UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment No.
)
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
x
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Preliminary Proxy
Statement
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o
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Confidential,
for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
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o
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Definitive Proxy
Statement
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o
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Definitive Additional
Materials
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o
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Soliciting Material Pursuant to
§240.14a-12
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GLOBALSTAR,
INC.
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
o
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Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
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Title of each class of securities
to which transaction
applies:
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(2)
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Aggregate number of securities to
which transaction
applies:
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(3)
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Per unit price or other
underlying value of transaction computed pursuant to Exchange Act Rule
0-11 (set forth the amount on which the filing fee is calculated and state
how it was
determined):
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(4)
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Proposed maximum aggregate value
of transaction:
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Fee paid previously with
preliminary materials.
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Check box if any part of the fee
is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the Form or Schedule
and the date of its
filing.
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(1)
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Amount Previously
Paid:
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(2)
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Form, Schedule or Registration
Statement No.:
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PRELIMINARY
COPY
GLOBALSTAR,
INC.
461
S. Milpitas Blvd.
Milpitas,
California 95035
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
be Held May 25, 2010
Dear
Stockholder:
It is my
pleasure to invite you to attend the 2010 Annual Meeting of Stockholders of
Globalstar, Inc.
The
meeting will be held at our headquarters at 461 S. Milpitas Blvd., Milpitas,
California 95035 at 10 a.m. on May 25, 2010. At the meeting, you will
be asked to:
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(1)
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Elect
J. Patrick McIntyre and Richard S. Roberts as the two Class A
Directors;
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(2)
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Ratify
the issuance of 2,525,750 shares of nonvoting common stock to Thermo
Funding Company LLC (Thermo Funding) in exchange for $2,425,983.26 in debt
(including accrued interest) outstanding under a short term note between
us and Thermo Funding (the
Conversion);
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(3)
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Ratify
the selection of Crowe Horwath LLP as our independent registered public
accounting firm for the year ending December 31, 2010;
and
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(4)
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Consider
any other matters that may properly be brought before the
meeting.
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Your vote is
important. To
ensure that your shares are voted at the meeting, we encourage you to act
promptly. Please vote, sign, date and return the enclosed proxy
card.
We
look forward to seeing you at the meeting.
Sincerely,
James
Monroe III
Chairman
of the Board
Milpitas,
California
April __,
2010
Important
Notice Regarding the Availability of Proxy Materials for the
Stockholder
Meeting to Be Held on May 25, 2010
The
proxy statement and annual report are available at
www.globalstar.com.
TABLE OF CONTENTS
Information
about the Meeting, Voting and Attendance
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1
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Security
Ownership of Principal Stockholders and Management
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4
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Discussions
of Proposals to be Voted on:
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6
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Proposal
1: Election of Directors
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6
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Proposal
2: Ratification of the Conversion
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10
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Proposal
3: Ratification of the Selection of Independent Registered Accounting
Firm
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Information
about the Board and its Committees
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12
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Compensation
of Directors
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17
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Executive
Officers
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18
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Compensation
of Executive Officers
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19
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Compensation
Discussion and Analysis
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19
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Summary
Information
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22
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Equity
Compensation Plan Information
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29
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Other
Information
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29
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PROXY
STATEMENT
GLOBALSTAR,
INC.
Annual
Meeting of Stockholders
May
25, 2010
INFORMATION
ABOUT THE MEETING, VOTING AND ATTENDANCE
We are sending you this proxy statement
and the enclosed proxy card because our Board of Directors (the “Board”) is
soliciting your proxy to vote your stock at our 2010 Annual Meeting of
Stockholders (the “Annual Meeting”). At the Annual Meeting,
stockholders will be asked to elect two Class A Directors, to ratify the
Conversion, to ratify the selection of Crowe Horwath LLP as our independent
registered public accounting firm, and to consider any other matters that may
properly be brought before the meeting. You are invited to attend the
Annual Meeting, where you may vote your stock directly. However,
whether or not you attend the Annual Meeting, you may vote by proxy as described
on the next page.
We expect
to begin mailing these proxy materials on or about April __, 2010 to
stockholders of record at the close of business on April 15, 2010 (the “Record
Date”).
Who
Can Vote
Only holders of our voting common stock
at the close of business on the Record Date are entitled to vote at the Annual
Meeting. On the Record Date, there were 279,494,779 shares of voting
common stock outstanding and entitled to vote. Each share of voting
common stock that you owned as of the Record Date entitles you to one vote on
each matter to be voted on at the Annual Meeting. Holders of our
nonvoting common stock are not entitled to vote those shares at the Annual
Meeting and will not be included in determining a quorum or the number of votes
required for passage of matters at the Annual Meeting. Unless the
context otherwise requires, references to common stock in this proxy statement
mean our voting common stock.
Shares Held of Record
— If you are a stockholder of record, you can vote before or at the Annual
Meeting on the matters to be presented in either of the ways described
below. If you vote by proxy card, you are authorizing the persons
named on the enclosed proxy card (the “management proxies”) to vote your stock
in the manner you direct.
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·
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By Mail — You
may vote by completing, signing, dating and returning the enclosed proxy
card. This proxy card must be received by the close of business
on May 24, 2010.
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·
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In Person — You
may come to the Annual Meeting and cast your vote
there.
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Shares Held in “Street
Name” — If your shares are held in the name of your broker, bank or other
nominee on the Record Date, the nominee should be contacting you to seek your
instructions on how to vote. If you do not instruct your nominee
before the Annual Meeting as to how you wish to vote, then under currently
applicable rules the nominee will have discretionary authority to vote your
shares on the ratification of the appointment of our independent registered
public accounting firm but will not have discretion to vote your shares on the
election of directors or approval of the Conversion.
Voting
Authority of Management Proxies
If you are a stockholder of record and
you vote by proxy, the management proxies will vote as directed by
you. If you are a stockholder of record and you send in a properly
executed proxy card without specific voting instructions, your shares of Common
Stock represented by the proxy will be voted as recommended by the Board,
namely:
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·
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FOR
the election of all nominees for
director.
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·
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FOR
the approval of the Conversion.
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·
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FOR
the ratification of the appointment of our independent accounting
firm.
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Our
Chairman and controlling stockholder, Mr. James Monroe III, has informed us that
he intends to vote, on behalf of himself and the entities he controls, in favor
of the three proposals, which assures approval of all three
proposals.
Other Business — We
are not aware of any other matter that is expected to be acted on at the Annual
Meeting.
How
to Change or Revoke Your Proxy Vote
Shares Held of Record
— If you send in a proxy card and later want to change or revoke your vote, you
may do so at any time provided that your instructions are received before voting
by proxy closes at the close of business on May 24, 2010 or if you vote at the
meeting. You may change or revoke your vote in any of the following
ways:
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·
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by
mailing new voting instructions to us on a proxy card with a later
date;
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·
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by
notifying our Corporate Secretary in writing (at the address listed at the
end of this proxy statement) that you have revoked your proxy;
or
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·
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by
voting in person at the Annual
Meeting.
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Shares Held in “Street
Name” — You should follow the instructions given to you by your broker or
nominee on how to change or revoke your vote.
You may
use any of these methods to change your vote, regardless of the method used
previously to submit your vote. Representatives of Computershare will
count only the most recent vote received and serve as the independent inspectors
of election for the meeting.
Quorum
Requirement
A quorum of stockholders is necessary
to hold a valid meeting. A quorum will exist if holders of a majority
of the shares of common stock entitled to vote at the meeting (139,747,390
shares) are present in person or by proxy. Abstentions, broker
non-votes and votes withheld from director nominees count as shares of common
stock present at the meeting for purposes of establishing a quorum.
Method
and Cost of Soliciting Proxies
We have asked banks, brokers and other
financial institutions, nominees and fiduciaries to forward our proxy material
to beneficial owners and to obtain authority to execute proxies on their behalf,
and we will reimburse them for their expenses in doing so. Proxies
also may be solicited by our management, without additional compensation,
through the mail, in person, or by telephone or electronic means.
Admission
to the Meeting
Admission to the Annual Meeting will be
limited to our stockholders of record, persons holding proxies from our
stockholders of record and beneficial owners of our common stock. If
your common stock is registered in your name, we will verify your ownership at
the meeting in our list of stockholders as of the Record Date. If
your common stock is held through a broker or a bank, you must bring to the
meeting proof of your beneficial ownership of the stock. This could
consist of, for example, a bank or brokerage firm account statement that shows
your ownership as of the Record Date or a letter from your bank or broker
confirming your ownership as of the Record Date.
SECURITY
OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The
following table shows (i) the number of shares of common stock beneficially
owned as of the Record Date by each director and nominee for director, by each
current executive officer named in the Summary Compensation Table, and by all
directors, nominees and executive officers as a group and (ii) all the persons
who were known to be beneficial owners of five percent or more of our common
stock, our only voting securities, on April 15, 2010 based upon
279,494,779 shares of common stock outstanding as of that
date. Holders of our common stock are entitled to one vote per
share.
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Amount and Nature of
Beneficial Ownership
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Common
Stock
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Name
of Beneficial Owner(1)
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Shares
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Percent
of
Class
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James
Monroe III
Globalstar
Holdings, LLC
Thermo
Funding Company LLC
Globalstar
Satellite, L.P.(2)
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248,770,746 |
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69.9
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% |
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Columbia
Wanger Asset Management, L.P. (3)
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16,843,900 |
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6.0
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% |
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Steelhead
Partners, LLC (“Steelhead”); Steelhead Navigator Master, L.P.
(“Navigator”); James Michael Johnston (“Johnston”); Brian Katz Klein
(“Klein”) (4)
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14,783,565 |
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5.3
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% |
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Whitebox
Advisors, LLC (“WA”), Whitebox Convertible Arbitrage Advisors, LLC
(“WCAA”); Whitebox Convertible Arbitrage Partners, L.P. (“WCAP”); Whitebox
Concentrated Convertible Arbitrage Fund , L.P. (“WCCAFLP”); Whitebox
Concentrated Convertible Arbitrage Fund, Ltd. (“WCCAFLTD”); Whitebox
Combined Advisors, LLC (“WCA”); Whitebox Combined Partners, L.P. (“WCP”);
Whitebox Multi-Strategy Fund, L.P. (“WMSFLP”); Whitebox Multi-Strategy
Fund, Ltd. (“WMSFLTD”); Pandora Select Advisors, LLC (“PSA”); Pandora
Select Partners, L.P. (“PSP”); Pandora Select Fund, L.P. (“PSFLP”);
Pandora Select Fund, Ltd. (“PSFLTD”); Whitebox Special Opportunities
Advisors, LLC (“WSOPA”); Whitebox Special Opportunities Fund, L.P.
(“WSOPFLP”); Whitebox Special Opportunities Fund SPC, Ltd. (“WSOPFLTD”);
Whitebox Special Opportunities Fund, L.P, Series B (“WSOPFLPB”); Whitebox
Special Opportunities Fund, Ltd. – Segregated Portfolio B (“WSOPFLTDB”);
IAM Mini-Fund 14 Limited (“IAM”) (5)
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14,184,413 |
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5.1
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% |
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Peter
J. Dalton(6)
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1,966,332 |
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* |
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William
A. Hasler(7)
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179,167 |
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* |
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Kenneth
E. Jones(7)
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687,931 |
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* |
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James
F. Lynch(7)
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179,167 |
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* |
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J.
Patrick McIntyre(8)
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403,817 |
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* |
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Richard
S. Roberts(7)
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179,167 |
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* |
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Fuad
Ahmad
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321,279 |
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* |
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Anthony
J. Navarra
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622,997 |
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* |
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All
directors and executive officers as a group (10 persons) (2)(6)(7)(8)
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253,316,078 |
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71.5
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% |
*Less
than 1% of outstanding shares.
1.
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“Beneficial
ownership” is a technical term broadly defined by the Securities and
Exchange Commission (“SEC”) to mean more than ownership in the usual
sense. Stock is “beneficially owned” if a person has or shares
the power (a) to vote it or direct its vote or (b) to sell it or direct
its sale, even if the person has no financial interest in the
stock. Also, stock that a person has the right to acquire
within 60 days is considered to be “beneficially owned.” Unless
otherwise noted, each person has full voting and investment power over the
stock listed.
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2.
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The
address of Mr. Monroe, Globalstar Holdings, LLC, Globalstar Satellite,
L.P. and Thermo Funding Company LLC is 1735 Nineteenth Street, Denver, CO
80202. This number includes 38,640,750 shares held by
Globalstar Holdings, LLC, 146,055,497 shares held by Thermo Funding
Company LLC, 618,558 shares held by Globalstar Satellite, L.P., and
515,000 shares held by Mr. Monroe’s trust. Under SEC rules
noted in footnote 1, Mr. Monroe also beneficially owns 179,167 shares
pursuant to vested options (excluding options to purchase 20,833 shares
that become exercisable more than 60 days after the Record Date);
19,275,750 shares issuable to Thermo Funding Company upon conversion of
our nonvoting common stock held by it; 6,581,037 shares issuable to his
trust upon conversion of our 8% Convertible Senior Unsecured Notes held by
the trust; and 17,629,237 shares issuable to his trust or Thermo Funding
upon exercise of certain warrants. This would represent
approximately 81.9% ownership. The terms of the nonvoting
common stock and the warrants prohibit conversions and exercises if the
resulting ownership for Thermo entities and affiliates would represent 70%
or more of our outstanding voting stock. Mr. Monroe controls,
either directly or indirectly, each of Globalstar Satellite, L.P.,
Globalstar Holdings, LLC and Thermo Funding and, therefore, is deemed the
beneficial owner of the common stock held by these
entities.
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3.
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Based
on information provided by Columbia Wanger Asset Management, L.P., a
registered investment adviser, in Amendment #3 to Schedule 13G filed on
February 11, 2010. The shares reported include those owned by
Columbia Acorn Trust. The address of Columbia Wanger Asset
Management, L.P. is 227 W. Monroe Street, Suite 3000, Chicago, IL
60606.
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4.
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Based
on information provided by Steelhead in Amendment #1 to Schedule 13G filed
January 29, 2010. The address of Steelhead, Johnston, Klein and
Navigator is 1301 First Avenue, Suite 201, Seattle, WA
98101. Steelhead reported sole voting and investment power over
14,783,565 shares of common stock and Johnston and Klein reported shared
voting and investment power over 14,783,565 shares of common stock as
member-managers of Steelhead. Steelhead, Johnston and Klein
disclaim beneficial ownership. Navigator reported sole voting
and investment power over 14,603,565 shares of common
stock.
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5.
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Based
on information provided by WA et al. in
Amendment #1 to Schedule 13G filed on February 10, 2010. The
address of WA, WCAA, WCCAFLP, WCA, WMSFLP, PSA, PSFLP, WSOPA, WSOPFLP and
WSOPFLPB is 3033 Excelsior Boulevard, Suite 300, Minneapolis, Minnesota
55416. The address of WCP, WCAP, WCCAFLTD, WMSFLTD, PSP,
PSFLTD, WSOPFLTD and WSOPLLTDP is Trident Chambers, Box 146, Waterfront
Drive, Wickhams Cay, Road Town, Tortola, British Virgin
Islands. The address of IAM is Boundary Hall, Cricket Square,
George Town, Grand Cayman, KY1-1102 Cayman Islands. WA has
shared voting and investment power with respect to 14,184,413 shares of
common stock. WCA, WCP, WMSFLP and WMSFLTD have shared voting
and investment power with respect to 6,085,307 shares of common
stock. WCAA, WCAP, WCAFLP and WCAFLTD have shared voting and
investment powers with respect to 4,515,523 shares of common
stock. PSA, PSP, PSFLP and PSFLTD have shared voting and
investment power with respect to 1,875,100 shares of common
stock. WSOPA, WSOPFL, WSOPFLTD, WSOPFLPB and WSOPFLTDB have
shared voting and investment power with respect to 625,033 shares of
common stock. The shares of voting common stock include shares
of common stock which may be issued upon conversion of our 5.75%
Convertible Senior Notes due 2028.
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6.
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Includes
1,965,834 shares of common stock that he may acquire upon the exercise of
currently exercisable stock options. Excludes options to
purchase 54,166 shares of common stock that become exercisable more than
60 days after the Record Date and options to purchase 1,500,000 shares of
common stock that become exercisable if the price of our common stock
exceeds $3.00 for 20 consecutive trading
days.
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7.
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Includes
179,167 shares of common stock that he may acquire upon the exercise of a
currently exercisable stock option. Excludes options to
purchase 20,833 shares of common stock that become exercisable more than
60 days after the Record Date.
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8.
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Includes
345,834 shares of common stock that he may acquire upon the exercise of a
currently exercisable stock option. Excludes options to purchase 54,166
shares of common stock that become exercisable more than 60 days after the
Record Date.
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Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities
Exchange Act of 1934 requires our executive officers and Directors and persons
who own more than 10% of any class of our equity securities to file forms with
the SEC and Nasdaq reporting their ownership and any changes in their ownership
of those securities. These persons also must provide us with copies
of these forms when filed. Based on a review of copies of those
forms, our records, and written representations from our Directors and executive
officers that no other reports were required, we believe that, except as
described below, all Section 16(a) filing requirements were complied with during
and for 2009, except for one Form 4 for each of Messrs. Monroe, Dalton and
McIntyre.
DISCUSSION
OF PROPOSALS TO BE VOTED ON
PROPOSAL
1: ELECTION OF DIRECTORS
Our
bylaws provide for a Board of seven members. The Board currently
consists of seven members.
Our Board
is divided into three classes, with staggered three-year terms. Each
of Class A and B consists of two directors, and Class C consists of three
directors. The terms of the directors of each class expire at the
annual meetings of stockholders to be held in 2010 (Class A), 2011 (Class B),
and 2012 (Class C). At each annual meeting of stockholders, one class
of directors will be elected for a term of three years to succeed the directors
whose terms are expiring. The current Directors are: Class
A – Richard S. Roberts and J. Patrick McIntyre; Class B – James F. Lynch and
Kenneth E. Jones; and Class C – Peter J. Dalton, William A. Hasler and James
Monroe III.
Upon
recommendation of the Nominating and Governance Committee, the Board has
nominated J. Patrick McIntyre and Richard S. Roberts for election as Class A
Directors at the Annual Meeting due, in part, to each nominee’s business
experience, qualifications, skills and attributes described below. Each of these
nominees has consented to being named in this proxy statement and has agreed to
serve if elected. If you elect them, they will hold office until the
annual meeting to be held in 2013 or until their successors have been elected
and qualified. The Board is not aware of any reason why either
nominee would be unable to serve as a director if elected. If prior to the
Annual Meeting either nominee should become unable to serve as a director, the
management proxies may vote for another nominee proposed by the Board, although
proxies may not be voted for more than two nominees. If any director
resigns, dies or is otherwise unable to serve out his term, or if the Board
increases the number of directors, the Board may fill the vacancy for the
balance of that director’s term. Under our Bylaws, only the Board may
fill vacancies on the Board.
Information
about Nominees for Director
The nominees for election as Class A
Directors are as follows:
Class
A
Name, Age, and
Tenure As Director
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|
Current
Committee
Memberships
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Current Occupation and Employment Background
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J.
Patrick McIntyre
Age
53
Director
since May 2007
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Audit;
Compensation;
Nominating and Governance
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|
Mr.
McIntyre has, since May 2009, served as Chairman and Chief Executive
Officer of ET Water, an early stage technology company in the commercial
irrigation market, and since February 2009 has served as Chairman of Big
Fish America, LLC, a private investment company that owns Northland
Fishing Tackle. Mr. McIntyre was President and Chief Operating
Officer of Lauridsen Group Incorporated, a privately owned holding company
that owns and operates numerous businesses involved in the global
development, manufacturing and selling of functional proteins from January
2007 to December 2008. From June 2003 until December 2006, he
was Chief Executive Officer of Pure Fishing, a global producer of sport
fishing equipment, and Worldwide Managing Director of Pure Fishing from
February 1996 until his promotion to Chief Executive Officer.
Mr.
McIntyre’s extensive experience in consumer products and global business
development provides important insight in the launch and expansion of our
SPOT satellite GPS messenger™.
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Richard
S. Roberts
Age
64
Director
since April 2004
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|
Nominating
and Governance (Chair)
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|
Mr.
Roberts has served as our Corporate Secretary since April 2004 and as Vice
President and General Counsel of Thermo Development Inc., the management
company of many Thermo businesses, since June 2002. Prior to
that he was a partner of Taft Stettinius & Hollister LLP, a law firm
whose principal office is located in Cincinnati, Ohio, for over 20
years. Mr. Roberts is a limited partner of Globalstar
Satellite, L.P.
Mr.
Roberts brings to the Board his broad understanding of legal and
regulatory issues and corporate governance, based on over 30 years of
experience.
|
Information
about Continuing Directors
Class
B
Name, Age, and
Tenure As Director
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Current
Committee
Memberships
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Current Occupation and Employment Background
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Kenneth
E. Jones
Age
63
Director
since January 2007
Term
Expires in 2011
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Audit;
Nominating
and Governance
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|
Mr.
Jones has served as non-executive Chairman of Globe Wireless, Inc., a
maritime communications business, since 1994. From January 1994
to August 2004, he served as Globe’s chief executive
officer. Mr. Jones was a director of Landec Corp. in the past
five years.
As
an experienced executive of a telecom business and director of other
public companies, Mr. Jones provides broad knowledge on industry trends
and corporate governance.
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|
|
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James
F. Lynch
Age
52
Director
since December 2003
Term
Expires in 2011
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|
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|
Mr.
Lynch has been Managing Partner of Thermo Capital Partners, L.L.C., a
private equity investment firm, since October 2001. Mr. Lynch
also served as Chairman of Xspedius Communications, LLC, a competitive
local telephone exchange carrier, from January 2005 until its acquisition
by Time Warner Telecom in October 2006 and as Chief Executive Officer of
Xspedius from August 2005 to March 2006. Prior to joining
Thermo, Mr. Lynch was a Managing Director at Bear Stearns &
Co. Mr. Lynch is a limited partner of Globalstar Satellite,
L.P.
Mr.
Lynch brings extensive financial management experience, especially in the
telecom industry, to the
Board.
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Class
C
Name, Age, and
Tenure As Director
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Current
Committee
Memberships
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Current Occupation and Employment Background
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Peter
J. Dalton
Age
66
Director
since January 2005
Term
Expires in 2012
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|
Compensation
|
|
Mr.
Dalton has served as our Chief Executive Officer since July 2009 and has
been chief executive officer of Dalton Partners, Inc., a turnaround
management firm, since January 1989. As chief executive officer
of Dalton Partners, Inc., Mr. Dalton also has served as chief executive
officer and director of a number of its clients, including as CEO of
Lightning Bug, Inc., a LED lighting startup, from November 2006 to
February 2009. From November 2001 to September 2004, Mr. Dalton
served as chief executive officer of Clickhome Reality, Inc., a discount
real estate and mortgage company.
For
more than 30 years, Mr. Dalton has served in executive and director
capacities for numerous private and public companies, and brings important
experience to position us for long-term growth.
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|
|
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|
William
A. Hasler
Age
68
Director
since July 2009
Term
Expires in 2012
|
|
Audit
(Chair)
|
|
Mr.
Hasler served from 1984 to July 1991 as Vice Chairman of KPMG Peat
Marwick, an international public accounting firm, from July 1991 to July
1998 as Dean of the Haas School of Business, University of California,
Berkeley, and from July 1998 to July 2004 as Co-Chief Executive Officer of
Aphton Corp., a biotechnology firm. He is a certified public
accountant. Mr. Hasler currently serves as a director of DiTech
Networks Corp., Harris Stratex Networks, Mission West Properties and the
Schwab Funds, and has served as a director of Aphton Corp., Genitope
Corp., Selectron Corp., and Tousa Inc. in the past five
years.
Mr.
Hasler has an extensive financial background and financial reporting
expertise. His financial leadership roles on other public
company boards is well-suited to be both one of our directors and Chair of
our Audit Committee.
|
James
Monroe III
Age
55
Director
since December 2003
Term
Expires in 2012
|
|
Compensation
(Chair)
|
|
Mr.
Monroe has served in an executive capacity as our Chairman of the Board
since April 2004. He was our Chief Executive Officer from
January 2005 until July 2009. Since 1984, Mr. Monroe has been
the majority owner of a diverse group of privately owned businesses that
has operated in the fields of telecommunications, real estate, power
generation, industrial equipment distribution, financial services and
leasing services and that are sometimes referred to collectively in this
proxy statement as “Thermo.” Mr. Monroe controls directly or
indirectly Globalstar Holdings, LLC, Globalstar Satellite, L.P. and Thermo
Funding.
In
addition to being our primary financial sponsor, Mr. Monroe brings his
long-term experience in investment, financing and the telecom and other
industries to the Board.
|
Vote
Required to Elect Directors
The two nominees who receive the
highest number of votes cast (a plurality) will be elected as
directors. There is no provision for cumulative voting in the
election of directors. If you do not vote for a particular nominee,
or if you indicate “withhold authority” to vote for a particular nominee, your
vote will not count “for” the nominee. “Abstentions” and “broker
non-votes” will not count as a vote cast with respect to that nominee’s
election. However, as described earlier in this proxy statement, in
these cases your vote will be counted for purposes of determining a
quorum.
Board
Recommendation
The Board
recommends that stockholders vote FOR the election of the two Class A director
nominees.
PROPOSAL
2: RATIFICATION OF THE CONVERSION
As
described in further detail in “Reportable Related Party Transactions and
Compensation Committee Interlocks and Insider Participation,” in 2009 we entered
into several agreements with Thermo Funding to meet certain conditions precedent
to the funding of our new $586.3 million credit facility (the Facility
Agreement). In advance of the funding of the Facility Agreement,
Thermo Funding provided cash to meet our working capital needs under a
short-term, unsecured promissory note.
In
January 2010, Thermo Funding agreed with us, upon recommendation and approval of
the Board, to convert our promissory note held by Thermo Funding in the
principal amount of $2,259,531 (plus accrued interest) into 2,525,750 shares of
our nonvoting common stock. Thermo Funding agreed that the shares
would not be convertible into voting common stock until stockholder approval was
obtained in accordance with the Nasdaq Listing Rules or if the issuance of
voting common stock would cause Thermo Funding and its affiliates to own more
than 70% of our outstanding voting stock. We believed this was
beneficial to us as a reduction of our outstanding debt. The conversion occured
on January 25, 2010.
Our
Executive Chairman James Monroe III controls Thermo Funding and its affiliates,
and is an indirect beneficial owner of the securities issued in the Conversion.
Through his affiliates, Mr. Monroe is able to control the election of all of the
members of our Board and the vote on substantially all other matters, including
significant corporate transactions such as the approval of a merger or other
transactions involving our sale. As a controlled company under the Nasdaq
Listing Rules, we are exempt from certain corporate governance requirements. Two
of our directors who are not independent, James F. Lynch and Richard S. Roberts,
have other affiliations with Mr. Monroe.
We have
depended substantially on Mr. Monroe's affiliates to provide capital to finance
our business. In 2006 and 2007, Thermo Funding purchased an aggregate of $200
million of our common stock at prices substantially above
market. Thermo Funding also was our lender under our Second Amended
and Restated Credit Agreement. In 2009 Thermo Funding converted
outstanding principal and accrued interest of approximately $180 million under
this credit agreement into Series A Preferred Stock, which it subsequently
converted into a combination of voting and nonvoting common stock. In
2009 Mr. Monroe's affiliates also purchased $11.4 million principal amount of
our 8.00% Convertible Senior Unsecured Notes and provided other funding to meet
other conditions precedent to the funding of the Facility
Agreement.
Vote
Required to Ratify the Conversion
The
affirmative vote of a majority of our outstanding shares of common stock
entitled to vote on January 19, 2009, or 137,378,795 shares, is required to
ratify and approve the Conversion under the Nasdaq Listing Rules.
Board
Recommendation
The Board
recommends that stockholders vote FOR ratification and approval of the
Conversion.
INFORMATION
ABOUT THE BOARD AND ITS COMMITTEES
Board
Governance, Meetings and Attendance at Meetings
Our Board has three standing
committees: Audit, Compensation, and Nominating and
Governance. The Board established these committees on October 23,
2006, at which time it also adopted a charter for each standing
committee. In addition, on August 1, 2008, the Board, having
determined that Messrs. Dalton, Jones and McIntyre were “disinterested
directors” under Section 144 of the Delaware General Corporation Law, appointed
these directors to serve as a Special Committee to act on our behalf to review,
evaluate, negotiate and approve any proposed transactions with Thermo that may
be required because of our capital requirements. This committee’s
authority expired on December 31, 2008. On April 3, 2009, the Board
extended the Special Committee’s authority through December 31,
2009. On July 8, 2009, Mr. Hasler replaced Mr. Dalton on the Special
Committee.
We have a
Code of Conduct that is applicable to all employees, including executive
officers, as well as to directors to the extent relevant to their service as
directors. The committee charters and Code of Conduct are available on our
website at www.globalstar.com by
clicking on “Corporate Site,” “Investor Relations” and “Corporate
Governance.” You may request a copy of any of these documents to be
mailed to you as described on page 35 of this proxy statement. We
will post any amendments to, or waivers from, the Code of Conduct that apply to
our principal executive and financial officers on our website.
Thermo and its affiliates hold stock
representing a majority of our voting power. See “Security Ownership of
Principal Stockholders and Management.” As a result, we are a
“controlled company” for purposes of the Nasdaq Listing Rules and are not
required to have a majority of independent Directors on the Board or to comply
with the requirements for compensation and nominating/governance
committees. However, we are subject to all other Nasdaq corporate
governance requirements, including the rule requiring that the audit committee
be composed entirely of independent directors.
The Board
has determined that Messrs. Hasler, Jones and McIntyre are independent directors
as defined in Rule 10A-3 under the Securities Exchange Act of 1934 and in the
Nasdaq Listing Rules. This determination was based on the absence of
any relationship known to the Board between Messrs. Hasler, Jones or McIntyre
and us (other than as a director and stockholder) and the Board’s conclusion
that the relationships described below do not affect the independence of any of
them as a Director.
Messrs.
Dalton, Hasler and McIntyre are directors of ET Water, a privately held company
of which Mr. Dalton was formerly Chairman. Mr. McIntyre is the
current Chairman and Chief Executive Officer of ET Water. Mr. Jones
is an investor in ET Water. Messrs. Hasler and Jones are minority
equity owners in Globe Wireless and Mr. Jones serves as non-executive
chairman. In 2009 we purchased approximately $3.7 million of services
and equipment from Globe Wireless. All of these purchases were made
on customary terms and conditions.
During 2009, the Board held 14 meetings
and took action by unanimous written consent five times. Each
director serving on the Board in 2009 attended at least 75% of the meetings of
the Board and of each committee on which he served.
We expect directors to attend the
Annual Meeting. Four of the seven directors then in office attended
the 2009 Annual Meeting.
From our
initial public offering in November 2006 until July 2009, Mr. Monroe served as
our Chairman and Chief Executive Officer. Although the Board intended
to separate the positions, Mr. Monroe continued his dual service to concentrate
on the strategic and financing issues we faced. Upon the completion of our
financing, the Board, with input from Mr. Monroe, changed our leadership
structure so that the Chief Executive Officer and Chairman of the Board
positions would be held by separate individuals. The Board determined that this
change in the leadership structure would benefit us as we prepared for the
launch of our second generation satellite constellation. Mr. Monroe
continues to perform executive duties as Chairman of the Board but in a more
limited degree than he did as CEO.
Board’s Role in
Risk Oversight
The Board
has determined that the role of risk oversight will remain with the full Board
as compared to having responsibility delegated to a specific committee,
although the Audit Committee continues its focus on accounting and financial
risks. Our executive officers evaluate and manage day-to-day risks
and report regularly to the Board on such matters.
Audit
Committee
The
current members of the Audit Committee are Messrs. Hasler, Jones and
McIntyre. Mr. Hasler serves as Chairman, and the Board has determined
that he is an “audit committee financial expert” as defined by SEC
rules.
The
principal functions of the Audit Committee include:
|
·
|
appointing
and replacing our independent registered public accounting
firm;
|
|
·
|
approving
all fees and all audit and non-audit services of the independent
registered public accounting firm;
|
|
·
|
annually
reviewing the independence of the independent registered public accounting
firm;
|
|
·
|
assessing
annual audit results;
|
|
·
|
periodically
reassessing the effectiveness of the independent registered public
accounting firm;
|
|
·
|
reviewing
our financial and accounting policies and its annual and quarterly
financial statements and earnings
releases;
|
|
·
|
reviewing
the adequacy and effectiveness of our internal accounting controls and
monitoring progress for compliance with Section 404 of the Sarbanes-Oxley
Act;
|
|
·
|
overseeing
our programs for compliance with laws, regulations and company
policies;
|
|
·
|
approving
all related person transactions;
|
|
·
|
considering
any requests for waivers from our Code of Conduct for senior executive and
financial officers (any such waivers being subject to Board approval);
and
|
|
·
|
in
connection with the foregoing, meeting with our independent registered
public accounting firm and financial
management.
|
During 2009, the Audit Committee held
four meetings and took action by unanimous written consent once.
The Audit Committee has furnished the
following report for inclusion in this proxy statement.
Audit Committee Report for
2009
In
addition to other activities, the Committee:
|
·
|
reviewed
and discussed with management the Company’s audited financial statements
for 2009;
|
|
·
|
discussed
with Crowe Horwath LLP, the Company’s independent registered public
accounting firm, the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended (AICPA, Professional Standards,
Vol. I, AU 380), as adopted by the Public Company Accounting Oversight
Board in Rule 3200T, including significant accounting policies,
management’s judgments and accounting estimates, and Crowe Horwath’s
judgments about the quality of the Company’s accounting principles as
applied in its financial reporting;
and
|
|
·
|
received
the written disclosures and the letter from Crowe Horwath required by the
applicable requirements of the Public Company Accounting Oversight Board
regarding the independent accountant’s communications with the Audit
Committee concerning the accountant’s independence from the Company and
its subsidiaries, and discussed with Crowe Horwath their
independence.
|
Based on
the reviews and discussions referred to above, the Committee recommended to the
Board of Directors that the audited financial statements for the year ended
December 31, 2009 be included in the Company’s Annual Report on Form 10-K for
filing with the Securities and Exchange Commission.
April 15,
2010
William A. Hasler (Chair)
Kenneth
E. Jones
J. Patrick McIntyre, Jr.
Compensation
Committee
The
current members of the Compensation Committee are Messrs. Monroe, Dalton and
McIntyre. Mr. Monroe serves as Chairman. The principal
functions of the Compensation Committee include:
|
·
|
reviewing
and approving corporate goals and objectives relevant to the compensation
of our executive officers in light of business strategies and
objectives;
|
|
·
|
reviewing
and recommending to the Board all compensation of our chief executive
officer and other executive officers;
and
|
|
·
|
administering
our incentive compensation plans, including the 2006 Equity Incentive
Plan, and, in this capacity, recommending all grants or awards to our
Directors, executive officers and other eligible participants under these
plans to the Board.
|
As
indicated above, the Compensation Committee is responsible for recommending the
compensation of each of our executive officers to the full
Board. (Director compensation is established by the full Board, based
upon recommendations of the Nominating and Governance Committee.) The
Compensation Committee may delegate tasks to a subcommittee for any purpose and
with such power and authority as it deems appropriate and has delegated to Mr.
Monroe the review of corporate goals objectives and compensation related to
executive officers. The Committee has designated Mr. Roberts to act
as an officer-administrator to approve actions on behalf of the Committee to
implement existing compensation awards under the 2006 Equity Incentive
Plan. Only the Compensation Committee or the Board may grant awards
to, or make decisions regarding awards granted to, executive officers and
directors.
Mr.
Monroe makes decisions on all components of compensation for all employees of
vice president level and above and reviews manager level employees and above for
bonus and equity awards based upon input from executive officers in charge of
each business unit. Mr. Monroe does not receive a salary from us and,
notwithstanding his position as executive Chairman, does not participate in any
of our incentive compensation plans. The Committee will review
annually the total business expense reimbursements paid to Thermo (described
under “Other Information – Related Person Transactions”) without Mr. Monroe’s
participation in the review.
The
Compensation Committee meets in person as often as it determines necessary to
discharge its responsibilities, which it expects to be approximately twice a
year. The Committee may hold follow-up conference calls and act by
written consent in between its regularly scheduled meetings. In 2009
the Compensation Committee acted 13 times by unanimous written consent,
including written actions by the designated
officer-administrator. Unless a later date is specified, the date of
grant of any award made by unanimous written consent is the date on which the
last consent is received by our Corporate Secretary.
Under its
charter, the Committee has the authority to retain and terminate a compensation
consultant, but has not retained one.
The
Compensation Committee has furnished the following report for inclusion in this
proxy statement.
Compensation Committee
Report
The
undersigned comprise the members of the Compensation Committee of the Company’s
Board of Directors.
The
Committee has reviewed and discussed the Compensation Discussion and Analysis
presented above with the Company’s management. Based upon that review and
those discussions, the Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement.
April 15,
2010
|
James
Monroe III, Chair
|
|
Peter
J. Dalton
|
|
J.
Patrick McIntyre, Jr.
|
Nominating
and Governance Committee
The
current members of the Nominating and Governance Committee are Messrs. Roberts,
Jones and McIntyre. Mr. Roberts serves as Chairman. The
principal functions of the Nominating and Governance Committee
include:
|
·
|
identifying
and recommending to the Board qualified candidates to fill vacancies on
the Board;
|
|
·
|
recommending
to the Board candidates to be nominated for election as directors at
annual meetings of stockholders;
|
|
·
|
considering
stockholder suggestions for nominees for
director;
|
|
·
|
making
recommendations to the Board regarding corporate governance matters and
practices;
|
|
·
|
reviewing
and making recommendations to the Board regarding director compensation;
and
|
|
·
|
reviewing
public policy matters of importance to our stockholders, including
oversight of our corporate responsibility
program.
|
The
Nominating and Governance Committee met twice and took action by written consent
once in 2009. We do not currently employ an executive search firm, or
pay a fee to any other third party, to locate or evaluate qualified candidates
for director positions. In the past, recommendations for new director
nominees were made by existing independent directors. The Board and
the Nominating and Governance Committee believe that the minimum qualifications
(whether recommended by a stockholder, management or the Board) for serving as a
director are that a nominee demonstrate, by significant accomplishment in his or
her field, an ability to make a meaningful contribution to the Board’s oversight
of our business and have an impeccable record and reputation for honest and
ethical conduct in both his or her professional and personal
activities.
Because
Mr. Monroe controls the election of all directors, the Board has not established
formal procedures for stockholders to submit director recommendations; however,
such recommendations may be sent to the Nominating and Governance Committee, c/o
Director, Public and Investor Relations, 461 S. Milpitas Blvd., Milpitas, CA
95035. If we were to receive a recommendation of a candidate from a
stockholder, the Nominating and Governance Committee would consider such
recommendation in the same manner as all other candidates. In
considering candidates submitted by stockholders, the Nominating and Governance
Committee will take into consideration the needs of the Board and the
qualifications of the candidate. We did not receive any
recommendations of candidates from stockholders during 2009.
Communicating
with the Board of Directors or with Individual Directors
The Board
has adopted a process for our stockholders to send communications to the Board
or any management or non-management director. Correspondence should
be addressed to the Board or any individual director(s) or group or committee of
Directors either by name or title. All such correspondence should be
sent c/o Director, Public and Investor Relations by mail to us at 461 South
Milpitas Blvd., Milpitas, CA 95035 or by fax at (408) 933-4954.
All
communications received as set forth in the preceding paragraph will be opened
by the office of the Director, Public and Investor Relations for the sole
purpose of determining whether the contents represent a message to the
Directors. Any contents that are not in the nature of promotion of a
product or service, advertising, or patently offensive will be forwarded
promptly to the addressee(s), but any communication will be available to any
director who requests it.
COMPENSATION
OF DIRECTORS
In 2009,
we provided the following compensation to our non-employee
directors:
2009 Director
Compensation
Name
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
Stock
Awards
($)
|
|
Option
Awards
($) (1)
|
|
All Other
Compensation
($) (2)
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(g)
|
|
(h)
|
|
James
Monroe III
|
|
— |
|
— |
|
— |
|
124,042 |
|
124,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
Dalton (3)
|
|
53,000 |
|
— |
|
— |
|
2,891 |
|
55,891 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth
E. Jones
|
|
— |
|
— |
|
— |
|
189 |
|
189 |
|
|
|
|
|
|
|
|
|
|
|
|
|
J.
Patrick McIntyre
|
|
44,000 |
|
— |
|
114,000 |
|
11,054 |
|
169,054 |
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Lynch
|
|
— |
|
— |
|
— |
|
21,523 |
|
21,523 |
|
|
|
|
|
|
|
|
|
|
|
|
|
William
Hasler
|
|
— |
|
— |
|
75,140 |
|
613 |
|
75,753 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Richard
Roberts
|
|
— |
|
— |
|
— |
|
64,569 |
|
64,569 |
|
1.
|
Represents
the market value at the date of grant relating to option awards granted to
directors. We determined the grant date fair value using a
binomial model.
|
2.
|
Represents
reimbursement for certain travel and meal expenses in connection with the
services of as directors.
|
3.
|
Mr. Dalton was appointed as our
Chief Executive Officer on July 8, 2009. All compensation
listed on this table was prior to that
date.
|
In
November 2008, the Board approved a change in our director compensation
structure. In lieu of the last two quarterly grants to the independent
directors of restricted common stock in payment of 2008 board fees (with a total
value of $15,000), and in consideration of future service on the Board through
November 1, 2010, the Board granted options to each then-current director
to purchase 200,000 shares of common stock at an exercise price of $0.38 per
share, which was the closing price of the common stock on the date of
grant. We granted the options under the 2006 Equity Incentive Plan to all
directors, including our Corporate Secretary and then Chairman of the Board and
Chief Executive Officer. All of the options are vested, but options with
respect to 100,000 shares of common stock are subject to decreasing incremental
risk of forfeiture until November 1, 2010 on a monthly schedule based on
continued service as a director and other conditions. In August 2009,
the Board granted options to purchase 200,000 shares of common stock at an
exercise price of $0.90 per share to Messrs. Dalton and McIntyre for services
provided as members of a special Board committee focused on cost
reductions.
EXECUTIVE
OFFICERS
The
current executive officers of the Company are James Monroe III, Executive
Chairman; Peter J. Dalton, Chief Executive Officer; Anthony J. Navarra,
President, Global Operations; Fuad Ahmad, Senior Vice President and Chief
Financial Officer; Stuart Mar, Vice President and Chief Accounting Officer; and
Richard S. Roberts, Corporate Secretary. Information about Messrs. Monroe,
Dalton and Roberts is given above under “Election of Directors.”
Anthony J. Navarra, age 61,
has served as our President, Global Operations since January
2005. Mr, Navarra was a director from December 2003 until September
2004. He served as President of our predecessor Globalstar, L.P. and the company
from September 1999 to December 2004.
Fuad Ahmad, age 40, has served as our Senior
Vice President and Chief Financial Officer since January 2008 and served as Vice
President and Chief Financial Officer from June 2005 to January
2008. From June 1999 to May 2005, he served as Finance Director of
Globalstar, L.P. and the company, where he was involved in the initial
fundraising activities related to building and launching the Globalstar
system. He joined the company in June 1996 as Finance Manager. Prior
to that time, he was employed by Transworld Telecommunications, Inc., a private
equity financed firm engaged in acquiring telecommunications companies in the
United States.
Stuart Mar, age 44, has served as our
Vice President and Chief Accounting Officer since March 2010. Mr. Mar
joined us as Controller in April 2006. Before that he was a Senior
Finance Manager at IBM for the Applications on Demand division located in
Cupertino, California from March 2005 to April 2006. He also served
as Senior Accountant and Accounting Manager at Globalstar, L.P. from 1995 to
2000.
COMPENSATION
OF EXECUTIVE OFFICERS
Compensation
Discussion and Analysis
Overview
Our
compensation program for executive officers is intended to:
|
·
|
provide
each officer with a conservative base salary;
and
|
|
·
|
create
an incentive for retention and achievement of our long-term business goals
using a sizeable, multi-year stock or option bonus
program.
|
The
Compensation Committee and its designated officer-delegate (currently our
Corporate Secretary) are responsible for evaluating the performance of, and
reviewing and approving all compensation of, our executive officers, including
those executive officers named on the Summary Compensation Table (the “Named
Executive Officers”). The full Board also approves equity awards to all
executive officers, including the Named Executive Officers and directors, to
preserve the exemption from short swing liability under
Section 16(b) of the Securities Exchange Act of 1934.
Compensation
Philosophy
We have
designed our compensation structure for executive officers to attract and retain
the most qualified individuals in the mobile satellite service industry.
Our CEO receives a base salary marginally higher than our other Named Executive
Officers and was granted stock options to incentivize him for long-term
performance. We compensate our other senior executive officers party
to a Designated Executive Award Agreement with a conservative base salary and
incentivize them to remain with us through a long-term stock bonus
program. We implemented the stock bonus program in collaboration with the
senior executive officers in an effort to focus cash payments to our planned
capital expenditures for our second-generation satellite
constellation. We reviewed market data with respect to the base
salary component of this philosophy. The Compensation Committee has not
independently reviewed peer group or other market data in setting base salaries
or incentive compensation for senior executives.
We do not
believe that our compensation policies or practices are reasonably likely to
have a material effect on us, due in part on the structure of our compensation
programs and risk mitigation provided by Board oversight of significant business
decisions.
Elements
of Compensation
The
principal elements of our compensation for the Named Executive Officers are base
salary and the opportunity to receive annual bonus awards under the Designated
Executive Award Agreements pursuant to the Amended and Restated 2006 Equity
Incentive Plan. We also match a portion of all contributions by executives
to our 401(k) Plan or applicable Canadian plan, as well as providing
certain Named Executive Officers with limited perquisites.
Base
Salaries. We have established base salaries according to each
Named Executive Officer’s position, responsibilities and
performance. We do not pay Mr. Monroe a salary for his services as
Chairman and did not pay him a salary for his prior services as Chief Executive
Officer. We have not increased base salaries for the other Named
Executive Officers in the last five years, except, in the case of Mr. Ahmad, on
his promotion to Chief Financial Officer in June 2005 and to Senior Vice
President in December 2007. The salary for Mr. Navarra is
consistent with his prior salary during his employment by our predecessor,
Globalstar, L.P. Upon his appointment as Chief Executive
Officer, we agreed to pay a $360,000 annual base salary to Mr.
Dalton. All executive officers are at-will employees.
Dalton
Agreement.
On
September 23, 2009, the Board of Directors approved a non-qualified stock option
grant and performance-based bonus arrangement with Mr. Dalton. Mr.
Dalton received options to purchase 3,000,000 shares of common stock with an
exercise price of $0.83 per share (the closing price on the grant date), of
which 1,500,000 are vested and immediately exercisable. The remaining
options will vest and become exercisable only if the closing price of our common
stock exceeds $3.00 per share for a 20 consecutive trading day
period. Any unexercised or unvested options will be forfeited if Mr.
Dalton resigns from service as a Globalstar officer or director or is otherwise
unable to continue service, if Mr. Dalton declines nomination for an additional
term as a director or informs Globalstar he will not serve if elected to a new
term, or if a majority of the Board (other than Mr. Dalton) requests his
resignation for cause.
In
addition, Mr. Dalton will be entitled to a cash bonus if, during his service as
Chief Executive Officer and director, he is materially involved in arranging and
concluding the sale, exchange or transfer of all of our equity or all or
substantially all of our assets if the holders of our common stock receive at
least $3.00 per share before taxes. The bonus payment would be equal
to 1% of the difference between $3.00 and the per share purchase price for the
transaction multiplied by the number of outstanding shares of common stock
immediately prior to the closing of the transaction.
The
Compensation Committee and directors other than Mr. Dalton viewed this
arrangement as an appropriate arrangement to focus on long-term value
creation.
Designated Executive Award
Agreements. Effective August 10, 2007 (the “Effective
Date”), the Board, upon recommendation of the Compensation Committee, approved
the concurrent termination of the former cash-based Executive Incentive
Compensation Plan and the award of restricted stock or restricted stock units
under the 2006 Equity Incentive Plan to the Named Executive Officers who
participated at that time in the Executive Incentive Compensation Plan (the
“Participants”). Each award agreement provides that the Participant will
receive awards of restricted common stock or restricted stock units, which, upon
vesting, each entitle the Participant to one share of common
stock. Total benefits per Participant (valued at the grant date) are
approximately $6.0 million, which represented an increase of approximately $1.5
million in potential compensation compared to the maximum potential benefits
under the Executive Incentive Compensation Plan. However, the new
award agreements extended the vesting period by up to two years and provided for
payment in shares of common stock instead of cash, thereby enabling us to
conserve our cash for capital expenditures for the procurement and launch of our
second-generation satellite constellation and related ground station
upgrades.
Pursuant
and subject to the award agreements, one-third of the 71,499 shares awarded to
each Participant vested in each of 2008, 2009 and 2010 not earlier than the
third business day after we announce our financial results for the preceding
year (each an “Annual Vesting Date”), the 190,658 shares awarded to each
Participant will vest on the Annual Vesting Date in 2011, the 95,329 shares
awarded to each Participant on the Annual Vesting Date in 2008 also will vest on
the Annual Vesting Date in 2011 and the shares awarded on each of the Annual
Vesting Dates in 2008, 2009 and 2010 (the number of shares awarded on each
Annual Vesting Date was equal to 750,000 divided by the then market price of the
common stock) vested immediately upon their award. The remaining vesting
date is subject to postponement to the first date on which the shares may be
sold as permitted by our Insider Trading Policy and applicable law.
If we or
stockholders owning more than 50% of our outstanding voting stock enter into one
or more final and binding agreements that would result in a change of control
before all awards have been granted and all shares subject thereto have vested,
all non-granted awards or unvested shares under the awards will be granted or
vest seven trading days before the effective date of the change of control,
except in the following circumstances. If the agreement governing the
change of control transaction provides for assumption or substitution of the
Awards by the successor and requires that a Participant remain employed by us or
our successor for up to 12 months after the effective date of the change of
control at a compensation level not less than the compensation received (except
pursuant to the award agreement) prior to the change of control, the Participant
agrees, under certain circumstances, to accept employment and any unvested
awards at the effectiveness of the change of control will vest on the earlier of
12 months following the change of control or termination of the Participant’s
employment by us or our successor. If the agreement governing
the change of control transaction provides for assumption or substitution of the
awards by the successor and requires that a Participant remain employed by us or
our successor for more than 12 months after the effective date of the change of
control, the Participant agrees, under certain circumstances, to accept
employment for up to 24 months and any Awards will vest as to 50% on each of the
first and second anniversaries of the change of control unless the Participant
is terminated prior to those times or the vesting date in 2011
occurs.
All
Awards not previously granted or vested under the award agreements will be
granted and vested immediately (subject to our Insider Trading Policy and
applicable law) upon the Compensation Committee’s determination that at least 24
second-generation satellites have entered commercial service and are performing
satisfactorily in carrying two-way voice and data, revenue capable,
communications service.
Except in
the circumstances described below, termination of a Participant’s employment for
any reason or a Participant’s resignation for any reason will result in
forfeiture of previously awarded but unvested awards or restricted stock and
forfeiture of any right to receive additional awards. If we terminate a
Participant other than for cause before any annual vesting date, a pro rata
portion of the shares that would have vested on the next annual vesting date
will vest. If we terminate a Participant other than for cause and the
effective date of a change of control occurs within six months after such
termination, the unvested portion of the 2007 awards will vest, and the
ungranted and unvested portions of the Participant’s 2008, 2009 and 2010 awards
will be granted and vested on the effective date of the change of control.
In addition, if these exceptions do not apply and a Participant’s employment
terminates prior to the annual vesting date in 2011 due to the Participant’s
death or disability, the Participant’s legal beneficiary will receive any shares
that would have vested on the next annual vesting date.
All Other
Compensation. We match a portion of the
401(k) contributions of all U.S. employees, including Named Executive
Officers. In 2009, we contributed $0.50 for each $1.00 contributed by an
employee, up to 4% of the employee’s base salary. In addition,
Messrs. Navarra and Ahmad are eligible for a benefit under our Retirement
Plan. This Plan is frozen, and there was no change in value for these
Named Executive Officers in 2009. In Canada, we contributed to a
Retirement Savings Program for Mr. Bell. We valued the 2009
contribution at US $8,800 (exchange rate of CAD 1.00 = USD .88 on the date of
contribution).
We
provide limited perquisites to certain Named Executive Officers consisting
primarily of premiums for term life insurance policies, funding of flexible
spending accounts and, in one case, a car allowance.
We
reimburse Thermo for transportation, lodging and meal expenses incurred by
Messrs. Monroe, Lynch and Roberts in connection with performing their
services for us. These reimbursements are reviewed and approved for payment by
our Chief Financial Officer during the course of a year. The
Compensation Committee reviews the total reimbursement amount annually.
During 2009, we reimbursed Thermo approximately $210,000 for these
expenses.
Deductibility of
Compensation. Section 162(m) of the Internal Revenue Code
prohibits us from taking an income tax deduction for any compensation in excess
of $1 million per year paid to its chief executive officer or any of its other
three most-highly compensated executive officers, unless the compensation
qualifies as “performance-based” pay under a plan approved by
stockholders. We may or may not design future compensation programs
so that all compensation above $1 million will be performance-based to permit
deductibility.
Summary
Information
The table
below summarizes, for 2009, 2008 and 2007, the compensation of our current and
former principal executive officer, our principal financial officer, and our
three most highly paid other executive officers during 2009 (collectively
referred to as the “Named Executive Officers”).
2009
Summary Compensation Table
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
Awards
($)
|
|
Option
Awards ($)(1)
|
|
Non-Equity
Compensation
($)
|
|
Compensation
($)
|
|
|
Total ($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(i)
|
|
|
(j)
|
|
James
Monroe III
|
|
2009
|
|
— |
|
— |
|
— |
|
— |
|
124,042 |
(3)
|
|
124,042 |
|
Chairman
of the Board,
|
|
2008
|
|
— |
|
— |
|
22,620 |
|
— |
|
101,259 |
|
|
123,879 |
|
Former President and
Chief Executive Officer(2)
|
|
2007
|
|
— |
|
— |
|
— |
|
— |
|
59,407 |
|
|
59,407 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Dalton
|
|
2009
|
|
170,308 |
|
— |
|
1,790,000 |
|
— |
|
— |
|
|
1,960,308 |
|
Chief Executive
Officer(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuad
Ahmad
|
|
2009
|
|
200,000 |
|
770,497 |
|
— |
|
— |
|
4,000 |
(4)
|
|
974,497 |
|
Senior
Vice President
|
|
2008
|
|
200,000 |
|
1,183,565 |
|
— |
|
— |
|
3,904 |
|
|
1,387,469 |
|
and
Chief Financial Officer
|
|
2007
|
|
186,231 |
|
1,695,343 |
|
— |
|
— |
|
1,733 |
|
|
1,883,307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
J. Navarra
|
|
2009
|
|
337,440 |
|
770,497 |
|
— |
|
— |
|
7,903 |
(5)
|
|
1,115,840 |
|
President
Global
|
|
2008
|
|
337,440 |
|
1,183,565 |
|
— |
|
— |
|
12,643 |
|
|
1,533,648 |
|
Operations
|
|
2007
|
|
337,440 |
|
1,695,343 |
|
— |
|
— |
|
11,086 |
|
|
2,043,869 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven Bell(6)
|
|
2009
|
|
207,749 |
|
770,497 |
|
— |
|
— |
|
20,548 |
(7)
|
|
998,794 |
(7)
|
Former
Senior Vice President of
|
|
2008
|
|
222,806 |
|
1,183,565 |
|
— |
|
— |
|
20,298 |
|
|
1,426,669 |
(8)
|
North
America and European Sales Operations
|
|
2007
|
|
220,812 |
|
1,695,343 |
|
— |
|
— |
|
21,385 |
|
|
1,937,540 |
(9)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert D. Miller(6)
|
|
2009
|
|
200,000 |
|
770,497 |
|
— |
|
— |
|
— |
|
|
970,497 |
|
Former
Senior Vice President of
|
|
2008
|
|
200,000 |
|
1,183,565 |
|
— |
|
— |
|
— |
|
|
1,383,565 |
|
Engineering
and Ground Operations
|
|
2007
|
|
200,000 |
|
1,695,343 |
|
— |
|
— |
|
— |
|
|
1,895,343 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denis C. Allen(6)
|
|
2009
|
|
37,308 |
|
1,024,549 |
|
— |
|
— |
|
122,073 |
(10)
|
|
1,183,930 |
|
Former
Senior Vice President of
|
|
2008
|
|
200,000 |
|
1,183,565 |
|
— |
|
— |
|
— |
|
|
1,383,565 |
|
Sales
and Marketing
|
|
2007
|
|
200,000 |
|
1,695,343 |
|
— |
|
— |
|
— |
|
|
1,895,343 |
|
1.
|
Represents
the aggregate grant date fair value computed consistent with FASB ASC
Topic 718. For further discussion of our accounting policies for
stock-based compensation and assumptions used in calculating the grant
date fair value of stock-based compensation awards, see Note 12 to the
Consolidated Financial Statements in our 2009 Annual Report on Form
10-K.
|
2.
|
Mr. Monroe
receives no cash compensation from us, and we do not intend to compensate
him for his services in the future. We accrued approximately $23,000
per month during 2009 as compensation expense for Mr. Monroe, which
amount is reflected in marketing, general and administrative expenses and
as an additional capital contribution by Thermo to our equity. We do
not issue any stock in exchange for this capital contribution. On
July 8, 2009, Mr. Dalton succeeded Mr. Monroe as our Chief Executive
Officer; Mr. Monroe retained his role as executive Chairman of the
Board.
|
3.
|
We
reimburse Thermo for expenses incurred by Mr. Monroe in connection
with performing his services for us, including temporary living expenses
while at its offices or traveling on its business, but generally we do not
reimburse Thermo for his air travel
expenses.
|
4.
|
Consists
of matching contributions to 401(k) Plan for
Mr. Ahmad.
|
5.
|
Consists
of premiums on life insurance for the benefit of Mr. Navarra ($4,788)
and matching contributions to his 401(k) Plan account
($3,115).
|
6.
|
Mr.
Bell’s employment ended February 8, 2010. Mr. Miller’s
employment ended February 12, 2010. Mr. Allen’s employment
ended January 23, 2009.
|
7.
|
Amounts
in Canadian dollars were translated at an average exchange rate for 2009
of CAD 1.00 = USD 0.88. All other compensation consists of
matching contributions to the Retirement Savings Program ($8,800), a car
allowance ($10,560) and life insurance premiums
($1,188).
|
8.
|
Amounts
in Canadian dollars were translated at an average exchange rate for 2008
of CAD 1.00 = USD 0.944.
|
9.
|
Amounts
in Canadian dollars were translated at an average exchange rate for 2007
of CAD 1.00 = USD 0.936.
|
10.
|
Consists
of $100,000 in payments for consulting services and $22,073 in payment of
certain taxes related to vesting of restricted stock and tax gross-up
thereon.
|
Equity
Compensation
The
following table sets forth certain information with respect to each cash or
equity award and award opportunity issued to the Named Executive Officers during
2009 under Mr. Dalton’s agreement and the Designated Executive Award
Agreements. See “Compensation, Discussion and Analysis — Elements of
Compensation” for an explanation of the terms of these plans.
2009
Grants of Plan-Based Awards
|
|
|
|
All Other Stock
Awards: Number of
Shares of Stock or
Units
|
|
All Other Option
Awards: Number of
Securities Underlying
Options
|
|
Exercise or Base Price
of Option Awards
|
|
Grant Date Fair
Value of Stock and
Option Awards(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Issuance Date
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
($)
|
|
(a)
|
|
(b)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
James
Monroe III
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Dalton
|
|
8/4/09
|
|
—
|
|
40,000
|
|
0.90
|
|
22,800
|
|
|
|
8/4/09
|
|
—
|
|
160,000
|
|
0.90
|
|
91,200
|
|
|
|
9/23/09
|
|
—
|
|
3,000,000
|
|
0.83
|
|
1,676,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuad
Ahmad
|
|
8/28/09
|
|
872,094
|
(1)
|
—
|
|
—
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
J. Navarra
|
|
8/28/09
|
|
872,094
|
(1)
|
—
|
|
—
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Bell
|
|
8/28/09
|
|
872,094
|
(1)
|
—
|
|
—
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Miller
|
|
8/28/09
|
|
872,094
|
(1)
|
—
|
|
—
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
C. Allen
|
|
8/28/09
|
|
872,094
|
(1)
|
—
|
|
—
|
|
750,000
|
|
1.
|
These
stock awards vested on the date of
issuance.
|
2.
|
The grant date fair value is
based on the closing price of our common stock on the date of issuance
($0.86 for the August 28, 2009 awards; others based on option exercise
price).
|
The
following table reports, on an award-by-award basis, each outstanding equity
award held by the Named Executive Officers on December 31, 2009. We
generally do not permit executive officers to transfer awards prior to the
vesting date, and no transfers were permitted during 2009. The market
value is based on the $0.87 per share closing price of common stock on
December 31, 2009.
Outstanding
Equity Awards at 2009 Fiscal Year-End
|
|
Option
Awards
|
|
|
|
|
|
Stock
Awards
|
|
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
|
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Number of Shares or
Units
of
Stock That Have Not
Vested
(#)
|
|
|
Market Value of
Shares or
Units
of Stock That Have
Not
Vested
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
James
Monroe III
|
|
|
200,000 |
|
|
|
— |
|
|
|
0.38 |
|
|
11/14/2018
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Dalton
|
|
|
1,500,000 |
|
|
|
1,500,000 |
|
|
|
0.83 |
|
|
9/23/2019
|
|
|
|
— |
|
|
|
— |
|
|
|
|
88,888 |
|
|
|
71,112 |
|
|
|
0.90 |
|
|
8/4/2019
|
|
|
|
— |
|
|
|
— |
|
|
|
|
— |
|
|
|
40,000 |
|
|
|
0.90 |
|
|
8/4/2019
|
|
|
|
— |
|
|
|
— |
|
|
|
|
200,000 |
|
|
|
— |
|
|
|
0.38 |
|
|
11/14/2018
|
|
|
|
— |
|
|
|
— |
|
|
|
|
120,000 |
|
|
|
— |
|
|
|
2.67 |
|
|
3/16/2011
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fuad
Ahmad
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
190,658 |
|
|
|
165,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,329 |
|
|
|
82,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
J. Navarra
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
190,658 |
|
|
|
165,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,329 |
|
|
|
82,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Bell
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
190,658 |
|
|
|
165,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,329 |
|
|
|
82,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Miller
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
190,658 |
|
|
|
165,872 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,329 |
|
|
|
82,936 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
C. Allen
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
The
following table summarizes the value to the Named Executive Officers of stock
awards which vested during 2009. The value realized on vesting was
calculated by multiplying the number of shares vested by the market value of a
share of common stock on the vesting date.
2009
Option Exercises and Stock Vested
|
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Shares
Acquired
on Exercise
(#)
|
|
Value Realized
on Exercise
($)
|
|
Number of
Shares
Acquired
on Vesting
(#)
|
|
Value Realized
on Vesting
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
James
Monroe III
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Dalton
|
|
— |
|
— |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
Fuad
Ahmad
|
|
— |
|
— |
|
872,094 |
|
750,000 |
|
|
|
|
|
|
|
23,833 |
|
20,496 |
|
|
|
|
|
|
|
|
|
|
|
Anthony
Navarra
|
|
— |
|
— |
|
872,094 |
|
750,000 |
|
|
|
|
|
|
|
23,833 |
|
20,496 |
|
|
|
|
|
|
|
|
|
|
|
Steven
Bell
|
|
— |
|
— |
|
872,094 |
|
750,000 |
|
|
|
|
|
|
|
23,833 |
|
20,496 |
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Miller
|
|
— |
|
— |
|
872,094 |
|
750,000 |
|
|
|
|
|
|
|
23,833 |
|
20,496 |
|
|
|
|
|
|
|
|
|
|
|
Dennis
C. Allen
|
|
— |
|
— |
|
872,094 |
|
750,000 |
|
|
|
|
|
|
|
95,329 |
|
78,170 |
|
|
|
|
|
|
|
190,658 |
|
156,339 |
|
|
|
|
|
|
|
23,833 |
|
19,543 |
|
|
|
|
|
|
|
23,833 |
|
20,496 |
|
Pension
Plan
Mr.
Navarra and Mr. Ahmad are entitled to benefits under a defined benefit
pension plan originally maintained by Space Systems/Loral for employees of our
predecessor, among others. The accrual of benefits in our predecessor’s
segment of this plan was curtailed, or frozen, as of October 23,
2003. On June 1, 2004, the assets and frozen pension obligations
of our predecessor’s segment of the plan were transferred to a new Globalstar
Retirement Plan, which remains frozen. We continue to fund the plan in
accordance with Internal Revenue Code requirements, but participants are not
currently accruing benefits beyond those accrued at October 23, 2003.
The estimated annual benefits payable upon retirement at normal retirement age
to Mr. Navarra and Mr. Ahmad are $35,349 and $1,915, respectively. The
actual amount of the estimated annual benefit depends upon a number of factors
such as time of retirement, years of contributions to the Plan, final average
salary, social security wage base and the election for receipt of benefit
payments. The estimated annual benefits upon retirement include
either a contributory benefit (for those who have enrolled in the Plan) or a
non-contributory benefit or a combination of both. The
non-contributory benefit equals $21 per month times the years of
non-contributory service. The contributory benefit is the larger of
the primary benefit formula, which factors in Social Security and a minimum
benefit formula, which does not. The assumptions for valuation
of the Pension Plan are described in Note 7 to our Consolidated Financial
Statements contained in our Annual Report on Form 10-K filed on
March 12, 2010.
Pension
Benefits
Name
|
|
Plan Name
|
|
Number of
Years Credited
Service
(#)
|
|
Present
Value of Accumulated
Benefit
($)
|
|
Payments During Last
Fiscal Year
($)
|
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
James
Monroe III
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Peter
J. Dalton
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Fuad
Ahmad
|
|
Globalstar
Retirement
Plan
|
|
7.6
|
|
3,683
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Navarra
|
|
Globalstar
Retirement
Plan
|
|
12.4
|
|
294,891
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
Steven
Bell
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Robert
D. Miller
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Dennis
C. Allen
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Payments
Upon Termination or Change In Control
We have
not entered into employment agreements with our current executive officers,
including the Named Executive Officers. Voluntary termination of
employment or retirement would not result in any payments to the Named Executive
Officers beyond the amounts each would be entitled to receive under our pension
and retirement plans. We pay life insurance premiums for all
U.S.-based employees that would be paid (based on a multiple of salary) to the
employee’s beneficiary upon death, in addition to an immediate payment of
two-weeks base salary.
We also
have a severance allowance applicable to all U.S.-based employees if an employee
is terminated due to a reduction in force plan of ten or more positions and upon
the employee’s execution of a release of claims. Under this plan,
Mr. Ahmad and Mr. Navarra would receive a lump sum payment equal to
four and six week’s base salary, respectively. Other severance, if any, is
determined at the time of dismissal and is subject to negotiation.
Vesting
of shares of common stock awarded under the executive award agreements will
accelerate upon a change of control as described above in “Compensation
Discussion and Analysis — Designated Executive Award
Agreements.”
EQUITY
COMPENSATION PLAN INFORMATION
The
following table provides information as of December 31, 2009 regarding the
number of shares of Common Stock that may be issued under our equity
compensation plans.
|
|
(a)
|
|
|
(b)
|
|
(c)
|
|
|
Plan category
|
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants and
rights
|
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under
equity
compensation plans
(excluding securities
reflected
in column (a))
|
|
|
Equity
compensation plans approved by security holders
|
|
7,159,007 |
(1) |
|
$ |
0.72 |
|
1,518,120 |
(2) |
|
Equity
compensation plans not approved by security holders(3)
|
|
120,000 |
|
|
$ |
2.67 |
|
0 |
|
|
Total
|
|
7,279,007 |
|
|
$ |
0.75 |
|
1,518,120 |
|
|
|
(1)
|
Consists
of unvested restricted stock unit grants and unexercised
options.
|
|
(2)
|
Consists
of remaining shares of common stock available under the Amended and
Restated 2006 Equity Incentive Plan at December 31,
2009. Pursuant to the Plan, 5,487,680 shares were added to the
Plan in March 2010.
|
|
(3)
|
Consists
of options granted to Peter Dalton prior to our initial public
offering.
|
OTHER
INFORMATION
Independent
Registered Public Accounting Firm
The accounting firm of Crowe Horwath
LLP has served as our independent auditors beginning with the audit of the year
ended December 31, 2005. We have been informed that neither Crowe
Horwath LLP nor any of its partners has any direct financial interest or any
material indirect financial interest in Globalstar and during the past five
years has no connection therewith in the capacity of promoter, underwriter,
director, officer or employee.
The Audit
Committee pre-approves all audit and permissible non-audit services to be
provided by the independent auditors. Non-audit services may include
audit-related services, tax services and other services not prohibited by SEC
rules on auditor independence. Pre-approval is detailed as to the
particular service or category of services and generally is subject to a
specific budget. The independent auditors report periodically to the
Audit Committee regarding the extent of services they provided in accordance
with the Committee’s pre-approvals and the fees for services performed to
date. In 2009, the Audit Committee’s pre-approval requirement was not
waived for any fees or services.
Audit
Fees
The
aggregate fees billed by Crowe Horwath LLP for professional services rendered
for the audits of our annual financial statements were $873,796 in 2009 and
$1,327,313 in 2008. The fees also covered services related to our
public offerings of 5.75% Notes and 8% Notes in 2008 and 2009,
respectively. Additionally, these fees covered other filings under
the Securities Act of 1933 and the Securities Exchange Act of 1934, and services
that are normally provided by the auditors in connection with statutory and
regulatory filings or engagements.
Audit-Related
Fees
The
aggregate fees billed by Crowe Horwath LLP for professional services rendered in
2009 or 2008 for assurance and related services that were reasonably related to
the performance of the audit or review of the Company’s financial statements did
not include any amounts not reported under “Audit Fees” above.
Tax
Fees
In 2009
and 2008, we did not pay Crowe Horwath LLP any fees for professional services
rendered for tax compliance, tax advice and tax planning.
All
Other Fees
Crowe
Horwath LLP did not provide any products or services other than those reported
in the preceding paragraphs.
Related
Person Transactions, Compensation Committee Interlocks and Insider
Participation
Review
of Transactions
Prior to the adoption of the Related
Person Transactions Policy described below, the Board reviewed and monitored any
arrangements with related persons. The related person transactions
described below, except for the assumption of the credit agreement, began prior
to our registration with the SEC.
On April
16, 2007, the Board adopted a written policy with respect to transactions in
which we participate and related persons have a material
interest. Related persons include our executive officers,
directors, director nominees, 5% or more beneficial owners of the our Common
Stock and immediate family members of these persons. Under the
policy, the Audit Committee is responsible for reviewing and approving or
ratifying related person transactions that exceed $120,000 per
year. Certain related person transactions have been deemed
pre-approved by the Audit Committee and do not require any other approval under
the policy. If an Audit Committee member or his or her family member
is involved in a related person transaction, the member will not participate in
the approval or ratification of the transaction. In instances where
it is not practicable or desirable to wait until the next meeting of the Audit
Committee for review of a related person transaction, the policy grants to the
Chair of the Audit Committee (or, if the Chair or his or her family member is
involved in the related person transaction, any other member of the Audit
Committee) delegated authority to act between Audit Committee meetings for these
purposes. A report of any action taken pursuant to delegated
authority must be made at the next Audit Committee meeting.
For the
Audit Committee to approve a related person transaction, it must be satisfied
that it has been fully informed of the interests, relationships and actual or
potential conflicts present in the transaction and must believe that the
transaction is fair to us. The Audit Committee also must believe, if
necessary, that we have developed a plan to manage any actual or potential
conflicts of interest. The Audit Committee may ratify a related
person transaction that did not receive pre-approval if it determines that there
is a compelling business or legal reason for the company to continue with the
transaction, the transaction is fair to the company and the failure to comply
with the policy's pre-approval requirements was not due to fraud or
deceit.
Reportable
Related Party Transactions and Compensation Committee Interlocks and Insider
Participation
Services Provided by
Thermo. We have an informal understanding with Thermo that we
will reimburse Thermo for expenses incurred by Messrs. Monroe, Lynch and
Roberts in connection with their services to us including temporary living
expenses while at our offices or traveling on its business, but for
Mr. Monroe generally excluding air travel expenses. For the year
ended December 31, 2008, such reimbursements aggregated approximately
$219,000, including approximately $84,000 related to expenses for
Mr. Monroe. For the year ended December 31, 2008, we
recorded approximately $449,000 for general and administrative expenses incurred
by Thermo on our behalf and for services provided to us by officers of Thermo.
These were accounted for as a contribution to capital. Neither Thermo nor
Messrs. Monroe, Lynch or Roberts receive any fees or reimbursements other
than as described above or under “Director Compensation.”
Credit Agreement and Other
Thermo Agreements. On November 7,
2007, we, Wachovia Investment Holdings, the lenders under our credit agreement
and Thermo Funding Company agreed that Thermo Funding Company would receive an
assignment of all of the rights (except indemnification rights) and assume all
of the obligations of Wachovia Investment Holdings and the lenders under the
credit agreement. The assignment and assumption was completed on
December 17, 2007.
The
credit agreement was amended and restated in connection with such assignment and
assumption and further amended in December 2008. As subsequently
amended, the credit agreement provided for a $100.0 million revolving credit
facility and a $100.0 million delayed draw term loan facility. At
March 31, 2009, we had outstanding $73.8 million and $100.0 million
principal amount of the revolving credit facility and the delayed draw term loan
facility, respectively.
To
fulfill certain conditions precedent to funding under our recent senior secured
credit facility agreement with a syndicate of French banks (the Facility
Agreement), we entered into several agreements with Thermo Funding as described
below.
Secured
Debt Conversion
On June
19, 2009, Thermo Funding exchanged all of the approximately $180 million of
outstanding secured debt (including accrued interest) owed to it by us under the
credit agreement for one share of Series A Convertible Preferred Stock (the
Series A Preferred), and the credit agreement was terminated. The
Series A Preferred included the following terms:
Liquidation Preference. The Series A
Preferred had a $0.01 liquidation preference upon any voluntary or involuntary
liquidation, dissolution or winding up of the Company.
Dividend
Preference. The Series A Preferred had no dividend preference
to the Common Stock.
Voting Rights. Subject to the
conversion limitation set forth below, Thermo Funding was entitled to vote
its share of Series A Preferred with holders of the common stock, voting as
a single class, on an as-converted basis.
Conversion Rights and
Limitations. The Series A Preferred was convertible into
126,174,034 shares of voting or nonvoting common stock. In addition,
no voting common stock was issuable upon such conversion if such issuance would
have caused Thermo Funding and its affiliates to own more than 70% of our
outstanding voting stock.
Additional
Issuances. We were not permitted to issue additional
shares of Series A Preferred or create any other class or series of capital
stock that ranked senior to or on parity with the Series A Preferred without the
consent of Thermo Funding.
In
December 2009, Thermo Funding converted the share of Series A Preferred into
109,424,034 shares of voting common stock and 16,750,000 shares of nonvoting
common stock.
Note
and Warrant Offering
On June 19, 2009, we sold
$55 million in aggregate principal amount of 8.00% Convertible Senior
Unsecured Notes (Notes) and warrants (Warrants) to purchase 15,277,771 shares of
our common stock at an initial exercise price of $1.80 per share to selected
institutional investors (including $11.4 million principal amount of Notes and
Warrants to purchase 3,166,666 shares of our common stock to an affiliate of
Thermo Funding) in a direct offering registered under the Securities Act of
1933.
Contingent
Equity Agreement
The
Contingent Equity Agreement also provides that we will pay Thermo Funding an
availability fee of 10% per year for maintaining funds in the contingent equity
account. This fee is payable solely in warrants to purchase common stock at
$0.01 per share with a five-year exercise period from issuance, with respect to
a number of shares equal to the available balance in the contingent equity
account divided by $1.37, subject to an annual retroactive adjustment at each
anniversary of the date of the agreement. We issued Thermo Funding a
warrant to purchase 4,379,562 shares for this fee upon the establishment of the
Contingent Equity Account. No common stock is issuable if it would
cause Thermo Funding and its affiliates to own more than 70% of our outstanding
voting stock.
Subordinated
Loan Agreement
On
June 25, 2009, we entered into a Loan Agreement with Thermo Funding whereby
Thermo Funding agreed to lend us $25 million for the purpose of funding the
debt service reserve account required under the Facility Agreement. This loan is
subordinated to, and the debt service reserve account is pledged to secure, all
of our obligations under the Facility Agreement. The loan accrues interest at
12% per annum, which is capitalized and added to the outstanding principal
in lieu of cash payments. We will make payments to Thermo Funding
only when permitted under the Facility Agreement. The loan becomes
due and payable six months after the obligations under the Facility Agreement
have been paid in full, we have a change in control or any acceleration of the
maturity of the loans under the Facility Agreement occurs. As
additional consideration for the loan, we issued Thermo Funding a warrant to
purchase 4,205,608 shares of common stock at $0.01 per share with a five-year
exercise period. No common stock is issuable upon such exercise if
such issuance would cause Thermo Funding and its affiliates to own more than 70%
of our outstanding voting stock.
Short
Term Note
See
Proposal 2 for a description of the short term note.
Payments to
Affiliates. In 2009, the Company purchased approximately
$3.7 million of services and equipment from a company whose non-executive
chairman, Mr. Jones, serves as a member of the Compensation
Committee. Mr. Jones and Mr. Hasler are minority stockholders of this
company.
Stockholder
Proposals at the 2011 Annual Meeting
In order
for any stockholder proposal to be eligible for inclusion in our proxy statement
and on our proxy card for the 2011 Annual Meeting of Stockholders, it must be
received by our Corporate Secretary at the address shown on the cover of this
proxy a reasonable amount of time before we begin to print and mail proxy
material for the 2011 Annual Meeting. The proxy card we distribute
for the 2011 Annual Meeting of Stockholders may include discretionary authority
to vote on any matter that is presented to stockholders at that meeting (other
than by the Board) if we do not receive notice of the matter at the above
address a reasonable amount of time before we begin to print and mail proxy
material for the 2011 Annual Meeting.
The
Report of the Audit Committee set forth in this Proxy Statement is not deemed
filed with the SEC and shall not be deemed incorporated by reference into any
prior or future filings made by the Company under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, except to the
extent that the Company specifically incorporates such information by
reference.
We hereby
incorporate by reference:
• the
financial statements and supplementary data, management's discussion and
analysis of financial condition and results of operations and quantitative and
qualitative disclosures about market risk contained in our Annual Report on Form
10-K filed March 12, 2010; and
• the
description of our common stock contained in our registration statement on Form
8-A dated October 30, 2006.
Householding
Under SEC
rules, only one annual report, proxy statement or Notice of Internet
Availability of Proxy Materials, as applicable, need be sent to any household at
which two or more of our stockholders reside if they appear to be members of the
same family and contrary instructions have not been received from an affected
stockholder. This procedure, referred to as householding, reduces the
volume of duplicate information stockholders receive and reduces mailing and
printing expenses for us. Brokers with accountholders who are our
stockholders may be householding these materials. Once you have
received notice from your broker that it will be householding communications to
your address, householding will continue until you are notified otherwise or
until you revoke your consent. If, now or at any time in the future,
you no longer wish to participate in householding and would like to receive a
separate annual report, proxy statement or Notice of Internet Availability of
Proxy Materials, or if you currently receive multiple copies of these documents
at your address and would prefer that the communications be householded, you
should contact us Globalstar, Inc. c/o Director of Investor Relations, 461 S.
Milpitas, CA 95035, 408-933-4006.
Requests
for Certain Documents
We
file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission (the
“SEC”). You may read and copy any document we file with the SEC at
the SEC’s public reference room at 100 F Street, NE, Washington, DC
20549. Please call the SEC at 1-800-SEC-0330 for information on the
public reference room. The SEC maintains an internet site that
contains annual, quarterly and current reports, proxy and information statements
and other information that issuers (including Globalstar) file electronically
with the SEC. Our electronic SEC filings are available to the public
at the SEC’s internet site, www.sec.gov.
We
make available free of charge financial information, news releases, SEC filings,
including our annual report on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K and amendments to these reports as soon as
reasonably practical after we electronically file such material with, or furnish
it to, the SEC, on our website at www.globalstar.com. The
documents available on, and the contents of, our website are not incorporated by
reference into this proxy statement.
|
|
Richard
S. Roberts, Corporate
Secretary
|
Milpitas,
California
April __,
2010