EXHIBIT 99.1
November 27, 2002
Geosor Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
The purpose of this letter agreement (the "Agreement") is to set forth the terms
of the agreement with Geosor Corporation (the "Investor") with regard to the
Investor's deposit of the sum of US$5,000,000 (the "Deposit Amount") with
Premium Quality Fund, a Cayman Islands corporation ("Premium") to be delivered
to the Bank (as defined below) on behalf of Investor as against the concurrent
delivery to the Investor of a Certificate of Deposit having a maturity of one
year from the date of issue (the "CD") registered in the name of the Investor
and issued by GNB Bank (Panama) S.A., a Panamanian bank (the "Bank") with
offices at Torre Banco Continental, 30th Floor, Xxxxx 00 x Xxxxxxxx xx xx
Xxxxxxx, Xxxxxx, Xxxxxxxx xx Xxxxxx.
In consideration of the mutual undertakings herein contained, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
A. Deposit
-------
On the date hereof, the Investor shall deliver to Premium the Deposit Amount and
concurrently, Premium shall deliver the Deposit Amount on behalf of Investor to
the Bank and shall deliver to Investor the CD registered in the name of the
Investor and issued by the Bank, in the form attached hereto as Exhibit A. The
CD shall provide for the payment at maturity to the Investor of the Deposit
Amount plus accrued interest at a rate of 5% per year (calculated on the basis
of a 360-day year) on the Deposit Amount commencing on the date hereof. The
Deposit Amount delivered to Premium pursuant to this Agreement shall be wire
transferred in lawful money of the United Sates of America in New York Clearing
House funds to the account described in Exhibit B attached hereto.
1
B. Termination Rights
------------------
1. Investor Rights. At any time commencing on July 1, 2003 until
the maturity date of the CD, the Investor shall have the right
to redeem all but not part of the CD ("Redemption"); provided
it uses the Deposit Amount to purchase from Premium shares of
common stock or any other securities (to the extent that
Premium has any securities or rights to acquire securities
other than common stock) of Phone1 Globalwide, Inc.
("Phone1"), a Delaware corporation, owned by Premium. The
number of shares of common stock or such other securities that
the Investor shall have the right to purchase from Premium
with the Deposit Amount (the "Shares") shall be equal to such
Deposit Amount (the "Purchase Price") tendered as
consideration for such purchase divided by the Per Share Price
(as defined below).
In the event that the Investor is considering exercising the
Redemption, the Investor shall give written notice to the Bank
and Premium informing the Bank and Premium that it is
considering exercising the Redemption (the "Preliminary
Redemption Notice"). Within 10 business days of the receipt by
the Bank and Premium of the Preliminary Redemption Notice,
Premium shall prepare and deliver to the Investor, or cause to
be prepared and delivered to the Investor, any disclosure
schedules to the Stock Purchase Agreement (as defined below)
it deems appropriate so that the representations and
warranties contained therein shall be true and correct as of
that date (such disclosure schedules to be prepared in good
faith and in a manner consistent with the disclosure schedules
that Phone1 and its affiliates have been producing in
connection with loans or investments in Phone1 and/or its
affiliates). After receipt by the Investor of any such
disclosure schedules, in the event that the Investor still
intends to exercise the Redemption, the Investor shall give
written notice to the Bank and Premium informing the Bank and
Premium of its intention to exercise the Redemption (the
"Redemption Notice"). The closing of the purchase of the
Shares shall occur within 10 days from receipt of the
Redemption Notice by the Bank and Premium. At such closing,
Premium and the Investor shall execute the agreement in the
form attached hereto as Exhibit C, including all disclosure
schedules (the "Stock Purchase Agreement"), Premium shall
deliver certificates for the Shares to the Investor together
with appropriate stock transfer documents (or certificates in
the name of the Investor or its designee), the CD shall be
cancelled and the Investor shall deliver the Purchase Price to
Premium (from the proceeds of the Deposit Amount paid (and
concurrently therewith) by the Bank to Investor when the CD is
redeemed). Upon the Redemption, the Investor will be paid all
accrued and unpaid interest on the Deposit Amount from the
date hereof to the date of Redemption.
For purposes hereof, "Per Share Price" shall mean $.40;
provided that if Phone1 raises, prior to the Redemption (i)
equity at a price per share below $.40 or (ii) any type of
debt or equity security convertible into equity of Phone1 at a
price per share below $.40, then the Per Share Price shall be
such number below $.40; provided, further, that the Per Share
Price shall also be subject to appropriate adjustment for
stock splits, combinations, recapitalizations, reorganizations
and similar events.
2
2. Premium Rights. At any time commencing on July 1, 2003 until
the maturity date of the CD but prior to receipt by Premium of
the Preliminary Redemption Notice, Premium shall have the
right to cancel the CD; provided Premium pays to the Investor
within 10 days of receipt by the Investor of the Premium
Notice (as defined below) (i) the Deposit Amount and accrued
interest on the CD plus (ii) a fee equal to the Deposit Amount
multiplied by .06 multiplied by a fraction, the numerator of
which shall be the number of days elapsed from the date of
issue of the CD until the date of its cancellation and payment
in full and the denominator of which shall be 360. It is
understood that the Investor shall also be entitled to
interest accrued under the CD as described under Paragraph A
hereof until the date of payment in full to the Investor. If
Premium elects to cancel the CD it shall give 10 days' prior
written notice (the "Premium Notice") of such election to the
Investor. All payments to be made by Premium to the Investor
under this Agreement shall be made to the Investor free and
clear of, and without deduction for, any and all present and
future taxes, withholdings, levies, duties and other
governmental charges (including all stamp, documentary and
other similar duties and taxes, if any, in connection with
such payment) ("Taxes") . If Premium is required by applicable
law to make any deduction or withholding on any payment as
described above in respect of Taxes or otherwise, Premium
shall: (i) promptly notify the Investor of such occurrence;
(ii) pay to the relevant taxation or other authorities the
full amount of the deduction or withholding within the time
allowed; (iii) furnish to the Investor within thirty (30) days
of such payment, an official receipt from such authorities for
all amounts so deducted or withheld; and (iv) pay to the
Investor an additional amount so that the Investor receives on
the due date of such payment the full amount the Investor
would have received had no such deduction or withholding taken
place. Premium will indemnify and hold harmless the Investor
after the 30 days period referred to in the preceding sentence
if any Taxes were due and payable, and reimburse the Investor
upon its written request, for the amount of any Taxes so
levied or imposed and paid by the Investor. Upon demand by
Premium, the Investor shall, as soon as practicable, deliver
to Premium or to such government or taxing authority as
Premium reasonably directs, any form, certificate or document
which the Investor is entitled or required as a matter of law
to deliver that may be requested in order to allow Premium to
make payments hereunder without any deduction or withholding
for or on account of any Taxes or with such deduction or
withholding at a reduced rate. Notwithstanding anything to the
contrary herein, (i) all of Premium's obligations pursuant to
this Section B 2 shall be subject to the Investor's compliance
with the immediately preceding sentence, and (ii) none of
Premium's obligations pursuant to this Section B 2 shall apply
with respect to income, corporate and franchise taxes imposed
on such payments as a result of a present or former connection
between the Investor and the jurisdiction of the
3
governmental authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than
any such connection arising solely from the Investor having
executed or delivered documents relating to this transaction,
or having performed its obligations, or received a payment
under, or enforced this Agreement, the CD or any other
document relating to this transaction).
C. Representations, Warranties and Covenants
-----------------------------------------
1. Based upon its actual knowledge without inquiry of any person,
Premium represents and warrants to the Investor that, as of
the date hereof, its representations and warranties contained
in Section 3 of the Stock Purchase Agreement are true and
correct and are incorporated as if made herein.
2. Premium covenants and agrees that it owns and will continue to
own a sufficient number of shares of common stock (or other
securities or rights to acquire securities) in order to
fulfill its obligations hereunder and under the Stock Purchase
Agreement.
3. In the event that the Investor redeems all of the CD and
purchases such number of Shares with the proceeds of the CD as
provided herein, Premium shall, and shall use its best efforts
to cause a majority in interest of the other stockholders of
Phone1 to, promptly vote all of their common and other voting
stock in Phone1; and Premium shall, and shall use its best
efforts to cause a majority in interest of the other
stockholders of Phone 1 to take all other necessary or
desirable actions within their control so that: (i) the
Investor shall have the right to appoint one representative to
the Board of Directors of Phone1 (the "Board") (or at the
election of the Investor, to appoint an "observer" to the
Board); (ii) the removal from the Board of any representative
designated hereunder by the Investor shall be at the written
request of the Investor, but only upon such written request
unless such designated representative has breached his
obligations as a director under Delaware law; (iii) in the
event that any representative designated by the Investor
hereunder for any reason (including cause) ceases to serve as
a member of the Board during his or her term of office, the
resulting vacancy on the Board shall be filled by a
representative designated by the Investor; and (iv) the right
of the Investor to appoint a representative to the Board shall
terminate upon the point in time at which the Investor ceases
to be the beneficial owner of at least 50% of the Shares
acquired pursuant to the Redemption (determined in accordance
with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended).
4. In the event that the Investor redeems all of the CD upon a
Redemption as provided in Section B 1 hereof, and upon the
request of the Investor, (i) Premium will use its best efforts
to cause Phone1 to file a shelf registration statement
covering the resale of the Shares, if a shelf registration is
filed for any other shareholder of Phone1 (or the underlying
common stock issued upon conversion of the Shares), and will
use its best efforts to cause such registration statement
promptly to be declared effective by the United States
Securities and Exchange Commission (and in any event within 45
days thereafter) and to remain continuously effective until
all Shares held by the Investor have been sold thereunder or
can be freely resold under Rule 144(k) under the Securities
Act of 1933, as amended, (ii) in the event that Premium or any
of its affiliates participates in an underwritten registration
4
of shares of Phone1, Premium will use its best efforts to
cause Phone1 to include in such registration all Shares
requested by the Investor to be included therein, subject to
normal underwriter cutbacks applicable to Premium and other
shareholders of Phone1 and on the same terms and under the
same cutback proportions as such shareholders, and (iii) in
the event that Premium or any of its affiliates participates
in any other registration of shares of Phone1, Premium will
use its best efforts to cause Phone1 to include in such
registration all Shares requested by the Investor to be
included therein.
D. Release of Information
----------------------
The parties agree that if any of the Investor, Phone1, the Bank or any of their
respective affiliates is required by applicable law, rule or regulation to
disclose this transaction or its terms, any of them may refer to this
transaction and the rights of Xxxxxx Xxxxx and his affiliates in connection with
this transaction in any filings required to be made by any of the Investor,
Phone1, Premium or any of their affiliates with the United States Securities and
Exchange Commission; provided, however, that (i) each party shall, and shall
cause its affiliates to, provide to the other party a copy in writing of any
such reference to the other party or its affiliates prior to making any such
filings and (ii) such reference shall be subject to the approval of the other
party, such approval not to be unreasonably withheld.
E. Event of Default
----------------
1. The occurrence of any of the following events or conditions
shall constitute an "Event of Default" under this Agreement:
Prior to the Redemption or the maturity date of the CD, the
Bank or Premium (i) is dissolved (other than pursuant to a
consolidation, amalgamation or merger); (ii) becomes insolvent
or is unable to pay its debts or fails or admits in writing
its inability generally to pay its debts as they become due;
(iii) makes a general assignment, arrangement or composition
with or for the benefit of its creditors; (iv) institutes or
has instituted against it a proceeding seeking a judgment of
insolvency or bankruptcy or any other relief under any
bankruptcy or insolvency law or other similar law affecting
creditors' rights, or a petition is presented for its
winding-up or liquidation which is not dismissed, discharged,
stayed or restrained within thirty (30) days of the
institution or presentation thereof; (v) has a resolution
passed for its winding-up, official management or liquidation
(other than pursuant to a consolidation, amalgamation or
merger); (vi) seeks or becomes subject to the appointment of
an administrator, provisional
5
liquidator, conservator, receiver, trustee, custodian or other
similar official for it or for all or substantially all its
assets; (vii) has a distress, execution, attachment,
sequestration or other legal process levied, enforced or sued
on or against all or substantially all its assets and such
process is not dismissed, discharged, stayed or restrained, in
each case within thirty (30) days thereafter; (viii) causes or
is subject to any event with respect to it which, under the
applicable laws of any jurisdiction, has an analogous effect
to any of the events specified in clauses (i) to (vii)
(inclusive); or (ix) takes any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in,
any of the foregoing acts.
2. Upon the occurrence and during the continuance of an Event of
Default, the Investor will have the option, upon notice to the
Bank and Premium, of declaring any or all unpaid Deposit
Amounts, together with unpaid accrued interest thereon, and
any or all fees and other amounts payable to the Bank under
this Agreement or the CD or otherwise to be immediately due
and payable in cash.
F. Entire Agreement
----------------
This Agreement together with its exhibits represents the complete understanding
between the parties with respect to the subject matters hereto and thereto and
supersedes any and all other understandings or agreements (whether orally or in
writing) between the parties, except as specifically otherwise provided herein
or therein.
G. Governing Law; Submission to Jurisdiction; Appointment of Process Agent
-----------------------------------------------------------------------
1. The terms of this Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of the
State of New York without regard to principles of conflicts of
law.
2. With respect to any suit, action or proceeding relating to
this Agreement or the transactions contemplated hereby,
Premium irrevocably (i) submits to the exclusive jurisdiction
of the United States District Court for the Southern District
of New York, and, if such Court lacks subject matter
jurisdiction, to the Supreme Court of the State of New York,
County of New York, and if such Courts lack subject matter
jurisdiction, to the U.S. District Court for the Southern
District of Florida or if such Court lacks subject matter
jurisdiction, in the courts of general jurisdiction in Dade
County, Miami, Florida; and (ii) waives, to the fullest extent
permitted by law, any objection or immunities to jurisdiction
which Premium may now or hereafter have at any time (including
sovereign immunity, immunity to pre-judgment attachment,
post-judgment attachment and execution) to the laying of venue
of any such suit, action or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby, or any judgment entered by any court in respect hereof
brought in any such court, waives any claim that any such
suit, action or proceeding has been brought in an inconvenient
6
forum and further waives the right to object with respect to
any such suit, action or proceeding that such court does not
have any jurisdiction over it. Xxxxxxx agrees that it will not
institute an action in any court except as contemplated by the
foregoing. Notwithstanding the foregoing, nothing contained
herein shall limit or impair the right of the Investor to
institute any suit, action, motion or proceeding in any other
court of competent jurisdiction, nor shall the taking of any
suit, action or proceeding in one or more jurisdictions
preclude the taking of proceedings in any other jurisdiction,
whether concurrently or not.
3. Nothing in this Agreement shall be deemed to constitute a
general consent to service of process or the in personam
jurisdiction of the United States District Court for the
Southern District of New York, County of New York, the Supreme
Court of the State of New York, the U.S. District Court for
the Southern District of Florida or the courts of general
jurisdiction in Dade County, Miami, Florida for legal actions
or proceedings not related to the transactions contemplated by
this Agreement.
4. Premium irrevocably appoints the following agent to receive,
for it and on its behalf, service of process in any suit,
action or proceeding relating to this Agreement: Proskauer
Rose LLP, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, Fax:
212.969.2900, Attn: Xxxxx X. Xxxxx. If for any reason
Premium's process agent is unable to act as such, Premium will
promptly notify the Investor and within thirty (30) days
appoint a substitute process agent acceptable to the Investor.
Nothing in this Agreement will affect the right of the
Investor to serve process in any other manner permitted by
law.
H. Notices
-------
All notices and other communications provided for herein shall be dated and in
writing and shall be deemed to have been duly given (x) on the date of delivery,
if delivered personally or by telecopier, receipt confirmed, (y) on the second
following business day, if delivered by a recognized overnight courier service,
or (z) seven days after mailing, if sent by registered or certified mail, return
receipt requested, postage prepaid, in each case, to the party to whom it is
directed at the following address (or at such other address as any party hereto
shall hereafter specify by notice in writing to the other parties hereto):
(i) If to the Investor to the following address:
Geosor Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000.000.0000
Attn: Xx. Xxxxxxx Paperin
and
7
Geosor Corporation
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Fax: 000.000.0000
Attn: Xx. Xxxxxxx X. Xxxxx
With a copy to:
Xxxx Xxxx Xxxxxxx Xxxxx & Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 212. 872.1002
Attn: Xxxxxxx X. Xxxxxx, Esq.
(ii) If to Premium to the following address:
Xxxxx 00, Edificio Global Bank, 15th Floor, Office 00-X
Xxxxxx Xxxx, Xxxxxxxx of Panama
Fax: 000.000.000.0000
Attn: Xx. Xxxxx X. Xxxxxxxxx
With a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx,
Xxx Xxxx, XX 00000
Fax: 000.000.0000
Attn: Xxxxx X. Xxxxx, Esq.
(iii) If to the Bank, to the following address:
Torre Banco Continental, 30th Floor
Xxxxx 00 x Xxxxxxxx xx xx Xxxxxxx,
Xxxxxx Xxxx, Xxxxxxxx of Panama
Fax: 000.000.000.0000
Attn: Xx. Xxxxxx Xxxxxxxxxx
With a copy to:
Proskauer Rose LLP,
0000 Xxxxxxxx,
Xxx Xxxx, XX 00000
Fax: 000.000.0000
Attn: Xxxxx X. Xxxxx, Esq.
8
I. Binding Agreement
-----------------
This Agreement is binding upon, and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
assigns; provided, however, that neither party may assign this Agreement or its
rights hereunder, except that the Investor may assign this Agreement and its
rights hereunder to any affiliate or affiliated fund or any fund advised by the
Investor or any of its affiliates.
J. Counterparts
------------
This Agreement may be executed in one or more counterparts each of which shall
be an original and together shall constitute a single agreement.
K. Severability
------------
The provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision hereof will not affect the validity or
enforceability of the other provisions hereof; provided that if any provision of
this Agreement, as applied to any party or to any circumstance, is adjudged by a
court or governmental body not to be enforceable in accordance with its terms,
the parties agree that the court or governmental body making such determination
will have the power to modify the provision in a manner consistent with its
objectives such that it is enforceable, and/or to delete specific words or
phrases, and in its reduced form, such provision will then be enforceable and
will be enforced.
L. Payments
--------
All payments under this Agreement shall be made in U.S. dollars.
[SIGNATURE PAGE FOLLOWS]
9
IN WITNESS WHEREOF, the parties have executed this Agreement this 27 day of
November, 2002.
GEOSOR CORPORATION
By:
---------------------------------------
Name:
Title:
PREMIUM QUALITY FUND
By:
---------------------------------------
Name:
Title:
10
Exhibit A
CONTRATO DE DEPOSITO A TERMINO
En fecha 27 de noviembre de 2002, GNB Bank (Panama) S.A., una sociedad anonima
organizada de acuerdo a las leyes de la Republica de Panama debidamente
habilitada para realizar el negocio de banca internacional (el "Banco") y Geosor
Corporation, una sociedad constituida bajo las leyes del Estado de Nueva York,
Estados Unidos de America (el "Cliente") celebran el presente contrato de
deposito a termino (el "Contrato de Deposito") bajo los siguientes terminos y
condiciones:
1. Declara el Banco que en esta fecha ha recibido la suma de US$5,000,000
(Dolares Estadounidenses cinco millones) (la "Suma Depositada") en concepto de
deposito a termino, distinguido con el numero 00-00-000000, pagadero a favor del
Cliente, en adelante el "Deposito".
2. Declara el Cliente que el Deposito ha sido efectuado en el Banco sujeto a los
terminos y condiciones establecidos en este Contrato de Deposito y a los
terminos y condiciones de la Carta Acuerdo entre el Banco, el Cliente y Premium
Quality Fund ("Premium") de fecha 27 de noviembre de 2002 ("Acuerdo
Banco/Geosor/Premium"). Una copia del Acuerdo Banco/Geosor/Premium se acompana
al presente como Apendice I, que incluye como Apendice A una copia de la Carta
Acuerdo ("Acuerdo Geosor/Premium") entre el Cliente y Premium, de fecha 27 de
noviembre de 2002.
3. El termino de vencimiento del presente Contrato de Deposito es de un ano
contado a partir de la fecha de este contrato, es decir, el Deposito vence el
dia 27 de noviembre de 2003, fecha en la cual el Banco pagara al Cliente la Suma
Depositada y los intereses devengados hasta la fecha de devolucion de la Suma
Depositada, intereses estos que seran calculados de acuerdo a lo indicado en el
siguiente parrafo. No obstante lo anterior, el Banco acepta que el presente
Contrato de Deposito podra ser terminado con anterioridad a su fecha de
vencimiento por el Cliente o por Premium, ello de acuerdo a los terminos de las
clausulas B1 o B2, respectivamente, del Acuerdo Geosor/Premium. En caso de que
el presente Contrato de Deposito sea terminado con anterioridad a su fecha de
vencimiento, el Banco devolvera al Cliente la Suma Depositada mas los intereses
devengados hasta la fecha de terminacion, los cuales seran calculados de acuerdo
a lo indicado en el siguiente parrafo del presente documento hasta la fecha de
devolucion de dicha Suma Depositada.
4. El Banco pagara al Cliente un interes a una tasa del 5% anual (calculado por
ano de 360 xxxx) sobre la Suma Depositada. Dichos intereses seran pagados (a) en
la fecha de vencimiento de este deposito o (b) si el Cliente o Premium cancela
el presente deposito con anterioridad a su fecha de vencimiento (de acuerdo a
los terminos de las clausulas B1 o B2 del Acuerdo Geosor/Premium) en la fecha de
devolucion al Cliente de la Suma Depositada.
11
5. El traspaso o pignoracion del presente Contrato de Deposito xxxxxx efectuarse
y notificarse al Banco con las formalidades que este requiera y xxxxxx
realizarse de acuerdo a los terminos del Acuerdo Geosor/Premium.
6. Todos los pagos que el Banco deba realizar al Cliente en virtud del presente
Contrato de Deposito, seran hechos en dolares estadounidenses y estaran sujetos
a la clausula B del Acuerdo Banco/Geosor/Premium.
7. Todos los avisos que se requieran conforme al presente Contrato de Deposito
deberan ser dados conforme lo establecido en el Acuerdo Banco/Geosor/Premium o,
en su defecto, en el Acuerdo Geosor/Premium.
8. El presente Contrato de Deposito xx xxxxxx bajo las leyes de la Republica de
Panama.
[EL RESTO DE ESTA PAGINA HA SIDO INTENCIONALMENTE DEJADO EN XXXXXX]
12
Por el Banco:
____________________
Nombre:
Titulo:
Fecha:
Por el Cliente:
____________________
Nombre:
Titulo:
Fecha:
Por Premium (en relacion a
sus derechos a solicitar la
cancelacion anticipada del
presente Contrato de
Deposito conforme lo
establecido en el Acuerdo
Geosor/Premium)
_____________________
Nombre:
Titulo:
Fecha:
13
Exhibit B
Premium Wire Transfer Instructions
CORRESPONDENT BANK: STANDARD CHARTERED BANK
Xxx Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
SWIFT: SCBLUS33
A.B.A.#026002561
ACCOUNT NO. 0000-000000-000
ACCOUNT NAME GNB BANK, PANAMA
SWIFT: XXXXXXXX
DETAILS OF PAYMENT FOR FURTHER CREDIT TO PREMIUM
QUALITY FUND
ACCOUNT NO. 10 07 008992
14
