Exhibit 4.12
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THIS
WARRANT (COLLECTIVELY, THE "SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT.
WARRANT TO PURCHASE
COMMON STOCK, PAR VALUE $.0001 PER SHARE
OF
TORBAY HOLDINGS, INC.
This certifies that, for value received, Nutmeg Group, LLC, or registered
assigns ("Warrantholder"), is entitled to purchase from TORBAY HOLDINGS, INC.
(the "Company"), subject to the provisions of this Warrant, at any time and from
time to time until 5:00 p.m. Eastern Standard Time on December 31, 2009,
2,000,000 shares of the Company's Common Stock, par value $.0001 per share
("Warrant Shares"). The purchase price payable upon the exercise of this Warrant
shall be $.10 per Warrant Share. The Warrant Price and the number of Warrant
Shares which the Warrantholder is entitled to purchase is subject to adjustment
upon the occurrence of the contingencies set forth in Section 3 of this Warrant,
and as adjusted from time to time, such purchase price is hereinafter referred
to as the "Warrant Price."
This Warrant is subject to the following terms and conditions:
I. Exercise of Warrant.
(a) This Warrant may be exercised in whole or in part but not for a
fractional share. Upon delivery of this Warrant at the offices of the Company or
at such other address as the Company may designate by notice in writing to the
registered holder hereof with the Subscription Form annexed hereto duly
executed, accompanied by payment of the Warrant Price for the number of Warrant
Shares purchased (in cash, by certified, cashier's or other check acceptable to
the Company, by Common Stock of the Company having a Market Value (as
hereinafter defined) equal to the aggregate Warrant Price for the Warrant Shares
to be purchased, or any combination of the foregoing), the registered holder of
this Warrant shall be entitled to receive a certificate or certificates for the
Warrant Shares so purchased. Such certificate or certificates shall be promptly
delivered to the Warrantholder. Upon any partial exercise of this Warrant, the
Company shall execute and deliver a new Warrant of like tenor for the balance of
the Warrant Shares purchasable hereunder.
(b) In lieu of exercising this Warrant pursuant to Section 1(a), the
holder may elect to receive shares of Common Stock equal to the value of this
Warrant determined in the manner described below (or any portion thereof
remaining unexercised) upon delivery of this Warrant at the offices of the
Company or at such other address as the Company may designate by notice in
writing to the registered holder hereof with the Notice of Cashless Exercise
Form annexed hereto duly executed. In such event the Company shall issue to the
holder a number of shares of the Company's Common Stock computed using the
following formula:
X = Y (A-B)
-------
A
Where X = the number of shares of Common Stock to be issued to the holder.
Y = the number of shares of Common Stock purchasable under this Warrant
(at the date of such calculation).
A = the Market Value of the Company's Common Stock on the business day
immediately preceding the day on which the Notice of Cashless Exercise
is received by the Company.
B = Warrant Price (as adjusted to the date of such calculation).
(c) The Warrant Shares deliverable hereunder shall, upon issuance,
be fully paid and non-assessable and the Company agrees that at all times during
the term of this Warrant it shall cause to be reserved for issuance such number
of shares of its Common Stock as shall be required for issuance and delivery
upon exercise of this Warrant.
(d) For purposes of this Warrant, the Market Value of a share of
Common Stock on any date shall be equal to (i) the closing bid price per share
as published by a national securities exchange on which shares of Common Stock
(or other units of the security) are traded (an "Exchange") on such date or, if
there is no bid for Common Stock on such date, the bid price on such exchange at
the close of trading on the next earlier date or, (ii) if shares of Common Stock
are not listed on a national securities exchange on such date, the closing bid
price per share as published on the National Association of Securities Dealers
Automatic Quotation System ("NASDAQ") National Market System if the shares are
quoted on such system on such date, or (iii) the closing bid price in the
over-the-counter market at the close of trading on such date if the shares are
not traded on an exchange or listed on the NASDAQ National Market System, or
(iv) if the Common Stock is not traded on a national securities exchange or in
the over-the-counter market, the fair market value of a share of Common Stock on
such date as determined in good faith by the Board of Directors. If the holder
disagrees with the determination of the Market Value of any securities of the
Company determined by the Board of Directors under Section 1(d)(iv) the Market
Value of such securities shall be determined by an independent appraiser
acceptable to the Company and the holder (or, if they cannot agree on such an
appraiser, by an independent appraiser selected by each of them, and Market
Value shall be the median of the appraisals made by such appraisers). If there
is one appraiser, the cost of the appraisal shall be shared equally between the
Company and the holder. If there are two appraisers, each of the Company and the
holder shall pay for its own appraisal.
(e) This Warrant shall be subject to the forced exercise
provisions set forth in an agreement, dated December 16, 2004 between the
Company and The Nutmeg Group, a copy of which is attached hereto as Exhibit A.
By accepting this Warrant from an assignor, the holder agrees to accept all of
the provisions of this Warant, including the obligation of the holder to
exercise this Warrant.
II. Transfer or Assignment of Warrant.
(a) Any assignment or transfer of this Warrant shall be made by
surrender of this Warrant at the offices of the Company or at such other address
as the Company may designate in writing to the registered holder hereof with the
Assignment Form annexed hereto duly executed and accompanied by payment of any
requisite transfer taxes, and the Company shall, without charge, execute and
deliver a new Warrant of like tenor in the name of the assignee for the portion
so assigned in case of only a partial assignment, with a new Warrant of like
tenor to the assignor for the balance of the Warrant Shares purchasable.
(b) Prior to any assignment or transfer of this Warrant, the holder
thereof shall deliver an opinion of counsel to the Company to the effect that
the proposed transfer may be effected without registration under the Act.
III. Adjustment of Warrant Price and Warrant Shares -- Anti-Dilution
Provisions.
A. (1) Except as hereinafter provided, in case the Company shall at
any time after the date hereof issue any shares of Common Stock (including
shares held in the Company's treasury) without consideration, then, and
thereafter successively upon each issuance, the Warrant Price in effect
immediately prior to each such issuance shall forthwith be reduced to a
price determined by multiplying the Warrant Price in effect immediately
prior to such issuance by a fraction:
(a) the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to such issuance, and
(b) the denominator of which shall be the total number of
shares of Common Stock outstanding immediately after such issuance.
For the purposes of any computation to be made in accordance with
the provisions of this clause (1), the following provisions shall be
applicable:
(i) Shares of Common Stock issuable by way of dividend
or other distribution on any stock of the Company shall be
deemed to have been issued and to be outstanding at the close
of business on the record date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without
consideration. Shares of Common Stock issued otherwise than as
a dividend, shall be deemed to have been issued and to be
outstanding at the close of business on the date of issue.
(ii) The number of shares of Common Stock at any time
outstanding shall not include any shares then owned or held by
or for the account of the Company.
(2) In case the Company shall at any time subdivide or combine
the outstanding shares of Common Stock, the Warrant Price shall
forthwith be proportionately decreased in the case of the
subdivision or proportionately increased in the case of combination
to the nearest one cent. Any such adjustment shall become effective
at the close of business on the date that such subdivision or
combination shall become effective.
B. In the event that the number of outstanding shares of Common
Stock is increased by a stock dividend payable in shares of Common Stock
or by a subdivision of the outstanding shares of Common Stock, which may
include a stock split, then from and after the time at which the adjusted
Warrant Price becomes effective pursuant to the foregoing Subsection A of
this Section by reason of such dividend or subdivision, the number of
shares issuable upon the exercise of this Warrant shall be increased in
proportion to such increase in outstanding shares. In the event that the
number of outstanding shares of Common Stock is decreased by a combination
of the outstanding shares of Common Stock, then, from and after the time
at which the adjusted Warrant Price becomes effective pursuant to such
Subsection A of this Section by reason of such combination, the number of
shares issuable upon the exercise of this Warrant shall be decreased in
proportion to such decrease in outstanding shares.
C. In the event of an adjustment of the Warrant Price, the number of
shares of Common Stock (or reclassified stock) issuable upon exercise of
this Warrant after such adjustment shall be equal to the number determined
by dividing:
(1) an amount equal to the product of (i) the number of shares
of Common Stock issuable upon exercise of this Warrant immediately
prior to such adjustment, and (ii) the Warrant Price immediately
prior to such adjustment, by
(2) the Warrant Price immediately after such adjustment.
D. In the case of any reorganization or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or
from par value to no par value, or from no par value to par value, or as a
result of a subdivision or combination) or in the case of any
consolidation of the Company with, or merger of the Company with, another
corporation, or in the case of any sale, lease or conveyance of all, or
substantially all, of the property, assets, business and goodwill of the
Company as an entity, the holder of this Warrant shall thereafter have the
right upon exercise to purchase the kind and amount of shares of stock and
other securities and property receivable upon such reorganization,
reclassification, consolidation, merger or sale by a holder of the number
of shares of Common Stock which the holder of this Warrant would have
received had all Warrant Shares issuable upon exercise of this Warrant
been issued immediately prior to such reorganization, reclassification,
consolidation, merger or sale, at a price equal to the Warrant Price then
in effect pertaining to this Warrant (the kind, amount and price of such
stock and other securities to be subject to adjustment as herein
provided).
E. In case the Company shall, at any time prior to the expiration of
this Warrant and prior to the exercise thereof, dissolve, liquidate or
wind up its affairs, the Warrantholder shall be entitled, upon the
exercise thereof, to receive, in lieu of the Warrant Shares of the Company
which it would have been entitled to receive, the same kind and amount of
assets as would have been issued, distributed or paid to it upon such
Warrant Shares of the Company, had it been the holder of record of shares
of Common Stock receivable upon the exercise of this Warrant on the record
date for the determination of those entitled to receive any such
liquidating distribution. After any such dissolution, liquidation or
winding up which shall result in any distribution in excess of the Warrant
Price provided for by this Warrant, the Warrantholder may at its option
exercise the same without making payment of the aggregate Warrant Price
and in such case the Company shall upon the distribution to said
Warrantholder consider that the aggregate Warrant Price has been paid in
full to it and in making settlement to said Warrantholder, shall deduct
from the amount payable to such Warrantholder an amount equal to the
aggregate Warrant Price.
F. In case the Company shall, at any time prior to the expiration of
this Warrant and prior to the exercise thereof make a distribution of
assets (other than cash) or securities of the Company to its stockholders
(the "Distribution") the Warrantholder shall be entitled, upon the
exercise thereof, to receive, in addition to the Warrant Shares it is
entitled to receive, the same kind and amount of assets or securities as
would have been distributed to it in the Distribution had it been the
holder of record of shares of Common Stock receivable upon exercise of
this Warrant on the record date for determination of those entitled to
receive the Distribution.
G. Irrespective of any adjustments in the number of Warrant Shares
and the Warrant Price or the number or kind of shares purchasable upon
exercise of this Warrant, this Warrant may continue to express the same
price and number and kind of shares as originally issued.
III. Officer's Certificate. Whenever the number of Warrant Shares and the
Warrant Price shall be adjusted pursuant to the provisions hereof, the Company
shall forthwith file, at its principal executive office a statement, signed by
the Chairman of the Board, President, or one of the Vice Presidents of the
Company and by its Chief Financial Officer or one of its Treasurers or Assistant
Treasurers, stating the adjusted number of Warrant Shares and the new Warrant
Price calculated to the nearest one hundredth and setting forth in reasonable
detail the method of calculation and the facts requiring such adjustment and
upon which such calculation is based. Each adjustment shall remain in effect
until a subsequent adjustment hereunder is required. A copy of such statement
shall be mailed to the Warrantholder.
IV. Charges, Taxes and Expenses. The issuance of certificates for Warrant
Shares upon any exercise of this Warrant shall be made without charge to the
Warrantholder for any tax or other expense in respect to the issuance of such
certificates, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued only in the name of the Warrantholder.
V. Miscellaneous.
(a) The terms of this Warrant shall be binding upon and shall inure
to the benefit of any successors or assigns of the Company and of the holder or
holders hereof and of the shares of Common Stock issued or issuable upon the
exercise hereof.
(b) No holder of this Warrant, as such, shall be entitled to vote or
receive dividends or be deemed to be a stockholder of the Company for any
purpose, nor shall anything contained in this Warrant be construed to confer
upon the holder of this Warrant, as such, any rights of a stockholder of the
Company or any right to vote, give or withhold consent to any corporate action,
receive notice of meetings, receive dividends or subscription rights, or
otherwise.
(c) Receipt of this Warrant by the holder hereof shall constitute
acceptance of an agreement to the foregoing terms and conditions.
(d) The Warrant and the performance of the parties hereunder shall
be construed and interpreted in accordance with the laws of the State of New
York and the parties hereunder consent and agree that the State and Federal
Courts which sit in the State of New York and the County of Nassau shall have
exclusive jurisdiction with respect to all controversies and disputes arising
hereunder.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer and its corporate seal to be affixed hereto.
Dated: December 16, 2004
TORBAY HOLDINGS, INC.
BY: /s/ Xxxxxxx Xxxxxx Large
------------------------------------
Xxxxxxx Xxxxxx Large
President
SUBSCRIPTION FORM
(TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXERCISE THE WARRANT)
To: TORBAY HOLDINGS, INC
The undersigned hereby exercises the right to purchase _________ shares of
Common Stock, par value $.0001 per share, covered by the attached Warrant in
accordance with the terms and conditions thereof, and herewith makes payment of
the Warrant Price for such shares in full.
Signature: ______________________________________
Address: _________________________________________
DATED: ___________________________
Exhibit A
December 16, 2004
Mr. Xxx Large Torbay Holdings, Inc.
000 Xxx Xxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Dear Xxx:
This is to confirm that The Nutmeg Group/Xxxxx Silver is entitled to the
following warrants at the following strike prices and expiration dates:
3million warrants @ .03= $ 90,000
2.5million warrants @ .04= $ 100,000
2million warrants @ .05= $ 100,000
2million warrants @ .06= $ 120,000
2million warrants @ .07= $ 140,000
2million warrants @ .08= $ 160,000
2million warrants @ .09= $ 180,000
2million warrants @ .10= $ 200,000
1million warrants @ .11= $ 110,000
1million warrants @ .12= $ 120,000
1million warrants @ .13= $ 130,000
TOTAL $1,450,000
In addition, The Nutmeg Group/Xxxxx Silver waives, and deems paid, any past-due
interest payments, due pursuant to the Loan Agreement and thus agrees not to
hold Torbay in default as a consequence of the tardy payments, non-payments or
any other breach.
Additionally, with regard to the above warrants, The Nutmeg Group/Xxxxx Silver
will agree that once the shares underlying such warrants are registered, Torbay
can force the exercise of such warrants, with thirty day prior notice (the
"Notice" or the "Demand") with respect to any such warrants. In the event of
such a Notice from Torbay, The Nutmeg Group/Xxxxx Silver must pay Torbay, within
thirty days of the expiration of the thirty-day period following such Notice,
provided however, that The Nutmeg Group/Xxxxx Silver would not be obligated to
pay to Torbay more than $75,000 within any thirty-day period, in connection with
such an exercise. In the event that any Demand exceeds the $75,000, then any
forced exercise shall be deferred until the next thirty-day period, subject
again to the limitation of $75,000 within any thirty-day period.
In addition to the foregoing, Torbay will not be eligible to demand exercise of
any warrants unless, the closing bid price of Torbay Common Stock was at least
50% more than the applicable strike price, for the full thirty day period prior
to such Notice, and remains at least such level during the thirty day period
following the Notice and the average daily dollar trading volume for Torbay
Common Stock for the thirty day period prior to the Notice is at least the
amount of the demand.
Torbay must issue the shares of any such exercise within forty-eight hours of
payment by The Nutmeg Group/Xxxxx Silver. If the shares underlying such warrants
are not registered by the one-year anniversary of the above date, the warrants
may be exercised on a cashless basis. Any unexercised warrants shall expire on
the five-year anniversary of the above date.
Very truly yours,
/s/ Xxxxxxx X. Xxxxxxxx
----------------------------------------
Xxxxxxx X. Xxxxxxxx
By executing below you are evidencing your acquiescence to the foregoing:
/s/ Xxx Large
----------------------------------------
Xxx Large
NOTICE OF EXERCISE OF COMMON STOCK WARRANT
PURSUANT TO NET ISSUE ("CASHLESS") EXERCISE PROVISIONS
Torbay Holdings, Inc. Aggregate Price of $
a Delaware corporation of Warrant ----------------------------
000 Xxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000 Aggregate Price Being $
Exercised:
----------------------------
Attention: Xxxxxxx Xxxxxx Large, President
Warrant Price $
(per share):
----------------------------
Number of Shares of
Common Stock to be
Issued Under this Notice:
CASHLESS EXERCISE
Gentlemen:
The undersigned, registered holder of the Warrant to Purchase Common Stock
delivered herewith ("Warrant") hereby irrevocably exercises such Warrant for,
and purchasesthereunder, shares of the Common Stock of TORBAY HOLDINGS, INC., a
Delaware corporation, as provided below. Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings given in the Warrant. The
portion of the Aggregate Price (as hereinafter defined) to be applied toward the
purchase of Common Stock pursuant to this Notice of Exercise is $_______,
thereby leaving a remainder Aggregate Price (if any) equal to $______. Such
exercise shall be pursuant to the net issue exercise provisions of Section I.
(b) of the Warrant; therefore, the holder makes no payment with this Notice of
Exercise. The number of shares to be issued pursuant to this exercise shall be
determined by reference to the formula in Section I.(b)of the Warrant which
requires the use of the Market Value (as defined in Section I.(d) of the
Warrant) of the Company's Common Stock on the business day immediately preceding
the day on which this Notice is received by the Company. To the extent the
foregoing exercise is for less than the full Aggregate Price of the Warrant, the
remainder of the Warrant representing a number of Shares equal to the quotient
obtained by dividing the remainder of the Aggregate Price by the Warrant Price
(and otherwise of like form, tenor and effect) may be exercised under Section
I.(a) of the Warrant. For purposes of this Notice the term "Aggregate Price"
means the product obtained by multiplying the number of shares of Common Stock
for which the Warrant is exercisable times the Warrant Price.
Signature:_____________________________________
Address:______________________________________
Date:__________________________________________
