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

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1 REED SMITH LLP Nicole K. O Sullivan, Esq. 599 Lexington Avenue New York, NY Telephone: (212) Facsimile: (212) and- Kurt F. Gwynne, Esq Market Street, Suite 1500 Wilmington, DE Telephone: (302) Facsimile: (302) Counsel for Space Systems/Loral, Inc. UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re: ) ) Chapter 11 TERRESTAR NETWORKS INC., et al. ) Case No (SHL) ) (Jointly Administered) Debtors. ) SPACE SYSTEMS/LORAL, INC. S MOTION PURSUANT TO 11 U.S.C. 107(b) AND RULE 9018 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE FOR AN ORDER AUTHORIZING THE FILING UNDER SEAL OF THE TS-2 CONTRACT AND SUBCONTRACT TO: THE HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE Space Systems/Loral, Inc. ( SS/L ), by and through their undersigned counsel, respectfully submits this motion for entry of an order, pursuant to Section 107(b) of title 11 of the United States Code, 11 U.S.C. 101 et seq. (the Bankruptcy Code ) and Rule 9018 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ), permitting the filing under seal of the TS-2 Contract (as defined below) and the Subcontract (as defined below) (the Motion ). In support of this Motion, SS/L respectfully states as follows:

2 JURISDICTION 1. This Court has jurisdiction over the subject matter of this Motion pursuant to 28 U.S.C and 157 and the Standing Order of Referral of Cases to Bankruptcy Judges of the United States District Court for the Southern District of New York, dated July 10, 1984 (Ward, Acting C.J.). This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2). Venue in this Court is proper pursuant to 28 U.S.C and The statutory predicate for the relief sought herein is Section 107(b) of the Bankruptcy Code and Rule 9018 of the Bankruptcy Rules. FACTUAL BACKGROUND A. The TS-2 Contract and the TS-2 Satellite 3. On October 19, 2010 (the Petition Date ), the Debtors filed their voluntary petitions for relief under chapter 11 of the Bankruptcy Code. Prior to the Petition Date, SS/L and the Debtor entered into, among other contracts, an Amended and Restated Contract for TerreStar-2 dated December 12, 2007 (as may be amended from time to time, the TS-2 Contract ). The TS-2 Contract provides for, among other things, SS/L s manufacture of the TerreStar-2 satellite ( TS-2 Satellite ). 4. By letter dated August 23, 2010, SS/L exercised its rights under Article 5.3 of the TS-2 Contract to suspend its performance under the TS-2 Contract due to the Debtor s payment defaults in the amount of $16,247, As of the Petition Date, including interest, the Debtor was $16,512, in arrears under the TS-2 Contract

3 6. Recently, SS/L has had discussions with Harris Corporation ( Harris ), one of the subcontractors working on the TS-2 Satellite, regarding the expiration of the permitted stop work time (the Stop Work Period ) under the Harris subcontract (the Subcontract ). 7. The Stop Work Period expires on April 29, Absent Harris extension of the Stop Work Period, Harris will terminate the Subcontract. 8. In exchange for extending the Stop Work Period and continuing to store and protect the reflector for the TS-2 Satellite, Harris has demanded the immediate payment of $1,304,475 (the Stop Work Fees ). 9. In order to minimize near term expenditures, Harris proposes to restart TS-2 Satellite construction in approximately eighteen (18) months, on September 30, Harris also has demanded SS/L s immediate agreement to the future payment of between $5.0 million and $6.5 million to restart construction of the TS-2 Satellite (the Restart Fees ). 10. SS/L will file a motion for stay relief to terminate the TS-2 Contract. SS/L intends to attach a portion of the TS-2 Contract and the Subcontract to a declaration in support of the stay relief motion. If SS/L and the Debtor do not resolve the terms upon which the Debtor will assume the TS-2 Contract and pay the cure amount prior to April 26, 2011, SS/L will prosecute the stay relief motion. 11. The TS-2 Contract is highly-confidential. In fact, printed boldly on the cover page of the TS-2 Contract is the following provision: The attached Contract and the information contained therein are confidential and proprietary to TerreStar Networks Inc. and Space Systems/Loral, Inc. and shall not be published or disclosed to any third party except as permitted by the Terms and Conditions of this Contract. See TS-2 Contract (cover page)

4 12. Section 8.5 of the TS-2 Contract further provides that SS/L may, in its reasonable discretion, deny access to [SS/L] s facilities, products or information to any and all [TerreStar] consultants and agents who are in direct competition with and/or currently employed by companies or entities that are in direct competition with [SS/L] for the sale of commercial telecommunications satellites. See TS-2 Contract at 8.5. The TS-2 Contract also contains provisions detailing the treatment of SS/L s and the Debtor s proprietary information. See TS-2 Contract at The Subcontract also contains confidential and proprietary information that may harm the Debtor s, SS/L s or Harris future business opportunities if made part of the public record. 14. On Friday, April 1, 2011, counsel for SS/L reached out to this Court regarding the scheduling of this Motion. During that call, this Court indicated that it would schedule an expedited hearing on this Motion. As indicated during that call, counsel for the Debtors stated that the Debtors do not oppose the relief requested in this Motion. RELIEF REQUESTED 15. By this Motion, SS/L seeks an order (a) authorizing SS/L not to file certain portions of the TS-2 Contract that are subject to restrictions on disclosure under federal law and (b) authorizing SS/L to file under seal the remainder of the TS-2 Contract and the Subcontract. BASIS FOR RELIEF REQUESTED 16. Federal law requires that major portions of the TS-2 Contract and Subcontract be filed under seal. Specifically, International Traffic in Arms Regulations ( ITAR ) is a set of United States government regulations that control the export and import of defense-related - 4 -

5 articles and services on the United States Munitions List (USML). Communications satellites are listed on the USML. See Category XV. 17. The Department of State interprets and enforces ITAR. Its goal is to safeguard U.S. national security and further U.S. foreign policy objectives. 18. For practical purposes, ITAR regulations dictate that information and material pertaining to defense and military related satellite technologies may be shared only with U.S. Persons unless authorization from the Department of State is received or a special exemption is used. Violators of ITAR can face heavy fines for providing, without authorization or the use of an exemption, foreign persons with access to ITAR-protected defense articles, services or technical data. Accordingly, pursuant to and as required by ITAR, SS/L intends not to file (even under seal) certain portions of the TS-2 Contract and related schedules. 19. Pursuant to section 107(b) of the Bankruptcy Code, this Court is authorized to protect from public access trade secrets and other confidential research, development, or commercial information. 11 U.S.C. 107(b)(1); see also Video Software Dealers Ass n v. Orion Pictures Corp. (In re Orion Pictures Corp.), 21 F.3d 24, 28 (2d Cir. 1994) (holding that, if material falls into one of the categories set forth in section 107(b), the court is required to protect a requesting party and has no discretion to deny the application. ) (emphasis added). Under this exception, an interested party has to show only that the information it wishes to seal is confidential and commercial in nature. Id. (citations omitted). 20. Bankruptcy Rule 9018 sets forth the procedure by which a party in interest may obtain a protective order authorizing the filing of a pleading under seal: On motion or on its own initiative, with or without notice, the court may make any order which justice requires (1) to protect the estate or any entity in respect of a trade secret or other confidential research, development, or commercial information

6 Fed. R. Bankr. P Section 107(b) of the Bankruptcy Code and Bankruptcy Rule 9018 are designed to protect business entities from disclosure of information that could reasonably be expected to cause the entity commercial injury. In re Global Crossing, Ltd., 295 B.R. 720, 725 (Bankr. S.D.N.Y. 2003). In Global Crossing, the court found that: When the requirements of Rule 918 are satisfied, the authority to issue the resulting order is broad any order which justice requires. The Court notes that the authority goes not just to the protection of confidential documents, but to other confidentiality restrictions that are warranted in the interests of justice. Id. at 72 (quotations omitted). 22. Commercial information is that which would cause an unfair advantage to competitors by providing them information as to the commercial operations of the debtor. In re Orion Pictures Corp., 21 F.3d at 27(citations omitted). Commercial information need not rise to the level of a trade secret to warrant protection under Section 107(b). See id. at The TS-2 Contract and the Subcontract contain commercial information entitled to protection under Section 107(b). For example, the TS-2 Contract and Subcontract contain detailed pricing information and other negotiated contractual terms. The significance of the information contained in the TS-2 Contract and its confidential nature is evidenced by the Confidentiality Provision. Disclosure of the TS-2 Contract and Subcontract may prejudice both the Debtor and SS/L s ongoing business relationships and their ability to negotiate contracts of this nature in the future. 24. The Subcontract contains similar confidential pricing and other commercial information, including specifications and other sensitive material

7 25. Of course, the Court must have a copy of the TS-2 Contract and the Subcontract in order to have a complete and accurate record upon which to rule on a stay relief motion relating to the TS-2 Contract. Filing the TS-2 Contract and the Subcontract under seal is the only way protect SS/L s and the Debtor s commercial and proprietary interests while complying with federal regulations and providing the Court with the information necessary to rule on the stay relief motion presented to the Court. NOTICE 26. SS/L has provided notice of this Motion to (a) the Debtors, (b) the Office of the United States Trustee for Region 2, (c) counsel to the Official Committee of Unsecured Creditors, and (d) the parties in interest requesting notice in accordance with Bankruptcy Rule 2002(i). SS/L respectfully submits that no further notice is necessary. NO PRIOR REQUEST 27. No previous request for the relief sought in this Motion has been made to this Court. WHEREFORE, SS/L respectfully requests that this Court enter an order, substantially in the form attached to this Motion as Exhibit A, (i) permitting SS/L to file the TS-2 Contract and Subcontract under seal and (ii) granting such further relief to SS/L as is appropriate

8 Dated: April 5, 2011 REED SMITH LLP By: /s/ Nicole K. O Sullivan Nicole K. O Sullivan, Esquire (No. NO9872) 599 Lexington Avenue, Floor 22 New York, NY Phone: (212) Facsimile: (212) nosullivan@reedsmith.com and Kurt F. Gwynne, Esquire (pro hac vice) Kathleen A. Murphy, Esquire 1201 Market Street, Suite 1500 Wilmington, DE Phone: (302) Facsimile: (302) kgwynne@reedsmith.com kmurphy@reedsmith.com Counsel to Space Systems/Loral, Inc

9 EXHIBIT A PROPOSED ORDER

10 UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re: ) ) Chapter 11 TERRESTAR NETWORKS INC., et al. ) Case No (SHL) ) (Jointly Administered) Debtors. ) ORDER GRANTING SPACE SYSTEMS/LORAL, INC. S MOTION PURSUANT TO 11 U.S.C. 107(b) AND RULE 9018 OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE FOR AN ORDER AUTHORIZING THE FILING UNDER SEAL OF THE TS-2 CONTRACT AND SUBCONTRACT Upon the Motion of Space Systems/Loral, Inc ( SS/L ) pursuant to 11 U.S.C. 107(b) and Rule 9018 of the Federal Rules of Bankruptcy Procedure for an Order Authorizing the Filing Under Seal of the TS-2 Contract and Subcontract (the Motion ), 1 the Court finds that (a) it has jurisdiction over this matter pursuant to 28 U.S.C 157 and 1334, (b) this is a core proceeding pursuant to 28 U.S.C. 157(b)(2), (c) venue of these cases and the Motion are proper in this District pursuant to 28 U.S.C and 1409, and (d) notice of the Motion and the hearing was sufficient under the circumstances. Accordingly, it is hereby, ORDERED THAT: 1. The Motion is GRANTED. 2. SS/L is permitted to not file certain portions of the TS-2 Contract that are subject to restrictions on disclosure under federal law. 3. SS/L is permitted to file the remainder TS-2 Contract under seal. 4. SS/L is permitted to file the Subcontract under seal. 1 Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Motion.

11 5. This Court shall retain jurisdiction to resolve all matters relating to the implementation of this Order. Dated: April, 2011 New York, New York HONORABLE SEAN H. LANE UNITED STATES BANKRUPTCY JUDGE - 2 -