Subsidiary of Elektrobit Corporation, Elektrobit Inc. and

Stock exchange release Free for publication on July 11, 2014 at 8 p.m. (CEST+1) Subsidiary of Elektrobit Corporation, Elektrobit Inc. and the TerreStar Networks Inc. liquidating trustee enter into conditional settlement agreement in the liquidation case Elektrobit Inc. (EB), a subsidiary of Elektrobit Corporation, has entered into a conditional agreement of settlement (the "Settlement") with the liquidating trustee of The Liquidating Trust (the "Trust") of TerreStar Networks Inc. ("TSN"), the Trust formed in connection with TSN's Court-approved Chapter 11 liquidation plan (the "Plan"). On July 10, 2014, the trustee filed a motion with the United States Bankruptcy Court seeking approval of the Settlement. According to the Settlement, if the conditions to its effectiveness are fulfilled (as described below), the Trust shall be obligated to pay to EB, an immediate cash payment of USD 1,075,000 (EUR 0.8 million as per exchange rate of July 10, 2014) (the "Settlement Payment") in full and final satisfaction of its claims against TSN and in resolution of all disputes between EB and the bankruptcy estate of TSN and certain of its subsidiaries and affiliates. If the Settlement is approved by the Bankruptcy Court and becomes effective by its terms, the Settlement Payment would be paid within ten days after the Settlement becomes effective, i.e. during the third year quarter of 2014. The Settlement Payment would result a non-recurring positive effect of approximately EUR 0.8 million as on Elektrobit Corporation's operating result and a positive effect on Elektrobit Corporation's cash flow of approximately EUR 0.8 million on the third quarter 2014. The Settlement will not become effective without Court approval by an order that has become final and unappealable. The Court hearing is now scheduled to be held on August 11, 2014 and before the hearing other stakeholders in the TSN Chapter 11 cases may file objections, if any, to the Settlement. At this time there is no assurance that these contingencies will be fulfilled. EB asserted claims for its accounts receivable in the amount of approximately USD 25.8 million (EUR 19.0 million as per exchange rate of July 10, 2014) in the Chapter 11 cases of its customers TSN and its parent company, TerreStar Corporation ("TSC"), filed in 2010 and 2011. In addition to the booked receivables, EB asserted claims for additional costs in the amount of approximately USD 2.1 million (EUR 1.6 million as per exchange rate of July 10, 2014) resulting mainly from the ramp down of the business operations between the parties. Thus, EB asserted claims against each of the TerreStar entities in amounts totaling USD 27.9 million (EUR 20.5 million as per exchange rate of July 10, 2014). Due to uncertainties related to the receivables, Elektrobit Corporation booked an impairment of the accounts receivable in the amount of EUR 8.3 million during the second half of 2010. The Settlement follows a settlement previously entered into between EB and TSC and certain of its preferred shareholders in TSC's Chapter 11 reorganization case. Pursuant to that settlement, on August 28, 2012 TSC made a cash payment to Elektrobit Inc. of USD 13.5 million in full and final satisfaction of EB's claim against that entity and the parties exchanged mutual releases. That settlement did not include TSN and did not include any distribution from the TSN Chapter 11 cases. On October 24, 2012, the Bankruptcy Court entered an order approving a plan of reorganization for TSC and a subsidiary of TSC (but not including TSN) that preserved EB's rights with respect to EB's claim against TSN. According to the terms of the Settlement, EB's remaining claims against TSN are fixed and allowed as a general unsecured non-priority claim in the amount of USD 19,551,147.65 (EUR 14.4 million as per exchange rate of July 10, 2014) (the "Allowed Non-priority Claim") and the Trust will pay to EB in full and final satisfaction of the Allowed Non-priority Claim a distribution equal to 5.4984% of the Allowed Non-priority Claim, which the parties agree equals the amount of the USD 1,075,000 Settlement Payment.  This amount supplements a USD 650,890 distribution received by EB under the Plan in March, 2012, on that portion of its claim entitled to payment priority under U.S. bankruptcy law. The Settlement also provides for an exchange of comprehensive mutual releases. The releases resolve, e.g., an informal objection by the trustee to certain amounts claimed by EB and an informal demand by the trustee for return by EB of certain payments received by EB within 90 days prior to TSN's bankruptcy filing. The full implications of the TSN and TSC Chapter 11 cases on EB's profit, financial position and outlook can be finally determined only when EB has accounted for all costs related to collecting the receivables and the tax treatment of its receivables is confirmed. As more fully discussed in EB's interim reports and financial statement at www.elektrobit.com, EB has appealed a ruling by the U.S. Internal Revenue Service ("IRS") disallowing a deduction taken on Elektrobit Corporation's subsidiary's, Elektrobit Inc.'s 2010 U.S. federal income tax return for the impairment of the receivables from the TerreStar companies. The appeal is presently pending before the IRS Office of Appeals. Oulu, July 11, 2014 Elektrobit Corporation Jukka Harju CEO Further information: Jukka Harju CEO Tel. +358 40 344 5466 Päivi Timonen Chief Legal Officer Tel. +358 40 344 2794 Distribution: NASDAQ OMX Helsinki Principal media Elektrobit Corporation (EB) EB creates advanced technology and turns it into enriching end-user experiences. EB is specialized in demanding embedded software and hardware solutions for wireless and automotive industries. The net sales in 2013 totaled EUR 199.3 million and operating profit was EUR 8.1 million. Elektrobit Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com [HUG#1822833]