Exhibit 10.4


 


CONTINGENT EQUITY AGREEMENT


 


This Contingent Equity
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, on June 5,
2009, the Company entered into a facility agreement with a syndicate of banks
for a secured loan facility being used to fund primarily the Company’s
second-generation satellite constellation (the “Facility Agreement”);


 


WHEREAS, Thermo has
agreed to deposit $60 million in the Contingent Equity Account to fulfill one
of the conditions precedent to funding the Facility Agreement; and


 


WHEREAS, upon the
recommendation of the Thermo Transactions Special Committee, the Board of
Directors has approved certain payments to Thermo.


 


NOW,
THEREFORE, in consideration of the promises 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.                                      Certain
Definitions.


 


“Closing Price” means, for any trading day, the closing
price of the Common Stock on the primary trading market for the Common Stock.


 


“Common Equity” means the Common Stock and the Nonvoting Common
Stock.


 


“Common Stock” means the Company’s common stock, par value
$0.0001 per share.


 


“Nonvoting Common Stock” means any class of nonvoting common
stock of the company approved by the Board of Director of the Corporation and
for which stockholder approval is obtained, and any securities into which such
nonvoting common stock may hereafter be reclassified.


 


“Securities” means the Common Equity and the Warrants.


 


“Warrants” means warrants to purchase the Common Stock at an
exercise price of $0.01 per share, in a form reasonably satisfactory to Thermo.


 


2.                                       Other Definitions.  Unless otherwise defined
herein, capitalized terms will have the meaning set forth in the Accounts
Agreement dated 5 June 2009 


 


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between
the Company, Thermo and BNP Paribas, as Security Agent, the COFACE Agent and
the Offshore Account Bank.


 


3.                                       Contingent
Equity Facility.  Thermo hereby
agrees to provide to the Company, on the terms and conditions described herein,
a contingent equity facility (the “Contingent Equity Facility”)
of $60,000,000, which Contingent Equity Facility may be drawn upon by the
Company for the purposes and subject to the limitations set forth in this
Agreement.


 


4.                                      Funding
Obligations.


 


(a) If,
at any time after the date of this Agreement until the Contingent Equity
Release Date, Thermo receives a Contingent Equity Funding Notice indicating
that it is required to advance funds from the Thermo Contingent Equity Account
to the Collection Account in accordance with Section 6.3 of the Accounts
Agreement, Thermo shall promptly advance such funds.


 


(b) Thermo
hereby consents to any advance of funds from the Thermo Contingent Equity
Account into the Collection Account initiated by the COFACE Agent in accordance
with Paragraph (d) of Section 6.3 of the Accounts Agreement.


 


(c) Any
advance made from the Thermo Contingent Equity Account to the Collection
Account pursuant to paragraph (a) or (b) of this Section 3 is
referred to herein as a “Thermo Advance.”


 


5.                                      Issuance
of Common Equity.


 


(a) In
consideration for, and simultaneously with, the funding of each Thermo Advance,
the Company shall issue to Thermo a number of shares Common Equity of equal to
the amount of such Thermo Advance divided  by 80% of the trailing
15-day average Closing Price immediately preceding such Thermo Advance.


 


(b) Except
as provided in paragraph (c) of this Section 5, all shares Common
Equity delivered in consideration for a Thermo Advance shall be shares of
Common Stock.


 


(c) To
the extent the issuance of Common Stock pursuant to this Section 5 would
result in Thermo or its affiliates individually or as a group acquiring
beneficial ownership of voting stock representing more than 69.9% of the total
voting power of all outstanding voting stock of the Company, the Company will
deliver Nonvoting Common Stock in lieu of Common Stock.


 


(d) The
shares of Common Equity to be issued to Thermo shall be delivered to Thermo free
and clear of any encumbrances. In connection with any such issuance of Common
Equity, the Company shall deliver a stock certificate representing the shares
of Common Equity to be issued to Thermo. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of Common Equity,
for the purpose of complying with the terms of this Agreement, such number of
its duly authorized shares of Common Equity as shall be sufficient to effect
the terms of this Agreement.


 


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6.                                      Termination
of Contingent Equity Facility. The Contingent Equity
Facility and all Funding Obligations hereunder shall terminate upon expiration
of the Funding Term; provided, that, the Contingent Equity Facility and all
Funding Obligations hereunder shall earlier terminate in the event that a
Change of Control (as defined in the Amended Charter) shall occur. Upon
termination of the Contingent Equity Facility, Thermo shall have no obligation
to provide any additional capital to the Company.


 


7.                                      Loan Fee.


 


(a) In consideration of Thermo’s funding
of the Contingent Equity Account, the Company will pay to Thermo, upon
execution of this Agreement and annually thereafter, a loan fee in the amount
of 10% of the outstanding amount of the Contingent Equity Facility (“Outstanding Amount”) delivered in the form
of a number of Warrants calculated as described in this section (the “Loan Fee”).


 


(b) The number of Warrants delivered as
the Loan Fee shall be equal to the Outstanding Amount divided by the
Warrant Price.  The Warrants shall be
delivered within 10 days of calculation of the Loan Fee.


 


(c) The Warrant Price shall initially be
equal to $1.37 and shall be adjusted as set forth in this Section 7.


 


(d) If on either or both of the second
and third anniversaries of the date of this Agreement the initial Warrant Price
is more than the Closing Price of the Common Stock on such date, the Warrant
Price shall be adjusted to equal the higher of (i) the Closing Price on
such date or (ii) $0.20.


 


(e) If on the last day of any year, the
fair market value of the Warrants received in consideration of Loan Fees for
such year is lower than the fair market value of such Warrants at the time they
were delivered, the Company shall deliver additional Warrants with a fair market
value equal to such difference to Thermo. 
All calculations of fair market value shall be based on the Closing
Price.  If the Closing Price is less than
$0.20, the Company shall pay Thermo cash for any of the difference in fair
market value below $0.20 if permitted under the Facility Agreement.  If not permitted such amounts shall be
accrued and added to the Outstanding Amount.


 


(f) If the Company at any time on or
after the date hereof the Company subdivides the outstanding Common Stock
(whether by stock split, stock dividend or otherwise) into a greater number of
shares, the Warrant Price shall be proportionately reduced.


 


8.                                      Representations
and Warranties.


 


(1) The
Company hereby represents, warrants and certifies to Thermo  that each of the following representations
and warranties with respect to itself is true and correct:


 


(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 


 


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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 Securities, 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 Securities are subject.


 


(c)                                 Title.  Upon delivery of the
certificate or certificates representing any Security, Thermo will obtain good,
valid and transferable title to such Security free and clear of all liens,
claims and encumbrances whatsoever.


 


(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.


 


(2) Thermo
hereby represents, warrants and certifies to the Company that each of the
following representations and warranties with respect to itself is true and
correct:


 


(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



 


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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
Securities 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 Securities have not been and are 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
certificates or records representing the Securities.


 


(f)                                    Stockholder
Approval.  Thermo
understands that neither the Warrants may be exercised nor the Common Equity
may be issued until receipt of any necessary approval by a majority of the
stockholders of the Company in accordance with applicable Nasdaq Listing Rules or
the Delaware General Corporation Law.


 


(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.


 


9.                                      Notices.  All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested, or sent by
telecopier or telex, addressed as follows:


 


(a) if
to the Company:


Globalstar, Inc.


461
S. Milpitas Blvd.


Milpitas,
CA 95035


Attn:  Chief Financial Officer


Phone:  (408) 933-4000


Facsimile:  (408) 933-4949


(b) if
to Thermo:


Thermo
Funding Company LLC


1735
Nineteenth Street


Denver,
CO 80202


Attention:  Manager


 


or,
in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.


 


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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 supersedes 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.                                    Further
Assurances. The parties shall execute and deliver such further
instruments and perform such further acts as may reasonably be required to
carry out the purposes of this Agreement.


 


14.                                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.


 


15.                                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.


 


16.                                Applicable Law.  This
Agreement shall be governed by the laws of the State of New York, 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