EX-99.1 3 termsheet.htm termsheet.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing

Exhibit 99.1


EXECUTION VERSION

EXHIBIT F

Term Sheet for Parent Shareholders’ Agreement1

   
  
  Parties        Polaris Acquisition Corp.(“Parent”), as the surviving 
        corporation in the merger of Hughes Telematics, Inc. (the 
        Company”) with and into Parent pursuant to the Amended 
        and Restated Merger Agreement. 
 
        Communications Investors LLC (“Apollo”), who shall serve 
        as the Escrow Representative. 
 
        the entities and individuals listed on Schedule I hereto (which 
        may be expanded before the Closing without the consent of 
        Parent to include such persons who may hereafter become 
        equityholders of the Company and agree to the terms of this 
        agreement) (the “Company Shareholders”). 
 
        Byron Business Ventures XX, LLC, Praesumo Partners, LLC, 
        Moore Holdings, LLC, Vinco Vincere Vici Victum LLC, 
        David F. Palmer, Meritage Farms LLC, Cloobeck Companies, 
        LLC, Granite Creek Partners, L.L.C., Hartz Capital 
        Investments LLC, Odessa, LLC and Roxbury Capital Group 
        LLC Incentive Savings Plan (together, the “Founders”). 
   
 
 

  Transfer Restrictions

 
  Company Shareholders        Each Company Shareholder agrees not to sell, transfer or 
  Transfer Restrictions        otherwise dispose of, directly or indirectly, any Transaction 
        Shares or Converted Option Shares underlying Converted 
        Options, in each case for 24 months post-Closing, except (i) 
        by gift to a member of such shareholder’s immediate family 
        or to a trust, the beneficiary of which is an Company 
        Shareholder or a member of an Company Shareholder’s 
        immediate family, (ii) by virtue of the laws of descent and 
        distribution upon death of any Company Shareholder, or (iii) 
        pursuant to a qualified relations order; provided, however, that 
        such permissive transfers may be implemented only upon the 
        respective transferee’s written agreement to be bound by the 
        terms and conditions of the Shareholders’ Agreement. 

1 Capitalized terms used herein but not defined herein shall have the meanings ascribed thereto in the Amended and
Restated Agreement and Plan of Merger, by and between Polaris and the Company, dated as of November 10, 2008
(the “Amended and Restated Merger Agreement”). 

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        Each Company Shareholder agrees not to sell, transfer or 
        otherwise dispose of, directly or indirectly, any Escrowed 
        Earnout Shares (or Converted Option Shares underlying 
        Earnout Options) until (a) with respect to such shares released 
        from escrow upon the achievement of the First Target 
        between the first and second anniversaries (including the 
        second anniversary) of the Closing Date, 12 months following 
        the distribution to shareholders of such shares from escrow 
        and (b) with respect to such shares released from escrow upon 
        the achievement of the First Target after the second 
        anniversary of the Closing Date, the Second Target and the 
        Third Target, the earlier of (i) 6 months following the 
        distribution to shareholders of such shares from escrow or (ii) 
        the fifth anniversary of the Closing Date. 
    
  

  Founders Restrictions 

      Subject to the immediately succeeding bullet and Section 
        2.8(b) of the Parent Disclosure Statement, the Parent common 
        stock and the warrants to purchase Parent common stock (the 
        Parent Warrants”) that are owned by the Founders and held 
        in escrow pursuant to the Stock Escrow Agreement and the 
        Warrant Escrow Agreement, both dated as of January 11, 
        2008, by and among Parent, certain of the Founders and 
        Continental Stock Transfer & Trust Company (the “Founders 
        Escrow Agreements”) shall continue to be subject to the 
        restrictions and other provisions of the Founders Escrow 
        Agreements and shall be released to the Founders as and when 
        provided for under the Founders Escrow Agreements. 
 
        Each Founder agrees not to sell, transfer or otherwise dispose 
        of, directly or indirectly, any Escrowed Sponsor Earnout 
        Shares until (a) with respect to such shares released from 
        escrow upon the achievement of the First Target between the 
        first and second anniversaries (including the second 
        anniversary) of the Closing Date, 12 months following the 
        distribution to the Founders of such shares from escrow and 
        (b) with respect to such shares released from escrow upon the 
        achievement of the First Target after the second anniversary 
        of the Closing Date, the earlier of (i) 6 months following the 
        distribution to the Founders of such shares from escrow or (ii) 
        the fifth anniversary of the Closing Date. 
   
 

  Governance

   
  Voting of Escrowed Shares        For any matters brought to a vote of the Parent shareholders 
        during such time when any Escrowed Earnout Shares or 
        Escrowed Sponsor Earnout Shares remain in escrow, the 
  

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        Each Company Shareholder agrees not to sell, transfer or 
Company Shareholders and the Founders shall be entitled to 
vote such shares without restriction. 
The Company Shareholders may vote the Escrowed 
Indemnity Shares without restriction. 
  
  
  Initial Composition of the  Simultaneously with the Closing, the Board shall be expanded 
  Board of Directors of Parent to 9 members and shall initially consist of the following
  (the “Board”) members: 
  
         The following 1 person designated by Apollo prior to
           Closing (or such other person as Apollo shall designate
           prior to the Closing):
  
                    Jeff Leddy
  
         5 persons to be designated by Apollo prior to Closing, at
           least one of whom shall be considered “independent”
           under applicable stock exchange rules.
  
         The following 1 person who is currently on the Board (or 
            such other person as the Board shall designate prior to the 
            Closing who is reasonably acceptable to the Escrow 
            Representative):
  
                    Marc Byron
  
         In addition, 2 persons who are considered “independent”
           under applicable stock exchange rules shall be designated
           mutually by the Board and the Escrow Representative. 
  
  
  Founder Board Nominations In the event of the death, disability, disqualification,
resignation or removal of Marc Byron, or his failure to be 
elected, in each case, prior to the expiration of the Escrow 
Period, Parent shall nominate for election to the Board a
replacement (the “Replacement Director”) designated by the
Founders (as determined by a majority-in-interest (based on
fully-diluted ownership of Parent common stock from time to
time) of the Founders), who shall be entitled to serve until the
expiration of the Escrow Period. Such Replacement Director
shall meet any applicable requirements or qualifications under 
applicable law, stock exchange rules and Parent
organizational documents to be a member of the Board.
Nothing herein shall be deemed to require that any party
hereto, or any affiliate thereof, act or be in violation of any
applicable provision of law, legal duty or requirement or stock 
  

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        exchange or stock market rule. 
    
        All of the parties to the Shareholders’ Agreement who are 
        entitled to vote with respect to the election of directors of the 
        Board shall agree to vote their shares in favor of Marc Byron 
        or the Replacement Director until the earlier of (x) the 
        termination of the Escrow Period and (y) the date when the 
        Founders hold less than 50% of the outstanding Parent 
        common stock held by the Founders at the Closing. 
   
    
  Unaffiliated Directors        For so long as any Escrowed Earnout Shares or Escrowed 
        Indemnity Shares remain in escrow (the “Escrow Period”) 
        pursuant to the Escrow Agreement, the Board shall at all 
        times include Marc Byron or the Replacement Director or, if 
        no such person is still a member of the Board, at least one 
        Unaffiliated Director (as defined in Section 7.6 of the 
        Amended and Restated Merger Agreement). 
   
    

  Registration Rights

  
 
  Registration Rights of the        The following registration rights shall extend to (A) the 
  Founders and Company        Company Shareholders, with respect to their Parent common 
  Shareholders        stock, and (B) the Founders, with respect to their Parent 
        common stock, Parent Warrants and shares of Parent common 
        stock underlying the Parent Warrants (such securities of the 
        Company Shareholders and the Founders, together, the 
        Registrable Securities”). As to any particular Registrable 
        Securities, such securities shall cease to be Registrable 
        Securities when: (a) a Registration Statement with respect to 
        the sale of such securities shall have become effective under 
        the Securities Act and such securities shall have been sold, 
        transferred, disposed of or exchanged in accordance with such 
        Registration Statement; (b) such securities shall have been 
        otherwise transferred, new certificates for them not bearing a 
        legend restricting further transfer shall have been delivered by 
        Parent and subsequent public distribution of them shall not 
        require registration under the Securities Act; (c) such 
        securities shall have ceased to be outstanding; or (d) the 
        Registrable Securities are saleable under Rule 144 and not 
        subject to the volume restrictions therein. 
 
        This agreement shall replace (A) all existing registration 
        rights that the Company Shareholders may have with respect 
        to the Company and (B) the Founders’ existing registration 
        rights with Parent. 
 
        The registration rights of the Company Shareholders and the 
  

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        Founders shall be subject to the transfer restrictions on each 
        such holder’s Parent securities referenced herein, and no 
        registration rights shall be available for any securities prior to 
        the expiry of such transfer restrictions with respect to such 
        securities. 
  
    
Demand Rights        Availability: Beginning after the expiry of the transfer
        restrictions applicable to the given securities of the Company 
        Shareholders’ or the Founders, as the case may be, the 
        Company Shareholders (as a group as determined by a 
        majority-in-interest) and the Founders (as a group as 
        determined by a majority-in-interest) may issue to Parent a 
        written request (a “Demand Notice”) that Parent effect the 
        registration of all or any portion of their Registrable Securities 
        (a “Demand Registration”). Parent shall not be required to (i) 
        effect more than two (2) Demand Registrations initiated by 
        the Founders or more than four (4) Demand Registrations 
        initiated by the Company Shareholders or (ii) effect a Demand 
        Registration (x) requested by the Founders if such Founders 
        request a registration of shares with a value of less than 
        $2,000,000 or (y) requested by the Company Shareholders if 
        such Company Shareholders request a registration of shares 
with a value of less than $20,000,000.
 
        Cutbacks: See “Cutbacks” under “Piggyback Rights.” 
 
        Withdrawal: The demanding party (based on the majority-in- 
        interest) may withdraw the Demand Notice at any time prior 
        to the effective date of the registration statement filed in 
        response to such Demand Notice if (a) it disapproves of the 
        terms of any underwriting or (b) it is not entitled to include all 
        of its requested Registrable Securities in the offering. Parent 
        shall be responsible for all expenses relating to withdrawn 
        registrations. 
 
        Underwriter: Following the date that is 24 months after the 
        Closing Date, the holders of (A) a majority of Registrable 
        Securities or (B) the Founders as a group, provided that their 
        demand relates to Registrable Securities with a value of 
        $20,000,000 or more, may elect to have an underwritten 
        offering, and may select an underwriter mutually agreed upon 
        with Parent (subject to both parties acting reasonably). 
      
    
Piggyback Rights        Availability: Company Shareholders and the Founders shall 
        have unlimited piggyback rights (including with respect to 
        Demand Registrations initiated hereunder) (beginning after 
        the expiry of the transfer restrictions applicable to the given 
   

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      securities of the Company Shareholders' or the Founders, as
      the case may be), provided that they shall have no piggyback
      rights for registration statements (i) filed on Form S-8 or
      otherwise in connection with any employee stock option or 
      other benefit plan, (ii) filed on Form S-4 or otherwise for an 
      exchange offer or offering of securities solely to the 
      Company’s existing stockholders, (iii) for an offering of debt 
      that is convertible into equity securities of the Company or 
      (iv) for a dividend reinvestment plan. 
 
      Notice: Parent shall give notice of an intended registered 
      offering to the Company Shareholders and Founders as soon 
      as practicable, but no less than 10 days prior to anticipated 
      filing date (after which such holders shall have 5 days to 
      respond). 
 
      Cutbacks: Cutbacks will be permitted in an underwritten 
      offering if the underwriter determines in good faith that 
      selling the number of shares requested to be included in the 
      offering would materially and adversely affect the initial 
      requesting party’s ability to sell the shares at the desired 
      offering price. If the offering is for Parent’s account, then 
      priority will be given to the shares being sold by Parent, then 
      to the Company Shareholders and the Founders (pro rata 
      based on the number of shares that each elects to include in 
      the registration), then to other holders of Parent shares. If the 
      offering is initiated by Parent shareholders other than the 
      Company Shareholders or the Founders, priority shall be to 
      those other shareholders, then to the Company Shareholders 
      and the Founders (pro rata based on the number of shares that 
      each elects to include in the registration), then to the shares 
      being sold by Parent. If the offering is initiated by the 
      Company Shareholders or the Founders pursuant to a Demand 
      Notice, then priority shall be to the demanding party, then to 
      the non-demanding party (i.e. the Company Shareholders or 
      the Founders), then to shares being sold by Parent, and then to 
      other shareholders; provided that in the case of a demand by 
      either party with respect to which the other party has 
      exercised piggyback rights, if the underwriter has determined 
      there should be a cutback, the party exercising piggyback 
      rights may convert its piggyback election to a demand, such 
      that the converting party and the demanding party will be 
      treated pro rata in such cutback (based on the number of 
      shares that each elects to include in the registration); provided 
      further that in the event a party converts a piggyback election 
      to demand election, such conversion shall be counted as a 
    

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        demand. 
 
        Withdrawal: Any Company Shareholder or Founder may 
        withdraw from a piggyback registration at any time. Parent 
        shall be responsible for all expenses relating to withdrawn 
        registrations. 
   
    
Shelf Rights        Availability: Shelf registration rights shall be available to the 
        Company Shareholders (as a group as determined by a 
        majority-in-interest) and the Founders (as a group as 
        determined by a majority-in-interest) after such time as Parent 
        becomes S-3 eligible (and beginning after the expiry of the 
        transfer restrictions applicable to the given securities of the 
        Company Shareholders’ or the Founders, as the case may be). 
        The number and frequency of takedown demands (a “Shelf 
        Notice”) to which the Company Shareholders (as a group as 
        determined by a majority-in-interest) and the Founders (as a 
        group as determined by a majority-in-interest) are entitled 
        shall be the same as the entitlement for demand registrations. 
        Parent shall not be required to effect a shelf registration 
        through an underwritten offering. Parent shall not be required 
        to give effect to a Shelf Notice if (a) Form S-3 is not available 
        for such an offering or (b) the holders requesting participation 
        in the offering propose to sell securities valued at less than 
        $2,000,000 (with respect to the Founders) or $20,000,000 
        (with respect to the Company Shareholders). 
   
    
Registration Procedures;        The registration procedures and indemnification applicable to 
Indemnification and        registrations hereunder shall be substantially similar to the 
Contribution        provisions in Sections 3 and 4 of the Founders Registration 
        Rights Agreement. 
   
 

  Other

   
  Charter and Bylaws         The parties shall take or cause to be taken all lawful action 
        necessary to ensure at all times as of and following the 
        Closing Date that the certificate of incorporation and by-laws 
        of Parent are not inconsistent with the provisions of this 
        agreement or the transactions contemplated hereby. 
   
    
  Termination         This agreement shall terminate (a) with respect to the 
        Company Shareholders, on the date when the Company 
        Shareholders hold less than 10% of the outstanding Parent 
        common stock, and (b) with respect to all parties, on the date 
        of a change of control of Parent, provided that, in either case, 
        the registration rights of the Company Shareholders shall 
        survive until the Company Shareholders no longer own any 
  

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    Parent common stock, and the registration rights of the 
    Founders shall survive until the Founders no longer own any 
    Parent common stock or Parent warrants, and the 
    indemnification provisions shall survive any termination. 
  

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Schedule I

Company Shareholders

1. Communications Investors LLC

2. Jeffrey Leddy

3. Erik Goldman

4. Robert Lewis

5. Craig Kaufmann

6. Kevin Link

7. Charles Link

8. Frederick Blumer

9. Art McMahon

10. Andrew Africk

11. Matthew Nord

12. Keith Schneider

13. Jeffrey A. Leddy Grantor Retained Annuity Trust

14. Blumer Family LLC

 

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