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
File by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ]Confidential, for use of the Commission Only
(as permitted by Rule 14-a-6(e)(2))
[x]Definitive Proxy Statement
[ ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to Rule 14a-12
SkyTerra Communications, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. (1)
(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------------
(3) 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):
----------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------------
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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.
(1) Amount Previously Paid:
----------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------------
(3) Filing Party:
----------------------------------------------------------------------------
(4) Date Filed:
----------------------------------------------------------------------------
SKYTERRA COMMUNICATIONS, INC.
F/K/A RARE MEDIUM GROUP, INC.
19 WEST 44TH STREET, SUITE 507
NEW YORK, NEW YORK 10036
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 4, 2003
To the holders of common stock and convertible preferred stock of SkyTerra
Communications, Inc., a Delaware corporation:
Please take notice that our annual meeting of stockholders for the year
ended December 31, 2002 will be held in the Concorde Room, 3rd floor, at the
Dylan Hotel, 52 East 41st Street, New York, New York 10017 on December 4, 2003,
at 10:00 a.m., local time, for the following purposes, all as more fully
described in the attached Proxy Statement:
1. To elect two (2) Class 1 Directors;
2. To amend the Certificate of Incorporation of the Company to eliminate
the classified board structure;
3. To amend the Certificate of Incorporation of the Company to reduce the
number of authorized shares of voting common stock, non-voting common
stock and preferred stock;
4. To ratify the appointment of KPMG LLP as the independent auditors of
the Company for the year ending December 31, 2003; and
5. To transact such other business as may come before the annual meeting
or any adjournment or postponement thereof.
Stockholders are urged to read carefully the attached proxy statement for
additional information concerning the matters to be considered at our annual
meeting. The board of directors has fixed the close of business on October 31,
2003 as the record date for the determination of stockholders entitled to vote
at the annual meeting. Only stockholders of record at the close of business on
October 31, 2003 will be entitled to notice of, and to vote at, the meeting or
any postponement or adjournment thereof. The proxy statement is being mailed to
these stockholders on or about November 11, 2003.
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, WE RESPECTFULLY URGE
YOU TO COMPLETE, SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED PROXY CARD OR
VOTING INSTRUCTION CARD. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. IF YOU
ATTEND THE MEETING, YOU MAY VOTE IN PERSON, EVEN IF YOU HAVE PREVIOUSLY RETURNED
YOUR PROXY CARD.
By Order of the Board of Directors,
/s/ Robert C. Lewis
---------------------------------------
Robert C. Lewis
Senior Vice President, General Counsel
and Secretary
New York, New York
November 4, 2003
IMPORTANT
Please complete, sign, date and promptly mail your proxy card or voting
instruction card.
TABLE OF CONTENTS
PAGE
----
Questions and Answers about the Annual Meeting 2
Proposal 1 Election of Directors 6
Proposal 2 Elimination of Classified Board Structure 11
Proposal 3 Reduction in Number of Authorized Shares 12
Proposal 4 Ratify the Appointment of KPMG LLP as the Independent Auditors
of the Company for the Year Ended December 31, 2003 13
Security Ownership of Certain Beneficial Owners and Management 14
Executive Compensation 16
Board Audit Committee Report 19
Board Compensation Committee Report on Executive Compensation 19
Performance Graph 22
Forward Looking Statements 23
Other Business 23
Stockholder Proposals 23
Additional Information 23
Annual Report on Form 10-K 23
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING
When And Where Is The Annual Meeting?
The annual meeting will be held on December 4, 2003, beginning at 10:00
a.m., local time, in the Concorde Room, 3rd floor, at the Dylan Hotel, 52 East
41st Street, New York, New York 10017.
What Is The Purpose Of The Annual Meeting?
At the annual meeting, we will ask you to consider and approve the matters
set forth in the accompanying notice of meeting and described in this proxy
statement, including the election of directors, elimination of a classified
board structure, reduction in the number of authorized shares and ratification
of our independent public accountants.
Why Did I Receive This Proxy Statement?
We sent you this proxy statement and the enclosed proxy card or voting
instruction card because our board of directors is soliciting your proxy to vote
at the annual meeting of stockholders.
This proxy statement summarizes the information you need to know to vote on
an informed basis at the annual meeting; however, you do not need to attend the
annual meeting to vote your shares (see "How Do I Vote?"). We began sending this
proxy statement, the attached notice of annual meeting and the enclosed proxy
card on or about November 11, to all stockholders entitled to vote.
How Many Shares Of Voting Stock Are Outstanding?
On October 31, 2003, the record date, there were 6,075,727 shares of our
voting common stock outstanding. In addition to this voting common stock, there
were 8,990,212 shares of our non-voting common stock and 1,158,150 shares of
preferred stock outstanding, all of which are owned by Apollo Investment Fund
IV, L.P.; Apollo Overseas Partners IV, L.P.; and AIF IV/RRR LLC (collectively,
the "Apollo Stockholders").
Who Is Entitled To Vote?
If our records show that you are a holder of our common stock or our
preferred stock as of the close of business on October 31, 2003, you are
entitled to receive notice of the annual meeting and to vote such shares of
common stock or preferred stock that you held on the record date. The voting
common stockholders and the preferred stockholders will vote together as a
single class on the elimination of the classified board structure and the
ratification of KPMG as our accountants for 2003 and the election of one of the
directors. Only the preferred stockholders are entitled to vote on the election
of the other director nominee. In addition in accordance with Delaware state
law, each class of stock, including the non-voting common stock, will vote
separately on the reduction in the number of authorized shares of stock. The
holders of our non-voting common stock are not entitled to vote such shares on
any other matters at the annual meeting.
How Many Votes Is The Common Stock Entitled To?
Each share of outstanding voting common stock owned as of the record date
entitles the holder to one vote for each matter to be voted upon. Accordingly,
the holders of common stock are entitled to an aggregate of 6,075,727 votes.
Each share of non-voting common stock is entitled to one vote in connection with
the proposal to reduce the number of authorized shares of stock. The outstanding
shares of non-voting common stock are entitled to vote only on the that
proposal.
How Many Votes Is The Preferred Stock Entitled To?
When voting with the holders of common stock, the holders of preferred
stock are entitled to an aggregate of 975,000 votes, or 0.842 votes per share of
preferred stock.
How Many Votes Are The Holders Of Preferred Stock Entitled To, Based On Their
Aggregate Holdings?
In addition to being entitled to 975,000 votes with respect to the
preferred stock, the Apollo Stockholders and an affiliate of theirs that
acquired shares of common stock of the company as a result of a tender offer in
2002, also own 1,745,375 shares of our voting common stock and 8,990,212 shares
of our non-voting common stock. Although the Apollo Stockholders and the
affiliate beneficially own 71.3% of our common stock and 38.6% of our
outstanding voting power, they have agreed to cause their affiliate to vote
474,427 common shares pro-rata with all other votes cast by the holders of
voting common stock.
Can I Attend The Annual Meeting?
If you owned common stock or preferred stock on the record date, you can
attend the annual meeting. You should be prepared to present photo
identification for admittance. In addition, if your shares are held in the name
of your broker, bank or other nominee, you must bring an account statement or
letter from the nominee indicating that you are the beneficial owner of the
shares on the record date.
What Is The Difference Between Holding Shares As A Stockholder Of Record And
Holding Shares As A Beneficial Owner?
Most of our stockholders hold their shares through a broker or other
nominee, rather than directly in their own name. The following are some
distinctions between shares held of record and those owned beneficially.
o Stockholder of Record: If your shares are registered directly in your
name with our transfer agent, American Stock Transfer & Trust Co., you
are considered, with respect to those shares, the stockholder of
record, and these proxy materials are being sent directly to you by
the transfer agent. As a stockholder of record, you have the right to
grant your voting proxy directly to us or to vote in person at the
annual meeting. The transfer agent has enclosed or sent a proxy card
for you to use.
o Beneficial Owner: If your shares are held in a brokerage account or by
another nominee, you are considered the beneficial owner of the shares
held in "street name," and these proxy materials are being forwarded
to you by your broker or nominee, together with a voting instruction
card. As the beneficial owner, you have the right to direct your
broker or nominee how to vote your shares and are also invited to
attend the annual meeting.
If I Plan To Attend The Annual Meeting, Should I Still Vote By Proxy?
Whether you plan to attend the annual meeting or not, we urge you to vote
by returning the enclosed proxy card or voting instruction card. Returning the
proxy card or voting instruction card will not affect your right to attend the
annual meeting and vote.
How Do I Vote?
o If you are a stockholder of record, you may instruct the proxy holders
named in the enclosed proxy card how to vote your shares of common
stock or shares of preferred stock by signing, dating and mailing the
proxy card in the postage-paid envelope that has been provided to you.
If you are a stockholder of record and attend the annual meeting, you
may deliver your completed proxy card in person.
o If you are a beneficial owner, you will receive a voting instruction
card from your nominee which you must properly execute in order to
have your shares voted by proxy by the nominee. Beneficial owner
stockholders who wish to vote at the meeting will need to obtain a
proxy form from the broker, bank or other nominee that holds their
shares of record.
Can I Change My Vote Or Revoke My Proxy?
Any stockholder who executes and returns a proxy may revoke such proxy or
change his or her vote at any time before it is voted at the annual meeting by:
(1) filing with the Secretary of the Company, at 19 West 44th Street,
Suite 507, New York, New York 10036, written notice of revocation
bearing a later date than the proxy; or
(2) filing a duly executed proxy bearing a later date; or
(3) appearing in person and voting by ballot at the annual meeting.
Any stockholder of record as of the record date attending the annual
meeting may vote in person whether or not a proxy has been previously given, but
the presence (without further action) of a stockholder at the annual meeting
will not constitute revocation of a previously given proxy. If you are a
beneficial owner who has properly executed and returned a voting instruction
card to your broker or nominee, you may change your vote by submitting new
voting instructions to your broker or nominee, or, if you have obtained a legal
proxy from your broker or nominee giving you the right to vote your shares, by
attending the annual meeting and voting in person.
What Does It Mean If I Get More Than One Proxy Card?
If your shares are registered differently and are in more than one account,
you will receive more than one proxy card or voting instruction card, each of
which will indicate the number of shares you are entitled to vote on that
particular card. Sign and return all proxy cards or voting instruction cards to
ensure that all your shares are voted.
How Does The Board Of Directors Recommend I Vote On The Proposals?
The board of directors recommends that you vote in favor of the election of
the director nominees, in favor of the amendment to our Amended and Restated
Certificate of Incorporation, as further amended (the "Certificate of
Incorporation") which eliminates the classified board structure, in favor of the
amendment to the our Certificate of Incorporation which reduces the authorized
number of shares of our voting common stock, non-voting common stock, and
preferred stock, and in favor of the ratification of the appointment of the
independent auditors.
What Constitutes A Quorum And Why Is It Necessary?
In order to carry on the business of the annual meeting, we must have a
quorum. The holders of a majority of the total number of votes of our capital
stock, present in person or represented by proxy, will constitute a quorum for
the transaction of business at the annual meeting. Abstentions and broker
non-votes, if any, will count for quorum purposes. If you submit a properly
executed proxy card or voting instruction card, even if you abstain from voting,
you will be considered part of the quorum.
What Is A Broker Non-Vote?
A broker non-vote occurs with respect to any proposal when a broker holds
your shares in its name and is not permitted to vote on that proposal without
instruction from the beneficial owner of the shares and no instruction is given.
What Vote Is Required For Approval Of The Proposals?
Our directors will be elected by a plurality of the votes cast at the
annual meeting. In the election of directors, votes to withhold authority,
abstentions from voting and broker non-votes, if any, will be disregarded and
have no effect on the outcome of the vote.
The elimination of our classified board structure requires the affirmative
vote of the holders of a majority of the total number of votes of our capital
stock outstanding. The reduction in the number of authorized shares of our
voting common stock, our non-voting common stock and our preferred stock
requires the affirmative vote of the holders of a majority of the total number
of votes of our capital stock, a majority of the votes of our preferred stock
and a majority of the votes of our non-voting common stock.
Ratification of the appointment of the independent auditors requires the
affirmative vote of the holders of a majority of the total number of votes of
our capital stock, present in person or represented by proxy. With respect to
the ratification of the appointment of auditors, abstentions from voting will
have the same effect as voting against such matter and broker non-votes, if any,
will be disregarded and have no effect on the outcome of the vote.
As of October 31, 2003, our directors, executive officers and affiliates
had the right to vote 1,749,875 shares of our common stock and all of the shares
of our preferred stock (with 975,000 votes). The Apollo Stockholders have
indicated that they will vote, or cause to be voted, 2,245,948 votes that they
control, 31.9% of the votes entitled to be cast at the meeting, in favor of the
election of the director nominees, in favor of the amendment to our Certificate
of Incorporation which eliminates the classified board structure, in favor of
the amendment to the our Certificate of Incorporation which reduces the
authorized number of shares of our voting common stock, non-voting common stock,
and preferred stock, and in favor of the ratification of the appointment of the
independent auditors. As the Apollo Stockholders control over 29.9% of the vote
at the annual meeting, in accordance with an investment agreement signed in
April 2002, the Apollo Stockholders will cause an affiliate to vote 474,427
shares of common stock pro-rata with all other votes cast by holders of voting
common stock. In addition, the Apollo Stockholders, who are the only holders of
our preferred stock and our non-voting common stock, will vote all of those
shares in favor of the amendment to our Certificate of Incorporation which
reduces the number of shares of stock authorized for issuance.
Will Other Matters Be Voted On At The Annual Meeting?
We are not aware of any other matters to be presented at the annual meeting
other than those described in this proxy statement. If any other matters not
described in the proxy statement are properly presented at the meeting, proxies
will be voted in accordance with the best judgment of the proxy holders.
What Are The Costs Of Soliciting These Proxies And Who Pays Them?
All expenses of soliciting proxies, including clerical work, printing and
postage, will be paid by us. Our directors, officers and other employees may
solicit proxies in person, by mail, by telephone, by facsimile, through the
Internet or by other means of communication, but such persons will not be
specifically compensated for such services. We will reimburse American Stock
Transfer & Trust Company for forwarding proxy materials to stockholders of
record and serving as inspectors of election and will pay the expenses
associated with forwarding proxy materials to beneficial owners by a third party
agent and various banks and brokers.
PROPOSAL 1
ELECTION OF DIRECTORS
Information With Respect To Director Nominees
Listed below are the nominees for class 1 directors, with information
showing the principal occupation, business experience and current public
directorships, if any, of each, the age of each as of the date of this proxy
statement and the year each was first elected a director of the Company.
Unless authority is withheld, proxies in the accompanying form will be
voted in favor of electing the individuals identified in the table below as
class 1 directors of the Company. If the proxy is executed in such a manner as
to withhold authority to vote for one or more nominees for director, such
instructions will be followed by the persons named as proxies.
All nominees for director to be elected at the annual meeting are currently
members of the board of directors. The Company has no reason to believe that any
of the nominees will be unable to serve. In the event that any nominee should
not be available, the persons named in the proxy will vote for the others and
may vote for a substitute for such nominee.
Our Certificate of Incorporation provides for a classified board of
directors, divided into three classes having staggered terms of three years
each. Currently, the board of directors has five members, consisting of two
class 1 directors, two class 2 directors and one class 3 director. The term of
the class 1 directors expires at this 2003 annual meeting and until their
successors are duly elected and qualified. The class 2 and class 3 directors
have terms expiring at the 2004 and 2005 annual meeting of stockholders,
respectively, and until their successors are duly elected and qualified. In
accordance with the Amended and Restated Securities Purchase Agreement, dated
June 4, 1999, by and among the Company and Apollo Investment Fund IV, L.P.,
Apollo Overseas Partners IV, L.P. and AIF IV/RRRR LLC (the "Securities Purchase
Agreement"), our preferred stockholders are entitled to, elect two of our
directors. Michael Gross, a class 1 director, and Andrew Africk, a class 2
director currently are elected by the preferred stockholders. Marc Rowan is a
class 1 director who is affiliated with our preferred stockholders, but elected
by the common stockholders, voting together with preferred stockholders on an as
converted basis. Because the Company's common stock was delisted from the NASDAQ
National Market in December 2002, an "Event of Non-Compliance," as defined in
our Certificate of Incorporation, has occurred. Accordingly, the Company's
preferred stockholders have the right to vote separately as a class to elect a
majority of our directors. In light of the current composition of our Board,
which includes a majority of directors affiliated with our preferred
stockholders, the preferred stockholders have waived their right solely for the
purposes of this meeting to vote separately as a class on Mr. Rowan's reelection
to the Board.
Class 1 Nominee to be elected by Common Stockholders and Preferred Stockholders:
Director
Name Age Class Position Since
---- --- ----- -------- -----
Marc J. Rowan 41 1 Director 1999
Class 1 Nominee to be elected by Preferred Stockholders:
Director
Name Age Class Position Since
---- --- ----- -------- -----
Michael S. Gross 42 1 Director 1999
Marc J. Rowan. Mr. Rowan, a class 1 director, has been a member of the
Board of Directors since June 1999. Mr. Rowan is one of the founding principals
of Apollo Advisors, L.P. (which, together with its affiliates, acts as the
managing general partner of several private securities investment funds,
including Apollo Investment Fund IV, L.P.). Mr. Rowan is also a director of Vail
Resorts, Inc., Quality Distribution, Inc., National Financial Partners, Inc.,
Cannondale Bicycle Corp., Wyndham International and NRT Incorporated.
Michael S. Gross. Mr. Gross, a class 1 director, has been a member of the
Board of Directors since August 1999. Mr. Gross is one of the founding
principals of Apollo Advisors, L.P. Mr. Gross is also a director of Allied Waste
Industries, Inc., Breuners Home Furnishing, Inc., United Rentals, Inc. and Saks
Incorporated.
Recommendation Of The Board Of Directors
The board of directors has carefully considered the class 1 director
nominees and believes that their election by the stockholders is in the best
interests of SkyTerra Communications and its stockholders and, accordingly,
unanimously recommends that stockholders vote for the class 1 director nominees.
If the class 1 director nominees are reelected and proposal 2 is not approved by
stockholders, then the class 1 director nominees will serve a three year term.
If proposal 2 is approved by stockholders, then each of the class 1 directors
will serve one year terms.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE CLASS 1
NOMINEES.
Information With Respect To Continuing Directors
Listed below are the continuing directors, with information showing the
principal occupation, business experience and current public directorships, if
any, of each, the age of each and the year each was first elected a director of
the Company.
Director
Name Age Class Position Since
---- --- ----- -------- -----
Andrew D. Africk 37 2 Director 1999
Jeffrey M. Killeen 50 2 Director 1998
William F. Stasior 62 3 Director 2000
Andrew D. Africk. Mr. Africk, a class 2 director, has been a member of the
Board of Directors since June 1999. Mr. Africk is a partner of Apollo Advisors,
L.P. Mr. Africk is also a director of several private venture companies.
Jeffrey M. Killeen. Mr. Killeen, a class 2 director, has been a director of
the Company since October 1998. Since January 1, 2002, Mr. Killeen has been
Chairman and Chief Executive Officer of Globalspec, Inc., an information
services company. Mr. Killeen was the Chief Executive Officer of Forbes.com from
August 1999 to March 2001. Prior to that, from January 1998 to March 1999, Mr.
Killeen was the Chief Operating Officer of barnesandnoble.com. Before joining
barnesandnoble.com, Mr. Killeen served as President and Chief Executive Officer
of Pacific Bell Interactive Media from August 1994 to January 1998.
William F. Stasior. Mr. Stasior, a class 3 director, joined the Board of
Directors in April 2000. Mr. Stasior was the Chairman and Chief Executive
Officer of Booz Allen & Hamilton Inc., a management and technology consulting
firm, from 1991 to 1999, and had served on the Board of Directors of Booz Allen
since 1979. Since October 1999, Mr. Stasior has been the Senior Chairman of Booz
Allen. Mr. Stasior also serves on the Board of Directors of OPNET, a software
company that specializes in enhancing network performance for enterprises and
service providers, and Vanu, Inc., a leading developer of software-defined radio
technology.
Board Meetings And Committees
The Board of Directors held four meetings during the year ended December
31, 2002. Messrs. Africk, Gross, Killeen, and Stasior attended all of the
meetings of the Board of Directors and of the committees of the Board of
Directors on which each serves. Mr. Rowan was unable to attend one of the
meetings of the Board of Directors.
The Board of Directors has an Audit Committee and a Compensation Committee
which meet as the need arises. The Board of Directors does not have a nominating
committee. The Audit Committee reviews and makes recommendations with respect to
the Company's internal controls and financial reports and in connection with
such reviews and recommendations, communicates with and receives information
independently from appropriate Company personnel regarding the Company's
financial condition. The Audit Committee also reviews the scope and results of
the annual audit with the Company's auditors and other activities the auditors
perform with the Company. The Audit Committee met five times during the year
ended December 31, 2002. The Audit Committee met on February 26, 2003, with the
Company's auditors to discuss the results of the 2002 audit. The Audit Committee
is currently composed of two outside directors, Mr. Killeen and Mr. Stasior,
both of whom are independent under Rule 4200(a)(14) of the National Association
of Securities Dealers' ("NASD") listing standards, and Mr. Africk, who continues
to serve on the Audit Committee as the Board of Directors determined that
exceptional and limited circumstances exist pursuant to Rule 4350(d)(2)(B) of
the NASD listing standards.
The Compensation Committee members conferred periodically during the year
ended December 31, 2002, though no formal meetings were held. All formal actions
taken by the Compensation Committee during the year were taken by unanimous
written consent. The Compensation Committee periodically reviews and evaluates
the compensation of the Company's officers and administers grants of options
from the Company's 1998 Long-Term Incentive Plan (the "1998 Plan") and the
Amended and Restated Equity Plan for Directors. The Compensation Committee is
currently composed of Mr. Killeen and Mr. Africk.
During the year ended December 31, 2002, the Board of Directors formed a
Special Committee, comprised of Mr. Killeen and Mr. Stasior, to review and
consider several transactions during the year, including those contemplated by
the settlement of the class action lawsuit. The Special Committee met eleven
(11) times during the year.
Compensation Of Directors
Each non-employee director receives a per meeting fee of $1,000 for each
meeting of the Board of Directors and $500 for each committee meeting attended,
along with expenses incurred in connection with each meeting attended.
The Compensation Committee has authority under the Company's 1998 Plan to
make stock option awards to non-employee directors of the Company. Historically,
the Compensation Committee has awarded non-employee directors a stock option for
7,500 shares, vesting ratably over three years in lieu of an automatic grant of
an option to purchase 2,500 shares of common stock as of the effective date of
the non-employee director's initial election to the Board of Directors, vesting
in one year, and thereafter, at the close of business on the date of final
adjournment of each annual meeting of stockholders as provided in the 1998 Plan.
In general, the exercise price per share of common stock purchasable upon
exercise of a non-employee director's options will be equal to 100% of the fair
market value of a share of common stock on the date of grant of the option.
Upon becoming a director of the Company in 1998, Mr. Killeen was granted an
option to purchase 7,500 shares of common stock on October 28, 1998 under the
Amended and Restated Equity Plan for Directors, exercisable at $19.375 per
share, the fair market value of the common stock on the date of grant. This
option vested ratably over three years and has expired as of the date hereof. On
December 21, 2001, the exercise price of this option was repriced at $6.00, the
fair market value of the common stock on that date. For more information
regarding the repricing of this option, see section entitled "Repricing of
Options" below. On October 15, 2002, Mr. Killeen was granted an option to
purchase 35,000 shares of common under the 1998 Plan, exercisable at $0.85 per
share, the fair market value on the date of grant. This option vests ratably
over three years beginning on the anniversary of Mr. Killeen's service with the
Company to the extent that Mr. Killeen is fully vested in the previously granted
option.
Upon becoming directors of the Company on June 4, 1999, each of Mr. Africk
and Mr. Rowan was granted an option to purchase 7,500 shares of common stock
under the 1998 Plan, exercisable at $70.00 per share, both of which vested
ratably over three years and have fully vested as of the date hereof. Upon
becoming a director of the Company as of August 19, 1999, Mr. Gross was granted
an option to purchase 7,500 shares of common stock under the 1998 Plan,
exercisable at $70.00 per share, which vested ratably over three years and has
fully vested as of the date hereof. On December 21, 2001, the exercise prices of
the options granted to Messrs. Africk, Rowan, and Gross were repriced at $6.00,
the fair market value of the common stock on that date. For more information
regarding the repricing of these options, see section entitled "Repricing of
Options" below. On October 15, 2002, each of Messrs. Africk, Rowan, and Gross
was granted an option to purchase 35,000 shares of common under the 1998 Plan,
exercisable at $0.85 per share, the fair market value on the date of grant. Each
of these options vests ratably over three years beginning on the anniversary of
each director's service with the Company to the extent that the director is
fully vested in previously granted options.
Upon becoming a director of the Company in April, 2000, Mr. Stasior was
granted an option to purchase 7,500 shares of common stock on April 26, 2000
under the 1998 Plan exercisable at $210.625 per share, the fair market value of
the common stock on the date of grant. This option vests ratably over three
years. During the year 2000, Mr. Stasior served as a consultant to the Company's
Internet professional services subsidiary, Rare Medium, Inc., and pursuant to a
consulting agreement Mr. Stasior received compensation of $10,000 per month for
his consulting services. This consulting agreement was terminated in the spring
of 2001. In addition, as compensation for his consulting services Mr. Stasior
received an option to purchase an additional 7,500 shares of common stock on
April 26, 2000 under the 1998 Plan exercisable at $210.625 per share, the fair
market value of the common stock on the date of grant. This option was to vest
ratably over three years; however, upon the termination of Mr. Stasior's
consulting agreement with Rare Medium, Inc. as of July 2, 2001, the unvested
portion of the option, covering 5,000 shares, related to the remaining term of
this agreement were cancelled. The remaining portion of the option, covering
2,500 shares, has vested as of the date hereof. On December 21, 2001, the
exercise prices of these options were repriced at $6.00, the fair market value
of the common stock on that date. For more information regarding the repricing
of these options, see section entitled "Repricing of Options" below. On October
15, 2002, Mr. Stasior was granted an option to purchase 35,000 shares of common
under the 1998 Plan, exercisable at $0.85 per share, the fair market value on
the date of grant. This option vests ratably over three years beginning on the
anniversary of Mr. Stasior's service with the Company to the extent that Mr.
Stasior is fully vested in the previously granted option.
It is anticipated that future grants of stock options to directors will
principally be made under the Company's 1998 Plan.
Executive Officers
The names of the Company's current executive officers and certain
information about them is set forth below.
Name Age Position Officer Since
---- --- -------- -------------
Jeffrey A. Leddy 48 Chief Executive Officer and President 2002
Robert C. Lewis 38 Senior Vice President, General Counsel and Secretary 1998
Erik J. Goldman 43 Vice President 2003
Keith C. Kammer 42 Vice President 2003
Craig J. Kaufmann 28 Controller and Treasurer 2003
Jeffrey A. Leddy - Chief Executive Officer and President. Mr. Leddy has
been the Company's Chief Executive Officer and President since April 2003,
having served as its President and Chief Operating Officer since October 2002
and its Senior Vice President of Operations since June 2002. From September 1980
to December 2001, Mr. Leddy worked for EMS Technologies, most recently as a Vice
President. Mr. Leddy also currently serves as President of Miraxis, LLC, an
affiliate of the Company, a position he has held since September 2001.
Erik J. Goldman - Vice President. Mr. Goldman has been a Vice President of
the Company since March 2003. Prior to joining the Company Mr. Goldman consulted
to Global Radio S.A., a European Satellite Digital Audio Radio start-up. From
1995 to December 2001 Mr. Goldman worked for Leo One Worldwide, most recently as
Vice President of Technology and Business Development. Previously, Mr. Goldman
served as Director of Business Development for dbX Corporation, a telecom
focused investment and management group. Prior to joining dbX in 1991, Mr.
Goldman served as a Member of Technical Staff of Mitre Corporation and as a
Senior Communications Design Engineer of Raytheon Corporation.
Keith C. Kammer - Vice President. Mr. Kammer has been a Vice President of
the Company since August 2003. From September 2000 to May 2003, Mr. Kammer was
the Chief Financial Officer of Alpha Fund Management, and from October 1980 to
September 2000, Mr. Kammer worked at United Parcel Service, most recently as a
Vice President of Finance.
Craig J. Kaufmann - Controller and Treasurer. Mr. Kaufmann has been the
Company's Controller and Treasurer since April 2003, having served as its
Director of Financial Reporting since November 2000. Prior to joining the
Company, Mr. Kaufmann was the Financial Reporting Manager of Kozmo.com since
March 2000 and an associate at PricewaterhouseCoopers from August 1998 to March
2000.
Certain Relationships And Related Transactions
Tender Offer
In connection with the settlement of a class action lawsuit, an affiliate
of the Apollo Stockholders conducted a cash tender offer for up to 1,500,291
shares, or approximately 23% of the Company's outstanding common stock at a
price of $2.80 per share, a price equaling 105% of the average closing prices of
the common stock for the five trading days prior to April 9, 2002. The affiliate
of the Apollo Stockholders purchased 474,427 shares pursuant to the tender
offer, and the Apollo Stockholders agreed that so long as any tendered shares
are held by them or any of their affiliates, they and their affiliates will
cause all such shares held by them, which would otherwise entitle them and their
affiliates, collectively, to cast more than 29.9% of voting power of our
outstanding capital stock, to be voted pro-rata with all other votes cast by
holders of common stock. The tender offer was intended to provide additional
liquidity for the Company's common stockholders and, thereby, provide near term
support for the market price of the Company's common stock in light of the one
for ten reverse stock split.
Rights Offering And Advance Purchase
In connection with the settlement of a class action lawsuit, the Company
distributed to each holder of record of its common stock, warrants and preferred
stock, as of the close of business on May 16, 2002, one non-transferable right
to purchase one additional share of its common stock, for each share held, at a
purchase price of $2.01 per share. On July 11, 2002, the rights offering was
approved by the Company's stockholders and was concluded on July 16, 2002, with
9,138,105 shares of common stock purchased for gross proceeds of $18.4 million.
Under an investment agreement made in connection with the settlement, the
Apollo Stockholders agreed to purchase, in advance of the rights offering,
3,876,584 shares of the Company's non-voting common stock. This purchase equaled
the number of shares of voting common stock that they would otherwise have been
entitled to purchase in the rights offering, after giving effect to the
cancellation of 20% of the outstanding warrants in connection with the
settlement. In connection with the advance purchase, the Apollo Stockholders
paid $2.01 per share for an aggregate gross purchase price of approximately $7.8
million. The Apollo Stockholders purchased an additional 5,113,628 shares of
non-voting common stock pursuant to their over subscription privilege. Under the
terms of the preferred stock agreement, the conversion price of the preferred
stock was adjusted from $70.00 to $68.50 as a result of the issuance of the
additional shares of common stock pursuant to the rights offering at a price
below the conversion price of the preferred stock at the time of the offering.
Similarly, under the terms of the Series 1-A and 2-A Warrants, the exercise
price of the Series 1-A and 2-A Warrants was adjusted from $42.00 and $70.00,
respectively, to $41.12 and $68.50, respectively, and, accordingly, the number
of shares purchasable under the warrants increased as a result of the issuance
of shares of common stock pursuant to the rights offering at a price below the
exercise price of the warrants in effect at the time of the offering.
Investment in Miraxis
In May 2002, the Company acquired Series B Preferred Shares and a warrant
from Miraxis, LLC ("Miraxis") for approximately $0.4 million, representing an
ownership of approximately 30%. Miraxis is a development stage, privately held
telecommunications company that has access to a Ka-band license with which it
intends to provide satellite based multi-channel, broadband data and video
services in North America. The Company entered into a management support
agreement with Miraxis under which the Company's current Chief Executive Officer
and President provided certain services to Miraxis through February 2003 in
exchange for additional Series B Preferred Shares and warrants being issued to
the Company. In addition, in December 2002, the Company acquired Series C
Preferred Shares and warrants from Miraxis for approximately $0.1 million.
In February 2003, the Company entered into a consulting agreement with
Miraxis pursuant to which Miraxis personnel provided services to the Company
through May 2003. In addition, Miraxis extended the management support agreement
whereby the Company's current Chief Executive Officer and President continued to
provide certain services to Miraxis through May 2003. In connection with these
agreements, the Company paid Miraxis approximately $40,000 but also received
additional Series C Preferred Shares and warrants.
In April 2003, the Company acquired additional Series C Preferred Shares
and warrants for approximately $40,000. Subsequent to June 2003, the Company
purchased promissory notes from Miraxis with an aggregate principal amount of
approximately $0.1 million. In November 2003, the promissory notes were
converted to Series D Preferred Shares. Currently, the Company holds
approximately 40% of the ownership interests of Miraxis.
The Company's President and Chief Executive Officer currently holds an
approximately 1% interest in Miraxis. Miraxis License Holdings, LLC ("MLH"), an
entity unaffiliated with Miraxis, other than as described below, holds the
rights to certain orbital slots that Miraxis has acquired access to in order to
implement its business plan. Prior to becoming affiliated with the Company, its
Chief Executive Officer and President acquired a 2% interest in MLH. In
addition, an affiliate of the Company's preferred stockholders has an
approximately 70% interest in MLH. Miraxis is in the process of issuing 10% of
its outstanding common equity on a fully diluted basis to MLH in exchange for
access to those slots.
Employment Agreements
For a description of the employment agreements between the Company and
certain executive officers, please see the descriptions under the heading
"Employment Contracts and Change-in-Control Arrangements" on page 17.
Compliance With Section 16(a) Of The Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors and executive officers, and persons who own more than
10% of a registered class of the Company's securities, to file with the
Securities and Exchange Commission initial reports of ownership and reports of
changes in ownership of common stock and other equity securities of the Company.
Officers, directors and greater than 10% stockholders are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company that no other reports were required, the
Company believes that during the year ended December 31, 2002, its officers,
directors and greater-than-10% stockholders complied with all Section 16(a)
filing requirements.
PROPOSAL 2
AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO DECLASSIFY THE BOARD OF DIRECTORS
The Board is currently separated into three classes, as follows:
Class 1 -- Mr. Gross and Mr. Rowan
Class 2 -- Mr. Africk and Mr. Killeen
Class 3 -- Mr. Stasior
Each year, the stockholders are requested to elect the directors comprising
one of the classes for a three-year term. Currently, the term of the Class 1
directors expires at this annual meeting, the term of the Class 2 directors is
set to expire in 2004 and the term of the Class 3 director is set to expire in
2005. Because of the classified board structure, stockholders have the
opportunity to vote on only approximately one-third of the directors each year.
The Board of Directors is proposing an amendment to SkyTerra
Communication's Certificate of Incorporation to eliminate the classified board
structure. If the stockholders approve this proposal, the terms of all directors
will expire at the annual meeting of stockholders each year and their successors
will be elected for one-year terms that will expire at the next annual meeting.
The text of the actual amendment to the Certificate of Incorporation is set
forth in Appendix A.
The concept of a classified board is an anti-takeover measure that the
Board of Directors feels is no longer appropriate. Rather, the Board believes
that stockholders should have the opportunity to vote on all directors each year
and believes that this will be an effective way to maintain and enhance the
accountability of the Board.
As noted above, if the stockholders approve this proposal, each of the two
(2) directors who are elected this year (who would otherwise comprise Class 1)
will be elected for a one-year term that will expire at next year's annual
meeting. In addition, the one (1) director who is currently a Class 3 and whose
term would otherwise expire in 2005 has agreed to voluntarily relinquish the
third year of his existing three-year term upon approval of this proposal by
stockholders. Consequently, if this proposal is approved by the stockholders,
the entire Board of Directors will be subject to election at next year's annual
meeting of stockholders.
Vote Required For Approval
Approval of the proposed amendment eliminating the classified board
requires the affirmative vote of a majority of the total number of votes of
capital stock of the Company outstanding as of the Record Date.
Recommendation Of The Board Of Directors
The Board of Directors has carefully considered Proposal 2, the proposal to
amend the Company's Certificate of Incorporation to eliminate the classified
board structure, and believes that its approval by the stockholders is in the
best interests of SkyTerra Communications and its stockholders and, accordingly,
unanimously recommends that stockholders vote for the approval of Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 2.
PROPOSAL 3
AMENDMENT TO THE COMPANY'S CERTIFICATE OF
INCORPORATION TO REDUCE THE AUTHORIZED CAPITAL
The Board of Directors has determined that it is advisable to decrease the
Company's authorized capital stock from a total of 310,000,000 shares to a total
of 77,500,000 shares by reducing the authorized number of shares of common stock
from 200,000,000 shares to 55,000,000 shares, the authorized number of shares of
non-voting common stock from 100,000,000 shares to 20,000,000 shares, and the
authorized number of shares of preferred stock from 10,000,000 shares to
2,500,000 shares. The Board has voted to recommend that the stockholders adopt
an amendment to the Company's Certificate of Incorporation implementing the
proposed decreases.
The reason for this action is to effect a savings in the amount of
franchise tax that the Company must pay each year in Delaware. The Company pays
franchise tax in Delaware based, in part, on the number of shares of common
stock and preferred stock that are authorized in the Company's Certificate of
Incorporation. Based on the authorized shares currently provided in its
Certificate of Incorporation, the Company has been paying $150,000 per year,
which is the maximum franchise tax in Delaware. By reducing the authorized
number of shares as proposed, the Company expects to reduce its annual franchise
tax by approximately $70,000 per year.
As of October 31, 2003, 6,075,727 shares of common stock were issued and
outstanding and an additional 2,320,694 shares were reserved for issuance under
the Company's stock option plans. On that date, there were 8,990,212 shares of
non-voting common stock issued and outstanding and 1,158,150 shares of preferred
stock issued and outstanding. The Board has no pending plans involving the
issuance of additional common or preferred stock and believes that the new
reduced levels of authorized shares will be adequate to cover requirements in
the foreseeable future. In the event that additional authorized shares are
needed in the future, each class of stockholders will be asked to approve an
amendment to the Certificate of Incorporation to increase the authorized shares
to the level needed at that time.
Vote Required For Approval
Approval of the proposed amendment decreasing the total number of
authorized shares of capital stock and the number of authorized shares of common
and preferred stock will require the affirmative vote of a majority of: the
total number of votes of common stock outstanding on the Record Date, the total
number of preferred shares outstanding on the Record Date and the total number
of shares of non-voting common stock outstanding as of the Record Date.
Recommendation Of The Board Of Directors
The Board of Directors has carefully considered Proposal 3, the proposal to
amend the Company's Certificate of Incorporation to reduce number of authorized
shares of capital stock, and believes that its approval by the stockholders is
in the best interests of SkyTerra Communications and its stockholders and,
accordingly, unanimously recommends that stockholders vote for the approval of
Proposal 3.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 3.
PROPOSAL 4
RATIFY THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT AUDITORS
OF THE COMPANY FOR THE YEAR ENDED DECEMBER 31, 2003
The firm of KPMG LLP, independent accountants, audited the financial
statements of the Company for the year ended December 31, 2002. The Board of
Directors of the Company has unanimously reappointed, and recommends to the
stockholders the ratification of the appointment of, KPMG LLP as independent
auditors for the Company for the year ended December 31, 2003. If the
stockholders do not ratify the appointment, the Board of Directors may
reconsider its recommendation.
A representative of KPMG LLP is expected to be available at the annual
meeting to respond to appropriate questions and will be given the opportunity to
make a statement if he or she so desires.
Required Vote
The affirmative vote of the holders of a majority of the total number of
the votes of capital stock of the Company represented and entitled to vote at
the annual meeting is required to approve this Proposal 4.
Audit Fees
For the fiscal year ended December 31, 2002, the aggregate fees for
professional services rendered for the audit of the Company's annual financial
statements for the fiscal year ended December 31, 2002 and the reviews of the
financial statements included in the Company's Forms 10-Q for the fiscal year
ended December 31, 2002 were $180,000, all of which has been billed.
Financial Information Systems Design And Implementation Fees
For the fiscal year ended December 31, 2002, the Company did not incur any
charges or pay any fees related to any financial information systems design and
implementation services provided by KPMG LLP.
All Other Fees
For the fiscal year ended December 31, 2002, the aggregate fees billed for
services rendered by KPMG LLP, other than the fees discussed in the foregoing
paragraphs, were $204,750, which related to services for offerings, registration
statements and related filings, due diligence related services and tax services.
The audit committee has concluded that provision of these non-audit
services is compatible with maintaining KPMG LLP's independence.
Recommendation Of The Board Of Directors
The Board of Directors has carefully considered Proposal 4, the proposal to
ratify the appointment of KPMG LLP as independent auditors of the Company, and
believes that its approval by the stockholders is in the best interests of
SkyTerra Communications and its stockholders and, accordingly, unanimously
recommends that stockholders vote for the approval of Proposal 4.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" PROPOSAL 4.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto set forth certain information, as of
October 31, 2003 (except as noted otherwise), regarding beneficial ownership of
the shares of Common Stock of the Company by (i) each person who is known to the
Company to be the beneficial owner of more than 5% of the outstanding shares of
common stock, (ii) each of the Company's named executive officers under the
Summary Compensation Table under the heading "Executive Compensation," (iii)
each director and nominee for director, and (iv) all executive officers and
directors of the Company as a group. Unless otherwise indicated, the
stockholders listed possess sole voting and investment power with respect to the
shares indicated as owned by them.
Number of Shares of
Common Stock
Beneficially Owned Percentage
Name and Address Position (1) of Class
---------------- -------- --- --------
Glenn S. Meyers Former Chairman and Chief Executive 295,000 1.9% (3)
Officer
Jeffrey A. Leddy Chief Executive Officer and President 43,750 * (2)
Robert C. Lewis Senior Vice President, General 26,167 * (4)
Counsel and Secretary
Craig C. Chesser Former Senior Vice President Finance 37,499 * (5)
and Treasurer
Michael A. Hultberg Former Senior Vice President and 37,500 * (6)
Controller
Jeffrey M. Killeen Director 23,333 * (2)
William F. Stasior Director 10,000 * (2)
Andrew D. Africk Director 13,715,275 76.0% (7)
c/o SkyTerra Communications, Inc.
19 West 44th Street, Suite 507
New York, New York 10036
Marc J. Rowan Director 13,715,275 76.0% (8)
c/o SkyTerra Communications, Inc.
19 West 44th Street, Suite 507
New York, New York 10036
Michael S. Gross Director 13,715,275 76.0% (9)
c/o SkyTerra Communications, Inc.
19 West 44th Street, Suite 507
New York, New York 10036
Apollo Investment Fund IV, L.P. 13,696,108 76.0% (10)
Two Manhattanville Road
Purchase, New York 10577
All executive officers, directors and 13,859,159 76.2% (11)
nominees as a group (10 persons)
---------------------
* Represents beneficial ownership of less than 1%.
(1) Beneficial ownership has been determined pursuant to Rule 13d-3 under the
Exchange Act.
(2) Represents options to purchase shares of common stock that are currently
exercisable, but does not include options that become exercisable upon a
change of control of the Company and upon certain other conditions.
(3) Represents options to purchase shares of common stock that are currently
exercisable. Mr. Meyers' employment with the Company ceased on April 15,
2003, and he resigned from the Company's board of directors on the same
day. His beneficial ownership is stated as of that date.
(4) Includes options to purchase 22,967 shares of common stock that are
currently exercisable, but does not include options that become
exercisable upon a change of control of the Company and upon certain
other conditions.
(5) Includes options to purchase 34,666 shares of common stock that are
currently exercisable. Mr. Chesser's employment with the Company ceased
on April 15, 2003. His beneficial ownership is stated as of that date.
(6) Represents options to purchase shares of common stock that are currently
exercisable. Mr. Hultberg's employment with the Company ceased on April
15, 2003. His beneficial ownership is stated as of that date.
(7) Includes an aggregate of (i) 1,270,948 shares of common stock acquired
through the exercise of Series 1-A warrants, (ii) 474,427 shares of
common stock acquired in a tender offer, (iii) 8,990,212 shares of
non-voting common stock acquired pursuant to the rights offering, and
(iv) 2,960,521 shares of common stock issuable to Apollo Stockholders
upon conversion of the Series A Preferred Stock and exercise of the
Series 1-A warrants and the Series 2-A warrants owned by them. Mr. Africk
is a principal of Apollo Advisors IV, L.P, which together with an
affiliated investment manager, serves as the manager of each of the
Apollo Stockholders. Mr. Africk disclaims beneficial ownership of such
shares. Includes options to purchase 19,167 shares of common stock that
are currently exercisable, but does not include options that become
exercisable upon a change of control of the Company.
(8) Includes an aggregate of (i) 1,270,948 shares of common stock acquired
through the exercise of Series 1-A warrants, (ii) 474,427 shares of
common stock acquired in a tender offer, (iii) 8,990,212 shares of
non-voting common stock acquired pursuant to the rights offering, and
(iv) 2,960,521 shares of common stock issuable to Apollo Stockholders
upon conversion of the Series A Preferred Stock and exercise of the
Series 1-A warrants and the Series 2-A warrants owned by them. Mr. Rowan
is a principal of Apollo Advisors IV, L.P, which together with an
affiliated investment manager, serves as the manager of each of the
Apollo Stockholders. Mr. Rowan disclaims beneficial ownership of such
shares. Includes options to purchase 19,167 shares of common stock that
are currently exercisable, but does not include options that become
exercisable upon a change of control of the Company.
(9) Includes an aggregate of (i) 1,270,948 shares of common stock acquired
through the exercise of Series 1-A warrants, (ii) 474,427 shares of
common stock acquired in a tender offer, (iii) 8,990,212 shares of
non-voting common stock acquired pursuant to the rights offering, and
(iv) 2,960,521 shares of common stock issuable to Apollo Stockholders
upon conversion of the Series A Preferred Stock and exercise of the
Series 1-A warrants and the Series 2-A warrants owned by them. Mr. Gross
is a principal of Apollo Advisors IV, L.P, which together with an
affiliated investment manager, serves as the manager of each of the
Apollo Stockholders. Mr. Gross disclaims beneficial ownership of such
shares. Includes options to purchase 19,167 shares of common stock that
are currently exercisable, but does not include options that become
exercisable upon a change of control of the Company.
(10) Represents the aggregate of (i) 1,270,948 shares of common stock acquired
through the exercise of Series 1-A warrants, (ii) 474,427 shares of
common stock acquired in a tender offer, (iii) 8,990,212 shares of
non-voting common stock acquired pursuant to the rights offering, and
(iv) 2,960,521 shares of common stock issuable upon conversion of the
aggregate of 1,158,150 shares of the Company's Series A Preferred Stock
and the exercise of an aggregate of 193,771 Series 1-A warrants and
9,810,033 Series 2-A warrants held by the Apollo Stockholders. Assuming
conversion of all the Series A Preferred Stock and the exercise of all
the Series 1-A warrants and Series 2-A warrants held by the Apollo
Stockholders, such 13,696,108 shares of common stock would consist of
11,811,246 shares of common stock beneficially owned by Apollo Investment
Fund IV, L.P., 593,399 shares of common stock beneficially owned by
Apollo Overseas Partners IV, L.P., 817,036 shares of common stock
beneficially owned by AIF IV/ RRRR LLC and 474,427 shares of common stock
owned by AP/RM Acquisition, LLC. The holders of the Company's Series A
Preferred Stock are only entitled to an aggregate of 975,000 votes with
respect to the Series A Preferred Stock as of October 31, 2003, or
approximately 0.842 votes per share of Series A Preferred Stock. Messrs.
Africk, Rowan and Gross, directors of the Company and associated with
Apollo Advisors IV, L.P., disclaim beneficial ownership of the shares
held by the Apollo Stockholders.
(11) Messrs. Africk, Rowan and Gross, directors of the Company and associated
with Apollo Advisors IV, L.P., disclaim beneficial ownership of shares
held by the Apollo Stockholders. Includes current executive officers not
required to be listed, and excludes Messrs. Meyers, Chesser and Hultberg
as they are no longer executive officers of the Company. Includes options
to purchase an aggregate of 158,551 shares of common stock that are
currently exercisable, but does not include options that become
exercisable upon a change of control of the Company or upon certain other
conditions.
EXECUTIVE COMPENSATION
The following Summary Compensation Table sets forth, for the three
years ended December 31, 2002, the compensation for services in all capacities
earned by the Company's Chief Executive Officer and its next most highly
compensated executive officers.
Summary Compensation Table
Other Securities
Annual Underlying LTIP All Other
Compensation Options/SARs Payouts Compensation
Name and Principal Position Year Salary Bonus (1) (#) ($) (2)
--------------------------- ---- ------ ----- --- --- --- ---
Glenn S. Meyers (3) 2002 $332,553 $375,000 $18,000 155,000 $-- $--
Former Chairman and 2001 278,096 -- 18,000 -- -- --
Chief Executive Officer 2000 267,400 1,469,090 18,000 -- -- --
Jeffrey A. Leddy 2002 138,462 15,000 -- 100,000 -- --
Chief Executive Officer and
President
Robert C. Lewis 2002 196,250 -- -- 20,000 -- --
Senior Vice President, 2001 140,000 90,000 6,000 10,000 -- 2,500
General
Counsel and Secretary 2000 128,692 40,000 -- -- -- 2,500
Craig C. Chesser (3) 2002 196,250 -- -- 20,000 -- --
Former Senior Vice President 2001 164,077 90,000 1,500 10,000 -- 2,500
Finance and Treasurer 2000 133,961 40,000 6,000 2,500 -- 2,500
Michael A. Hultberg (3) 2002 223,333 -- -- 20,000 -- --
Former Senior Vice President 2001 177,135 90,000 3,000 10,000 -- --
and Controller 2000 145,000 40,000 -- -- -- --
--------------
(1) Represents non-accountable expense allowance.
(2) Represents employer matching contributions to retirement accounts.
(3) Effective April 15, 2003, Messrs. Meyers, Chesser and Hultberg ceased full
time employment.
Option / SAR Grants in the Last Year
The following table sets forth information concerning grants of stock
options to purchase common stock during the year ended December 31, 2002 to the
named executive officers.
Percent of
Number of Total Potential Realizable Value
Securities Options/SARs at Assumed Annual Rates of
Underlying Granted to Exercise or Stock Appreciation for
Options /SARs Employees in Base Price Expiration Option Term
Name Granted (1) Fiscal Year ($/Share) Date 5% 10%
----- ----------- ----------- --------- ---- ----------- --------
Glenn S. Meyers (4) 155,000 (2) 31.6% $0.85 10/15/12 $82,857 $209,976
Jeffrey A. Leddy 25,000 (3) 5.1% $1.80 06/03/12 $28,300 $71,718
75,000 (2) 15.3% $0.85 10/15/12 $40,092 $101,601
Robert C. Lewis 20,000 (2) 4.1% $0.85 10/15/12 $10,691 $27,094
Craig C. Chesser (5) 20,000 (2) 4.1% $0.85 10/15/12 $10,691 $27,094
Michael A. Hultberg (5) 20,000 (2) 4.1% $0.85 10/15/12 $10,691 $27,094
--------------
(1) The vesting of the options is subject to acceleration in the event of a
change in control of the Company, which means, generally, the consummation
of any merger or consolidation involving the Company, any sale of
substantially all of the Company's assets or other transaction or related
transactions as a result of which a single person or several persons acting
in concert own a majority of the shares of common stock. These options also
vest upon the termination of the executives' employment with the Company.
(2) These options were granted on October 15, 2002 at an exercise price of
$0.85, the per share fair market value of the common stock at that time.
The options have a term of ten (10) years. These options are exercisable
cumulatively in three (3) equal annual installments, beginning on October
9, 2003.
(3) This option was granted on June 3, 2002 at an exercise price of $1.80, the
per share fair market value of the common stock at that time. The option
has a term of ten (10) years. The option is exercisable cumulatively in
four (4) equal installments every six months, beginning on June 3, 2002.
(4) Mr. Meyers employment contract expired on April 15, 2003. At such time, all
outstanding options held by Mr. Meyers became fully vested.
(5) Effective April 15, 2003, Messrs. Hultberg and Chesser ceased full time
employment. At such time, all outstanding options held by each of Messrs.
Hultberg and Chesser became fully vested.
Aggregated Option/SAR Exercises in the Last Year and Year-End Option/SAR Values
The following table sets forth information concerning the exercise of
options to purchase shares of common stock by the named executive officers
during the year ended December 31, 2002, as well as the number and potential
value of unexercised options (both options which are presently exercisable and
options which are not presently exercisable) as of December 31, 2002.
Number of Value of
Number of Securities Unexercised
Securities Underlying In-the-Money
Underlying Options/SARs at Options/SARs
Options/SARs Fiscal Y/E (#) at Fiscal Y/E ($)
Acquired on Value Exercisable/ Exercisable/
Name Exercise (#) Realized Unexercisable Unexercisable
---- ------------ -------- ------------- -------------
Glenn S. Meyers (1) -- -- 126,667/168,333 0/0
Jeffrey A. Leddy -- -- 6,250/93,750 0/0
Robert C. Lewis -- -- 19,500/20,000 0/0
Craig C. Chesser (2) -- -- 15,833/20,000 0/0
Michael A. Hultberg (2) -- -- 17,500/20,000 0/0
(1) Mr. Meyers employment contract expired on April 15, 2003. At such time, all
outstanding options held by Mr. Meyers became fully vested.
(2) Effective April 15, 2003, Messrs. Hultberg and Chesser ceased full time
employment. At such time, all outstanding options held by each of Messrs.
Hultberg and Chesser became fully vested.
Employment Contracts And Change In Control Arrangements
Expired Meyers Employment Agreement
In connection with the transactions consummated pursuant to the 1998
acquisition by the Company of Rare Medium, Inc., the Company entered into an
Employment Agreement effective April 15, 1998 with Glenn S. Meyers, as amended
(the "Meyers Employment Agreement"). Pursuant to the Meyers Employment
Agreement, Mr. Meyers was engaged as the Chairman, President and Chief Executive
Officer of the Company to serve for a term of five years, expiring April 15,
2003. Pursuant to the Meyers Employment Agreement, during its last year, Mr.
Meyer received an annual base salary of $292,465, with a minimum annual increase
during the term of not less than 4% per annum. The Meyers Employment Agreement
also contains a covenant not to compete with the Company or any of its
affiliates for the term of the agreement, plus one additional year. Concurrently
with the execution of the Meyers Employment Agreement, the Company granted to
Mr. Meyers options to acquire an aggregate of 200,000 shares of common stock at
exercise prices equal to $23.75 per share (the fair market value at the time of
issuance), which options become exercisable ratably on a monthly basis over a
period of 60 months from the date of grant and expire ten years from the date of
grant. On October 15, 2002, in recognition of Mr. Meyers' contribution to the
Company, among other things, the Compensation Committee approved the repricing
of the exercise prices of Mr. Meyers' outstanding options to purchase an
aggregate of 140,000 shares of common stock to $0.85 per share, the fair market
value at the date of the repricing. Additionally, on that date, Mr. Meyers
received an additional option to purchase 155,000 shares of common stock at
$0.85 per share. On April 15, 2003, the Meyers Employment Agreement expired, and
Mr. Meyers ceased to be employed by the Company and resigned from the Board of
Directors.
Leddy Employment Agreement
In June 2002, the Company entered into an employment agreement, effective
June 4, 2002, with Jeffrey Leddy. Pursuant to the agreement, Mr. Leddy was
engaged as Senior Vice President of Operations for a term expiring on December
31, 2003. Mr. Leddy currently receives an annual base salary of $225,000, which
is subject to increase at the sole discretion of the Compensation Committee. In
addition, Mr. Leddy is eligible, based upon the achievement of certain
subjective goals established by the Compensation Committee, to receive a bonus
of up to 75% of his base salary following the end of each calendar year during
the term of the agreement. Mr. Leddy also received an option to purchase 25,000
shares of common stock at an exercise price of $1.80 per share, the fair market
value on the date of grant. This option vests ratably every six months for two
years. On October 9, 2002, Mr. Leddy was promoted to President and Chief
Operating Officer of the Company. In connection with his promotion, Mr. Leddy
received an option to purchase an additional 75,000 shares of common stock at an
exercise price of $0.85 per share, the fair market value on the date of the
grant. This option vests ratably every year for three years. In the event that
Mr. Leddy is terminated other than for "cause" as that term is defined in the
agreement, he is entitled to receive a lump sum payment equal to one year of his
current salary and all stock options granted to him by the Company shall
immediately vest. In April 2003, Mr. Leddy was promoted to Chief Executive
Officer. In connection with this promotion, Mr. Leddy also received a option to
purchase an additional 100,000 shares of common stock at an exercise price of
$0.91. The Company is in the process of renewing his employment agreement.
Other Executive Employment Agreements
The Company has or had employment agreements with each of Craig Chesser,
Michael Hultberg and Robert Lewis, each of who is or was an executive officer of
the Company. Under these agreements, if, either (i) after 90 days following a
change in control of the Company, the executive terminates his employment or
(ii) the executive is terminated for other than "cause" as such term is defined
in his respective agreement, then the executive is entitled to receive severance
compensation and benefits in a lump sum payment consisting of one year of his
current salary and the right to exercise all vested stock options and unvested
stock options through the option expiration date for such options. For purposes
of these agreements, a change in control of the Company occurs when, among other
things, the stockholders of the Company approve a merger of the Company.
As part of the Company's efforts to further reduce costs, the Company
reached agreements with Messrs. Hultberg and Chesser pursuant to which the full
time employment of each ceased as of April 15, 2003. At that time, Messrs.
Hultberg was paid severance and benefits in accordance with his employment
agreement. In September 2003, Mr. Chesser was paid severance and benefits in
accordance with his employment agreement, concurrent with the resolution of an
outstanding matter between Mr. Chesser and the Company.
BOARD AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed the audited financial
statements with the Company's management. The Audit Committee has discussed with
the Company's independent auditors the matters required to be discussed by SAS
61 (Codification of Statements on Auditing Standards AU Section 380), as may be
modified or supplemented. The Audit Committee has received the written
disclosures and the letter from the Company's independent accountants required
by the Independence Standards Board Standard No. 1 (Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees), as may be
modified or supplemented, and has discussed with the Company's independent
accountants the independent accountant's independence. Based on the review and
discussions referred to above, the Audit Committee recommended to the Board of
Directors that the audited financial statements be included in the Company's
Annual Report on Form 10-K for the year ended December 31, 2002.
By the Audit Committee
of the Board of Directors,
/s/ JEFFREY M. KILLEEN
----------------------
Jeffrey M. Killeen
/s/ WILLIAM F. STASIOR
----------------------
William F. Stasior
/s/ ANDREW D. AFRICK
--------------------
Andrew D. Africk
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors reviews, recommends
and approves changes to the Company's compensation policies and benefits
programs, administers the Company's stock option plans, including approving
stock option grants, and otherwise seeks to ensure that the Company's
compensation philosophy is consistent with the Company's best interests and is
properly implemented. The members of the Compensation Committee are Jeffrey M.
Killeen and Andrew D. Africk.
Compensation Philosophy And Review
The Company's compensation philosophy for its executive officers serves two
principal purposes: (1) to provide a total compensation package for such
officers that is competitive and enables the Company to attract and retain key
executive and employee talent needed to accomplish the Company's business
objectives, and (2) to directly link compensation to improvements in Company
performance and increases in stockholder value as measured principally by the
trading price of the common stock.
The 2002 compensation levels for the Company's executive officers generally
were determined on an individual basis, including consideration of employment
agreements entered into between the Company and such individuals.
Members of the Compensation Committee approve the material terms of any
employment agreement, and any amendments thereto, entered into between the
Company and an executive officer, as well as any stock option grants to an
executive officer. In determining compensation levels for 2002, the Compensation
Committee primarily relied upon factors relating to responsibilities of the
executive officer and both his current and expected future contributions to the
Company. The Compensation Committee did not determine it necessary to, and did
not attempt to, specifically analyze compensation levels at companies included
in the indexes under the caption, "Performance Graph."
Elements Of Executive Officer Compensation
The Company's executive compensation consists primarily of salary, bonus
and awards of stock options. The Company emphasizes the award of stock options
and makes use of cash incentive bonuses to reward performance and retain its
executive officers. The Compensation Committee believes that in the highly
competitive, emerging markets in which the Company has historically operated,
equity-based compensation provides the greatest incentive for outstanding
executive performance and the greatest alignment of management and stockholder
long-term interests.
Officer Salaries. The Compensation Committee reviews each executive
officer's salary annually. Except to the extent that salary increases are
prescribed by written employment agreements, in determining the appropriate
salary levels, the Compensation Committee considers, among other factors, the
officer's scope of responsibility, prior experience and past accomplishments.
Stock Option Grants. As noted above, the Company has relied substantially
on long-term equity compensation as the principal means of providing long-term
incentives for its executive officers and key employees. The Company's practice
has been to set option exercise prices at not less than 100% of fair market
value on the date of grant. Options are generally granted for a term of five to
ten years. Options granted to executive officers and key employees become
exercisable over time and are typically dependent on continuing employment with
the Company or one of its subsidiaries, thus providing incentive to remain in
the Company's employ.
In determining the size of the stock option grants, the Compensation
Committee considers various subjective factors primarily relating to the
responsibilities of the individual officers and key employees, and also their
current and expected future contributions to the Company, as well as the number
of shares owned by the officer or key employee or which remain unvested under
outstanding options. In addition, the Compensation Committee examines the level
of equity incentives held by each officer and key employee relative to the other
officers' and key employees' equity positions and their tenure,
responsibilities, experience and value to the Company.
Repricing Of Options
On October 5, 2001, the Compensation Committee determined that because the
outstanding options held by certain executive officers and employees were
exercisable at prices that were significantly above prevailing market prices for
the Company's common stock, they no longer provided an adequate level of
incentive. Accordingly, to reincentivize certain executive officers and
employees of the Company and in recognition of their service to the Company, the
Compensation Committee approved the repricing of the exercise prices of options
to purchase an aggregate of 35,000 shares of common stock to $1.30 per share,
the fair market value at the date of the repricing. On December 21, 2001, the
Compensation Committee approved an additional repricing of the exercise prices
of options to purchase an aggregate of 40,000 shares of common stock held by
non-management directors to $6.00 per share, the fair market value at the date
of the repricing.
On October 15, 2002, in recognition of contributions made to the Company by
the Company's then Chairman and Chief Executive Officer, among other things, the
Compensation Committee approved the repricing of the exercise prices of
outstanding options to purchase an aggregate of 140,000 shares of common stock
to $0.85 per share, the fair market value at the date of the repricing.
The following table provides information related to the repricing of each
option held by the executive officers of the Company during the last ten
completed fiscal years.
Length of
Number of Exercise Original
Securities Market Price Price of Option Term
Underlying of Stock at Stock at Remaining
Options Time of Time of New at Date of
Repriced or Repricing or Repricing Exercise Repricing
Name Date Amended Amendment or Amendment Price or Amendment
----- ---- ------- --------- ------------ ----- ------------
Glenn Meyers 10/15/02 140,000 $0.85 $23.75 $0.85 66 Months
Craig C. Chesser 10/5/01 1,167 $1.30 $23.75 $1.30 23 Months
10/5/01 833 $1.30 $51.10 $1.30 28 Months
10/5/01 1,334 $1.30 $85.63 $1.30 36 Months
10/5/01 2,500 $1.30 $145.00 $1.30 46 Months
Michael A. Hultberg 10/5/01 7,500 $1.30 $147.50 $1.30 37 Months
Robert C. Lewis 10/5/01 3,200 $1.30 $23.75 $1.30 23 Months
10/5/01 3,800 $1.30 $47.70 $1.30 30 Months
10/5/01 2,500 $1.30 $85.63 $1.30 36 Months
Policy Of Deductibility Of Compensation
Section 162(m) of the U.S. Internal Revenue Code limits the tax
deductibility of a corporation of compensation in excess of $1,000,000 paid to
any of its five most highly compensated executive officers. However,
compensation that qualifies as "performance-based" is excluded from the
$1,000,000 limit if, among other requirements, the compensation is payable only
upon attainment of pre-established, objective performance goals under a plan
approved by shareholders.
Total cash compensation paid for salaries and bonuses during 2002 did not
exceed the $1,000,000 limit for any individual executive. In addition, the
Compensation Committee does not anticipate that total cash compensation paid for
salaries and bonuses during 2003 will exceed the $1,000,000 limit for any
individual executive. Stock option grants to date do not meet the requirement
that such grants be "performance based" and are, therefore, not exempt from the
limitations on deductibility. The Compensation Committee will continue to
monitor the compensation levels potentially payable under the Company's cash and
stock option compensation programs, but intends to retain the flexibility
necessary to provide total cash and stock option compensation in line with
competitive practice, the Company's compensation philosophy and the Company's
best interests.
In conclusion, the Compensation Committees believes that the policies and
programs described in this report are competitive and effectively align
executive compensation with the Company's goal of maximizing the return to
stockholders.
By the Compensation Committee
of the Board of Directors,
/s/ JEFFREY M. KILLEEN
----------------------
Jeffrey M. Killeen
/s/ ANDREW D. AFRICK
--------------------
Andrew D. Africk
PERFORMANCE GRAPH
The following graph shows a five-year comparison of cumulative total
shareholder returns for the Company, the Nasdaq Market Index, the Media General
Internet Software and Services Index, and the Media General Diversified
Communications Services Index from December 31, 1997 through December 31, 2002.
The cumulative total shareholder returns on the Company's common stock was
measured by dividing the difference between the Company's share price at the end
and the beginning of the measurement period by the share price at the beginning
of the measurement period. The total stockholder return assumes $100 invested at
the beginning of the period in common stock, in the Nasdaq Market Index and the
Industry Index. The Company did not pay dividends on its common stock during the
measurement period and the calculations of cumulative total stockholders return
on the common stock did not include dividends. The Company presents below the
Internet Software and Services Index as a comparative industry index for the
Company's Internet professional services business, which it commenced upon the
acquisition of Rare Medium, Inc. in April 1998 and ceased in September 2001. In
addition, the Company presents below the Diversified Communications Services
Index as a comparative industry index for the Company's business in which it has
operated since November 2001 when it became a participant in the MSV Joint
Venture.
COMPARISON OF CUMULATIVE 5-YEAR ANNUAL RETURN AMONG
SKYTERRA COMMUNICATIONS, INC., NASDAQ MARKET INDEX,
INTERNET SOFTWARE AND SERVICES INDEX AND
DIVERSIFIED COMMUNICATIONS SERVICES INDEX
GRAPHIC OMITTED
LEGEND:
Fiscal Year Ending
-------------------------------------------------------------------------------------
Company/Index/Market 1997 1998 1999 2000 2001 2002
-------------------- ---------- ----------- ----------- ------------ ----------- -----------
SkyTerra Communications, Inc. 100.00 235.71 1950.00 108.91 42.29 6.57
Media General Internet Software &
Services Index 100.00 262.37 763.61 168.89 113.97 76.35
Media General Diversified
Communications Services Index 100.00 107.07 175.86 79.46 48.21 30.21
Nasdaq Market Index 100.00 141.04 248.76 156.35 124.64 86.94
--------------
(1) Assumes $100 invested on January 1, 1998 and reinvestment of dividends.
(2) The Media General "Internet Software and Services Index" relates to the
primary business engaged in by the Company from April 1998 through
September 2001 through its subsidiary Rare Medium, Inc.
(3) The Media General "Diversified Communications Services Index" relates to
the primary business engaged in by the Company since November 2001 when it
became a participant in the MSV Joint Venture.
FORWARD LOOKING STATEMENTS
This proxy statement contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The words "believe," "anticipate,"
"expect," "estimate," "intent" and similar expressions identify forward-looking
statements. Forward looking statements necessarily involve risks and
uncertainties, and our actual results could differ materially from those
anticipated in the forward-looking statements. Factors that would cause actual
results to differ materially from the Company's current expectations include but
are not limited to those factors set forth in the Company's Annual Report on
Form 10-K for the year ended December 31, 2002 filed with the SEC and mailed
with this proxy statement.
OTHER BUSINESS
The Board of Directors knows of no business other than the matters set
forth herein which will be presented at the annual meeting. Inasmuch as matters
not known at this time may come before the meeting, the enclosed proxy confers
discretionary authority with respect to such matters as may properly come before
the meeting and it is the intention of the persons named in the proxy to vote in
accordance with their judgment on such matters.
STOCKHOLDER PROPOSALS
The Company expects that the date of the 2004 annual meeting of
stockholders will change by more than 30 days from this year's annual meeting.
Stockholders who wish to submit proposals pursuant to Rule 14a-8 of the 1934 Act
for inclusion in the Proxy Statement for the Company's 2004 annual meeting of
stockholders must submit the same to the Secretary of the Company within a
reasonable time before the Company begins to print and mail its proxy materials
at the Company's principal executive office, 19 West 44th Street, Suite 507, New
York, New York 10036. In order for a shareholder proposal at the 2004 annual
meeting submitted outside of Rule 14a-8 to be considered "timely" within the
meaning of Rule 14a-4(c) of the 1934 Act, such proposal must be received by the
Company within a reasonable time before the Company mails its proxy materials.
ADDITIONAL INFORMATION
The Company is a reporting company and files annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy these reports, proxy statements and other information at the SEC public
reference rooms in Washington, DC, New York, NY or Chicago, IL. You can request
copies of these documents by writing to the SEC and paying a fee for the copying
costs. Please call the SEC at 1-800-SEC-0330 for more information about the
operation of the public reference rooms. The Company's SEC filings are also
available at the SEC's Web site at "http://www.sec.gov." In addition, you can
read and copy the Company's SEC filings at the office of the National
Association of Securities Dealers, Inc. at 1735 K Street, Washington, DC 20006.
ANNUAL REPORT ON FORM 10-K
The Company is required to file an Annual Report on Form 10-K with the SEC.
A copy of the Company's Annual Report on Form 10-K for the year ended December
31, 2002, filed with the SEC is available without charge by writing to Robert C.
Lewis, Senior Vice President, General Counsel and Secretary, SkyTerra
Communications, Inc., 19 West 44th Street, Suite 507, New York, New York 10036.
IMPORTANT -- MAIL YOUR SIGNED PROXY CARD OR VOTING INSTRUCTION CARD
Please complete, sign, date and mail the enclosed proxy card or voting
instruction card in the enclosed self-addressed envelope.
By Order of the Board of Directors,
/s/ Robert C. Lewis
---------------------------------------
Robert C. Lewis
Senior Vice President, General Counsel
and Secretary
November 4, 2003
New York, New York
Appendix A
PROPOSED AMENDMENTS TO
CERTIFICATE OF INCORPORATION
If Proposal 2 (Elimination of Classified Board) is approved by the
stockholders, Article Ninth of the Certificate of Incorporation will be amended
in its entirety to read as follows:
"NINTH: At each annual meeting of stockholders of the Corporation, all
directors shall be elected for a one-year term expiring at the next succeeding
annual meeting of stockholders. Any director may be removed from office by a
vote of the holders of a majority of the shares then issued and outstanding.
Vacancies and newly created directorships resulting from any increase in the
authorized number of directors may be filled by a majority of the directors then
in office, although less than a quorum, or the sole remaining director, and
shall not be filled by the stockholders; any director so chosen shall hold
office until the next annual meeting of stockholders, and until his or her
successor shall be duly elected and shall qualify, unless sooner displaced."
If Proposal 3 (Reduction in Authorized Shares) is approved by the each
class of our outstanding stock, the existing first two paragraphs to the
beginning of Article Fourth of the Certificate of Incorporation will be amended
in their entirety to read as follows:
"FOURTH: The aggregate number of shares which the corporation shall have
the authority to issue shall be:
Seventy Seven Million Five Hundred Thousand (77,500,000) shares, consisting of
Fifty Five Million (55,000,000) shares of Common Stock, with a par value of One
Cent ($0.01) per share, Twenty Million (20,000,000) shares of Non-Voting Common
Stock, with a par value of One Cent ($0.01) per share, and Two Million Five
Hundred Thousand (2,500,000) shares of Preferred Stock, with a par value of One
Cent ($0.01) per share. The Board of Directors, in its sole direction shall have
full and complete authority, by resolutions, from time to time, to establish one
or more series or classes and to issue shares of Preferred Stock, and to fix,
determine and vary the voting rights, designations, preferences, restrictions,
qualifications, privileges, limitations, options, conversion rights and other
special rights of each series or class of Preferred Stock, including, but not
limited to, dividend rates and manner of payment, preferential amounts payable
upon voluntary or involuntary liquidation, voting rights, conversion rights,
redemption prices, terms and conditions and sinking fund and stock purchase
prices, terms and conditions."
COMMON STOCK PROXY
SKYTERRA COMMUNICATIONS, INC.
19 WEST 44TH STREET, SUITE 507, NEW YORK, NEW YORK 10036
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON DECEMBER 4, 2003
The undersigned hereby appoints Jeffrey A. Leddy, Chief Executive Officer and
President of SkyTerra Communications, Inc. and Robert C. Lewis, Senior Vice
President, General Counsel and Secretary of SkyTerra Communications, Inc., and
each of them, with full power of substitution, proxies to represent the
undersigned at the annual meeting of stockholders of SkyTerra Communications,
Inc. to be held at 10:00 a.m., local time, on December 4, 2003, in the Concorde
Room, 3rd floor, at the Dylan Hotel, 52 East 41st Street, New York, New York
10017, and at any adjournment or postponement thereof and thereat to vote all of
the shares of stock which the undersigned would be entitled to vote, with all
the powers the undersigned would possess if personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SKYTERRA
COMMUNICATIONS, INC. Unless otherwise specified in the boxes provided below,
this Proxy will be a vote FOR the director nominee in Proposal 1 and FOR
Proposals 2, 3 and 4, and in the discretion of the above named persons as to any
other matter that may properly come before the annual meeting.
1. The election of one Class 1 director Marc Rowan, to the Board of
Directors.
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY
2. To amend the Certificate of Incorporation of the Company to eliminate
the classified board structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To amend the Certificate of Incorporation of the Company to reduce the
number of authorized shares of voting common stock, non-voting common
stock and preferred stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the appointment of KPMG LLP as the independent auditors of
the Company for the year ending December 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In the discretion of persons named above, to act upon such other
business as may properly come before the annual meeting or any
adjournment or postponement thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" THE DIRECTOR NOMINEE ON PROPOSAL 1
AND "FOR" PROPOSALS 2, 3 and 4 SET FORTH ON THE REVERSE SIDE HEREOF. IF ANY
FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL MEETING, IT IS THE INTENTION OF
THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
________________________
Signature
________________________
Signature
Dated: __________________, 2003
In case of joint owners, each joint owner must sign. If signing for a
corporation or partnership or an agent, attorney or fiduciary, indicate the
capacity in which you are signing.
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD
AND RETURN IN THE ENCLOSED ENVELOPE
NON-VOTING COMMON STOCK PROXY
SKYTERRA COMMUNICATIONS, INC.
19 WEST 44TH STREET, SUITE 507, NEW YORK, NEW YORK 10036
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON DECEMBER 4, 2003
The undersigned hereby appoints Jeffrey A. Leddy, Chief Executive Officer and
President of SkyTerra Communications, Inc. and Robert C. Lewis, Senior Vice
President, General Counsel and Secretary of SkyTerra Communications, Inc., and
each of them, with full power of substitution, proxies to represent the
undersigned at the annual meeting of stockholders of SkyTerra Communications,
Inc. to be held at 10:00 a.m., local time, on December 4, 2003, in the Concorde
Room, 3rd floor, at the Dylan Hotel, 52 East 41st Street, New York, New York
10017, and at any adjournment or postponement thereof and thereat to vote all of
the shares of stock which the undersigned would be entitled to vote, with all
the powers the undersigned would possess if personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SKYTERRA
COMMUNICATIONS, INC. Unless otherwise specified in the boxes provided below,
this Proxy will be a vote FOR Proposal 2, and in the discretion of the above
named persons as to any other matter that may properly come before the annual
meeting.
2. To amend the Certificate of Incorporation of the Company to reduce the
number of authorized shares of voting common stock, non-voting common
stock and preferred stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" PROPOSAL 2 SET FORTH ON THE
REVERSE SIDE HEREOF. IF ANY FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL
MEETING, IT IS THE INTENTION OF THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN
ACCORDANCE WITH THEIR BEST JUDGMENT.
________________________
Signature
________________________
Signature
Dated: __________________, 2003
In case of joint owners, each joint owner must sign. If signing for a
corporation or partnership or an agent, attorney or fiduciary, indicate the
capacity in which you are signing.
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD
AND RETURN IN THE ENCLOSED ENVELOPE
PREFERRED STOCK PROXY
SKYTERRA COMMUNICATIONS, INC.
19 WEST 44TH STREET, SUITE 507, NEW YORK, NEW YORK 10036
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING ON DECEMBER 4, 2003
The undersigned hereby appoints Jeffrey A. Leddy, Chief Executive Officer and
President of SkyTerra Communications, Inc. and Robert C. Lewis, Senior Vice
President, General Counsel and Secretary of SkyTerra Communications, Inc., and
each of them, with full power of substitution, proxies to represent the
undersigned at the annual meeting of stockholders of SkyTerra Communications,
Inc. to be held at 10:00 a.m., local time, on December 4, 2003, in the Concorde
Room, 3rd floor, at the Dylan Hotel, 52 East 41st Street, New York, New York
10017, and at any adjournment or postponement thereof and thereat to vote all of
the shares of stock which the undersigned would be entitled to vote, with all
the powers the undersigned would possess if personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SKYTERRA
COMMUNICATIONS, INC. Unless otherwise specified in the boxes provided below,
this Proxy will be a vote FOR the director nominees in Proposal 1 and FOR
Proposals 2, 3 and 4, and in the discretion of the above named persons as to any
other matter that may properly come before the annual meeting.
1. The election of two Class 1 directors, Michael Gross and Marc Rowan to
the Board of Directors.
[ ] FOR [ ] AGAINST [ ] WITHHOLD AUTHORITY
FOR ALL NOMINEES EXCEPT AS NOTED BELOW:
----------------------------------------------------
2. To amend the Certificate of Incorporation of the Company to eliminate
the classified board structure.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To amend the Certificate of Incorporation of the Company to reduce the
number of authorized shares of voting common stock, non-voting common
stock and preferred stock.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the appointment of KPMG LLP as the independent
auditors of the Company for the year ending December 31, 2003.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In the discretion of persons named above, to act upon such other
business as may properly come before the annual meeting or any
adjournment or postponement thereof.
THE PROXY HOLDERS WILL VOTE THE SHARES REPRESENTED BY THIS PROXY IN THE MANNER
INDICATED ON THE REVERSE SIDE HEREOF. UNLESS A CONTRARY DIRECTION IS INDICATED,
THE PROXY HOLDERS WILL VOTE SUCH SHARES "FOR" THE DIRECTOR NOMINEE ON PROPOSAL 1
AND "FOR" PROPOSALS 2, 3 and 4 SET FORTH ON THE REVERSE SIDE HEREOF. IF ANY
FURTHER MATTERS PROPERLY COME BEFORE THE ANNUAL MEETING, IT IS THE INTENTION OF
THE PERSONS NAMED ABOVE TO VOTE SUCH PROXIES IN ACCORDANCE WITH THEIR BEST
JUDGMENT.
________________________
Signature
________________________
Signature
Dated: __________________, 2003
In case of joint owners, each joint owner must sign. If signing for a
corporation or partnership or an agent, attorney or fiduciary, indicate the
capacity in which you are signing.
PLEASE MARK, DATE AND SIGN YOUR NAME AS IT APPEARS ON THIS CARD
AND RETURN IN THE ENCLOSED ENVELOPE