EXHIBITS 10.1
THIS REDEMPTION AND SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE
THIS REDEMPTION AND SETTLEMENT AGREEMENT AND MUTUAL GENERAL RELEASE (Agreement")
is made and entered into as of February 17, 2004, by: among AJW Partners, LLC.
New Millennium Capital Partners ll. LLC, AJW Offshore, Ltd- (flkla/ AJW /New
Millennimn Offshore. Ltd), and AJW Qualified Partners, LLC (f/k/a Pegasus
Capital Partners, LLC) (collectively, the "Investors") on behalf of themselves
and their officers, directors. employees, attorneys and agents, and Torbay
Holdings, Inc. ("Torbay") on behalf of itself and its officers, directors,
employees. attorneys, heirs, executors and agents, in accordance with the terms
and conditions set forth below.
RECITALS:
WHEREAS. on May 15, 2002, the Investors entered into a Securities Purchase
agreement and several related agreements with Torbay, pursuant to which the
investors purchased from Torbay $500,000 of 12% secured convertible debentures
(the "2002 Debentures") and 1,500.000 warrants to buy shares of Torbay's common
stock and on April 16. 2003, the Investors entered into a Securities Purchase
agreement and several related agreements with Torbay, pursuant to which the
Investors purchased from Torbay $250,000 of 12% secured convertible debentures
(the "2003 Debentures") and 500,000 warrants to buy shares of Torbay's common
stock (collectively, the "Securities Purchase Agreements" or "Debentures").
Since that time, the Investors have converted a portion of their Debentures into
shares of Torbay common stock, leaving the following principal amounts
outstanding: $338,850 principal amount of thc 2002 Debentures and approximately
$207,000 principal amount of the 2003 Debentures.
WHEREAS, Torbay has defaulted on its obligations contained in the agreements,
including, without limitation, its obligation to deliver common stock upon its
receipt of conversion notices from the Investors and the Investors have not
exercised their rights under the default provisions of the Debentures.
WHEREAS, on December 18, 2003, Torbay filed a summons against the Investors, The
NIR Group, LLC, First Street Manager III LLC, Pegasus Manager, LLC and AJW
Manager, LLC entitled Torbay v. The NIR Group et al,. No 03/018792 in the
Supreme Court of the State of New York, County of Nassau (the "Nassau County
Summons").
WHEREAS, the parties have agreed to enter into this Agreement to settle.
compromise, release. and dismiss, fully and completely and forever, each and
every claim that the Investors may have against Torbay and that Torbay may have
against the Investors.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, to avoid further risks and
uncertainty of litigation, and for other good and sufficient consideration, the
partiers agree as follows:
1. Redemption of Debentures. The parties have agreed that the 2002 Debentures
and the 2003 Debentures will be redeemed under the following terms and
conditions and that once these terms and conditions have been satisfied, the May
15, 2002 and April 16, 2003 Securities Purchase Agreements will be discharged in
full:
(a) Shares ofTorbay Common Stock. The Investors do not currently hold any shares
of Torbay's common stock. Within three (3) days of the execution of this
Agreement, Torbay will issue and deliver to the Investors 2,000,000 shares of
unrestricted, freely Tradeable: Torbay common stock upon conversion of and in
accordance with the terms and conditions of the Debentures. This Agreement will
not become effective until the 2,000,000 shares are delivered to the Investors.
The shares are to be allocated among the Investors as follows: AJW Partners..
LLC will receive 700,000 shares, New Millennium Capital Partners ll, LLC will
receive 140,000 shares, AJW Offshore Ltd. will receive 700,000 shares, and AJW
Qualified Partners win receive 460,000 shares. Subsequent to their sale of the
2,000,000 unrestricted shares of Torbay Common stock, the Investors will notify
Torbay that they have sold their shares of Torbay common stock. Such notice can
be delivered by the Investors to Torbay by facsimile, hand, regular mail, or
federal express. Within five (5) business days of receiving such notice, Torbay
will deliver to the Investors 4,000,000 Restricted shares of Torbay common
stock. The 4,000,000 shares are to be allocated among the Investors as follows:
AJW Partners, LLC will receive 1,400,000 shares, New Millennium Capital Partners
II, LLC will receive 280,000 shares, AJW Offshore Ltd. will receive 1,400,000
shares, and AJW Qualified Partners will receive 920,000 shares.
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(b) Redemption Payment. Torbay will pay the Investors $200,000 in cash, in
monthly installments of $16,666.66 commencing eight (8) weeks from the execution
of this Agreement. The montly installments will be paid on the first of each
month and the monthly installments will be allocated as follows: AJW Partners,
LLC will receive $5,833.33, New Millennium Capital Partners II, LLC will receive
$1,166.66, AJW Offshore Ltd. will receive $5,833.33, and AJW Qualified Partners
will receive $3,833.34. Although the monthly installments are due and owing on
the first of each month, Torbay will have a grace period of seven (7) business
days in which to pay the monthly installments.
2. The Nassau County Summons. Torbay will withdraw with prejudice the Nassau
County Summons. Within ten (10) business days from the execution of this
Agreement, Torbay will provide the Investors with a fully filed and docketed
Notice of Withdrawal With Prejudice.
3. The Press Release. Within three (3) business days of the execution of this
Agreement, Torbay will release the following press release on Business Wire:
Torbay Holdings Inc. Enters Into Redemption and Settlement Agreement with
Debenture Holders, Withdraws Summons against Debenture Holders
New York - February -' 2004 - Torbay Holdings Inc. (OTC BB: TRBY.OB) today
announced that it has entered into a Redemption and Settlement Agreement and
Mutual General Release with certain holders of its debentures.
As part of the settlement agreement, Torbay agreed to withdraw the summons that
it filed in Nassau County, New York in December 2003. No complaint was ever
filed by Torbay against the debenture holders. Terms of the redemption and
settlement agreement were not disclosed.
4. Confession of Judgment. At the time of the execution of this Agreement.
Torbay will deliver to the Investors a fully executed Affidavit of Confession of
Judgment ("Judgment"), in the form set forth hereto as Exhibit A in favor of the
Investors, in the amount of $350,000, plus accrued interest, late fees,
liquidated damages, and attorneys' fees and costs. The Judgment will be held in
escrow by Brune & Richard LLP pending Torbay's performance of the obligations
set forth in this Agreement. If Torbay is in default of this Agreement, as
defined in paragraph 5, the Investors shall file the Judgment in the New York
State Supreme Court.
5. Default. Upon the occurrence of any of the following events of default by
Torbay) the Investors may file and enforce tile Judgment:
(a) Torbay fails to comply with the obligations set forth in this Agreement;
(b) Any statement by or on behalf of Torbay, its then current directors.
officers, employees, attorneys or agents that contradicts the text of the Press
Release set forth in Paragraph 3 hereof, that repudiates this Agreement, or that
accuses the Investors of wrongdoing in connection with the Transactions
contemplated by the Securities Purchase Agreements;
(c) Torbay becomes insolvent, ceases operations. Dissolves, terminates its
business existence, makes an assignment for the benefit of creditors, suffers
the appointment of a receiver, trustee, liquidator or custodian of any or all of
its property; or
(d) Torbay is the subject of a bankruptcy or insolvency proceeding.
6. Mutual General Release.
(a) Except for the performance by the parties of the provisions of this
Agreement, each party hereto, for itself and on behalf of all partners,
officers, directors, employees, affiliates (both persons and entities),
representatives, agents, attorneys, servants, trustees, beneficiaries,
predecessors in interest, successors in interest, assigns, nominees and insurers
(collectively, the "Releasing Parties"), shall be deemed to have released and
forever discharged each of the other parties hereto, and all partners, officers,
directors, employees. affiliates (both persons and entities), representatives,
agents, attorneys, servants. trustees, beneficiaries, predecessors in interest.
successors in interest, assigns, nominees and insurers of each such party, of
and from any and all claims. demands, actions and causes of action, whether
known or unknown, fixed or contingent, that any of the Releasing Parties may
have had, may now have or may hereafter acquire with respect to any matters
whatsoever arising under or in any way related to (i) any claims, counterclaims,
third-party claims, and causes of action that the Releasing Parties have or may
have concerning the Securities Purchase Agreements and related agreements, (ii)
any act which may constitute a defense to the performance of this Agreement, the
Securities Purchase Agreements and the Debentures~ and (iii) any claims any
party may have against any other with respect to or in connection with any
alleged violation of any state common law, statute. or state or Federal
securities laws, prior to the date of this Agreement, including the Securities
Act of 1933, as amended and the Securities Exchange Act of 1934, as amended.
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(b) In addition. Torbay for itself and on behalf of all partners. officers.
directors. employees. affiliates (both persons and entities). representatives,
agents, attorneys. servants, trustees, beneficiaries. predecessors in interest,
successors in interest, assigns, nominees and insurers specifically releases and
forever discharges The NIR Group, LLC. First Street Manager II LlC, Pegasus
Manager. LLC, and AJW Manager7 LLC of and from any and all claims, demands,
actions and causes of action, whether known or unknown. fixed or contingent,
that any of the Releasing Parties may have had, may now have or may hereafter
acquire with respect to any matters whatsoever arising under or in any way
related to (i) any claims, counterclaims. third-party claims. and causes of
action that the Re]easing Parties have or may have concerning the Securities
Purchase Agreements and related agreements, (ii) any act which may constitute a
defense to the performance of this Agreement, the Securities Purchase Agreements
and the Debentures. and (iii) any claims any party may have against any other
with respect to or in connection with any alleged violation of any state common
law, statute. or state Or Federal securities laws, prior to the date of this
Agreement, including the Securities Act of 1933. as amended and the Securities
Exchange Act of 1934, as amended.
(c) Notwithstanding anything to the contrary contained herein, the foregoing
shall not release Torbay from any claims, demands, expenses or losses by the
Investors (or causes of action or remedies related thereto) arising from any
indemnity by Torbay or any affiliate for the benefit of the Investors as
required by the Debentures, the Securities Purchase Agreements and related
agreements.
General Provisions.
(a) Entire Agreement. This Agreement and the documents referred to herein
constitute the entire understanding, arrangement and agreement among the parties
hereto or any of them with respect to the subject matter hereof, and supersedes
all prior agreements. arrangements, understandings, negotiations and
discussions, written or oral, between or among the parties hereto.
(b) Successors and Assigns. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and
assigns.
(c) Modifications in Writing. No provisions of this Agreement may be amended,
supplemented or waived except by a writing signed by the party or parties to be
bound thereby.
(d) Execution in Counterparts. This Agreement may be executed in two more
counterparts, all of which taken together shall be considered one and the same
agreement and ea(:h of which shall be deemed an original.
(e) Severability. In case any provision of this Agreement shall be held illegal,
invalid or unenforceable. the legality, validity and enforceability of the
remaining provisions hereof shrill not m any way be affected or impaired
thereby.
(1) Construction. The parties acknowledge that each party and its counsel have
reviewed and revised this Agreement and that no rule of construction to the
effect that any ambiguities are to be resolved against the drafting party shall
be employed in the interpretation of this Agreement or any amendments or
exhibits to it or any document executed and delivered, by either party in
connection with this Agreement. All captions in this Agreement are for reference
only and shall not be used in the interpretation of this Agreement or any
related document. All Exhibits attached hereto are hereby incorporated herein by
reference.
(g) Attorneys' Fees And Costs. In the event any dispute between the parties to
this Agreement should result in litigation or other proceeding, the prevailing
party shall be reimbursed by the non-prevailing party for all reasonable
attorneys' fess and costs, incurred by the prevailing party in connection with
such litigation or other proceeding and any appeal thereof. Such costs, expenses
and fees shall be included in and made a part of the judgment recovered by the
prevailing party, if any.
(h) Conflicting Terms. To the extent any of the terms herein conflict with the
terms of the Debenture Documents, the terms herein shall prevail.
(i) Informed Consent. The parties admit, acknowledge and declare that each has
given mature and careful thought and consideration to the making of this
Agreement and to all of the obligations hereby undertaken and the rights hereby
extinguished or created; that this Agreement is entered into voluntarily, after
advice of counsel, free of undue influence, coercion. duress, menace or fraud of
any kind; that this Agreement and each and every paragraph and every part hereof
has been carefully read and explained; and, that each party fully and completely
understands aDd is cognizant of all of the terms and conditions in this
Agreement.
(j) Governing Law. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of New York for contracts to be wholly
performed in such state and without giving effect to the principles thereof
regarding the conflict of laws. Any litigation based thereon, or arising out of,
under, or in connection with. this agreement or any course of conduct, course of
dealing, statements (whether oral or written) or actions of the parties hereto
shall be brought and maintained exclusively in the state or Federal courts
within the State of New York, sitting in New York City. The parties hereby
expressly and irrevocably submit to the jurisdiction of the state and Federal
Courts within the State of New York for the purpose of any such litigation as
set forth above and irrevocably agrees to be bound by any final judgment
rendered thereby in connection with such litigation. The parties further
irrevocably consent to the service of process by registered mail postage
prepaid, or by personal service within or without the State of New York. The
parties hereby expressly and irrevocably waive, to the fullest extent permitted
by law, any objection which they may have or hereafter may have to venue of any
such litigation brought in any such court referred to above and any claim that
any such litigation has been brought in any inconvenient forum. To the extent
that the parties have or hereafter may acquire any immunity from jurisdiction of
any court or from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution or otherwise) with
respect to themselves or their property, the parties hereby irrevocably waive
such immunity in respect of its obligations under this Agreement and the related
agreements entered into in connection herewith.
(k) Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY
KNOWINGLY~ VOLUNTARILY AND INTENTJONALLY WAIVES ANY RIGHT TO TRIAL BY JURY ON
ANY CLAIM DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER. THIS AGREEMENT
OR. (b) IN ANY WAY CONNECTED WITH OR. RELATED OR INCIDENTAL TO THE DEALINGS
AMONG THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
THE PARTIES AGREE AND CONSENT THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DOCIDED BY COURT TRJAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OR
THEIR RIGHT TO TRIAL BY JURY. THE PARTIES ACKNOWLEDGE THAT THEY HAVE HAD THE
OPPORTUNITY TO CONSULT WITH COUNSEL REGARDING THIS SECTION, THAT THEY FULLY
UNDERSTAND ITS TERMS, CONTENT AND EFFE'CT, AND THAT THEY VOLUNTARILY AND
KNOWINGLY AGREE TO THE TERMS OF THIS SECTION. THIS WAIVER CONSTITUTES A MATERIAL
INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.
(l) Further Assurances. The parties hereto hereby agree to execute such further
documents, and take such further actions as may reasonably be necessary to carry
out the intent and provisions of this Agreement, or any agreement or document
relating hereto or entered into in connection herewith.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first within above.
PLEASE READ CAREFULLY. THIS REDEMPTION AND SETTLEMENT AGREEMENT AND MUTUAL
GENERAL RELEASE INCLUDES A RELEASE OF KNOWN AND UNKNOWN CLAIMS.
TORBAY HOLDINGS INC.
By: /s/ W. T. Large
- --------------------------------------------
Its: President and CEO
AJW PARTNERS, LLC.
BY: SMG GROUP, LLC
BY: /s/ Corey Ribotsky
- --------------------------------------------
Its: Manager
NEW MILLENNIUM CAPITAL PARTNERS II, LLC
BY: FIRST STREET MANAGER II LLC
BY: /s/ Corey Ribotsky
- --------------------------------------------
Its: Manager
AJW OFFSHORE, LTD
BY: FIRST STREET MANAGER II LLC
BY: /s/ Corey Ribotsky
- --------------------------------------------
Its: Manager
AJW QUALIFIED PARTNERS LLC
BY: AJW MANAGER, LLC
BY: /s/ Corey Ribotsky
- --------------------------------------------
Its: Manager
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SUPREME COURT FOR THE STATE OF NEW YORK COUNTY OF NASSAU
Index No.
- ---------------------------------------------------
AJW PARTNERS, LLC, NEW MILLENIUM CAPITAL PARTNERS |
II, LLC, AJW OFFSHORE, LTD, and AJW QUALIFIED |
PARTNERS, LLC |
|
PLAINTIFF(S) | AFFIDAVIT OF
AGAINST | CONFESSION OF
TORBAY HOLDINGS INC., | JUDGMENT
|
DEFENDANT(S) |
- ---------------------------------------------------
STATE OF NEW YORK, COUNTY OF ss.:
WILLIAM THOMAS LARGE
BEING DULY SWORN, DEPOSES AND SAYS; THAT DEPONENT IS
the President and CEO of Torbay Holdings, Inc., the
DEFENDANT HEREIN.
THE DEFENDANT HEREBY CONFESSES JUDGMENT HEREIN AND AUTHORIZES ENTRY
THEREOF AGAINST DEFENDANT IN THE SUM OF
$350,000 plus accrued interest, late fees, liquidated damages and attorneys fees
and costs, as set forth in the May 15, 2002 and April 16, 2003 Securities
Purchase Agreements and related agreement:
DEFENDANT RESIDES AT DEFENDANT AUTHORIZED ENTRY
IN THE COUNTY OF STATE OF
Nassau New York
OF JUDGMENT IN
Supreme Court for the State of New York, County of Nassau
THIS CONFESSION OF JUDGMENT IS FOR A DEBT DUE TO THE PLAINTIFF
ARISING FROM THE FOLLOWING FACTS: On May 15, 2003 and April 16, 2003, Plaintiffs
entered into Securities Purchase agreements and several related agreements with
Torbay Holdings Inc. ("Torbay"), pursuant to which the Plaintiffs purchased from
Torbay $750,000 of 12% secured convertible debentures and 2,000,000 warrants to
buy shares of Torbay's common stock (collectively, the "Agreements").
Subsequently, the Investors converted a portion of their Debentures into shares
of Torbay common stock, leaving $545,850 principal amount outstanding. On
November 12, 2003, in accordance with the Agreements between the parties, the
Plaintiffs tendered Conversion Notices to Torbay. The conversion prices were
calculated in accordance with the formula set forth in the Agreements. Pursuant
to the terms of the Agreements, Torbay was obligated to deliver to the
Plaintiffs the shares of its common stock set forth in the Conversion Notices no
later than November 14, 2003. Thereafter, Torbay informed the Plaintiffs that it
would not honor the November 12, 2003 Conversion Notices. On November 18, 2003,
each of the Plaintiffs sent to Torbay a Notice of Default. Under the terms of
the Agreements, a failure by Torbay to deliver common stock issuable by
conversion within the deadline constitutes a default of the Agreements. The
Agreements provide that Torbay must pay a late fee of $2000 per day for failing
to deliver common stock to be issued and delivered upon conversion. The
Agreements also provide for the payment of attorneys' fees and costs to the
prevailing party in any litigation brought to enforce the Agreements. The
Agreements also provide that in the event of default interest is to accrue on
the outstanding principal at the annual rate of 15%.
THIS AFFIDAVIT, IF MADE IN CONNECTION WITH AN AGREEMENT FOR THE PURCHASE FOR
$1,500.00 OR LESS OF ANY COMMODITIES FOR ANY USE OTHER THAN A COMMERCIAL OR
BUSINESS USE UPON ANY PLAN OF DEFERRED PAYMENTS WHEREBY THE PRICE OR COST IS
PAYABLE IN TWO OR MORE INSTALLMENTS, WAS EXECUTED SUBSEQUENT TO THE TIME A
DEFAULT OCCURRED IN THE PAYMENT OF AN INSTALLMENT THEREUNDER.
SWORN TO BEFORE ME THIS
DAY OF /s/ William Thomas Large
--------------------------------------------
The name signed must be printed beneath
+ Strike out matter in parenthesis if defendant is individual.
* Insert words "to become" if debt is not yet due.
** If in a city court, Insert name of court, UCCA ss. 1403.