Exhibit 2.1
SETTLEMENT AGREEMENT
THIS SETTLEMENT AGREEMENT ("Agreement") is entered into as of this 28th day of
February 2006 among Sand Hills General Partners, a Texas general partnership
("SHGP"), G/O International, Inc., a Colorado corporation ("G/O"), Waterbury
Resources, Ltd., a Cayman Islands company ("Waterbury"), Q-Marq Securities,
Ltd., a Cayman Islands company ("Q-Marq"), Yankee Investments, Ltd., a Cayman
Islands company ("Yankee") and Charlie Investments, Ltd., a Cayman Islands
company ("Charlie").
WHEREAS, Waterbury is indebted to Q-Marq in the principal amount of $643,598,
(the "Waterbury Debt"); and
WHEREAS, Charlie and Yankee have each undertaken to guaranty the Waterbury
Debt (the "Charlie and Yankee Guaranty"); and
WHEREAS, G/O and Waterbury, and each of them, have insufficient funds to repay
the Waterbury Debt; and
WHEREAS, Charlie and Yankee are unable to meet the obligations respecting the
Guaranty, and deem it in their best interest to seek an outside entity willing
to assume their Guaranty ("Assuming Entity"); and
WHEREAS, Charlie and Yankee are willing to transfer to the Assuming Entity all
of their respective interests in and to both G/O and Waterbury as set forth in
Schedule 1 hereto, in exchange for the assumption of the Guaranty.
WHEREAS, SHGP is willing to provide its Guaranty of the Waterbury Debt in
exchange for the G/O and Waterbury Shares held by Charlie and Yankee, and upon
the willingness of Q-Marq to: (1) accept SHGP's promissory note in the
principal amount of $35,000, and (2) convert the Waterbury Debt into shares of
Waterbury, as more fully set forth herein.
WHEREAS, Q-Marq is willing to release Charlie and Yankee from its Guaranty and
accept the Guaranty of SHGP and, as further consideration, accept the Note of
SHGP in the principal amount of $35,000 for conversion of the Waterbury Debt
into shares of Waterbury as set forth in Schedule 1 hereto, thereby releasing
SHGP of its Guaranty of the Waterbury Debt, and accepting the SHGP Note and
the Waterbury Shares in full settlement of the Waterbury Debt.
NOW THEREFORE, upon the premises stated herein, the parties hereto do hereby
agree as follows:
1. SHGP's Assumption of the Charlie and Yankee Guaranty. Through the
execution and delivery of the Agreement to Assume Guaranty for the Transfer of
Shares, in form attached hereto as Exhibit 1, SHGP shall Guaranty the
Waterbury Debt in exchange for Charlie and Yankee transferring to SHGP those
shares of G/O set forth in Schedule 1 hereto and Charlie, Yankee and G/O
transferring the Waterbury shares set forth in Schedule 1 hereto and Q-Marq's
conversion of the Waterbury Debt as provided in paragraph 2 herein below.
2. Conversion of Waterbury Debt. In consideration for the issuance of the SHGP
promissory note in form attached hereto as Exhibit 2 and the issuance of a
total of 1,500,000 of the ordinary shares of Waterbury, Q-Marq shall execute
and delivery the Election to Convert and Release, Waiver and Novation in form
attached hereto as Exhibit 3 thereby unconditionally forgiving and releasing
the Waterbury Debt.
3. Transaction Documents. The Agreement to Assume Guaranty for the Transfer of
Shares, the SHGP Note, and the Election to Convert and Release, Waiver and
Novation shall hereinafter be referred to collectively as the "Transaction
Documents."
4. Representations and Warranties. Each party to this Settlement Agreement
hereby represents and warrants that:
(a) they are at least 21 years of age and possess the full capacity
and authority to execute and deliver this Agreement and the
Transaction Documents and to make the conveyances and transfers
and to undertake the obligations undertaken by them as contained
in this Agreement and in the Transaction Documents;
(b) they have taken such actions as required under their respective
charters to authorize the transactions contemplated hereby;
(c) this Agreement and the Transaction Documents, when executed and
delivered by them, will each constitute valid and legally binding
agreements enforceable in accordance with there terms.
(d) their execution and delivery of this Agreement and of the
Transaction Documents will neither conflict with nor result in any
breach or contravention of, or the creation of any lien under, any
indenture, agreement, lease, instrument or understanding to which
they are a party or by which any of their assets or properties is
bound.
(e) This Agreement and the Transaction Documents will be binding upon
their respective estates, their heirs, executors and all others
who may claim an interest in the property or obligations contained
herein.
5. General.
(a) Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the each of the parties and their respective heirs,
personal representatives, successors and assigns.
(b) Complete Understanding. This Agreement and the Transaction
Documents, collectively, constitute the complete understanding
between the parties. No alteration or modification of any provision
of this Agreement shall be valid unless made in writing and signed
by each of the parties.
(c) Severability. If a court of competent jurisdiction rules that any
one or more of the provisions of this Agreement and/or any
Transaction Document executed and delivered pursuant to this
Agreement are invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any
other provisions of this Agreement and/or, any Transaction Document
executed and delivered pursuant to this Agreement this Agreement
and/or such Transaction Document shall be construed as if it had
never contained such invalid, illegal or unenforceable provision.
(d) Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes
constitute part of one original.
(e) Costs of Enforcement. Unless other wise provided in an Transaction
Document, in the event that a party institutes any proceedings to
enforce the terms and conditions of this Agreement or any
Transaction Document, all the costs or expenses (including
reasonable attorneys' fees) incurred by the prevailing party
hereto to enforce the terms and conditions of this Agreement
and/or any Transaction Document shall be paid by the other party
in such proceedings.
(f) Applicable Law. Unless indicated to the contrary in a Transaction
Document, the laws of the State of Texas (other than those which
pertain to conflicts of law) shall govern this Agreement and the
Transaction Documents, irrespective of the fact that any of the
parties is presently or may be a resident of a different state or
country. The parties shall submit all disputes which arise under
this Agreement to state or federal courts located in the City of
Houston, State of Texas, United States of America, for resolution.
The parties acknowledge the aforesaid courts shall have exclusive
jurisdiction over this Agreement and specifically waive any claims
which they may have that involve jurisdiction or venue, including
but not limited to forum non conveniens.
(g) Agreement to be Construed Fairly. This Agreement and the Transaction
Documents have been the subject of negotiations and discussions
between and among the parties. Unless otherwise provided in an
Transaction Document, It has been and shall be construed to have
been drafted by all the parties, so that any rule of construing
ambiguities against the drafter shall have no force and effect. In
addition, if any portion or term of this Agreement is held
unenforceable by a court of competent jurisdiction, the remainder
of this Agreement shall not be affected and shall remain fully in
force and enforceable.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
G/O International, Inc., a Colorado corporation
/s/Brian Rodriguez
Brian Rodriguez, President
Waterbury Resources, Inc., a Cayman Islands company
/s/ Peter Anderson
Peter Anderson, Managing Director
Q-Marq Securities, Ltd., a Cayman Islands company
/s/ Peter Anderson
Peter Anderson, Managing Director
Yankee Investments, Ltd.
/s/ David Strawn
Attorney In Fact
Charlie Investments, Ltd.
/s/ David Strawn
Attorney In Fact
Sand Hills General Partnership by Sand Hills Partners, LLC, its authorized
partner
/s/ George Jarkesy
George Jarkesy, Voting Member
Schedule 1
G/O and Waterbury Shares
Name Number of Waterbury Ordinary
Charlie Investments, Ltd. 187,500
Yankee Investments, Ltd. 187,500
G/O International, Inc. 257,000
Number of G/O shares of common stock
Charlie Investments, Ltd. 1,537,000
Yankee Investments, Ltd. 1,537,000
Exhibit 1
Agreement to Assume Guaranty for Transfer of Shares
AGREEMENT TO
ASSUME GUARANTY
FOR
TRANSFER OF SHARES
This Agreement to Assume Guaranty for the Transfer of Shares ("Agreement") is
entered into this 28th day of February 2006 among Waterbury Resources, Inc., a
Cayman Islands company ("Waterbury"), G/O International, Inc., a Colorado
corporation (the "G/O"), Yankee Investments, Ltd., a Cayman Islands company
("Yankee"), Charlie Investments, Ltd., a Cayman Islands company ("Charlie"),
Q-Marq Securities, Ltd., a Cayman Islands company ("Q-Marq"), and SHGP, a
Texas General Partnership ("SHGP").
WHEREAS, G/O, Waterbury, Yankee, Charlie, Q-Marq and SHGP have entered into a
Settlement Agreement of even date herewith (the "Settlement Agreement")
pursuant to which SHGP has agreed to assume the Charlie and Yankee Guaranty
obligation as set forth in the Settlement Agreement;
WHEREAS, G/O, Yankee, Charlie and Q-Marq have agreed, as consideration for the
assumption of the Charlie and Yankee Guaranty, to transfer to the SHGP those
shares of G/O and Waterbury, as set forth in the Settlement Agreement;
NOW THEREFORE, for and in consideration set forth herein, the parties mutually
agree as follows:
1. Assumption of Charlie and Yankee Guaranty. SHGP hereby assumes and
agrees to pay to Q-Marq, those obligations arising out of the
Charlie and Yankee Guaranty in the principal amount of $643,589 as
set forth in the Settlement Agreement.
2. Acceptance of Assumption and Release of Obligors. Q-Marq, through
execution and delivery of its counterpart signature page hereto,
hereby agrees and accepts such assumption of the Charlie and
Yankee Guaranty by SHGP and hereby releases and forever waives any
claim against Charlie and Yankee respecting the Waterbury Debt.
3. Payment for the Assumptions-Transfer of Shares
A. Transfer of Waterbury and G/O Shares. In consideration for
SHGP's assumption of the Charlie and Yankee Guaranty, as
contained paragraph 1 herein above, Charlie and Yankee
hereby deliver to SHGP the shares of G/O and Waterbury set
forth in Schedule 1 hereto and G/O hereby delivers the
shares of Waterbury set forth in Schedule 1 hereto, in the
names and quantities as set forth therein. In connection
therewith, SHGP has simultaneously executed and delivered
the Investment Letter Attached hereto as Exhibit 1.
4. Definition of Terms. The capitalized terms used herein, unless
otherwise indicated shall have the same meaning as those set forth
in the Settlement Agreement.
5. Further Cooperation. Each of the parties hereto will further
cooperate in performing all tasks necessary to complete the
transaction contemplated hereby including the execution and
deliver of such further documents as reasonably deemed necessary
by all transfer agents, legal and accounting professionals.
6. Representations of G/O, Yankee, Charlie and Q-Marq. G/O, Yankee,
Charlie and Q-Marq each hereby represent and warrant to SHGP that:
A. Each is the rightful owner of the Shares to be transferred
to SHGP hereunder.
B. The Shares, upon transfer, will be duly and validly issued,
non-assessable and there exists no valid claims against such
shares.
G/O International, Inc. Waterbury Resources, Inc.
/s/Brian Rodriguez /s/Peter Anderson
Brian Rodriguez Peter Anderson, its Director
Yankee Investments, Ltd. Charlie Investments, Inc.
/s/ David Strawn /s/David Strawn
Attorney In Fact Attorney in Fact
Q-Marq Securities, Ltd. Sand Hills General Partnership,
through Sand Hills Partners, LLC
/s/ Peter Anderson /s/George Jarkesy
Peter Anderson, Its Director George Jarkesy, Voting Member
Schedule A
G/O and Waterbury Shares
Name Number of Waterbury Ordinary
Charlie Investments, Ltd. 187,500
Yankee Investments, Ltd. 187,500
G/O International, Inc. 357,000
Number of G/O shares of common stock
Charlie Investments, Ltd. 1,537,500
Yankee Investments, Ltd. 1,537,500
Exhibit 1
Investment Letter
INVESTMENT LETTER
Waterbury Resources, Ltd.
Grand Cayman
Cayman Islands
G/O International, Inc.
18205 Burkhardt
Tomball, Texas
Re: Transfer of Waterbury and G/O Shares
Gentlemen:
Pursuant to that certain Agreement to Assume Guaranty for Transfer of Shares
among the undersigned, Waterbury Resources, Inc., a Cayman Islands company
("Waterbury"), G/O International, Inc., a Colorado corporation ("G/O"), Yankee
Investments, Ltd., a Cayman Islands company ("Yankee"), Charlie Investments,
Ltd., a Cayman Islands company ("Charlie"), and Q-Marq Securities, Ltd., a
Cayman Islands company ("Q-Marq"), G/O, Charlie and Yankee have each agreed to
transfer to the undersigned those Ordinary Shares of Waterbury and common
stock of G/O (the "Shares") set forth in Schedule 1 of the Agreement. In
connection therewith:
1. Representations and Warranties of the Signatories.
(a) Respecting Offering Materials. SHGP hereby represents and warrants
that, subject to the further terms of the Agreement, it:
(1) has been furnished with those materials and documents as
deemed necessary to make a decision to acquire the Shares
("Disclosure Materials").
(2) has been given the opportunity to ask questions of and
receive answers from the officers and directors of Waterbury
and G/O, with respect to the issuance of the Shares pursuant
to the Agreement, the Shares, the business of the Waterbury
and G/O and any other matters which it considered to be
material to its investment decision and all such questions
have been answered to its full satisfaction;
(3) has not relied on any information or representation other
than those set forth in Waterbury's and G/O's, Disclosure
Materials and such other written information and
representations as have been provided by the officers and
directors of the Waterbury and G/O pursuant to a specific
question or request for additional information;
(4) has not been presented with or solicited by any leaflet,
public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement, or any other
form of general advertising.
(b) Respecting Investor Suitability. SHGP hereby represents and
warrants that it and each of its general partners:
(1) is an "Accredited Investors" as that term is defined in
Securities and Exchange Commission Regulation D, promulgated
under the Securities Act of 1933, as amended (the "Act");
(2) is capable of bearing the high degree of economic risk
associated with this investment including, but not limited
to, the possibility of complete loss of all his or its
investment capital;
(3) has sufficient financial and other resources to provide for
anticipated financial needs, without taking into account any
income which may be generated as a result of his or its
investment in the Shares, and has no need for liquidity with
respect to the investment in the Shares;
(4) has total investments in illiquid investments that are
reasonable in relation to his or its net worth and can
afford the total loss of the investment in the Shares;
(5) has had substantial experience in business of investments in
one or more of the following: (i) investment experience with
securities, such as stock and bonds; (ii) ownership of
interests in new ventures and start-up companies; and (iii)
experience in business and financial dealings;
(6) can protect his or its own interests in an investment of
this nature and does not have a "Purchaser Representative,"
as that term is defined in Regulation D of the Act and does
not need such Representative.
(7) understands and agrees that the Shares acquired pursuant to
the Agreement have not been and will not be registered under
the Act, that the Shares are being offered and sold in
reliance upon the exemption from registration afforded by
Section 4(2) and Rule 506 of Regulation D as promulgated
under the Act and that the Shares have not been registered
with any state securities commission or other governmental
authority. Undersigned hereby acknowledges that pursuant to
the requirements of Section 4(2) and Rule 506 or Regulation
D, the Shares acquired from the Company may not be
transferred, sold or otherwise exchanged unless registered
or in transactions that are exempt there from.
(8) Each of SHGP and its partners, acknowledges that the
Waterbury and G/O are relying upon the representations made
by him or it herein in transferring the Shares hereunder
without registration under the Act pursuant to an exemption
there from as provided in Section 4(2) and Rule 506 of
Regulation D promulgated hereunder. Undersigned has
consulted with legal counsel in connection with this
transaction.
(9) is purchasing the Shares exclusively for its own account and
not for the account or benefit or on behalf of another
person.
(c) Respecting Investment Liquidity. SHGP hereby represents and
warrants that it:
(1) has been advised that the Shares have not been registered
under the Securities Act of 1933 in reliance on the
exemption provided by Section 4(2) and Rule 506 of
Regulation D of the Act relating to transactions not
involving a public offering;
(2) understands that the issuance of the Shares has not been
approved or disapproved by the Securities and Exchange
Commission or the securities regulatory authority of any
state;
(3) understands that the Shares, are, and will continue to be,
unregistered securities which may not be assigned, sold,
transferred, conveyed or hypothecated to any person unless
such are subsequently registered under applicable Federal
and state law, or unless an exemption from such registration
is available to both the undersigned and the proposed
transferee under such laws;
(4) understands that, neither Waterbury nor G/O has any
obligation or intention to register the Shares for sale
under the Act;
(5) understands that there is at present a limited public market
for the G/O Shares and no public market for the Waterbury
Shares and that the lack of a liquid market may make it
impossible to liquidate the Shares when desired or at then
current asking price, and there can be no assurances that an
active public market will ever develop; and
(6) understands and acknowledges that this investment may be
long term, must be held indefinitely, and is, by nature,
highly speculative.
SHGP further represents and warrants that all of the representations and
warranties set forth above are true as of the date of this Investment Letter.
2. Representations and Warranties of Charlie, Yankee, Waterbury and G/O.
Charlie, Yankee, Waterbury and G/O each represent to SHGP that:
a. Charlie, Yankee and Waterbury is each organized under the laws of the
Cayman Islands with full corporate authority to conduct its business as now
being conducted,
b. G/O is organized under the laws of the State of Colorado with full
corporate authority to conduct its business as now being conducted
`
c. The delivery of the Shares required to be delivered by the Charlie
and Yankee pursuant to this Agreement, will have been duly authorized by all
necessary corporate action Charlie and Yankee and will not violate any
provision of the corporate statutes or similar organic documents of Charlie or
Yankee.
c. Neither the execution nor delivery of this Investment Letter nor the
issuance of Shares, nor the performance, observance or compliance with the
terms and provisions of this Investment Letter by Charlie, Yankee, Waterbury
or G/O will violate any provision of law, any order of any court or other
governmental agency, or any indenture, agreement or other instrument to which
the any of them is a party or by which any of them is bound. This Investment
Letter, upon its execution and delivery by Charlie, Yankee, Waterbury and G/O
and assuming the due authorization, execution and delivery by the other
parties hereto, will be the valid, binding, and legally enforceable obligation
of the each of them.
d. The Shares, when issued to SHGP will be duly and validly authorized
and issued on a fully paid basis with no further right of assessment by the
either Waterbury or G/O. In order to further compliance with the requirements
of Regulation D, the both Waterbury and G/O shall cause the certificates
delivered by their respective transfer agent for delivery to SHGP to bear the
following legend or one substantially similar thereto, to be contained on the
certificate representing the Shares:
"The securities represented by this certificate have been acquired
pursuant to a transaction effected in reliance upon an exemption
under the Securities Act of 1933, as amended (the "Act"), and have
not been the subject to a Registration Statement under the Act or
any state securities act. The securities may not be sold or
otherwise transferred in the absence of such registration or
applicable exemption there from under the Act or any applicable
state securities act."
e. Each of Charlie, Yankee, Waterbury and G/O will take any and all
reasonable action necessary to assist the undersigned in obtaining timely
transfer and delivery of the Shares as contemplated hereby (including the
execution and delivery of such additional documents as may be required to
effect transfer of the Shares to the undersigned thereof as contemplated
hereby).
3. Express Covenants of SHGP.
(a) Respecting Resales and Transfers. SHGP expressly represents,
covenant and warrant that it:
(1) will not transfer or assign this Investment Letter or any of
its rights hereunder, and further agrees that the assignment
and transferability of the Shares shall be made only in
accordance with this Investment Letter and the Agreement;
and
(2) will not, without the prior written consent of Waterbury, as
to the Waterbury Shares and G/O as to the G/O Shares,
assign, sell, transfer, convey or hypothecate any interest
in the Shares to any person, unless the proposed transfer
may be lawfully completed without such consent under the
applicable provisions of the Securities and Exchange
Commission Rule 144 and/or Regulation D or pursuant to a
registration.
4. Restrictive Legend. Each of Waterbury and G/O intend to place the
following restrictive legend, or a legend similar thereto, on each certificate
representing the Shares:
"The securities represented by this certificate have been
acquired pursuant to a transaction effected in reliance upon an
exemption under the Securities Act of 1933, as amended (the
"Act"), and have not been the subject to a Registration Statement
under the Act or any state securities act. The securities may not
be sold or otherwise transferred in the absence of such
registration or applicable exemption there from under the Act or
any applicable state securities act."
5. Notices. All notices or other communications which are, or may be,
required or permitted to be given or made hereunder shall be in writing and
shall be delivered or mailed by registered or certified mail, return receipt
requested, postage prepaid, each of the parties at the address designated in
their counterpart signature page to this Investment Letter tendered herewith.
6. Governing Law. The offer and other transactions contemplated under this
Agreement shall be construed in accordance with the governed by the laws of
the State of Texas.
7. Entire Agreement. This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties.
IN WITNESS WHEREOF, the undersigned has executed this Investment as of
the 28th day of February, 2006.
Sand Hills General Partners, a Texas
General partnership, through its authorized general
partner, Sand Hills Partners, LLC, a Delaware limited
liability company.
By /s/George Jarkesy
George Jarkesy, Voting Member
Approval of Transfer
Waterbury Resources, Ltd. hereby approves the transfer contemplated
hereby this 1st day of March, 2006.
Waterbury Resources, Ltd.
..
By/s/Peter D. Anderson
Peter D. Anderson
Its Director
G/O hereby approves the transfer contemplated hereby this 20th day of March,
2006.
G/O International, Inc., a Colorado corporation
By/s/Brian Rodriguez
Brian Rodriguez, President
Exhibit 2
SHGP Promissory Note
PROMISSORY NOTE
U.S. $35,000
February 28, 2006
FOR VALUE RECEIVED, the undersigned, Sand Hills General Partners, a Texas
general partnership, whose address is 18205 Burkhardt, Tomball, Texas 77377,
by and through their general partner as Maker, promises to pay, without set
off, deduction or counterclaim of any kind or nature to Q-Marq Securities,
Ltd., a Cayman Islands company, whose address is PO Box 897GT, One Capital
Place, George Town, Grand Cayman, Cayman Islands, as Payee, or Holder, at the
address of Payee or Holder listed in this Note, the sum of thirty-five
thousand dollars $35,000. The principal sum is to be paid in lawful United
States currency in the following manner:
Payment shall be made on the fifth anniversary of the date of this Note, in
full, without interest thereon, unless prepaid, sooner by Maker as provided
herein.
This Note may be prepaid in full without penalty.
In the event that any payment is not made on or before the due date, the
entire remaining unpaid balance shall become immediately due and payable at
the option of Payee or Holder, without notice, time being of the essence, and
the sum shall bear interest from such time until paid at the highest rate
allowable under the laws of the State of Texas. Failure of Payee or Holder to
exercise this option shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default.
Maker and all endorsers now or in the future becoming parties to this Note
jointly and severally waive presentment and demand for payment, notice of
dishonor, protest, and notice of protest of this Note.
Maker agrees to pay all costs and expenses of collection incurred by Payee or
Holder of this Note, in or out of Court, including without limitation, Court
related costs and expenses and reasonable attorneys' fees and disbursements
(including such costs, fees, and disbursements incurred on appeal of any
litigation). No extension of time for payment of this Note and no alteration,
amendment, or waiver of any provision of this Note shall release, discharge,
modify, change, or effect the liability of Maker under this Note.
No delay by Payee or Holder in enforcing any covenant or right under this Note
shall be deemed a waiver of any covenant or right, and no waiver by Payee or
Holder of any particular provision of this Note shall be deemed a waiver of
any other provision or a continuing waiver of any particular provision, and
except as so expressly waived in writing, all provisions shall continue in
full force and effect.
Maker agrees and acknowledges that Sand Hills Partners, L.L.C., a Delaware
Limited Liability Company is an authorized general partner and that it has
full power and authority to bind partnership to the terms of this Promissory
Note. Furthermore, Maker acknowledges that the execution of the Promissory
Note is pursuant to the legitimate business purposes of the general
partnership.
This Note shall be construed and enforced according to the laws of the State
of Texas.
Whenever used in this Note, the terms "Holder", "Maker", and "Payee" shall be
construed in the singular or plurals as the context may require.
Sand Hills General Partners, a Texas
General partnership through its general
Partner, Sand Hills Partners, L.L.C., a Delaware
Limited Liability Company.
/s/George Jarkesy
George Jarkesy, Voting Member
Sand Hills Partners, LLC
Exhibit 3
Election to Convert and Release, Waiver and Novation
ELECTION TO CONVERT
AND
RELEASE WAIVER AND NOVATION
1. Conversion
The undersigned, Q-Marq Securities, Ltd., a Cayman Islands company, pursuant
to that certain Settlement Agreement among G/O International, Inc., a Colorado
corporation, Waterbury Resources, Ltd., a Cayman Islands company, Q-Marq
Securities, Ltd., a Cayman Islands company, Yankee Investments, Ltd., a Cayman
Islands company, Charlie Investments, Ltd., a Cayman Islands company and Sand
Hills General Partners, a Texas general partnership (the "Agreement"), hereby
tenders this written Election to Covert that certain Debt of Waterbury
Resources, Ltd., in the principal amount of $643,598 representing funds
advanced to Waterbury, ("Waterbury Debt") in exchange for: (1) the Promissory
Note of SHGP in the principal amount of $35,000 in the form of Exhibit 1
Attached hereto (the "SHGP Note") and the issuance of a total of 1,500,000
newly issued ordinary shares of Waterbury (the "Shares"). In connection
therewith, undersigned hereby executes and delivers the Investment Letter
attached hereto and by this reference incorporated herein (the "Investment
Letter").
2. Release Waiver and Novation
In consideration for the delivery of the SHGP Note and the issuance of the
Shares pursuant to the conversion, and such further consideration as set forth
in the Agreement, the undersigned, Q-Marq Securities, Ltd., hereby waives the
Waterbury Debt in the principal amount of USD$643,598 and forever releases
Waterbury Resources, Ltd. and its parent G/O International, Inc., a Colorado
corporation, from any further obligation to repay such amount. Q-Marq, for
such consideration also releases and waives any obligation of SHGP in
connection with its Guaranty of the Waterbury Debt.
3. Definition of Terms
Capitalized terms used herein, unless otherwise indicated, shall have the
meanings ascribed in the Settlement Agreement delivered therewith.
Executed this 28th day of February 2006.
Q-Marq Securities, Ltd.
By /s/Peter Anderson
Director
Affirmed and Agreed to this 28th day of February 2006 by Waterbury Resources,
Ltd.
By /s/Peter Anderson
Director
Affirmed and Agreed to this 28th day of February 2006 by Sand Hills General
Partners, through its general partner, Sand Hills Partners, LLC.
By/s/George Jarkesy
Managing Member
EXHIBIT 1
Sand Hills General Partners
Note
PROMISSORY NOTE
U.S. $35,000
February 28, 2006
FOR VALUE RECEIVED, the undersigned, Sand Hills General Partners, a Texas
general partnership, whose address is 18205 Burkhardt, Tomball, Texas 77377,
by and through their general partner as Maker, promises to pay, without set
off, deduction or counterclaim of any kind or nature to Q-Marq Securities,
Ltd., a Cayman Islands company, whose address is PO Box 897GT, One Capital
Place, George Town, Grand Cayman, Cayman Islands, as Payee, or Holder, at the
address of Payee or Holder listed in this Note, the sum of thirty-five
thousand dollars $35,000. The principal sum is to be paid in lawful United
States currency in the following manner:
Payment shall be made on the fifth anniversary of the date of this Note, in
full, without interest thereon, unless prepaid, sooner by Maker as provided
herein.
This Note may be prepaid in full without penalty.
In the event that any payment is not made on or before the due date, the
entire remaining unpaid balance shall become immediately due and payable at
the option of Payee or Holder, without notice, time being of the essence, and
the sum shall bear interest from such time until paid at the highest rate
allowable under the laws of the State of Texas. Failure of Payee or Holder to
exercise this option shall not constitute a waiver of the right to exercise
the same in the event of any subsequent default.
Maker and all endorsers now or in the future becoming parties to this Note
jointly and severally waive presentment and demand for payment, notice of
dishonor, protest, and notice of protest of this Note.
Maker agrees to pay all costs and expenses of collection incurred by Payee or
Holder of this Note, in or out of Court, including without limitation, Court
related costs and expenses and reasonable attorneys' fees and disbursements
(including such costs, fees, and disbursements incurred on appeal of any
litigation). No extension of time for payment of this Note and no alteration,
amendment, or waiver of any provision of this Note shall release, discharge,
modify, change, or effect the liability of Maker under this Note.
No delay by Payee or Holder in enforcing any covenant or right under this Note
shall be deemed a waiver of any covenant or right, and no waiver by Payee or
Holder of any particular provision of this Note shall be deemed a waiver of
any other provision or a continuing waiver of any particular provision, and
except as so expressly waived in writing, all provisions shall continue in
full force and effect.
Maker agrees and acknowledges that Sand Hills Partners, L.L.C., a Delaware
Limited Liability Company is an authorized general partner and that it has
full power and authority to bind partnership to the terms of this Promissory
Note. Furthermore, Maker acknowledges that the execution of the Promissory
Note is pursuant to the legitimate business purposes of the general
partnership.
This Note shall be construed and enforced according to the laws of the State
of Texas.
Whenever used in this Note, the terms "Holder", "Maker", and "Payee" shall be
construed in the singular or plurals as the context may require.
Sand Hills General Partners, a Texas
General partnership through its general
Partner, Sand Hills Partners, L.L.C., a Delaware
Limited Liability Company.
By/s/ George Jarkesy
George Jarkesy, Managing Member
Sand Hills Partners, LLC
Waterbury Resources, Ltd.
INVESTMENT LETTER
Waterbury Resources, Ltd.
Grand Cayman
Cayman Islands
Re: Conversion of Waterbury Debt into Ordinary Shares of Waterbury Resources,
Ltd., a Cayman Islands corporation (the "Company")
Gentlemen:
Pursuant to that certain Settlement Agreement among G/O International,
Inc., a Colorado corporation, Waterbury Resources, Ltd., a Cayman Islands
company, Q-Marq Securities, Ltd., a Cayman Islands company, Yankee
Investments, Ltd., a Cayman Islands company, Charlie Investments, Ltd., a
Cayman Islands company and Sand Hills General Partners, a Texas general
partnership (the "Agreement"), Q-Marq Securities, Ltd. ("Q-Marq") has agreed
to exchange the outstanding debt of Waterbury Resources, Ltd. in the principal
amount of $643,598 for (1) the promissory note of SHGP and (2) the issuance of
a total of 1,500,000 Ordinary Shares of the Company (the "Shares"). In
connection therewith:
1. Representations and Warranties of Q-Marq.
(a) Respecting Offering Materials. Q-Marq hereby represents and
warrants that, subject to the further terms of the Agreement it :
(1) has been furnished with those materials and documents as
deemed necessary in order to make the decision to acquire
the Shares ("Disclosure Materials").
(2) has been given the opportunity to ask questions of and
receive answers from the officers and directors of the
Company and G/O International, Inc. with respect to the
issuance of the Shares pursuant to the Agreement, the
Shares, the business of the Company and G/O International,
Inc. and any other matters which it considered to be
material to its investment decision and all such questions
have been answered to its full satisfaction;
(3) has not relied on any information or representation other
than those set forth in the Company's and G/O International,
Inc. Disclosure Materials and such other written information
and representations as have been provided by the officers
and directors of the Company and G/O International, Inc.
pursuant to a specific question or request for additional
information;
(4) has not been presented with or solicited by any leaflet,
public promotional meeting, circular, newspaper or magazine
article, radio or television advertisement, or any other
form of general advertising.
(b) Respecting Investor Suitability. Q-Marq hereby represents and
warrants that it:
(1) is an "Accredited Investors" as that term is defined in
Securities and Exchange Commission Regulation D, promulgated
under the Securities Act of 1933, as amended (the "Act");
(2) is capable of bearing the high degree of economic risk
associated with this investment including, but not limited
to, the possibility of complete loss of all its investment
capital;
(3) has sufficient financial and other resources to provide for
anticipated financial needs, without taking into account any
income which may be generated as a result of its investment
in the Shares, and has no need for liquidity with respect to
the investment in the Shares;
(4) has total investments in illiquid investments that are
reasonable in relation to its net worth and can afford the
total loss of the investment in the Shares;
(5) has had substantial experience in business of investments in
one or more of the following: (i) investment experience with
securities, such as stock and bonds; (ii) ownership of
interests in new ventures and start-up companies; and (iii)
experience in business and financial dealings;
(6) can protect its own interests in an investment of this
nature and does not have a "Purchaser Representative," as
that term is defined in Regulation D of the Act and does not
need such Representative;
(7) understands and agrees that the Shares acquired pursuant to
the Agreement have not been and will not be registered under
the Act, that the Shares are being offered and sold in
reliance upon the exemption from registration afforded by
Section 4(2) and Rule 506 of Regulation D as promulgated
under the Act and that the Shares have not been registered
with any state securities commission or other governmental
authority. Q-Marq hereby acknowledge that pursuant to the
requirements of Section 4(2) and Rule 506 or Regulation D,
the Shares acquired from the Company may not be transferred,
sold or otherwise exchanged unless registered or in
transactions that are exempt there from;
(8) Q-Marq, acknowledges that the Company and G/O International,
Inc. are relying upon the representations made by it herein
in transferring the Shares hereunder without registration
under the Act pursuant to an exemption therefrom as provided
in Section 4(2) and Rule 506 of Regulation D promulgated
thereunder. Q-Marq has consulted with legal counsel in
connection with this transaction; and
(9) is purchasing the Shares exclusively for its own account and
not for the account or benefit or on behalf of another
person.
(c) Respecting Investment Liquidity. Q-Marq hereby represents and
warrants that it:
(1) has been advised that the Shares have not been registered
under the Securities Act of 1933 in reliance on the
exemption provided by Section 4(2) and Rule 506 of
Regulation D of the Act relating to transactions not
involving a public offering;
(2) understands that the issuance of the Shares has not been
approved or disapproved by the Securities and Exchange
Commission or the securities regulatory authority of any
state;
(3) understands that the Shares, are, and will continue to be,
unregistered securities which may not be assigned, sold,
transferred, conveyed or hypothecated to any person unless
such are subsequently registered under applicable Federal
and state law, or unless an exemption from such registration
is available to both the undersigned and the proposed
transferee under such laws;
(4) understands that, the Company has no obligation or intention
to register the Shares for sale under the Act;
(5) understands that there is at present a limited public market
for the Shares and that the lack of a liquid market may make
it impossible to liquidate the Shares when desired or at
then current asking price, and there can be no assurances
that an active public market will ever develop; and
(6) understands and acknowledges that this investment may be
long term, must be held indefinitely, and is, by nature,
highly speculative.
Q-Marq further represents and warrants that all of the representations and
warranties set forth above are true as of the date of this Investment Letter.
2. Representations and Warranties of the Company
a. The Company is organized under the laws of the Cayman Islands with
full corporate authority to conduct its business as now being conducted,
b. The issuance of the Shares required to be delivered by the Company
pursuant to this Agreement, will have been duly authorized by all necessary
corporate action by the Company and will not violate any provision of the
corporate statutes or similar organic documents of the Company.
c. Neither the execution nor delivery of this Investment Letter nor the
issuance of Shares, nor the performance, observance or compliance with the
terms and provisions of this Investment Letter by the Company will violate any
provision of law, any order of any court or other governmental agency, or any
indenture, agreement or other instrument to which the Company is a party or by
which the Company is bound. This Investment Letter, upon its execution and
delivery by the Company and assuming the due authorization, execution and
delivery by the other parties hereto, will be the valid, binding, and legally
enforceable obligation of the Company.
d. The Shares, when issued to undersigned will be duly and validly
authorized and issued on a fully paid basis with no further right of
assessment by the Company. In order to further compliance with the
requirements of Regulation D, the Company shall cause the certificates
delivered by the Company's transfer agent for delivery to the Purchaser to
bear the following legend or one substantially similar thereto, to be
contained on the certificate representing the Shares:
"The securities represented by this certificate have been acquired
pursuant to a transaction effected in reliance upon an exemption
under the Securities Act of 1933, as amended (the "Act"), and have
not been the subject to a Registration Statement under the Act or
any state securities act. The securities may not be sold or
otherwise transferred in the absence of such registration or
applicable exemption therefrom under the Act or any applicable
state securities act."
e. The Company will take any and all reasonable action necessary to
assist the undersigned in obtaining timely transfer and delivery of the Shares
as contemplated hereby (including the execution and delivery of such
additional documents as may be required to effect transfer of the Shares to
the undersigned thereof as contemplated hereby).
3. Express Covenants of Q-Marq.
(a) Respecting Resales and Transfers. Q-Marq expressly represents,
covenants and warrants that, except as provided in the Settlement
Agreement it:
(1) will not transfer or assign this Investment Letter or any of
its rights hereunder, and further agrees that the assignment
and transferability of the Shares shall be made only in
accordance with this Investment Letter and the Agreement;
and
(2) will not, without the prior written consent of the Company,
assign, sell, transfer, convey or hypothecate any interest
in the Shares to any person, unless the proposed transfer
may be lawfully completed without such consent under the
applicable provisions of the Securities and Exchange
Commission Rule 144 and/or Regulation D or pursuant to a
registration.
4. Restrictive Legend. The Company intends to place the following
restrictive legend, or a legend similar thereto, on each certificate
representing the Shares:
"The securities represented by this certificate have been
acquired pursuant to a transaction effected in reliance upon an
exemption under the Securities Act of 1933, as amended (the
"Act"), and have not been the subject to a Registration Statement
under the Act or any state securities act. The securities may not
be sold or otherwise transferred in the absence of such
registration or applicable exemption therefrom under the Act or
any applicable state securities act."
5. Notices. All notices or other communications which are, or may be,
required or permitted to be given or made hereunder shall be in writing and
shall be delivered or mailed by registered or certified mail, return receipt
requested, postage prepaid, to the Company at the address first above written
and to the undersigned at the address designated in undersigned's counterpart
signature page to this Investment Letter tendered herewith.
6. Governing Law. The offer and other transactions contemplated under this
Agreement shall be construed in accordance with the governed by the laws of
the Cayman Islands, British West Indies.
7. Entire Agreement. This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and may be
amended only by a writing executed by all parties.
IN WITNESS WHEREOF, the undersigned has executed this Investment Letter
in the City of Georgetown, Country of Cayman Islands, as of the 1st day of
March, 2006.
No. Shares to be issued: 1,500,000 Ordinary Shares
Q-Marq. Securities, Ltd., a Cayman Islands company,
Through its duly authorized Director
By/s/Peter Anderson
Director
SUBSCRIPTION ACCEPTANCE
The subscription for Shares set forth in this Investment Letter is
accepted by the Company on this 1st day of March, 2006.
Waterbury Resources, Ltd.
..
By/s/ Peter Anderson
Its Director