UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK---------------------------------------------------------------XIN RE GLOBALSTAR, INC.SECURITIES LITIGATION,

THIS DOCUMENT RELATES TO:

IN RE GLOBALSTAR, INC.SECURITIES LITIGATION.---------------------------------------------------------------X

MASTER FILE NO. 07-CV-0976AND RE Q̀j'^^ C1 (r1 (

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SECURITIES CLASS ACTION CONSOLIDATED AMENDED COMPLAINT

I.

INTRODUCTION

1. This action is brought by Lead Plaintiff, The Connecticut Laborers' Pension

Fund, on behalf all purchasers of Globalstar, Inc. ("Globalstar" or the "Company") common

stock pursuant or traceable to a $127.5 million initial public offering of 7.5 million shares of

Globalstar common stock at $17.00 per share on or about November 3, 2006 (the "Offering" or

the "IPO"), (the "Class"). It is alleged that the Registration Statement filed with the Securities

and Exchange Commission ("SEC") in connection with the IPO contained materially false and

misleading statements and omitted to state material facts in violation of Sections 11, 12(a)(2),

and 15 of the Securities Act of 1933 ("Securities Act"), 15 U.S.C. §§77k , 771(a)(2) and 77(o),

respectively. The action is brought against Globalstar; two Globalstar officers who signed the

Registration Statement (i.e., its Chief Executive Officer, Chairman of the Board and Director,

James Monroe III; and its Vice President and Chief Financial Officer; Fuad Ahmad); and the

three co-lead underwriters of the IPO (i.e., Wachovia Capital Markets, LLC ((Wachovia

Securities")), JPMorgan Securities, Inc. and Jeffries & Company, Inc.).

2. Since inception, Globalstar, in its various organizational forms, always has

engaged in the business of providing global telephone and data services through a "constellation"

of low earth orbit ("LEO") satellites.' The constellation was originally composed of 52

satellites, including four in-orbit spares, launched between 1998 and 2000 (the "First Generation

Satellites" or the "First Generation Constellation"). On February 15, 2002, Globalstar Inc.'s

predecessor entity, Globalstar L.P. ("Old Globalstar"), a publicly traded company, and three of

its subsidiaries filed petitions for bankruptcy under Chapter 11 of the United States Bankruptcy

Code. In November 2003, Thermo Capital Partners LLP ("Thermo") formed Globalstar, LLC,

and completed the acquisition and transfer of all of Old Globalstar's business and assets into that

entity. On or about March 17, 2006, Globalstar, LLC became incorporated under Delaware Law

as Globalstar, Inc., and all partnership interests in the LLC were transferred into shares of

Globalstar, Inc. Globalstar, Inc. continued to operate as a privately held company from March

2006 until the decision was made to take it public in November of that year. The IPO in

November 2006 thus represented Globalstar's re-emergence for the first time as a public

company following its reorganization in bankruptcy.2

3. From the time Globalstar emerged from bankruptcy protection in late 2003,

however, the Company faced a critical and immense operational and financial hurdle: replacing

` LEO satellites orbit the Earth at altitudes which range from 500 kilometers (311 miles) toaround 3000 kilometers (1,864 miles). In contrast, Middle Earth Orbit ("MEO") andGeosynchronous Earth Orbit ("GEO") satellites orbit at significantly higher altitudes of up to15,000 (9,321) and 40,000 (24,852) kilometers (miles), respectively. Moreover, because of theirrelative light weight, exposure to radiation, and the large number of power and thermal cycles inlow orbit, LEO satellites are typically designed for an average life span of five to seven years,whereas MEO and GEO satellites have life spans in excess of 15 and 20 years, respectively.

2 Post-reorganization , Thermo became the principal owner of Globalstar, holding anownership interest of 81.25%, four percent of which was to be transferred to QUALCOMM,

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its existing, and significantly degrading, First Generation Satellites. In comparison to the

satellite networks of its industry competitors, such as Iridium, Inc. ("Iridium"), Globalstar's

constellation is operated with fewer satellites and these satellites are orbited at much higher

altitudes. The placement of satellites at higher elevations was an attempt to achieve greater

efficiency by covering a larger geographic area with fewer satellites. There was, however, a cost

to this strategy: launching satellites into higher altitude LEO orbits resulted in a more rapid

deterioration of the satellites due to the adverse effects radiation had on the "S-band" frequency

antennas, which were key to the transmission of satellite voice communications, at that altitude.

4. Globalstar officers, directors and underwriters were presented with, but ultimately

ignored, a clear "red flag" in connection with S-band antenna problems only weeks before the

November 2006 IPO. It was disclosed in an October 16, 2006 article in Satellite Week, a

prominent industry publication, that as Globalstar satellites age, "nearly all have begun or will

begin to exhibit a modest degree of reduced call capacity due to S-band antenna amplifiers" and

that indeed, eight Globalstar satellites are "temporarily out of service because of S-band

antenna subsystem problems " and nine other satellites were "dead. "

5. The Prospectus filed only a few weeks later on November 3, 2006 sought to

dispel any investor concern about the current functioning and commercial viability of

Globalstar's constellation of satellites. While the Prospectus set forth a laundry list of "risk

factors" describing "potential" problems with the satellites, Defendants were careful to

specifically affirm the current strength of its satellites, as well as the anticipated strength of its

satellites into 2010, stating that:

INC. ("Qualcomm") after the completion of the sale. The reorganization agreement provided the

creditors of Old Globalstar with an 18.75% minority ownership interest in Globalstar.

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(a) its current service had solid voice quality sufficient to not only retain

existing clients but attract new ones - "We believe we are able to retain our current customers

and attract new customers because of ... the voice quality ofour network." (j¶ 91-95);

(b) its "subscribers" had increased by 21 % in the recent period prior to the

IPO - "At June 30, 2006, we served approximately 236,500 subscribers. We added

approximately 54,000 and 41,000 net subscribers in the year ended December 31, 2005 and in

the six months ended June 30, 2006, respectively" (¶¶ 96-99);

(c) there was no anticipated period of time when Globalstar would have less

than the minimum number of satellites required to maintain operations since Globalstar's First

Generation Satellites would be "commercially viable into 2010" while a second-generation

constellation would be launched "in 2009"(11 100- 110); and,

(d) its "current satellites" and constellation were also capable of supporting

ancillary terrestrial component ("ATC") services. (ATC provides cellular voice service using

satellite frequencies by relying on less costly "terrestrial" (i.e., cellular phone towers) where

available and only on satellite components where no cell towers exist) (¶¶ 111-113).

6. Unfortunately for the IPO investors, however, each of these representations was

materially false and misleading and omitted material facts as follows:

(a) the true misrepresented and deteriorated condition of Globalstar's

satellites was such that 66% of the total number of subscriber voice calls were "dropped" or

disconnected within the first three minutes of being connected (Jj 9, 77-84, 95);

(b) the Company's "growth" in subscribers was due mainly from an increase

in the usage of Globalstar's satellite data transmission services - not in the more profitable area

of satellites voice communication services (Jj 54-59, 99);

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(c) in Globalstar's 2006 Form 10-K filed with the SEC after the IPO was

consummated , Global was forced to concede and reveal that "effective October 1, 2006" - prior

to the date of the IPO - the actual useful life of Globalstar's First Generation Satellites would

extend only into 2008 - not "into 2010 " (11 70-73); thus, the assurances to investors that there

would be no interval of time where there would be complete loss of satellite voice

communication service, as indicated in the Prospectus, was false (¶11 100-107); and

(d) Globalstar' s constellation did not contain the forty-one working satellites

required in order to provide ATC services (¶¶ 111-113);

7. Each of these representations and omissions were highly material to the IPO

investors since the bulk (i.e., $600-$800 million) of the $1.0-$1.2 billion in funds needed to

replace the First Generation Satellites - which was vital in order to sustain continuing operations

- was to be derived not from the $117 million proceeds raised by the IPO, but rather from

revenue derived from Globalstar' s continuing business operations . If Globaistar 's current

operations were enfeebled and rapidly deteriorating, no reasonable or rationale investor would

purchase Globalstar common stock on the IPO since there would be no hope that Globalstar

could generate the required additional funds in excess of the IPO proceeds needs to secure the

manufacture and launch of a Second Generation Satellite Constellation (the "Second Generation

Satellites" or the "Second Generation Constellation") and continue operations . Further, the ATC

services Globalstar claimed to be able to support with its constellation would provide additional

cellular communication market-share and revenue.

8. The falsity of the Prospectus misrepresentations began to emerge in the period

shortly after the IPO was consummated in November 2006. On February 8, 2007, a mere three-

months later, Globalstar filed a Form 8-K with the SEC which disclosed that the useful life of its

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satellites, allegedly based on "new data "; reflected that the life of the satellites may well end

before the Second Generation Satellites are launched, such that there could be a loss of service

for most subscribers for twelve months beginning in fiscal year 2008 until the next generation

satellites are launched (170). This disclosure caused a precipitous 28% decline in Globalstar's

common stock price on February 8, 2007 from the prior day's closing (¶71).

9. The Company's claim on February 8, 2007 that its revised assessment of the

satellites useful life was based on only "recent data" which the Company obtained was severely

undermined by subsequent disclosures . On February 26, 2007, Frost & Sullivan ("Frost"), a

respected third-party industry consultant , published the results of a study it conducted comparing

Globalstar's performance with that of Iridium's. Iridium engaged Frost & Sullivan to conduct

the study after its monitoring of Globalstar's performance as of August 2006 - again well before

the IPO -showed extremely high drop off rates and a significant increase in subscriber migration

from Globalstar to Iridium. The Frost study concluded that Iridium's average call success rate

was around 95%, while Globalstar had a call success rate of only 34%. In other words, 66% of

Globalstar calls were dropped within the first three minutes they were connected.

10. Further, in Globalstar's fiscal 2006 Form 10-K, filed on April 2, 2007, the

Company revised and significantly reduced the useful life of satellite constellation "effective

October 1, 2006" - one-month prior to the IPO - from 39 months-down to only 27 months. This

placed the true end of the constellation's useful life as of October 1, 2006 - one month before

the IPO - to be in 2008 as opposed to 2009, thus presenting IPO investors with the stark reality -

undisclosed at the time of the IPO - that there would be sustained periods of time where the

constellation would be completely non-operational.

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11. Finally, from its offices in San Jose and El Dorado Hills, California, Globalstar

monitored its satellites twenty-four hours a day. As of June 2006 - again well prior to the IPO -

projections of the life span of the remaining First Generation Satellites, referred to internally as

"Plots", showed that the constellation would cease all commercial viability in 2008.

12. Plaintiff' s allegations are based on extensive investigation of counsel, including

without limitation: (a) review and analysis of filings made by Globalstar with the Securities and

Exchange Commission ("SEC") (J¶ 8, 61-73, 85-90); (b) Globalstar' s press releases (¶¶ 70-73);

(c) Globalstar' s presentations made to analysts (183); (d) media reports about the Company (J¶

3, 25, 36-38, 44-49, 60); (e) publicly available trading data relating to the price and volume of

Globalstar's common stock (J 71); (f) telecommunications and satellite industry analyst reports

on Globalstar and its competitors (1139-43, 54-59); (g) securities analysts reports on G1obaIstar

(1j 73); (h) interviews with former Globalstar employees, including a former employee engaged

in monitoring Globalstar satellites (% 50-59, 108-113); and (i) interviews with analysts from

Frost & Sullivan in connection with their independent report on Globalstar and Iridium satellite

communications services published on or about February 26, 2007. (¶¶ 74-84).

II.JURISDICTION AND VENUE

13. The claims asserted herein arise under and pursuant to Sections 11, 12(a)(2), and

15 of the Securities Act (15 U.S.C. §§ 77k, 771(a)(2) and 77o).

14. This Court has jurisdiction over the subject matter of this action pursuant to

Section 22 of the Securities Act (15 U.S.C. § 77v), and pursuant to 28 U .S.C. § 1331, in that this

is a civil action arising under the laws of the United States.

15. Venue is proper in this Judicial District pursuant to Section 22 of the Securities

Act and pursuant to 28 U.S.C. § 1391(b). Many of the acts and transactions alleged herein,

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including the preparation and dissemination of materially false and misleading information in

the Prospectus, occurred in substantial part in this Judicial District. Additionally, the IPO was

actively marketed and sold in this District. In addition, two of the Underwriter Defendants

(JPMorgan and Jefferies) maintain principal executive offices and reside in this District.

16. In connection with the acts, conduct and other wrongs alleged in this complaint,

Defendants, directly or indirectly, used the means and instrumentalities of interstate commerce,

including but not limited to, the United States mails, interstate telephone communications and

the facilities of the national securities exchange.

III.PARTIES

17. Lead Plaintiff, The Connecticut Laborers' Pension Fund, as set forth in its

certification, incorporated by reference herein, purchased Globalstar common stock at artificially

inflated prices pursuant or traceable to the Company's IPO and has been damaged thereby.

18. Defendant Globalstar is a Delaware corporation with its principal place of

business located at 461 South Milpitas Boulevard, Milpitas, California. Globalstar's common

stock is listed on the NASDAQ under ticker symbol "GSAT," with approximately 76.6 million

shares of common stock outstanding. During all relevant times, Globalstar maintained

operations in North America as a provider of mobile voice and data communication services via

satellite . Globalstar provides mobile and fixed satellite voice and data services , asset tracking

and monitoring services, high-speed internet access, video and audio broadcasting, supervisory

and data control applications, and remote file transfer and virtual private networking services.

19. Defendant James Monroe III ("Monroe") was, at all relevant times, Globalstar's

Chairman of the Board, Chief Executive Officer and a Director of Globalstar.

Defendant Monroe signed the Registration Statement. Mr. Monroe is the principal owner of

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Thermo. Together, Defendant Monroe and Thermo own sixty-three percent of Globalstar's

outstanding shares.

20. Defendant Fuad Ahmad ("Ahmad") was, at all relevant times , Globalstar's

Chief Financial Officer ("CFO") and Vice President. Defendant Ahmed signed the Registration

Statement.

21. Defendants Monroe and Ahmed are collectively referred to herein as the

"Individual Defendants." The Individual Defendants, because of their ownership interests and

positions with Globalstar, possessed the power and authority to contr I the contents of

Globalstar's submissions to the SEC and the market.

22. Defendant Wachovia Capital Markets, LLC (operating under the trade name

"Wachovia Securities") is an investment banking firm and a limited liability company organized

in Delaware, with its principal executive offices located at Riverfront Plaza, 901 E. Byrd St.,

Richmond, Virginia 23219-4069. Wachovia Securities was one of three underwriters in the

November 2006 offering. Wachovia Securities was a co-lead underwriters and acted as a joint

book-runner, and was allocated forty-five percent of the common stock to be sold in the IPO

23. Defendant, JPMorgan Securities, Inc. ("JPMorgan"), is in investment banking

firm incorporated in Delaware, with its principal place of business at 270 Park Avenue, New

York, New York. JPMorgan was one of the three underwriters in the November 2006 offering.

JPMorgan was a co-lead underwriter and acted as a joint book-runner, and was allocated forty-

five percent of the common stock to be sold through the IPO.

24. Defendant, Jeffries & Company, Inc. ("Jeffries"), is an investment banking firm

incorporated in Delaware with its principal place of business located at 520 Madison Avenue,

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12`h Floor, New York, New York. Jeffries was one of the three underwriters in the November

2006 offering. Jefferies was allocated ten percent of the common stock to be sold in the IPO.

25. Defendants Wachovia Securities, JPMorgan and Jeffries are hereinafter

collectively referred to as the "Underwriters" or the "Underwriter Defendants." The

Underwriter Defendants substantially participated in the drafting, editing and dissemination of

the Prospectus and commission of the wrongs alleged herein through their involvement in the

Offering of Globalstar common stock. The Underwriter Defendants were at all relevant times

entities engaged in the business of investment banking, underwriting and selling securities to the

investing public. For their services underwriters for the IPO, the Underwriters collectively

received fees of $10,263,750. As set forth herein, the Underwriters performed a deficient due

diligence review in connection with the IPO because, inter alia, they ignored specific and readily

apparent red flags indicating that the degradation and deterioration of Globalstar satellites was

far more significant than that which was disclosed in the Prospectus and, as a result, the

Prospectus contained false and misleading affirmative statements concerning the voice quality of

Globalstar's current and future system and the growth and anticipated future growth of

Globalstar's subscribers. These red flags included, inter alia, the report in Satellite Week on

October 16, 2006 that eight satellites were "temporarily out of service" and nine other satellites

were "dead" (¶3); the internal Plots of the satellites ' estimated life (11¶ 50-53); and the stagnant

growth in voice, as opposed to data transmission, subscribers prior to the Offering (I¶ 54-59).

26. The Individual Defendants had access to all of Globalstar's detailed internal

reporting data on its system. This system contained detailed satellite health and performance

data, as well as sales and subscription data. Globalstar's internal reporting data on each

individual satellite's health and performance, as well as the total constellation's health and

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performance, was monitored twenty-four hours a day, seven days a week (% 50-53). Globalstar

employed a team of personnel over three eight-hour daily work shifts for the sole purpose of

monitoring the performance of their satellites. Id. Globalstar's personnel were responsible for

monitoring and tracking satellite temperature, power supply, electrical components and signal

strength. Following each eight-hour shift, that team of personnel briefs the personnel who will

be tracking the satellites during the subsequent eight-hour shift . Id. Each morning there is a nine

o'clock meeting at which the individual satellites' and the entire constellation ' s health and

performance are reported to management . Id. Present at these meetings were personnel from

Globalstar ' s monitoring team and senior management, including Megan Fitzgerald

("Fitzgerald "), Vice President of Strategic Planning and Operations , Claudia Duncan ("Duncan")

and Thomas Lewietski ("Lewietski "). Id. Fitzgerald , Duncan and Lewietski reported directly to

Monroe and Ahmed and as such would brief Monroe and Ahmed on the health and performance

of the satellites . Id. Internal reporting also showed Globalstar ' s sales by dollar amount and

subscriber base for each quarter versus the forecast , so the Individual Defendants saw the

adverse effects of Globalstar ' s deteriorating satellites and constellation system.

27. The Individual Defendants were directly involved in the day-to-day operations of

the Company and had access to internal Company documents and reports concerning the health

and performance of the Globalstar satellites . Id. By reason of their positions as senior

management with the Company , the Individual Defendants also attended management and/or

board of directors meetings and were responsible for the truthfulness and accuracy of the

Company's public reports and releases described herein, and were involved in drafting,

producing, reviewing and/or disseminating the misleading statements and information alleged

herein . It is therefore appropriate to treat the Individual Defendants as a group for pleading

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purposes and to presume that the misleading and incomplete information conveyed in the

Company's public filings, press releases and other publications concerning Globalstar's

operations, as alleged herein, were their collective actions.

28. The Individual Defendants , as officers and/or directors of a publicly-held

company whose securities were, and are, registered with the SEC pursuant to the Securities Act,

each had a duty to promptly disseminate accurate and truthful information with respect to

Globalstar, and to correct any previously issued statements issued by, or on behalf of the

Company that had become materially misleading. The Individual Defendants'

misrepresentations and omissions in the Prospectus violated these specific requirements and

obligations. The Individual Defendants were signatories to the Registration Statement filed with

the SEC on November 1, 2006, incorporated by reference in the Prospectus at page 123.

29. The Defendants are all liable , jointly and severally, as participants in the issuance

of Globalstar common stock, including issuing, causing , or making materially misleading

statements in the Prospectus.

IV.

PLAINTIFF'S' CLASS ACTION ALLEGATIONS

30. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil

Procedure 23(a) and (b)(3) on behalf of a Class, consisting of all those who purchased or

otherwise acquired Globalstar common stock pursuant or traceable to the Company's November

2, 2006 IPO, and who were damaged thereby. Excluded from the Class are Defendants, the

officers and directors of the Company, at all relevant times, members of their immediate families

and their legal representatives , heirs , successors or assigns and any entity in which Defendants

have or had a controlling interest.

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31. The members of the Class are so numerous that joinder of all members is

impracticable. Throughout the Class Period, Globalstar's common stock was actively traded on

the NASDAQ. While the exact number of Class members is unknown to Plaintiff at this

time and can only be ascertained through appropriate discovery, Plaintiff believe that there are

hundreds or thousands of members in the proposed Class. Record owners and other members of

the Class may be identified from records maintained by Globalstar, the Underwriter

Defendants or Globalstar's transfer agent and may be notified of the pendency of this action by

mail, using the form of notice similar to that customarily used in securities class actions.

32. Plaintiff' s claims are typical of the claims of the members of the Class as all

members of the Class are similarly affected by Defendants' wrongful conduct in violation of

federal law that is complained of herein.

33. Plaintiff will fairly and adequately protect the interests of the members of the

Class and have retained counsel competent and experienced in class and securities litigation.

34. Common questions of law and fact exist as to all members of the Class and

predominate over any questions solely affecting individual members of the Class. Among the

questions of law and fact common to the Class are:

(a) whether the federal securities laws were violated by Defendants' acts as

alleged herein;

(b) whether statements made by Defendants to the investing public during the

Class Period misrepresented and/or omitted to state material facts about the business,

operations, financial condition and management of Globalstar; and

(c) to what extent the members of the Class have sustained damages and the

proper measure of damages.

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35. A class action is superior to all other available methods for the fair and efficient

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as

the damages suffered by individual Class members may be relatively small, the expense and

burden of individual litigation make it impossible for members of the Class to individually

redress the wrongs done to them. There will be no difficulty in the management of this action as

a class action.

V.

FACTUAL BACKGROUND AND SUBSTANTIVE ALLEGATIONS

A. Globalstar's Bankruptcy And Reorganization

36. Globalstar is a public company incorporated in the state of Delaware in March

2006. Its principal office is in Milpitas, California, and its common stock is listed on the

NASDAQ under ticker symbol "GSAT," with approximately 76.6 million shares of common

stock outstanding. During all relevant times, Globalstar maintained operations in North America

as a provider of mobile voice and data communication services via satellite. Globalstar provides

mobile and fixed satellite voice and data services, asset tracking and monitoring services, high-

speed internet access, supervisory and data control applications, and remote file transfer and

virtual private networking services.

37. Globalstar is the successor company to Globalstar L.P. On February 15, 2002,

Old Globalstar and three of its subsidiaries filed voluntary petitions for bankruptcy under

Chapter 11 of the United States Bankruptcy Code. In 2003, Thermo became the principal owner

of Globalstar , LLC, after completing the acquisition of all of the business and assets of Old

Globalstar. On March 17, 2006, all partnership interests of Globalstar, LLC, were converted into

shares of Globalstar, Inc. when the company became incorporated under Delaware Law.

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Globalstar, Inc. continued to operate as a privately held company until the decision was made to

take it public in November 2006.

38. Key to the Company' s emergence from Bankruptcy was maintaining the 10-year

useful lifespan of the First Generation Constellation to 2010, which were initially launched in

1998 and became operational in early 2000, in conjunction with the Company's long-term

business plan to raise the over $1 billion of capital that would be necessary in order to

manufacture, launch and activate a Second Generation Constellation.

B. Globalstar's First Generation

Satellite Constellation Begins To Fail

1. Background Of The First Generation Constellation

39. Globalstar' s First Generation Satellite Constellation , acquired from Old

Globalstar in 2003, was built during the late 1990's by Loral Space & Communications, Ltd.

("Loral") and launched into orbit between 1998 and 2000. The agreement with Loral called for

the design, manufacture and delivery of sixty-four low earth orbit ("LEO") satellites. Despite the

loss of twelve satellites in 1998 during an unsuccessful launch, Globalstar's First Generation

Constellation , consisting of fifty-two LEO satellites , became operational in early 2000, with

forty-eight functional satellites , plus four in-orbit spares.

40. Globalstar's communications service network consists of in-orbit satellites and

ground stations, referred to as "gateways," which work in concert to provide voice and data

communications services to the Company's subscribers. A completed voice communication on

the Globalstar system would work as follows: (1) the handset user dials the party with whom

they wish to speak and a signal is sent from the handset to the Globalstar satellite passing

overhead (this signal is transmitted via the L-band frequency); (2) the satellite then passes a

signal down to earth to a gateway (using a specific C-band frequency); (3) a return signal is sent

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back to the satellite from the gateway (using another C-band frequency); and (4) the handset user

receives a signal from the satellite (using the S-band frequency). Only after the handset user

receives a signal back from the satellite (on the S-band) is the call connected . The Globalstar

satellites have separate antennas for voice communications (transmitted via S-band frequency)

and L-band transmissions for one- and two-way data transmissions . The S-band antenna has 91

elements . Each element is driven by a solid state power amplifier know as the Field Effect

Transistor ("FET") that produces a maximum power of 4.2 Watts. This array of elements is used

to produce 16 antenna beams (one central beam, six middle beams, and nine outer beams). The

S-band electrical power that is delivered by the FET is continuously adjusted by sampling the

input power level. The lower the power level the less data that could be shifted across the

satellite's S-band antenna - directly impacting the number of connected calls and whether a

connected call would be dropped. The FETs used in Globalstar 's satellites could only support a

maximum charge or current of 200 Amps - above 200 Amps the FET would blow out and

become permanently inoperable . Each satellite was equipped with two FETs - a primary and a

back-up. A Globalstar satellite could effectively operate with just a single FET' however, the

destruction of both the primary and the back-up FET would result in the satellite ' s complete

catastrophic failure.

41. Globalstar sought to revolutionize satellite telecommunications with a "cheaper,

better, faster" attitude towards the design, manufacture and launch of their satellite constellation.

Globalstar's plan was to manufacture relatively inexpensive satellites and place them at higher

altitude orbits above the Earth's surface. Globalstar's satellites orbit the Earth at an altitude of

876 miles, or 1,414 kilometers.

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42. In comparison to Globalstar's constellation, Iridium, Inc. ("Iridium"), Globalstar's

foremost industry competitor in the market of mobile and fixed satellite voice and data

transmission services, maintains a constellation of sixty-six satellites (plus six in-orbit spares)

which orbit the Earth at an altitude of around 476 miles, or 766 kilometers. Iridium has a larger

constellation because their constellation, operating at a lower orbit altitude, requires more

satellites to cover the same area of the Earth's surface as a constellation such as Globalstar's.

The chart below illustrates the relationship between satellite altitude and the number of satellites

necessary to provide coverage to a given geographic area.

Globalstar (1,414 km) Iridium (766 km)

Earth'sSurface

43. As evident above, the lower the orbit altitude of a satellite, the smaller the amount

of geographic surface area its "cone" will have the ability to cover. Thus, because Iridium's

satellites orbit at a lower altitude, they require a higher number of satellites to cover the same

geographical area as the higher flying Globalstar satellites, thereby costing less overall.

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2. Globalstar ' s Satellites Orbit Through The Van AllenBelts Hastens Deterioration Of Their S-Band Antennas

44. Globalstar 's satellites , because of the altitude at which they orbit the Earth, are

significantly affected by large bands of charged particles, known as the radiation belts, which

orbit around the Earth ' s magnetic poles . The innermost of the radiation belts, the "Van Allen

Belts" are extremely intense bands of high-energy protons and other bi-products of the impact

between solar radiation (cosmic rays) and nuclei of the Earth 's upper atmosphere . The Van

Allen Belts are known for their high levels of radiation and their damaging effect on instruments

and satellites which travel through them. These inner belts hold charged particles in a constant

orbit above the Earth's surface.

45. Scientific studies and research have shown that as a result of the orbit altitude at

which Globalstar chose for their satellites to orbit, Globalstar satellites are exposed to upwards of

10 times more radiation as lower flying LEO satellites, such as the Iridium satellites . Iridium's

satellites , at an altitude of only 766 kilometers (476 miles), spend much of their orbital period

underneath the Van Allen Belts, avoiding much of the negative effects the radiation may have on

the satellites ' on board instruments and ability to function.

46. Globalstar satellites are equipped to handle both voice, as well as data traffic.

Voice signals are received by the satellites on what is known as the S-band frequency by the S-

band antenna, and then relayed back down to Earth on the S-band frequency. The satellites' one-

way data communication operates on an L-band frequency and is relayed using a completely

different receiver and antenna on the satellites. The continued exposure to, and periodic surges

of, intense radiation have a damaging effect on the electronic instruments and components on the

satellites. One of the most damaging effects that radiation has had on Globalstar's satellites is

the acceleration of the degradation of the satellites S-band antennas. The excessive amount of

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radiation to which Globalstar's satellites are exposed has caused persistent degradation and

deterioration of the S-band antennas on many of their First Generation satellites, resulting in

partial, and in some cases total, loss of the satellites' capacity to transmit S-band signals.

3. Radiation From Solar Flares Hastens TheDeterioration Of Globalstar' s Satellites

47. In addition to being placed largely in the Van Allen Belts, Globalstar's satellites

were subjected to radiation from solar flares. A solar flare is a violent explosion in the Sun's

atmosphere releasing a tremendous amount of energy - as intense as a 10 billion megaton

nuclear bomb. Solar flares take place in the solar corona heating plasma to tens of millions of

Kelvins and accelerating electrons , protons and heavier ions to near the speed of light. They

produce electromagnetic radiation across the electromagnetic spectrum at all wavelengths from

long-wave radio to the shortest wavelength gamma rays. Most flares occur in active regions

around sunspots, where intense magnetic fields emerge from the Sun's surface into the corona.

The average solar cycle - or sunspot cycle - is 11.1 years, but cycles as short as nine years and

as long as fourteen years have been observed. The occurrence frequency of solar flares is

strongly modulated by the solar activity cycle. Flares of any given size are some fifty times

more frequent at solar maximum than at minimum (which refers respectively to epochs of

maximum and minimum sunspot counts). Large solar flares occur on average a few times a day

at solar maximum, down to one every few days at solar minimum. Flares are powered by the

sudden (timescales of minutes to tens of minutes) release of magnetic energy stored in the

corona. X-rays and UV radiation emitted by solar flares can affect Earth's ionosphere and

disrupt long-range radio communications. Direct radio emission at decimetric wavelengths may

disturb operation of radars and other devices operating at these frequencies.

19

48. The solar cycle was discovered in 1843 by amateur astronomer Samuel Heinrich

Schwabe, and each cycle has been sequentially numbered. Solar Cycle 23 approximately began

in 1996, and peaked in 2001. Although the peak of Cycle 23 was not particularly noteworthy,

two record-setting solar flares came as part of a string of solar storms that struck planet Earth

during October-November 2003 and on January 20, 2005. The January 20, 2005 solar flare had

the hardest spectrum observed during solar cycle 23 and also reached the highest >100 MeV

("megaelectron volt") intensity level in approximately 30 years, reaching its peak intensity at 1

AU (1 Astronomical Unit = 149,598,000 kilometers or 92,955,888 miles, the distance from the

sun to Earth) within minutes. The culmination of these two record-setting solar flares and

numerous less intense solar flares wreaked havoc on Globalstar's satellites.

49. By 2003, radiation from the Sun and the Van Allen Belts forced Globalstar to

reduce its constellation from a 48-satellite constellation, with six satellites on each of eight

orbital planes, to a 40-satellite constellation, decreasing the available satellite coverage at any

given time to only five satellites on each of eight orbital planes. While still able to maintain

operations with only forty functional satellites, the decrease in the number of satellites to forty

results in less coverage over certain areas - the consequences of which are an increase in

dropped calls, inability to obtain service in specific areas with less satellite coverage, and

scheduled blackouts in less populated areas in order to maintain coverage in areas with larger

subscriber bases. As the total number of satellites in the constellation falls below forty, these

issues become more prevalent, and should the constellation ever drop below thirty-two satellites

(capable of S-band signal transmission) the Globalstar system would cease all commercial

viability.

20

C. Globalstar Employs A Team Of Satellite Engineers ToMonitor Its Satellites And "Plot" Satellite Useful Lives

50. To monitor it satellites , Globalstar employs three teams of satellite engineers,

stationed at two different locations, San Jose and El Dorado Hills, California responsible for the

twenty-four hour a day, seven day a week monitoring of each of Globalstar' s individual satellites

in the constellation. During each of three eight-hour shifts, Globalstar teams, consisting of as

many as four satellite engineers , monitor and chart satellite temperature, power supply, electrical

sensors, signal strength and other essential satellite metrics. Following each eight-hour shift, the

exiting team of satellite engineers briefs the incoming team that will be monitoring the satellites

during the subsequent eight-hour shift. Each morning, at the San Jose, California, location there

is a nine o'clock a.m. meeting at which the individual satellites ', as well as the entire

constellation's, health and performance is reported to senior management, i.e., Fitzgerald,

Duncan and Lewietski, who then reported directly to Individual Defendants Monroe and Ahmad.

The metrics and statistics gathered on satellite health and performance were entered into a

database in order to determine the existence of trends in certain measurements and also in order

to predict future health and performance. Throughout 2006, Globalstar's monitoring team

tracked the signal strength ofthe constellation, which, by early summer of2006, had revealed an

alarming decline in overall signal strength of the constellation. By July and August 2006, the

diminished signal strength was clearly problematic to Globalstar's future and its constellation's

continued commercial viability.

51. Furthermore, by running these diagnostic tests on its satellites , Globalstar was

able to determine the expected lifespan of each satellite. These projections were commonly

referred to as "Plots." Globalstar calculated Plots on a daily basis and tracked changes or

21

deviations from the previous day's Plot for each satellite in its constellation. In June 2006,

Globalstar 's Plots revealed that the constellation would cease all commercial viability in 2008.

52. By June 2006, as a result of the combination of the critical issues pertaining to

Globalstar ' s rapidly degrading and deteriorating constellation , the number of satellites in the

constellation able to "carry traffic " had declined to only thirty-seven in total. Satellites are

only able to "carry traffic" if the signal strength is strong enough to support voice or data

transmissions. As the signal strength decreases (due to failure in the S-band antenna, FET

failure, or inability of the satellite to carry enough power) the signal to noise (e.g., static or

interference) ratio increases. The higher the noise ratio the more likely a call would be dropped

due to loss of signal by the user terminal (i.e., handset) as well as, in the first instance, an

increased likelihood that a call would not even connect. When the noise level is high enough,

the satellite thinks that the subscriber hung up the phone, which results in a dropped call, or

thinks that the subscriber has no service, which prevents a call from being completed for that

subscriber.

53. Because of the reconfiguration of the satellites in 2003 to a "Walker 40" pattern

of five satellites in each of eight orbital planes in 2003, the Company was forced to plan

scheduled "blackouts" (periods during which there would be little to no satellite coverage over a

given geographic region) so that more populated regions would have the necessary satellite

coverage. From 2003 to early 2006, these blackouts affected geographic areas that had little to

no Globalstar subscriber base. However, by June 2006, when the number of healthy satellites

decreased to thirty-seven, these blackouts began to seriously affect the quality of service in more

populated geographic areas as their length of time and the impacted geographic area expanded.

22

D. Globalstar's Heavy Reliance On VoiceSubscribers To Drive Service Revenue

54. Globalstar provides both voice and data communications services via its satellite

constellation . On a per subscriber basis, mobile and fixed voice services generate substantially

more revenue for the Company. While the majority of Globalstar revenue prior to 2006 was

principally derived from their mobile and fixed voice communications operations , in 2006

Globalstar began to experience an increase in the amount of total revenue which is derived from

these data services. This coincided with the increasing deterioration and degradation of the S-

band antennas on Globalstar satellites . As Globalstar' s voice communication capabilities

became increasingly impaired throughout 2006, the Company became more dependent on

revenues derived from data subscribers - from which Globalstar did not derive as much revenue

from as compared to voice subscribers. The increase in the Company's subscriber base from

196,000 in January 2006 to over 256,000 at the time of the Prospectus, coupled with relatively

small increases in service revenue from quarter to quarter, was a result of a large decrease in

high-revenue yielding voice service subscriber growth and a large increase in the low-revenue

yielding data service subscriber growth. A large portion of Globalstar's total revenue is now

derived from the use of high and low speed data services.

55. In its financial statements filed with the SEC, Globalstar does not break down its

total service revenues into separate subcategories for revenue derived from the use of voice

services and for revenue derived from data services by customers. Instead, Globalstar combines

the two distinct revenue streams . For fiscal 2006, Globalstar's total service revenue was $93.04

million, and broken down by quarter was $20.69 (first quarter 2006), $21.51 (second quarter

2006), $27.65 (third quarter 2006) and $22.19 (fourth quarter 2006). But for a small spike in

service revenue during the third quarter of 2006 - which may be accounted for by factors

23

unrelated to the strength or quality of Globalstar's satellite services, namely the expiration of a

large amount of Globalstar "Liberty" Plan service contracts - Globalstar's total service revenue,

on a quarterly basis remains relatively constant throughout the year, despite continuing increases

in total subscriber base over the same period. In August, 2004, Globalstar began offering these

"Liberty Plans," annual service plans with "bundled" minutes to its subscribers as an alternative

to monthly per-minute service plans. The Liberty Plan requires a subscriber to pre-pay usage

charges for an entire twelve month period. Under the Company's revenue recognition policy for

its Liberty Plans, it revenue derived from those plans is deferred until the earlier of when the

minutes are used by a subscriber or when those minutes expire at the end of the twelve month

period. All unused minutes on the Liberty Plans are recognized as revenue at the end of the

twelve month contract period. Furthermore, the Company states in the Prospectus, "most of our

customers have not used all the minutes that are available to them or have not used them at the

pace anticipated, which, with the rapid acceptance of our Liberty Plans, has caused us to defer

increasingly large amounts of service revenue." (Prospectus at 48). The Company goes on to

state that as of June 30, 2006, the total amount of deferred revenue for the remainder of 2006

derived from services provided under their Liberty Plans was approximately $21.8 million.

56. Because of the relative deal that subscribers were getting by pre-paying for an

entire year of satellite communication service, Liberty Plans had become very popular with

subscribers beginning in mid-summer 2005. All of the unused Liberty Plan minutes held by

subscribers who began their contracts in summer 2005 expired in summer 2006. By Globalstar's

own admission, most customers do not use all of the minutes allotted to them under the Liberty

Plan, and as such, all of those unused minutes are recorded as revenue in the third quarter 2006

upon their expiration, resulting in a twenty-five percent increase in service revenue that quarter.

24

57. In addition, Globalstar provides total subscriber data in the periodic reports which

it submits to the SEC, detailing the total number of subscribers at the end of a given fiscal period.

Globalstar reported in its fiscal 2006 Form 10-K filing that it had 196,000 "total" subscribers as

of December 31, 2005. According to their September 30, 2006, Form 10-Q filing, as of June 30,

2006 the Company's subscriber base had increased to 236,515 total subscribers over the first six

months of the 2006 fiscal year. The number then increased to 256,000 and 263,000 at the end of

the third and fourth quarters of 2006, respectively.

58. Globalstar's total subscriber numbers for the period covering the first nine months

of 2006 were deceptive for two reasons . First, the Company did not break down the total

subscribers figure into voice versus data subscribers. Globalstar experienced an increase of over

70,000 subscribers in the nine months ending September 30, 2006, though at the same time total

service revenues remained relatively constant and total revenue decreased consistently quarter

over quarter. This decrease in total revenue, over the same period during which Globalstar's

service revenue remained constant while subscriber base increased, could only be explained by a

large increase in the number of data service subscribers and a simultaneous decrease in the

amount of voice service subscribers added during the period.

59. Second, the Company also had to compensate for the customers that were lost

from month to month. To truly gauge the subscriber base growth of Globalstar, the figures in

the above paragraph must be read in conjunction with the Company's churn rate - the

Company's self-proclaimed indicator of business health and customer satisfaction, signifying the

average monthly loss of subscribers. In the Company's third quarter 2006 Form 10-Q filing, the

company reported that the churn rate for the third quarter was .90%, and for the nine months

ending September 30, 2006, the churn rate was 1.00%. In their Form 10-K filing for fiscal 2006,

25

the Company stated that its churn rate for the fiscal year was 1.09%. Based on the information

provided by Globalstar in their quarterly and year-end SEC filings, and calculating the chum rate

for periods for which none is provided, Globalstar's churn rate for the fourth quarter 2006

increased dramatically to the area of 1.4% - indicating a loss of almost 4,000 subscribers per

month during October, November and December 2006. For the first nine months of fiscal 2006,

Globalstar lost an average of 2,560 customers each month, totaling over 23,000 customers lost

over the same period. Hence, Globalstar actually increased their customer base by over 93,000

customers 'over the first nine months of fiscal 2006 - a large percentage of which were low-

revenue yielding data customers.

E. Globalstar's Poor Service And High Dropped Call Rate ResultIn A Loss Of Business To Its Largest Competitor - Iridium

60. In addition to Globalstar monitoring its satellites , its main competitor, Iridium,

routinely monitored Globalstar's call connectivity and quality of service. Iridum's internal

reports showed a decrease in Globalstar's connectivity rate and quality of service. During the

summer and fall of 2006, Iridium's internal reports regarding Globalstar's poor service quality,

high dropped call rate and failing satellites coincided with a rapid increase in Iridium's voice-

service subscriber growth rate.

26

F. Globalstar Goes To The Capital Markets To Finance TheResurrection Of A Second-Generation Constellation

61. In mid-2006, Globalstar disclosed its long-term business plan to the market,

specifically, its intentions to replace its First Generation Satellites with a state-of-the-art Second

Generation Constellation beginning in 2009. The Company estimated the cost of this "upgrade"

would be between $1.0 and $1.2 billion.

62. It became readily apparent, because of the potential and actual deterioration of

what remained of Globalstar's First Generation Constellation, that Globalstar was in dire need of

a massive cash infusion in order to successfully manufacture and launch their Second Generation

Satellite Constellation. The decreasing health of their First Generation Satellites drove the need

to consummate a $127.5 million IPO in November 2006 . However, an IPO for that amount

alone was insufficient to fund the manufacture and launch of the entire Second Generation

Satellite Constellation which was estimated to cost in excess of $1.0-1.2 billion. In fact, the

Company stated in the Prospectus that $600-800 million of the over $1.0 billion needed would be

funded by revenue from ongoing operations through the year 2014. For this to become a reality,

Globalstar would need not only to maintain, but also spur substantial growth in subscriber

revenue in order to successfully complete the manufacture, launch and activation of the Second

Generation Satellites.

63. As a result, from the perspectives of potential IPO investors, there were at least

two critical concerns which presented themselves pertaining to the future of Globalstar's

business operations. First, investors had to be assured both that the current satellite constellation

would remain operational through the date the Second Generation Constellation would become

operational, and also be assured that the current subscriber base was sufficiently solid and would

27

continue to grow, so as to provide the necessary funds to pay for the Second Generation

Constellation.

64. As part of Globalstar' s long-term business plan, on November 2, 2006, the

Prospectus with respect to the IPO, which forms part of the Registration Statement, became

effective, indicating that the Company sought to sell 7.5 million shares of its common stock to

the public at $17.00 per share, thereby raising approximately $117 million after underwriting fees.

G. Satellites' Commercial Viability Through 2010 WasEssential to Globalstar' s Operations And Business Plan

65. According to the November 2006 Prospectus, proceeds from the public offering

were going to be used by the Company to cover part of the cost associated with the manufacture

and launch of the Second Generation LEO Satellite Constellation. Central to the long-term

business plan was the maintenance and viability of the Company's First Generation LEO

Constellation through 2010, when the Second Generation Constellation was scheduled to be in

service. Above all, the main concern for Globalstar was preventing any gap in satellite coverage

resulting from the loss of viability of the First Generation Satellites prior to the manufacture,

delivery and launch of the Second Generation.

66. As such, the Prospectus was riddled with statements claiming that based both on

outside assessments and internal monitoring of the Company 's satellites , the estimated useful life

of the First Generation Constellation was 10 years from commencement of service , which would

extend the useful life of the current constellation into 2010. Globalstar's claim that its

constellation would remain "commercially viable" until 2010 was premised on its representation

that its "satellite network include[d] 43 in-orbit low earth satellites, including in-orbit spares

temporarily placed into service and satellites that are temporarily out of service but are

considered restorable." (Prospectus at 87).

28

67, Thus, based on the Prospectus , the First Generation Constellation was, according

to the Company, capable of providing full satellite voice and data transmission services to

Globalstar subscribers until such time when the Second Generation Constellation manufactured,

launched and ready to become operational.

68. It was also essential to Globalstar's viability and business plan success to

maintain their First Generation LEO Satellites until 2010 because they depended on their

ongoing operations to fund a large part of the Second Generation LEO Constellation. The

Company estimated, as of the Prospectus date, that the cost to procure and launch the Second

Generation Satellites and upgrade their facilities would be approximately $1.0 to $1.2 billion.

The Company stated in the Prospectus that they intended to use the entire net proceeds from the

Offering to pay part of the cost, funding the remaining balance of the costs from proceeds from a

delayed term loan under their credit agreement, remaining proceeds from sales of common stock

to Thermo under an irrevocable standby stock purchase agreement and approximately $600 to

$800 million in cash generated by ongoing business operations.

69. In December 2006, Globalstar announced it entered into a Contract with Alcatel

Alenia Space ("Alcatel") for the design, development and manufacture by Alcatel of Globalstar's

Second Generation LEO Satellites. The contract called for Globalstar to pay Alcatel $880

million in exchange for the design , manufacture and delivery of forty-eight Second Generation

Satellites. Delivery of the satellites is expected to begin in or around summer 2009, with

launches beginning soon after.

H. February 2007 Form 8-K Reveals Worst

Case Scenario On Horizon For Globalstar

70. On February 5, 2007, Globalstar filed a Form 8-K with the SEC. Therein, the

Company, in relevant part, revealed that "the degradation of amplifiers is now occurring at a

29

faster rate than previously experienced and faster than the Company had previously

anticipated"; that "to date the Company has been unable to correct the amplifier problem and

may be unable to do so"; and thus, that "it will take substantially longer to establish calls and

the average duration of calls may be impacted adversely":

Satellite Constellation Operations.

As reported in the Company's prior public filings, in early 2006 the Companyundertook a comprehensive third party review of this problem and the likelyimpact of the degradation of performance of these amplifiers in individualsatellites on the performance of the constellation as a whole. At that time, basedin part on the third-party report, the Company concluded that, althoughthere was risk, with the addition of the eight spare satellites in 2007, theconstellation would continue to provide commercially viable two-waycommunication services until the next generation satellites were placed inservice in 2009 . Based on data recently collected from satellite operations,the Company has concluded that the degradation of the amplifiers is nowoccurring at a rate that is faster than previously experienced and faster thanthe Company had previously anticipated . In response, the Company, inconsultation with outside experts, has implemented innovative methods, and plansto continue to implement additional corrective measures , to attempt to amelioratethis problem, including modifying the configuration of its constellation asdescribed above, and thereby extend the life of the two-way communicationcapacity of the constellation. Nonetheless , to date the Company has beenunable to correct the amplifier problem and may be unable to do so.

Based on its most recent analysis, the Company now believes that, if thedegradation of the S-band antenna amplifiers continues at the current rateor further accelerates, and if the Company is unsuccessful in developingadditional technical solutions, the quality of two-way communicationsservices will decline, and by sometime in 2008 substantially all of theCompany's currently in-orbit satellites will cease to be able to support two-way communications services. As the number of in-orbit satellites withproperly functioning S-band antenna decreases, despite a successfullaunch and optimized placement in orbit of the eight spare satellites inmid-2007, increasingly larger coverage gaps will recur over areas in whichthe Company currently provides two-way communication services.Subscriber service will continue to be available, but at certain times in anygiven location it will take substantially longer to establish calls and theaverage duration of calls may be impacted adversely.

(Emphasis added.)

30

71. On the release of this "bad news," shares of the Company's stock declined $4.08

per share, or twenty- eight percent, to close on February 6, 2007 at $10.40 per share

(approximately $6.60 below the IPO price of $17.00 per share) on unusually heavy trading

volume, for a market loss of $45,581,000.

72. This disclosure was crucial to the long-term business plan of Globalstar for two

reasons. First, the Company would cease to be able to provide satellite service to their customers

before the end of 2008, almost a year before they even take delivery of the first of the Second

Generation Satellites, let alone launch them into orbit. Second, because they would be unable to

provide satellite uplinks to their customers beginning in late-2008, analysts and industry experts

believe that Globalstar's revenues will decrease drastically, calling into question their ability to

fund the $1.2 billion expense of securing and putting into service a Second Generation

Constellation with $600-800 million with cash from operations.

73. Globalstar stock was almost immediately downgraded by analysts at Wachovia,

and Jeffries & Co. based on the information contained in the February 5th Form 8-K filing,

Specifically, in a February 7, 2007 Analyst Report, Jeffries & Co. analysts stated:

As we discussed in our note yesterday , GSAT's satellites are experiencingdegradation in the amplifiers for the S-band satellite antennas . GSAT is workingon a solution and has hired third party experts to help analyze the problem andmake recommendations . If GSAT is unsuccessful in slowing down thedegradation of the existing satellites or accelerating the deployment of a portionof the next generation satellites, there could be a loss of service for mostsubscribers for 12 months beginning in FY08 until the next generation satellitesare launched.

Moreover, in regards to the Company's ability to fund the over $1 billion network upgrade,

Jeffries analysts stated, in part:

As we noted in our initiation report, we expected GSAT would require additionalfunding for the deployment of its $1.2 billion next generation satelliteconstellation. Our concern increases as GSAT had intended to fund $600-

31

800MM of the costs of the next generation satellite constellation using cash flowfrom operations. In light of the recent satellite disclosures , we believe it isunlikely that GSAT will achieve the expected $600-800MM in OCF.

1. Frost & Sullivan Investigate Globalstar's Connectivity RateAnd Found That Approximately 66% Of All Calls Are EitherNot Connected Or Dropped With Three Minutes

74. Frost & Sullivan ("Frost") is a firm which specializes in providing independent

third-party market consulting, monitoring of new technologies, tracking changes in distribution

channels, forecasting market trends and performing strategic analysis and market research of

industry competitors. Frost was a pioneer of this type of business beginning in the 1960's and is

considered today to be a leader in providing consumers and the public with fair and impartial

studies on inter-industry competition, new technology and market research.

75. In December 2006, Iridium contacted Frost to discuss conducting a

comprehensive and comparative study on the health and quality of service of their system and

the system of their closest industry competitor, Globalstar. Iridium sought the independent study

to confirm the results of their own internal monitoring which signaled a significant decline in

Globalstar' s satellite performance and quality of service.

76. However, Frost analysts and Iridium executives agreed to postpone the strategic

analysis until after the newest Globalstar technology, the Qualcomm GSP-1700 satellite

communications handset, was made available to the public in mid-January 2007.

77. The Frost study commenced in late-January 2007 and a comprehensive report of

their findings were published and released to the public on February 26, 2007 (the "Frost

Report"). The results were shocking. The study concluded that while Iridium's average call

success rate was around 95%, Globalstar had a call success rate of only 34%.

32

78. The Frost study focused solely on the Quality of Service ("QoS") metric in

comparing Iridium and Globalstar. This metric is calculated using the most basic of

measurements: voice call completion and termination of voice calls. The test was conducted in

two geographic locations - Northern California and Central Texas. Moreover, two types of

satellite phones were used in these tests. Frost used fixed unit models (Iridium's CTX 1147M

and Globalstar's Qualcomm GSP-2400) which were supplemented by handheld units (the

Iridium 9505A and Globalstar 's Qualcomm GSP-l 700).

79. Each fixed unit was operated for twenty-four hours successively from the same

location. In addition to auto-dialer tests, 25 calls were attempted on a handheld unit from each

location with each satellite service in order to validate the auto-dialer results. In total, over 1,500

phone calls were made with the Iridium and Globaistar fixed and handheld units and two

geographically dispersed test sites. In order to assure comparable results, tests at each site were

conducted from exactly the same locations, under identical environmental conditions.3

80. The auto-dialer equipped fixed units were run continuously for a period of

twenty-four hours to ensure that a full cycle of the constellation was witnessed. In total, the

Frost team conducted ninety-six hours of auto-dialer testing (twenty-four hours for each Iridium

and Globalstar at each of the two geographic locations). Three minute calls were made with a

one minute buffer in between each - resulting in about 360 calls per twenty-four hour period.

81. For the purposes of the Frost study, successful calls were considered those in

which the satellite phones connected with the satellite, the call went through to the intended

recipient and the call then remained connected for a period of three minutes. Calls that did not

3 Test sites in each location were chosen in order to minimize obstructions, 15 degreesabove the horizon, and to avoid interference from external signal sources such as industrialparks, airports, etc.

33

connect were recorded as failed and calls that connected but were not maintained for the full

three minutes were recorded as dropped. The auto-dialer results were then validated using the

handheld devices of both Iridium and Globalstar.

82. On February 26, 2007 the Frost Report was released to the public. Iridium's call

success rate was measured to be 98.1% in Northern California and 94.7% in Central Texas.

Globalstar, on the other hand, had a call success rate in Northern California of 36.2% and

only 31. 8% in Central Texas.

83. In response, Globalstar quickly released a five page report of their own attempting

to discount the Frost Report with their own internal "test results ." Globalstar did not provide any

methodology or system of controls which would allow industry experts or consultants to

replicate the Globalstar tests to either confirm or discount Globalstar ' s conclusions , While the

Frost Report made it clear that the study being conducted was only focusing on voice Quality of

Service as of January 2007 in respect to Iridium and Globalstar, Globalstar's response was a full

explanation about data service, 2002 reports on performance and service, and excuses for the

poor quality of service at the time of the report, namely the unsubstantiated claim of

repositioning of Globalstar satellites.

84. It was only at a time subsequent to the release of Globalstar's response to the

Frost Report that Iridium disclosed their confidential internal monitoring and testing results to

the Frost analysts. The Frost Report was confirmed by the data gathered by Iridium prior to the

initiation of the Frost study.

34

J. Globalstar's Year-Ended 2006 Form 10-K Filing DisclosedThe True Lifespan Of The First Generation Satellites

85. On April 2, 2007, Globalstar filed their Form 10-K for the fiscal year ending

December 31, 2006. In the Form 10-K filing, the Company disclosed the true life span of their

satellites to be more than a year shorter than what they had provided for in the Prospectus , stating

that the First Generation LEO Constellation would only remain commercially viable up to

December 2008. Buried in Globalstar's Form 10-K filing on page 82, the Company revealed:

Effective October 1, 2006, the Company reduced the estimated remaininglives for the Globalstar System assets from 39 months to 27 months due tothe uncertainties about their remaining useful lives.

(Emphasis added.)

86. This decrease in the estimated useful life of the First Generation satellites from

thirty-nine months to twenty-seven months meant that by December 2008, Globalstar current

satellite constellation would no longer be commercially viable - Globalstar would be unable to

support any two-way satellites voice communication.

87. Statement of Financial Accounting Standards No. 154, Accounting Changes and

Error Corrections ("SFAS 154") defines a change in an accounting estimate and lists the change

in the service life of depreciable assets as one example of a change in an accounting estimate:

Definitions

2. The following terms are defined as used in this Statement:

d. Change in accounting estimate-a change that has the effect of adjustingthe carrying amount of an existing asset or liability or altering the subsequentaccounting for existing or future assets or liabilities. A change in accountingestimate is a necessary consequence of the assessment, in conjunction with theperiodic presentation of financial statements, of the present status and expectedfuture benefits and obligations associated with assets and liabilities. Changes inaccounting estimates result from new information. Examples of items for whichestimates are necessary are uncollectible receivables, inventory obsolescence,service lives and salvage values of depreciable assets, and warranty obligations.

35

88. SFAS 154 also prescribes that a change in an accounting estimate should be

reflected in the financial statements prospectively, meaning that the financial statements should

reflect the new information in the period in which the new information becomes known:

Change in Accounting Estimate

19. A change in accounting estimate shall be accounted for in (a) the period ofchange if the change affects that period only or (b) the period of change andfuture periods if the change affects both. A change in accounting estimate shallnot be accounted for by restating or retrospectively adjusting amounts reported infinancial statements of prior periods or by reporting pro forma amounts for priorperiods.

89. Since the changes in accounting estimates are accounted for prospectively - i.e.,

from the date on which the change becomes known - Globalstar's disclosure in its Annual

Report that the change in depreciable lives was "effective October 1, 2006" (emphasis added)

was an admission that the "period of change" in the estimable life of the satellite was in the very

same quarter that the IPO occurred.

90. The disclosure of the accounting change in the 2006 Form 10-K "effective

October 1, 2006" amounted to nothing less than an admission by Globalstar that problems with

the First Generation Satellites existed in the period when the IPO was consummated, which

rendered the statements contained in the Prospectus filed in connection with the IPO materially

false and misleading, in violation of Sections 11 and 12 (a)(2) of the Securities Act, 15 U.S.C.

§§77k and 771(a)(2).

36

VI.

PROSPECTUS' MATERIAL MISREPRESENTATIONS AND FALSE STATEMENTS

A. The Prospectus Misrepresented That Globalstar ' s Voice Quality WasCapable Of Retaining Current Customers And Attracting New Customers

91. Since the Company's continued operations were essential to its ability to

replace its degrading constellation of satellites, it was critical to emphasize to IPO investors

that the existing constellation of satellites functioned well enough to both sustain existing

customers and attract new ones as follows:

Service and Product Offerings. We believe we are able to retain our currentcustomers and attract new customers because of our pricing plans and the voicequality of our network . We offer pricing plans with rates as low as $0.14 perminute.

Existing Global Satellite Communications Network. Our constellation of lowearth orbit satellites and terrestrial gateways has been in commercial operationsince 2000 and serves as the backbone of our communications network. Webelieve our existing network is capable of handling the expected growth indemandfor our services.

(Prospectus at 3) (emphasis added).

92. On page 76 of the Prospectus, under the heading "Competitive Strengths",

Globalstar largely reiterated verbatim the same misrepresentations set forth in the preceding

paragraph:

Competitive StrengthsWe believe that our competitive strengths position us to enhance our growth andprofitability:

Service and Product Offerings. We believe we are able to retain our currentcustomers and attract new customers because our pricing plans, which offerrates as low as $0.14 per minute, are the lowest in the mobile satellite servicesindustry and our voice services provide the best audio quality in our industry. Areport published by Frost & Sullivan in 2002 concluded that our voice servicesprovide audio quality that is superior to that of our principal mobile satelliteservices competitor and approach that of a good quality cellular call. We believethe voice and data products that we expect to introduce in 2006 and 2007 will be

37

cheaper, lighter and better performing than those previously available to mobilesatellite services customers and will be equal to or better than those offered by ourcompetitors. We believe our high quality and low cost services and products offer

us a competitive advantage in retaining our current customers and attractingnew customers in our vertical markets.

Existing Global Satellite Communications Network. Our constellation of lowearth orbit satellites and terrestrial gateways has been in commercial operationsince 2000 and serves as the backbone of our communications network. Gartner

has described our satellite constellation as "simple, yet proven technology." We

believe our existing network is capable of handling the expected growth indemandfor our services, as evidenced by our ability to handle increased usage ofover 500% in the areas affected by Hurricane Katrina while terrestrialcommunications networks were impaired. We plan to supplement ourconstellation by launching our eight spare satellites during 2007.

(Emphasis added).

93. On page 42 of the Prospectus, Globalstar misrepresented that its satellite

communication business provides "reliable mobile communications to [its] customers" and that

its subscriber base has been "growing rapidly" as a result of "improved voice and data

transmission quality" as follows:

Material Trends and Uncertainties. Our satellite communications business, by

providing critical, reliable mobile communications to our subscribers, servesprincipally the following markets: government, public safety and disaster relief;recreation and personal; maritime and fishing; business, financial and insurance;natural resources, mining and forestry; oil and gas; construction; utilities; andtransportation. Both our industry and our own subscriber base have beengrowing rapidly as a result of:

• favorable market reaction to new pricing plans with lower service charges;• awareness of the need for remote and reliable communication services;• increased demand for reliable communication services by disaster and reliefagencies and emergency first responders;• improved voice and data transmission quality; and• a general reduction in prices of user equipment.

(Emphasis added).

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94. On Page 88 of the Prospectus, Globalstar in a blatant misrepresentation touted

that it offered "superior call clarity, virtually no discernable delay and a low incidence of

dropped calls":

Compared to other satellite and network architectures , we offer superior callclarity, virtually no discernable delay and a low incidence ofdropped calls. Theworldwide call success rate average for all of our users varies between 79% and82%.

(Emphasis added).

95. The statements in the preceding paragraphs 91 to 94, supra, were materially false

and misleading because it was readily apparent to Globalstar, based on the Company' s internal

monitoring of their satellite constellation, that due to the deteriorated and degraded condition of

its constellation it could not adequately support Globalstar's current subscriber base - let alone a

growing subscriber base. Even Iridium began to notice a significant increase in conversion to

Iridium services by Globalstar customers. Moreover, this was linked to Iridium's findings in

mid-2006 that Globalstar' s satellites ' health and performance were seriously degraded. As a

result, in early January 2007, Iridium contracted a third-party independent consultant to confirm

the results of Iridium 's monitoring of both Globalstar's and their own service quality and

performance. The third-party consultant, Frost & Sullivan, performed an impartial survey of the

Iridium and Globalstar systems and concluded overwhelmingly that Globalstar's satellite service

capacity was seriously degraded - with a call success rate in Northern California of 36.2% and

only 31.8% in Central Texas. See ¶¶ 74-84, supra.

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B. The Prospectus Falsely Touted Subscriber

Growth Qualified As Of June 30, 2006

96. To further promote the underlying strength of its operations - which, again, was

to serve as the primary source of replacing the First Generation Satellites - the Prospectus

quantified a twenty-one percent subscriber growth as of June 30, 2006 as follows:

At June 30, 2006, we served approximately 236,500 subscribers. We added

approximately 54,000 and 41,000 net subscribers in the year ended December 31,

2005 and in the six months ended June 30, 2006, respectively. We count

"subscribers" based on the number of devices that are subject to agreements

which entitle them to use our voice or data communication services rather than

the number of persons or entities who own or lease those devices.

(Prospectus at 1).

97. Defendants reiterated this misrepresentation throughout the Prospectus, as

follows:

At June 30, 2006, we served approximately 236,500 subscribers, which

represented a 50% increase since June 30, 2005. We believe the heightened

demand for reliable communications services , particularly in the wake of the

September 11, 2001 terrorist attacks, the December 2004 Asian tsunami and the

U.S. Gulf Coast hurricane activity in 2004 and 2005, will continue to drive our

strong growth in sales of both voice and data services. We have a diverse

customer base, including the government (including federal, state and local

agencies), public safety and disaster relief; recreation and personal; maritime and

fishing; business, financial and insurance; natural resources, mining and forestry;

oil and gas; construction; utilities; and transportation sectors, which we refer to as

our vertical markets. According to Gartner, we are one of the two key mobile

satellite services providers whose networks can deliver voice and datacommunication services over most of the world's landmass.

(Prospectus at 73)(emphasis added).

98. Defendants misrepresented subscriber growth yet again on Page 77 of the

Prospectus, as follows:

Continuing Rapid and Profitable Growth of Our Subscriber Base. In 2005, weadded approximately 54,000 net subscribers , a 39% growth rate over the numberof subscribers at the end of 2004. We intend to continue to increase ourpenetration of the growing mobile satellite services market and our market share

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of key vertical markets by continuing to provide compelling service and productofferings and utilizing our strong distribution network.

99. The statements in the preceding paragraphs 96 to 98, supra, were materially false

and misleading because while Globalstar's total subscriber numbers did increase throughout

2006, it was mainly due to the addition of Simplex and Duplex data communication subscribers

and not the higher revenue-yielding voice subscribers. As set forth in paragraphs 54 to 59,

supra, Globalstar relies heavily on voice subscribers to drive revenue growth in comparison to

lower revenue yielding data customers. However, due to the degrading and deteriorating nature

of the First Generation Constellation , which began to accelerate by the summer of 2006,

completing voice transmissions via the Globalstar satellite network became increasingly

difficult, though data transmissions were barely affected by those issues.

C. The Prospectus Falsely Stated Satellites Would Be"Commercially Viable" Through The Year 2010

100. Since it was essential to the business plan presented by Globalstar to the market

that here be no gap between current operations of the First Generation Satellites and operations

of the Second Generation Constellation, Defendants repeatedly advised investors that the

satellites would provide "commercially viable" and "commercially acceptable" service to

customers "into 2010".

101. On Page 2 of the Prospectus, Globalstar stated that its current First Generation of

satellites was viable "into 2010" while the Second Generation would begin to be deployed "in

2009" as follows:

"Our satellite constellation was launched in the late 1990s. We intend to launcheight spare satellites in 2007 to supplement those currently in orbit. We believethat, as supplemented, our constellation will continue to provide commerciallyacceptable service at least into 2010.

We are currently in the process of designing and procuring our second-generation

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satellite constellation , which we expect to deploy beginning in 2009 to extend thelife of our network until approximately 2025."

(Prospectus at 2) (emphasis added).

102. On Page 16 of the November 2006 Prospectus, in the section titled "Risk

Factors", the Company claims that the First Generation Satellite Constellation will provide

"commercially viable" service to customers until the year 2010, at which time the Second

Generation Constellation be put into service.

We expect that our current satellite constellation will provide commerciallyviable service into 2010 and plan to deploy our second-generation satelliteconstellation beginning in 2009. If we are unable for any reason, includingmanufacturing or launch delays, launch failures, delays in receiving regulatoryapprovals or insufficient funds, to deploy our second-generation constellationbefore our current constellation ceases to provide commercially viable service weare likely to lose subscribers, and will incur a decline in revenues and profitabilityas our ability to provide commercially viable service declines.

(Emphasis added).

103. Furthermore, under the heading "Constellation life and health" on Page 43 of the

Prospectus, the company reiterates the fact that the "current satellite constellation will provide a

commercially acceptable quality of service into 2010."

Our current satellite constellation was launched from 1998 to 2000. We plan tolaunch our eight spare satellites during 2007. Assuming the successful launch ofthese spare satellites , we believe our current satellite constellation will providea commercially acceptable quality of service into 2010.

(Emphasis added).

104. On page 49 of the Prospectus the company touted its belief that the First

Generation Constellation will have a useful life of "10 years from the commencement of service,

or through December 31, 2009."

Depreciation is provided using the straight-line method over the estimated useful

lives [of the satellites]. For this purpose, we have estimated that our satellites

have an estimated useful life of 10 years from commencement of service, or

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through December 31, 2009.

(Emphasis added).

105. On Page 88 of the Prospectus, Globalstar again misrepresented that its in-space

constellation will provide a commercially acceptable quality of service into 2010:

We believe our in-space constellation will provide a commercially acceptablequality of service into 2010. We have eight spare satellites which are beingprepared for launch during 2007 to augment our constellation . We plan to placethe eight satellites into a constellation configuration which seeks to optimize ourservice at that time . We have entered into a launch service agreement withStarsem for two launches, with the launches of the spare satellites scheduled forMarch and May, 2007

(Emphasis added).

106. On Page 89 of the Prospectus, Globalstar misrepresented the results of its internal

satellite and constellation monitoring operations and again misrepresented that its constellation

should provide "commercially acceptable quality of service into 2010":

We monitor the health of our satellites for quick identification of"out-of-family" conditions . Our control phones located at selected gateways,which are placed in clear line of sight to the sky, make three-minute calls every10 minutes and are used to recognize and pinpoint problems quickly if theyoccur on the system. These phones have a call success rate of over 98%. Werecently hired an independent third party consultant to conduct a survey on thehealth of our satellites . The report confirmed that the constellation shouldprovide a commercially acceptable quality of service into 2010, assuming thespare satellites are launched during 2007, no major new anomalies are detectedand those anomalies currently known are controlled satisfactorily.

(Emphasis added).

107. The material statements in paragraphs 100 to 106 above were disclosed to be false

when Globalstar admitted that "effective October 1, 2006" - over one month before the Offering

date - the true useful life of the current satellite constellation would end in 2008, it would not

last "into 2010." Additionally, the material statements in paragraphs 100 to 106 above were

disclosed to be false and inconsistent with facts available earlier in 2006. The February 5, 2007

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Form 8-K filing acknowledges that by early 2006, Globalstar believed its satellite constellation

would be commercially viable under the Second Generation Satellites were operable in 2009.

Moreover, the Company learned throughout 2006 that efforts "to date" had been unsuccessful in

correcting the amplifier degradation.

D. The Prospectus Misrepresented That It Had 43 In-Orbit SatelliteWhen, In Fact, Only 37 Satellites Could "Carry Traffic"

108. According to the November 2006 Prospectus, as of June 30, 2006, Globalstar's

constellation was made up of forty-three in-orbit satellites , including in-orbit spares and

satellites which were temporarily out of service, but which the Company was attempting to

restore to service . Moreover, the Prospectus states that the satellites orbit the Earth in a 40-

satellite configuration, referred to more commonly as a "Walker pattern."

109. On page 87 of the Prospectus, Globalstar misrepresented its number of

commercially viable satellites, as follows:

Our Network

Our satellite network includes 43 in-orbit low earth orbit satellites, includingin-orbit spares temporarily placed into service and satellites that aretemporarily out of service but are considered restorable. The design of ourorbital planes and the positioning of our ground stations ensure that generally atleast two satellites, and often more, are visible to subscribers from any point onthe earth's surface between 70° north latitude to 700 south latitude, covering mostof the world's population. All of our satellites are virtually identical in design andmanufacture, and each satellite contributes equally to the constellationperformance, which allows satellite diversity for mitigation of service gaps fromindividual satellite outages. Our constellation currently orbits in a 40-satelliteconfiguration known as a "Walker pattern" orbital geometry. Each satellite hasa high degree of on-board subsystem redundancy, an on-boardfault detectionsystem and isolation and recoveryfor safe and quick risk mitigation. Our abilityto reconfigure the orbital location of each satellite provides us with operatingflexibility and continuity ofservice. The design of our space and ground controlsystem facilitates the real time intervention and management of the satelliteconstellation and service upgrades via hardware and software enhancements.

(Emphasis added.)

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110. The statements in paragraph 109 above are false and misleading because, as of

June 2006, according to confidential sources, including former employees of Globalstar, the

Company only had thirty-seven fully functioning satellites in orbit which were capable of

carrying satellite communication traffic, i.e., able transmit and receive band signals from

terrestrial sources . The fact that the Company had at most thirty-seven fully functioning

satellites at the time of the Offering in November is material because once Globalstar's

constellation falls below forty satellites, outages, loss of service, and decreased call capacity in

populated areas become more common. Additionally, Globalstar failed to mention that despite

redundancy of certain satellite components, destruction of a FET was irreparable, and destruction

of both FETs would complete incapacitate the satellite. Many of Globalstar's thirty-seven

operable satellites were down to their last FET and a subsequent solar flare could compromise

the viability of entire constellation.

E. Globalstar Misrepresented And Omitted Material Facts RegardingIts Ability To Provide Terrestrial Cellular Phone Services

111. According to the Prospectus, Globalstar , in describing its business, and

consequently its revenue generating capabilities, represented that it was "licensed by the U.S.

Federal Communications Commission, or the FCC, to provide an ancillary terrestrial component,

known as ATC services, in combination with our existing communication services." (Prospectus

at 1). ATC, or hybrid terrestrial-satellite, networks blend the most powerful aspects of each

technology. Satellites historically have provided the best and most comprehensive coverage of

low-density populations across large land masses while terrestrial facilities (i.e., traditional

cellular tower service) have provided the highest bandwidth, lowest cost coverage of high-

density populations in urban environments . ATC networks utilize common devices to provide a

45

user experience which utilizes the power and cost efficiency of terrestrial networks where they

are available and the ubiquity and disaster-tolerance of satellite networks when necessitated.

Globalstar ' s touted ability to provide ATC services would provide a tremendous financial benefit

to the Company, and in turn significant common stock value.

112. In addition, on Page 3 of the Prospectus, under the heading "Competitive

Strengths," Globalstar stated as follows:

Our current satellites and gateways are capable ofsupporting A TC services and,therefore, in combination with a terrestrial network, we will be able to provideservices where satellite services generally do not function, such as urban areasand inside buildings. We believe this capability will allow us to be among thefirst to introduce these services, potentially as soon as 2007.

(Emphasis added).

113. The statements in the preceding paragraph 112, supra, are patently false and

materially misleading . Although Globalstar obtained an FCC license to provide ATC service,

the approval was subject to certain conditions that Globalstar does not currently meet. For

example, a satellite provider that provides ATC service must have a fully functioning

constellation plus one in-orbit spare. This means that Globalstar would need forty-one fully

functioning satellites under its current "Walker 40" constellation; however, as set forth in

paragraphs 50-53 and 108-110, supra, at the time of the Offering the Company had at most

thirty-seven functioning satellites and thus, this condition could not be met. Additionally, based

on a variety of material factors - which Globalstar omitted to disclose - it is unlike that it would

"be among the first" to introduce ATC services. Besides Globalstar, there are several

competitors who also qualify to provide ATC services, including, for example, TerreStar

Networks , ICO Satellite Management , LLC (formerly ICO Global Communications), and

Mobile Satellite Ventures. Each of these companies is willing to provide the space segment, but

46

not the terrestrial infrastructure. Additionally, each of these companies has attempted,

unsuccessfully, to structure a joint venture with cellular operators or other established service

providers to provide the terrestrial infrastructure. One reason is that the business model for

cellular involves vendor financing by major infrastructure providers such as Motorola and

Ericsson, which took significant MSS losses ten years ago and are not willing to invest in space-

based cellular again. Most significantly, Globalstar is the least desirable of the alternative

systems for providing ATC because its user frequencies are widely separated (in S and L-bands).

Consequently, the same terrestrial antenna cannot be used to receive and transmit and, therefore,

the terrestrial tower equipment would be more expensive.

MISREPRESENTATIONS AND OMISSIONS CAUSED LOSS

114. Defendants' wrongful conduct, as alleged herein , directly and proximately caused

the economic loss suffered by Plaintiff and the Class.

115. Pursuant or traceable to the Prospectus, Plaintiff and the Class purchased the

common stock of Globalstar at artificially inflated prices and were damaged thereby. The

price of Globalstar's common stock declined when the misrepresentations made to the market,

and/or the information alleged herein to have been concealed from the market, and/or the effects

thereof, were revealed, causing investors' losses.

COUNT I

Violation of Section 11 of The Securities ActAgainst All Defendants

116. This claim is brought by Plaintiff and asserted on behalf of all other members of

the Class who purchased or acquired Globalstar common stock issued in the November 2006

Offering. This claim does not sound in fraud, and Plaintiff does not incorporate herein any

allegations of fraud in connection with this Count.

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117. Globalstar is the registrant for the Offering and filed the Registration Statement as

the issuer of the stock, as defined in Section 11(a)(5) of the Securities Act.

118. The Individual Defendants were directors of Globalstar at the time the

Registration Statement for the Offering became effective, and with their consent were identified

as such in the Registration Statement. In addition, they signed the Registration Statement or

authorized it to be signed on their behalf.

119. The Underwriter Defendants served as the underwriters of the Offering and

qualify as such according to the definition contained in Section 2(a)(11) of the Securities Act, 15

U.S.C. § 77b(a)(11). As such, they participated in the solicitation, offering, and sale of

Globalstar common stock to the investing public pursuant to the Registration Statement.

120. The Registration Statement, at the time it became effective, contained material

misrepresentations of fact and omitted facts necessary to make the facts stated therein not

misleading, as set forth 11 91-113 above . The facts misstated and omitted would have been

material to a reasonable person reviewing the Registration Statement.

121. The Individual Defendants and the Underwriter Defendants did not make a

reasonable investigation and did not possess reasonable grounds for believing that the statements

contained in the registration statements were true, did not omit any material fact, and was not

materially misleading.

122. Plaintiff and the other Class members did not know, and in the exercise of

reasonable diligence, could not have known of the misstatements and omissions contained in the

Registration Statement.

123. Plaintiff and other Class members sustained damages as a result of misstatements

and omissions in the Registration Statement, for which they are entitled to compensation.

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124. Plaintiff brought this action within one year after the discovery of the untrue

statements and omissions , and within three years after the Offering.

COUNT II

Violation of Section 12(a)(2) of the Securities ActAgainst All Defendants

125. Lead Plaintiff repeats and realleges each and every allegation contained above.

126. This Count is brought pursuant to Section 12(a)(2) of the Securities Act on behalf

of the Class, against all defendants.

127. By means of the Registration Statement and Prospectus, and by using means and

instruments of transportation and communication in interstate commerce and of the mails, the

Underwriter Defendants through the Offering sold Globalstar stock to Plaintiff and other

members of the Class.

128. The Underwriter Defendants, Globalstar and the Individual Defendants each

successfully solicited these purchases motivated at least in part by its or his own financial

interest. The Individual Defendants each signed the Registration Statement, and the Underwriter

Defendants, Globalstar and the Individual Defendants each reviewed and participated in drafting

the Prospectus and participated in "road shows" at which the Offering was presented to

investors . Through ensuring the successful completion of the Offering, the Underwriter

Defendants obtained substantial underwriting fees; Globalstar received more than $100 million

in needed capital; and the Individual Defendants (who were Globalstar's principal officers)

ensured that Globalstar would obtain that needed capital. Also, defendant Monroe sought to

protect the substantial investment that Thermo had made in Globalstar.4

4 Defendant Monroe, "controls, either directly or indirectly, each of Globalstar SatelliteLP, Globalstar Holdings, LLC and Thermo Funding Company LLC and, therefore, is deemed the

49

129. The Registration Statement, at the time it became effective, contained material

misrepresentations of fact and omitted facts necessary to make the facts stated therein not

misleading , as set forth above at 11 91-113. The facts misstated and omitted would have been

material to a reasonable person reviewing the Registration Statement.

130. Defendants as "sellers" owed to the purchasers of Globalstar securities, including

Plaintiff and other Class members, the duty to make a reasonable and diligent investigation of the

statements contained in the IPO materials, including the Prospectus contained therein, to

ensure that such statements were true and that there was no omission to state a material fact

required to be stated in order to make the statements contained therein not misleading.

Defendants knew of, or in the exercise of reasonable care should have known of, the

misstatements and omissions contained in the IPO materials as set forth above.

131. Plaintiff and other members of the Class purchased or otherwise acquired

Globalstar securities pursuant to the defective Registration Statement and Prospectus . Plaintiff

did not know, or in the exercise of reasonable diligence could not have known, of the untruths

and omissions contained in the Prospectus.

132. Plaintiff, individually and representatively, hereby offers to tender to defendants

those securities which plaintiff and other Class members continue to own, on behalf of all

members of the Class who continue to own such securities, in return for the consideration paid

for those securities together with interest thereon. Class members who have sold their

Globalstar stock are entitled to rescissionary damages.

133. By reason of the conduct alleged herein, these defendants violated, and/or

controlled a person who violated Section 12(a)(2) of the Securities Act. Accordingly, Plaintiff

beneficial owner of the shares held by such entities ." (Prospectus at 109, fn. 5).

50

and members of the Class who hold Globalstar securities purchased in the IPO have the right

to rescind and recover the consideration paid for their Globalstar securities and hereby elect to

rescind and tender their Globalstar securities to the defendants sued herein. Plaintiff and Class

members who have sold their Globalstar securities are entitled to rescissionary damages.

COUNT III

Violation of Section 15 of The Securities ActAgainst Individual Defendants

134. This claim is brought by Plaintiff and asserted on behalf of all Class members

who purchased or acquired common stock in the Offering. This claim does not sound in fraud

and Plaintiffs do not incorporate herein any allegations of fraud in connection with the Count.

135. The Individual Defendants at all relevant times participated in the operation and

management of the Company, and conducted and participated, directly and indirectly, in the

conduct of Globalstar's business affairs.

136. As officers and directors of a publicly owned company, the Individual Defendants

had a duty to disseminate accurate and truthful information with respect to Globalstar's financial

condition and results of operations.

137. Globalstar has admitted that its financial statements included and incorporated in

the Registration Statement and Prospectus for the Offering were materially false and misleading.

This admission by itself proves Globalstar's primary violation of Section 11 of the Securities Act

with respect to the Offering.

138. Because of their positions of control and authority as senior officers and directors

of Globalstar, the Individual Defendants were able to, and did, control the contents of the

Registration Statement which contained materially false information. The Individual Defendants

51

were therefore "controlling persons" of Globalstar within the meaning of § 15 of the Securities

Act.

139. Plaintiff and other Class members purchased Globalstar common stock issued

pursuant , or traceable , to the Offering. The Offering was conducted pursuant to the Registration

Statement.

140. The Registration Statement, at the time it became effective, contained material

misrepresentations of fact and omitted facts necessary to make the facts stated therein not

misleading. The facts misstated and omitted would have been material to a reasonable person

reviewing the registration statement.

141. Plaintiff and the Class did not know, and in the exercise of reasonable diligence,

could not have known of the misstatements and omissions in the Registration Statement.

142. Plaintiff and the Class have sustained damages as a result of the misstatements

and omissions of the registration statement , for which they are entitled to compensation.

143. Plaintiff brought this action within one year after the discovery of the untrue

statements and omissions, and within three years after the Offering.

WHEREFORE, Plaintiff prays for relief and judgment, as follows:

(a) Determining that this action is a proper class action under Rule 23 of the

Federal Rules of Civil Procedure;

52

(b) Awarding compensatory damages in favor of Plaintiff and the other

Class members against all Defendants, jointly and severally, for all damages sustained as a result

of Defendants' wrongdoing, in an amount to be proven at trial, including interest thereon;

(c) Awarding Plaintiff and the Class their reasonable costs and expenses

incurred in this action, including counsel fees and expert fees; and

(d) Such other and further relief as the Court may deem just and proper.

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury.

Dated : August 15, 2007New York, New York

Respectfully submi

By:Samuel P . po (SP-4444)Joel P . L man (JL-8177)Christopher Lometti (CL-3775)Ashley Kim (AK-0105)Frank R . Schirripa ( FS-1960)Daniel B. Rehns (DR-5506)SCHOENGOLD SPORN LAITMAN &LOMETTI, P.C.19 Fulton Street , Suite 406New York, New York 10038Telephone : ( 212) 964-0046

Lead Counselfor the Plaintiff

53