Exhibit 10.3

 

CONVERSION AGREEMENT

 

This Conversion Agreement (“Agreement”) is entered into as of June 19, 2009
between THERMO FUNDING COMPANY LLC, a Colorado limited liability company
(“Thermo”), and GLOBALSTAR, INC., a Delaware corporation (the “Company”).

 

WHEREAS, the Company and Thermo have determined that it is in their mutual best
interests for Thermo to convert all of the debt of the Company owed to Thermo
under the Second Amended and Restated Credit Agreement dated as of December 17,
2007, as amended (the “Thermo Debt”) into Series A Convertible Preferred Stock
(“Preferred Stock”).

 

WHEREAS, upon the recommendation of the Thermo Transactions Special Committee,
the Board of Directors has approved conversion of the Thermo Debt, on the terms
set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and of the mutual covenants and
agreements hereinafter set forth and for other good and valuable consideration,
the receipt and legal sufficiency of which are hereby acknowledged, the parties
do hereby agree as follows:

 

1.                                       SALE OF STOCK IN EXCHANGE FOR REDUCTION
OF DEBT.  SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THERMO AGREES
TO EXCHANGE THE THERMO DEBT (THE “TRANSACTION”) FOR ONE SHARE OF SERIES A
CONVERTIBLE PREFERRED STOCK (THE “SHARE”) CONVERTIBLE INTO COMMON EQUITY AS
PROVIDED IN THE CERTIFICATE OF DESIGNATION TO BE FILED WITH THE SECRETARY OF
STATE OF DELAWARE.

 

2.                                       CONSIDERATION.  AS CONSIDERATION FOR
THE TRANSACTION AND THE AGREEMENTS SET FORTH HEREIN, THE FOLLOWING SHALL OCCUR
AT THE CLOSING (AS DEFINED BELOW):

 

(A)                                  THERMO SHALL CREDIT TO THE COMPANY BY
REDUCTION IN OUTSTANDING PRINCIPAL AND INTEREST UNDER THE THERMO REVOLVING AND
TERM CREDIT FACILITY, THE SUM OF $180,176,520.30 IN U.S. DOLLARS (THE “EXCHANGE
PRICE”); AND

 

(B)                                 THE COMPANY SHALL DELIVER TO THERMO A STOCK
CERTIFICATE FOR THE SHARE.

 

3.                                       CLOSING.  THE CLOSING OF THE
TRANSACTION (THE “CLOSING”) CONTEMPLATED BY THIS AGREEMENT SHALL TAKE PLACE AT
9:00 A.M. EASTERN DAYLIGHT TIME ON JUNE 19, 2009 AT THE OFFICES OF THE COMPANY
IN MILPITAS, CALIFORNIA, OR SUCH OTHER DATE, TIME AND PLACE AS THE PARTIES MAY
AGREE.

 

4.                                       MAXIMUM SHARES; STOCKHOLDER APPROVAL. 
THERMO ACKNOWLEDGES THAT ITS CONVERSION RIGHTS FOR THE PREFERRED STOCK LIMITS
THE AMOUNT OF VOTING STOCK IT MAY HOLD.  UPON WRITTEN NOTICE TO THE COMPANY, THE
COMPANY WILL USE ITS REASONABLE EFFORTS TO OBTAIN BOARD OF DIRECTOR AND
STOCKHOLDER APPROVAL TO ISSUE A NONVOTING CLASS OF COMMON STOCK WITH THE SAME
RIGHTS AS THE EXISTING CLASS OF COMMON

 

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STOCK ON THE DATE HEREOF, EXCEPT WITH REGARD TO VOTING RIGHTS THAT WOULD HAVE AN
ADVERSE EFFECT ON THE COMPANY.  THE COMPANY ALSO UNDERTAKES TO USE ITS
REASONABLE EFFORTS TO OBTAIN STOCKHOLDER APPROVAL OF THE TRANSACTION AS REQUIRED
BY NASDAQ LISTING RULES.

 

5.                                       REPRESENTATIONS AND WARRANTIES OF THE
COMPANY.  THE COMPANY REPRESENTS AND WARRANTS TO THERMO, WITH RESPECT TO THE
TRANSACTION AS OF THE CLOSING DATE, AS FOLLOWS:

 

(A)                                  ORGANIZATION AND AUTHORITY.  THE COMPANY
HAS ALL REQUISITE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO
CONSUMMATE THE TRANSACTION.  THE COMPANY IS DULY ORGANIZED AND VALIDLY EXISTING
UNDER THE LAWS OF THE STATE OF DELAWARE.  THE EXECUTION AND DELIVERY BY THE
COMPANY OF THIS AGREEMENT AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTION
HAS BEEN DULY AUTHORIZED.  THIS AGREEMENT, WHEN DULY EXECUTED AND DELIVERED BY
THE COMPANY WILL CONSTITUTE A LEGAL, VALID, AND BINDING OBLIGATION OF THE
COMPANY, ENFORCEABLE AGAINST IT IN ACCORDANCE WITH ITS TERMS, EXCEPT AS THE
ENFORCEMENT THEREOF MAY BE LIMITED BY BANKRUPTCY, INSOLVENCY, FRAUDULENT
CONVEYANCE, REORGANIZATION, MORATORIUM, OR SIMILAR LAWS AFFECTING THE
ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND GENERAL EQUITABLE PRINCIPLES
WHETHER IN A PROCEEDING IN EQUITY OR AT LAW.

 

(B)                                NONCONTRAVENTION.  THE EXECUTION AND DELIVERY
OF THIS AGREEMENT, THE CONSUMMATION OF THE TRANSACTION AND THE FULFILLMENT OF
AND COMPLIANCE WITH THE TERMS AND CONDITIONS HEREOF DO NOT AND WILL NOT WITH THE
PASSING OF TIME OR GIVING OF NOTICE (I) RESULT IN A VIOLATION OF THE
ORGANIZATIONAL DOCUMENTS OF THE COMPANY, (II) VIOLATE ANY LAW, RULE, REGULATION,
PROVISION OF ANY JUDICIAL OR ADMINISTRATIVE ORDER, AWARD, JUDGMENT OR DECREE
APPLICABLE TO THE COMPANY OR THE SHARE, OR (III) CONFLICT WITH, RESULT IN A
BREACH OF OR RIGHT TO CANCEL OR CONSTITUTE A DEFAULT UNDER ANY AGREEMENT OR
INSTRUMENT TO WHICH THE COMPANY IS A PARTY, BY WHICH THE COMPANY IS BOUND OR TO
WHICH THE COMPANY OR THE SHARE ARE SUBJECT.

 

(C)                                 TITLE.  UPON DELIVERY OF THE CERTIFICATE OR
CERTIFICATES REPRESENTING THE SHARE, THERMO WILL OBTAIN GOOD, VALID AND
TRANSFERABLE TITLE TO THE SHARE FREE AND CLEAR OF ALL LIENS, CLAIMS AND
ENCUMBRANCES WHATSOEVER.

 

(D)                                SHARE.  THE COMPANY IS ISSUING THE SHARE
PURSUANT AN EXEMPTION FROM REGISTRATION UNDER SECTION 4(2) OF THE SECURITIES ACT
OF 1933 (THE “SECURITIES ACT”).

 

(E)                                 BROKER.  NO OFFICER, DIRECTOR, EMPLOYEE OR
THIRD PARTY SHALL BE ENTITLED TO RECEIVE ANY BROKERAGE COMMISSIONS OR SIMILAR
COMPENSATION IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT
BASED ON ANY ARRANGEMENT OR AGREEMENT MADE BY OR ON BEHALF OF THE COMPANY.

 

(F)                                    ACKNOWLEDGEMENT.  THE COMPANY
ACKNOWLEDGES THAT THERMO HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES TO IT
EXCEPT TO THE EXTENT OF THE REPRESENTATIONS AND WARRANTIES OF THERMO IN THIS
AGREEMENT.

 

6.                                      REPRESENTATIONS AND WARRANTIES OF
THERMO.  THERMO HEREBY REPRESENTS AND WARRANTS TO THE COMPANY AS FOLLOWS:

 

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(A)                                  ORGANIZATION AND AUTHORITY.  THERMO HAS ALL
REQUISITE POWER AND AUTHORITY TO ENTER INTO THIS AGREEMENT AND TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY.  THERMO IS DULY ORGANIZED OR FORMED AND
VALIDLY EXISTING AS A LIMITED LIABILITY COMPANY, AND IN GOOD STANDING UNDER THE
LAWS OF THE STATE OF COLORADO.  THE EXECUTION AND DELIVERY BY THERMO OF THIS
AGREEMENT AND THE CONSUMMATION BY THERMO OF THE TRANSACTION HAVE BEEN DULY
AUTHORIZED.  THIS AGREEMENT, WHEN DULY EXECUTED AND DELIVERED BY THERMO WILL
CONSTITUTE A LEGAL, VALID AND BINDING OBLIGATION OF THERMO, ENFORCEABLE AGAINST
THERMO IN ACCORDANCE WITH ITS TERMS, EXCEPT AS THE ENFORCEMENT THEREOF MAY BE
LIMITED BY BANKRUPTCY, INSOLVENCY, FRAUDULENT CONVEYANCE, REORGANIZATION,
MORATORIUM OR SIMILAR LAWS AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS
GENERALLY AND GENERAL EQUITABLE PRINCIPLES WHETHER IN A PROCEEDING IN EQUITY OR
AT LAW.

 

(B)                                 NONCONTRAVENTION.  THE EXECUTION AND
DELIVERY OF THIS AGREEMENT, THE CONSUMMATION OF THE TRANSACTION AND THE
FULFILLMENT OF AND COMPLIANCE WITH THE TERMS AND CONDITIONS HEREOF DO NOT AND
WILL NOT WITH THE PASSING OF TIME OR GIVING OF NOTICE (I) RESULT IN A VIOLATION
OF THE ORGANIZATIONAL DOCUMENTS OF THERMO, (II) VIOLATE ANY LAW, RULE,
REGULATION, PROVISION OF ANY JUDICIAL OR ADMINISTRATIVE ORDER, AWARD, JUDGMENT
OR DECREE APPLICABLE TO THERMO, OR (II) CONFLICT WITH, RESULT IN A BREACH OF OR
RIGHT TO CANCEL OR CONSTITUTE A DEFAULT UNDER ANY AGREEMENT OR INSTRUMENT TO
WHICH THERMO IS A PARTY, BY WHICH THERMO IS BOUND OR TO WHICH THERMO IS SUBJECT.

 

(C)                                      SECURITIES ACT.  THERMO IS ACQUIRING
THE SHARE FOR ITS OWN ACCOUNT FOR INVESTMENT ONLY AND NOT WITH A PRESENT VIEW
TOWARDS THE PUBLIC SALE OR DISTRIBUTION THEREOF, EXCEPT PURSUANT TO SALES
REGISTERED OR EXEMPTED UNDER THE SECURITIES ACT.

 

(D)                                    THERMO’S QUALIFICATIONS.  THERMO IS AN
“ACCREDITED INVESTOR” AS SUCH TERM IS DEFINED IN REGULATION D UNDER THE
SECURITIES ACT.

 

(E)                                  TRANSFER OR RESALE.  THERMO UNDERSTANDS
THAT THE SHARE HAS NOT BEEN AND IS NOT BEING REGISTERED UNDER THE SECURITIES ACT
OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD, ASSIGNED OR
TRANSFERRED WITHOUT REGISTRATION UNDER THE SECURITIES ACT OR AN EXEMPTION
THEREFROM, AND THAT THE GROUNDS FOR EXEMPTION OF THE TRANSACTION IS
SECTION 4(2) OF THE SECURITIES ACT.  THERMO UNDERSTANDS THAT A LEGEND
RESTRICTING TRANSFER EXCEPT IN COMPLIANCE WITH THE SECURITIES ACT WILL BE
REFLECTED ON THE CERTIFICATE OR RECORDS REPRESENTING THE SHARE.

 

(F)                                    BROKER.  NO OFFICER, DIRECTOR, EMPLOYEE
OR THIRD PARTY SHALL BE ENTITLED TO RECEIVE ANY BROKERAGE COMMISSIONS OR SIMILAR
COMPENSATION IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT
BASED ON ANY ARRANGEMENT OR AGREEMENT MADE BY OR ON BEHALF OF THERMO.

 

(G)                                 ACKNOWLEDGEMENT.  THERMO ACKNOWLEDGES THAT
THE COMPANY HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES TO IT EXCEPT TO THE
EXTENT OF THE REPRESENTATIONS AND WARRANTIES OF THE COMPANY IN THIS AGREEMENT.

 

7.                                       CONDITION SUBSEQUENT.  IF THE INITIAL
FUNDING TO THE COMPANY UNDER THE COFACE FACILITY AGREEMENT DATED AS OF JUNE 5,
2009 DOES NOT OCCUR BY [JUNE 30], 2009, THE PARTIES AGREE THAT THE TRANSACTION
SHALL BE DEEMED VOID AND STATUS QUO ENTE

 

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TO IMMEDIATELY PRIOR TO THE TRANSACTION.  THE COMPANY SHALL TAKE ALL ACTIONS TO
AFFECT THIS SECTION 7 AND PAY ALL COSTS AND FEES RELATED TO THIS CONDITION.

 

8.                                       REPORTING.  EACH PARTY IS RESPONSIBLE
FOR MAKING AND SHALL MAKE ITS OWN REQUIRED REPORTS WITH THE SECURITIES AND
EXCHANGE COMMISSION AND NASDAQ REGARDING THE TRANSACTION.

 

9.                                       SURVIVAL.  THE REPRESENTATIONS AND
WARRANTIES OF THERMO AND THE COMPANY CONTAINED IN SECTIONS 5 AND 6 AND THE
COVENANT IN SECTION 7 SHALL SURVIVE THIS AGREEMENT.

 

10.                                SUCCESSORS AND ASSIGNS.  NO PARTY MAY ASSIGN
THIS AGREEMENT OR ANY RIGHTS OR OBLIGATIONS HEREUNDER WITHOUT THE PRIOR WRITTEN
CONSENT OF THE OTHER PARTY.  SUBJECT TO THE PRECEDING, THIS AGREEMENT SHALL BE
BINDING UPON, INURE TO THE BENEFIT OF AND BE ENFORCEABLE BY THE PARTIES HERETO
AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.

 

11.                                SEVERABILITY.  IF ANY PROVISION OF THIS
AGREEMENT IS PROHIBITED BY LAW OR OTHERWISE DETERMINED TO BE INVALID OR
UNENFORCEABLE BY A COURT OF COMPETENT JURISDICTION, THE PROVISION THAT WOULD
OTHERWISE BE PROHIBITED, INVALID OR UNENFORCEABLE SHALL BE DEEMED AMENDED TO
APPLY TO THE BROADEST EXTENT THAT IT WOULD BE VALID AND ENFORCEABLE, AND THE
INVALIDITY OR UNENFORCEABILITY OF SUCH PROVISION SHALL NOT AFFECT THE VALIDITY
OF THE REMAINING PROVISIONS OF THIS AGREEMENT SO LONG AS THIS AGREEMENT AS SO
MODIFIED CONTINUES TO EXPRESS, WITHOUT MATERIAL CHANGE, THE ORIGINAL INTENTIONS
OF THE PARTIES AS TO THE SUBJECT MATTER HEREOF AND THE PROHIBITED NATURE,
INVALIDITY OR UNENFORCEABILITY OF THE PROVISION(S) IN QUESTION DOES NOT
SUBSTANTIALLY IMPAIR THE RESPECTIVE EXPECTATIONS OR RECIPROCAL OBLIGATIONS OF
THE PARTIES OR THE PRACTICAL REALIZATION OF THE BENEFITS THAT WOULD OTHERWISE BE
CONFERRED UPON THE PARTIES.  THE PARTIES WILL ENDEAVOR IN GOOD FAITH
NEGOTIATIONS TO REPLACE THE PROHIBITED, INVALID OR UNENFORCEABLE
PROVISION(S) WITH A VALID PROVISION(S), THE EFFECT OF WHICH COMES AS CLOSE AS
POSSIBLE TO THAT OF THE PROHIBITED, INVALID OR UNENFORCEABLE PROVISION(S).

 

12.                                ENTIRE AGREEMENT; AMENDMENTS.  THIS AGREEMENT
SUPER-SEDES ALL OTHER PRIOR ORAL OR WRITTEN AGREEMENTS BETWEEN THERMO, THE
COMPANY, AND THEIR RESPECTIVE AFFILIATES AND PERSONS ACTING ON THEIR BEHALF WITH
RESPECT TO THE MATTERS DISCUSSED HEREIN, AND THIS AGREEMENT CONTAINS THE ENTIRE
UNDERSTANDING OF THE PARTIES WITH RESPECT TO THE MATTERS COVERED HEREIN AND,
EXCEPT AS SPECIFICALLY SET FORTH HEREIN, NEITHER THERMO NOR THE COMPANY MAKES
ANY REPRESENTATION, WARRANTY, COVENANT OR UNDERTAKING WITH RESPECT TO SUCH
MATTERS.  NO PROVISION OF THIS AGREEMENT MAY BE AMENDED, WAIVED, TERMINATED OR
OTHERWISE MODIFIED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY THERMO AND
THE COMPANY.  ANY AMENDMENT TO THIS AGREEMENT MADE IN CONFORMITY WITH THE
PROVISIONS OF THIS SECTION 11 SHALL BE BINDING ON ALL PARTIES.  NO PROVISION
HEREOF MAY BE WAIVED OTHER THAN BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY
AGAINST WHOM ENFORCEMENT IS SOUGHT.

 

13.                                BINDING EFFECT.  THIS AGREEMENT SHALL BE
BINDING UPON AND INURE TO THE BENEFIT OF THE PARTIES HERETO AND THE RESPECTIVE
SUCCESSORS, LEGAL REPRESENTATIVES AND ASSIGNS OF EACH.

 

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14.                                COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED
IN COUNTERPARTS, EACH OF WHICH SHALL BE DEEMED AN ORIGINAL, BUT ALL OF WHICH
TOGETHER SHALL BE DEEMED ONE AND THE SAME INSTRUMENT.

 

15.                                APPLICABLE LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO THE CHOICE OF
LAW RULES THEREOF.

 

Signatures are on the following page.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed by each of the parties
hereto as of the date first above written.

 

 

THERMO FUNDING COMPANY LLC

 

 

 

 

 

 

 

By:

/s/ James Monroe III

 

Printed Name: James Monroe III

 

Title: Manager

 

 

 

 

 

 

 

GLOBALSTAR, INC.

 

 

 

 

 

 

 

By:

/s/ Fuad Ahmad

 

Printed Name: Fuad Ahmad

 

Title: Senior Vice President and CFO

 

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