outstanding as of March 25,
2009.





Name and Address of
      Beneficial Owner
            
            Number
      of
              Shares
              Beneficially
              Owned
            
            
            Percent
              of
      ClassDirectors
      and Executive OfficersJeffrey
      Epstein (1)
            
            
            246,594
            
            
            
            *Vincent
      Loiacono (2)
            
            
            60,000
            
            
            
            *Dennis
      Matheson (3)
            
            
            384,600
            
            
            
            *Douglas
      Brandon (2)
            
            
            75,000William
      Freeman, Chairman of the Board (4)
            
            
            45,600
            
            
            
            *David
      Andonian, Director (5)
            
            
            45,000
            
            
            
            *David
      Rayner, Director (6)
            
            
            20,000
            
            
            
            *Jacques
      Leduc, Director (5)
            
            
            45,000
            
            
            
            *Eugene
      Davis, Director (7)
            
            
            20,000
            
            
            
            *David
      Meltzer, Director (8)
            
            
            40,000
            
            
            
            *Dean
      Olmstead, Director (6)
            
            
            20,000
            
            
            
            *Current
      Directors and Officers as a Group (10 persons)
            
            
            981,794
            
            
            
            *Other
      5% StockholdersHarbinger
      Capital Partners (9)
            
            
            81,415,294
            
            
            
            49.1%EchoStar
      Corporation (10)
            
            
            39,180,172
            
            
            
            29.7%Solus
      Alternative Asset Management LP (11)
            
            
            12,190,414
            
            
            
            9.5%The
      Vanguard Group, Inc. (12)
            
            
            6,230,835
            
            
            
            5.1%


*     Less
than 1%.


Share
ownership reflects options to purchase Common Shares exercisable within 60 days
of the date hereof.








(1)
            Includes
      94,444 shares of non-vested restricted Common Shares, and 30,000 shares
      purchased open market and 122,150 options to purchase Common
      Shares.  The non-vested Common Shares are subject to repurchase
      by the Company in the event of termination of
  service.


(2)
            Includes
      non-vested restricted Common Shares. The non-vested restricted Common
      Shares are subject to repurchase by the Company in the event of
      termination of service.


(3)
            Includes
      24,266 shares of non-vested restricted Common Shares and 360,334 options
      to purchase Common Shares.  The non-vested restricted Common
      Shares are subject to repurchase by the Company in the event of
      termination of service.  Mr. Matheson is an executive officer of
      our subsidiary TerreStar
Networks.


(4)
            Includes
      options to purchase Common
Shares.


(5)
            Includes
      18,000 shares of vested restricted Common Shares, 12,000 non-vested
      restricted Common Shares and 15,000 options to purchase Common
      Shares.  The non-vested restricted Common Shares are subject to
      repurchase by the Company in the event of termination of
      service.


(6)
            Includes
      8,000 vested restricted Common Shares, 12,000 non-vested restricted Common
      Shares.  The non-vested Common Shares are subject to repurchase
      by the Company in the event of termination of service.  Messrs.
      Olmstead and Rayner expressly disclaimed beneficial ownership of any
      shares not directly owned by
them.


(7)
            Includes
      8,000 vested restricted Common Shares, 12,000 non-vested restricted Common
      Shares.  The non-vested Common Shares are subject to repurchase
      by the Company in the event of termination of
  service.


(8)
            Includes
      15,000 vested restricted Common Shares, 10,000 non-vested restricted
      Common Shares and 15,000 options to purchase Common Shares.  The
      non-vested restricted Common Shares are subject to repurchase by the
      Company in the event of termination of
  service.


(9)
            Funds
      Affiliated with Harbert Management Corporation.  Pursuant to a
      Schedule 13D/A dated March 6, 2009, as filed with the Commission, Harbert
      Management Corporation reported that as of March 5, 2009, it had shared
      voting and dispositive power over 81,415,294 Common Shares, including
      1,886 shares issuable upon exercise of warrants, 4,405,170 shares issuable
      upon conversion of shares of Series B Preferred Stock and approximately
      40,000,000 shares issuable upon conversion of shares of Series E Preferred
      Stock.  Each of Harbinger Capital Partners Master Fund I, Ltd.
      and Harbinger Capital Partners LLC reported shared voting and dispositive
      power over 56,654,268 Common Shares.  Each of Harbinger Capital
      Partners Special Situations Fund, L.P. and Harbinger Capital Partners
      Special Situations GP, LLC reported shared voting and dispositive power
      over 22,761,026 Common Shares.  Philip Falcone reported shared
      voting and dispositive power over 81,415,294 Common Shares.  The
      mailing address of Harbert Management Corporation is One Riverchase
      Parkway South, Birmingham,
  Alabama 35244.


(10)
            EchoStar
      Corporation.  Pursuant to a Schedule 13D dated June 19, 2008, as
      filed with the Commission, EchoStar Corporation reported it had shared
      voting and dispositive power over 39,180,172 shares, including 9,180,172
      shares of Common Shares issuable upon the conversion of its Exchangeable
      Notes.


(11)
            Solus
      Alternative Capital Asset Management LP.  Pursuant to a Schedule
      13G/A dated February 17, 2009, as filed with the Commission, Solus
      Alternative Asset Management LP reported that as of December 31, 2008, it
      had shared voting and dispositive power over 12,190,414 Common Shares, of
      which  6,926,609 were held as  Common Shares and the
      remainder were held as notes and convertible preferred stock which are
      convertible into 5,263,805 Common
Shares.


(12)
            Pursuant
      to a Schedule 13G filed on February 13, 2009, as filed with the
      Commission, the Vanguard Group, Inc. reported it beneficially owned
      6,230,835 Common Shares.








The
address for all officers and directors is c/o TerreStar Corporation, 12010
Sunset Hills Road, Reston, Virginia 20190.





17


Equity
Compensation Plan Information




The
following table provides information as of December 31, 2008 with respect to
shares of our common stock that may be issued under our existing equity
compensation plans.




A
            
            B
            
            CPlan
      Category
            
            Number
      of Securities to be
              Issued
      Upon Exercise of
              Outstanding
      Options
            
            Weighted
      Average
              Exercise
      Price of
              Outstanding
      Options
            
            Number
      of Securities Remaining
              Available
      for Future Issuance
              Under
      Equity Compensation
              Plans
              (Excluding
      Securities Reflected in
              Column
      A)Equity
      Compensation Plans Approved by Shareholders (1)
            
            8,664,732
            
            11.69
            
            2,335,268Equity
      Compensation Plans Not Approved by Shareholders
            
            --
            
            --
            
            --Total
            
            8,664,732
            
            11.69
            
            2,335,268




(1)
            Consists
      of our 2002 Stock Option Plan and 2006 Equity Incentive
      Plan.








Item
13.  Certain Relationships and Related Transactions, and Director
Independence.




Policies and Procedures with Respect
to Related Party Transactions. Our Board of Directors is given the
responsibility to review and approve all related party transactions as described
in Item 404 of Regulation S-K promulgated by the SEC. We do not currently
have a written policy regarding the approval of all related party transactions.
Each of our directors and executive officers is required by the Board of
Directors to notify the Corporate Secretary (who, in turn, will provide such
information to the Board of Directors) of any proposed related party
transactions. To assist with the identification of potential related party
transactions, we solicit information through questionnaires in connection with
the appointment of new directors and executive officers and on an annual basis
with respect to existing directors and executive officers. All other proposed
related party transactions are subject to approval or ratification by the Board,
except for certain categories of transactions that are deemed to be pre-approved
by the Board. In determining whether to approve or ratify a related party
transaction, the Board and the Chairman, if applicable, will take into account,
among other factors deemed appropriate, whether the related party transaction is
on terms no more favorable to the counterparty than terms generally available to
an unaffiliated third-party under the same or similar circumstances and the
extent of the related party’s interest in the transaction.




Our
Code of Business Conduct and Ethics requires our executive officers to disclose
any conflicts of interest, including any material transaction or relationship
involving a potential conflict of interest. No executive officer may work,
including as a consultant or a board member, simultaneously for us and any
competitor, customer, supplier or business partner without the prior written
approval of our Chief Financial Officer or legal department. Furthermore,
executive officers are encouraged to avoid any direct or indirect business
connections with our competitors, customers, suppliers or business
partners.




We
expect each of our directors to ensure that other existing and future
commitments do not conflict with or materially interfere with their service as a
director. Directors are expected to avoid any action, position or interest that
conflicts with our interests, or gives the appearance of a conflict. In
addition, directors are requested to inform the Chairman of our Nominating and
Corporate Governance Committee prior to joining the board of another public
company to ensure that any potential conflicts, excessive time demands or other
issues are carefully considered.




Director Independence. See
the subsection entitled “Board Committees and Meetings” in Item 10 “Directors,
Executive Officers and Corporate Governance” above.




18


Related
Party Transactions




In
2008 we entered into certain agreements with EchoStar Corporation and affiliates
of Harbinger Capital Partners that are described in Item 7 “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations-Overview-Current Year’s Developments” of our Annual Report on Form
10-K.  As a result of these transactions, EchoStar and Harbinger had
the right to nominate up to two members of each board and two employees of
EchoStar, Dean Olmstead and David J. Rayner, were appointed to our Board of
Directors.  In addition, both EchoStar and Harbinger Capital Partners
are holders of over 5% of the outstanding shares of our common stock and are
listed in Item 12 “Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters” above.







Item 14.  Principal Accountant Fees and
Services.




Audit
Fees





The
following table presents fees for professional services rendered by Friedman LLP
and billed to us for the audit of our annual financial statements for the years
ended December 31, 2008 and 2007, and fees for other services billed by Friedman
LLP during those periods:








Twelve
      Months Ended
              December 31, 2008
            
            Twelve
      Months Ended
              December 31, 2007Audit
      fees
            
            541,380
            
            
            823,831Audit
      related fees
            
            151,821
            
            
            96,654Tax
      fees
            
            0
            
            
            0Other
            
            0
            
            
            20,193Total
            
            693,201
            
            
            940,678





Audit Fees.  Annual
audit fees relate to services rendered in connection with the audit of the
annual financial statements included in our Annual Report on Form 10-K, the
quarterly reviews of financial statements included in our Quarter Reports on
Form 10-Q, registration statement consent procedures and audit and testing of
the company’s internal controls in accordance with Section 404 of the
Sarbanes-Oxley Act of 2002.





Audit-Related
Fees.  Audit-related services include fees for consultations
concerning financial accounting and reporting matters, services in connection
with our 401(k) Plan and issuance of subsidiary stand-alone financial
statements.  Audit-related fees are disclosed as those audit-related
fees paid during the specified fiscal year.





Tax Fees.  Tax
services include fees for tax compliance, tax advice and tax
planning.  Tax fees are disclosed as those tax fees paid during the
specified fiscal year.





All Other Fees. Includes fees
related to permitted corporate finance assistance and permitted advisory
services.




Audit
Committee Policies





The
Audit Committee of our Board of Directors is solely responsible for the approval
in advance of all audit and permitted non-audit services to be provided by the
independent auditors (including the fees and other terms thereof), subject to
the de minimis exceptions for non-audit services provided by Section
10A(i)(1)(B) of the Exchange Act, which services are subsequently approved by
the Audit Committee prior to the completion of the audit.  None of the
fees listed above are for services rendered pursuant to such de minimis
exceptions.




19





SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.




TERRESTAR
      CORPORATIONBy:
            /s/ Jeffrey
      W. EpsteinJeffrey
      W. EpsteinPresidentDate:  March  27 ,
      2009




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant in the
capacities as of March 27 , 2009.




/s/
      Jeffrey W. Epstein
            
            PresidentJeffrey
      W. Epstein
            
            (principal
      executive officer)/s/
      Vincent Loiacono
            
            Chief
      Accounting OfficerVincent
      Loiacono
            
            (principal
      financial officer)*
            
            Chairman
      of the BoardWilliam
      Freeman*
            
            DirectorDavid
      Andonian*
            
            DirectorEugene
      Davis*
            
            DirectorJacques
      Leduc*
            
            DirectorDavid
      B. Meltzer*
            
            DirectorDean
      Olmstead*
            
            DirectorDavid
      Rayner







*      By
Power of Attorney.




20





EXHIBIT
INDEX









31.1
            -
            Certification
      of the principal executive officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200231.2
            -
            Certification
      of the principal financial officer pursuant to Section 302 of the
      Sarbanes-Oxley Act of 200232
            -
            Certification
      of the principal financial officer and principal executive officer
      pursuant to Section 906 of the Sarbanes-Oxley Act of
    2002








21