Warrant for the Purchase of Shares of Common Stock - Vermont Teddy Bear Co. and Joan Hixon Martin
NEITHER THE WARRANTS REPRESENTED
BY THIS CERTIFICATE NOR THE SHARES
ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. NEITHER THE
WARRANTS NOR SUCH SHARES MAY BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT,
OR AN EXEMPTION FROM REGISTRATION UNDER
SUCH ACT.
THE VERMONT TEDDY BEAR CO., INC.
WARRANT FOR THE PURCHASE OF SHARES OF COMMON STOCK
par value $.05 per share
April 12, 1996 43,826.087 Shares
THIS CERTIFIES that, for good and valuable consideration, the receipt of
which is hereby acknowledged, Joan Hixon Martin (the "Holder") is entitled to
subscribe for and purchase from The Vermont Teddy Bear Co., Inc., a New York
corporation (the "Company"), upon the terms and conditions set forth herein, at
any time or from time to time after the date hereof, and before 5:00 P.M. on
April 12, 2001, New York time or such earlier time as set forth herein (the
"Exercise Period"), 43,826.087 shares of the Company's Common Stock, par value
$.05 per share ("Common Stock"), at a price of $2.875 per share (the "Exercise
Price"). As used herein the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant in whole or in part.
The number of shares of Common Stock issuable upon exercise of this
Warrant (the "Warrant Shares") and the Exercise Price may be adjusted from time
to time as hereinafter set forth.
l. This Warrant may be exercised during the Exercise Period, as to the
whole or any lesser number of the respective whole Warrant Shares, by the
surrender of this Warrant (with the election at the end hereof duly executed)
to the Company at its office as set forth in the form of election attached
hereto, or at such other place as is designated in writing by the Company,
together with a certified or bank cashier's check payable to the order of the
Company in an amount equal to the Exercise Price multiplied by the number of
the respective Warrant Shares for which this Warrant is being exercised.
2. Upon each exercise of the Holder's rights to purchase Warrant Shares
and payment of the Exercise Price, the Holder shall be deemed to be the holder
of record of the Warrant Shares issuable upon such exercise, notwithstanding
that the transfer books of the Company shall then be closed or certificates
representing such Warrant Shares shall not then have been actually delivered to
the Holder. As soon as practicable after each such exercise of this Warrant and
payment of the Exercise Price, the Company shall issue and deliver to the
Holder a certificate or certificates for the Warrant Shares issuable upon such
exercise, registered in the name of the Holder or her designee. If this Warrant
should be exercised in part only, the Company shall, upon surrender of this
Warrant for cancellation, execute and deliver a new Warrant evidencing the
right of the Holder to purchase the balance of the Warrant Shares (or portions
thereof) subject to purchase hereunder.
3. This Warrant shall be transferable only on the books of the Company
upon delivery thereof duly endorsed by the Holder or by her duly authorized
attorney or representative, or accompanied by proper evidence of succession,
assignment, or authority to transfer. In all cases of transfer by an attorney,
executor, administrator, guardian, or other legal representative, duly
authenticated evidence of his or her authority shall be produced. Upon any
registration of transfer, the Company shall deliver a new Warrant or Warrants
to the person entitled thereto. This Warrant may be exchanged, at the option of
the Holder thereof, for another Warrant, or other Warrants of different
denominations, of like tenor and representing in the aggregate the right to
purchase a like number of Warrant Shares (or portions thereof), upon surrender
to the Company or its duly authorized agent. Notwithstanding the foregoing, the
Company shall have no obligation to cause Warrants to be transferred on its
books to any person if, in the opinion of counsel to the Company, such transfer
does not comply with the provisions of the Securities Act of 1933, as amended
(the "Act"), and the rules and regulations thereunder.
4. The Company shall at all times reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of providing for
the exercise of the rights to purchase all Warrant Shares granted pursuant to
this Warrant, such number of shares of Common Stock as shall, from time to
time, be sufficient therefor. The Company covenants that all shares of Common
Stock issuable upon exercise of this Warrant, upon receipt by the Company of
the full Exercise Price therefor, shall be validly issued, fully paid,
nonassessable, and free of preemptive rights.
5. (a) In case the Company shall at any time after the date this Warrant
was first issued (i) declare a dividend on the outstanding Common Stock payable
in shares of its capital stock, (ii) subdivide the outstanding Common Stock,
(iii) combine the outstanding Common Stock into a smaller number of shares, or
(iv) issue any shares of its capital stock by reclassification of the Common
Stock (including any such reclassification in connection with a consolidation
or merger in which the Company is the continuing corporation), then, in each
case, the Exercise Price, and the number of Warrant Shares issuable upon
exercise of this Warrant, in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that the Holder after
such time shall be entitled to receive the aggregate number and kind of shares
which, if this Warrant had been exercised immediately prior to such time, she
would have owned upon such exercise and been entitled to receive by virtue of
dividend, subdivision, combination, or reclassification. Such adjustment shall
be made successively whenever any event listed above shall occur.
(b) In case the Company shall issue or fix a record date for the issuance
to all holders of Common Stock of rights, options, or warrants to subscribe for
or purchase Common Stock (or securities convertible into or exchangeable for
Common Stock) at a price per share (or having a conversion or exchange price
per share, if a security convertible into or exchangeable for Common Stock)
less than the Exercise Price per share of Common Stock on such record date,
then, in each case, the Exercise Price shall be adjusted by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the number of shares of Common Stock
outstanding on such record date plus the number of shares of Common Stock which
the aggregate offering price of the total number of shares of Common Stock so
to be offered (or the aggregate initial conversion or exchange price of the
convertible or exchangeable securities so to be offered) would purchase at such
current Exercise Price and the denominator of which shall be the number of
shares of Common Stock outstanding on such record date plus the number of
additional shares of Common Stock to be offered for subscription or purchase
(or into which the convertible or exchangeable securities so to be offered are
initially convertible or exchangeable). Such adjustment shall become effective
at the close of business on such record date; provided, however, that, to the
extent the shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock) are not delivered, the Exercise Price
shall be readjusted after the expiration of such rights, options, or warrants
(but only with respect to that portion of this Warrant exercised after such
expiration), to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights, options, or warrants been
made upon the basis of delivery of only the number of shares of Common Stock
(or securities convertible into or exchangeable for shares of Common Stock)
actually issued. In case any subscription price may be paid in a consideration
part or all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Company's Board of
Directors, whose determination shall be conclusive absent manifest error.
Shares of Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose of
any such computation.
(c) In case the Company shall distribute to all holders of Common Stock
(including any such distribution made to the stockholders of the Company in
connection with a consolidation or merger in which the Company is the
continuing corporation) evidences of its indebtedness or assets (other than
cash dividends or distributions and dividends payable in shares of Common
Stock), or rights, options, or warrants to subscribe for or purchase Common
Stock, or securities convertible into or exchangeable for shares of Common
Stock (excluding those with respect to the issuance of which an adjustment of
the Exercise Price is provided pursuant to Section 5(b) hereof), then, in each
case, the Exercise Price shall be adjusted by multiplying the Exercise Price in
effect immediately prior to the record date for the determination of
stockholders entitled to receive such distribution by a fraction, the numerator
of which shall be the Exercise Price per share of Common Stock on such record
date, less the fair market value (as determined in good faith by the Company's
Board of Directors, whose determination shall be conclusive absent manifest
error) of the portion of the evidences of indebtedness or assets so to be
distributed, or of such rights, options, or warrants or convertible or
exchangeable securities, applicable to one share, and the denominator of which
shall be such current Exercise Price per share of Common Stock. Such adjustment
shall be made whenever any such distribution is made, and shall become
effective on the record date for the determination of shareholders entitled to
receive such distribution.
(d) In case the Company shall issue shares of Common Stock or rights,
options, or warrants to subscribe for or purchase Common Stock, or securities
convertible into or exchangeable for Common Stock (excluding shares, rights,
options, warrants, or convertible or exchangeable securities issued or issuable
(i) in any of the transactions with respect to which an adjustment of the
Exercise Price is provided pursuant to Sections 5(a), 5(b), or 5(c) above or
(ii) upon exercise of this Warrant), at a price per share (determined, in the
case of such rights, options, warrants, or convertible or exchangeable
securities, by dividing (x) the total amount received or receivable by the
Company in consideration of the sale and issuance of such rights, options,
warrants, or convertible or exchangeable securities, plus the minimum aggregate
consideration payable to the Company upon exercise, conversion, or exchange
thereof, by (y) the maximum number of shares covered by such rights, options,
warrants, or convertible or exchangeable securities) lower than the Exercise
Price per share of Common Stock in effect immediately prior to such issuance,
then the Exercise Price shall be reduced on the date of such issuance to a
price (calculated to the nearest cent) determined by multiplying the Exercise
Price in effect immediately prior to such issuance by a fraction, (iii) the
numerator of which shall be an amount equal to the sum of (A) the number of
shares of Common Stock outstanding immediately prior to such issuance plus (B)
the quotient obtained by dividing the consideration received by the Company
upon such issuance by such current Exercise Price, and (iv) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such issuance. For the purposes of such adjustments, the
maximum number of shares which the holders of any such rights, options,
warrants, or convertible or exchangeable securities shall be entitled to
initially subscribe for or purchase or convert or exchange such securities into
shall be deemed to be issued and outstanding as of the date of such issuance,
and the consideration received by the Company therefor shall be deemed to be
the consideration received by the Company for such rights, options, warrants,
or convertible or exchangeable securities, plus the minimum aggregate
consideration or premiums stated in such rights, options, warrants, or
convertible or exchangeable securities to be paid for the shares covered
thereby. No further adjustment of the Exercise Price shall be made as a result
of the actual issuance of shares of Common Stock on exercise of such rights,
options, or warrants or on conversion or exchange of such convertible or
exchangeable securities. On the expiration or the termination of such rights,
options, or warrants, or the termination of such right to convert or exchange,
the Exercise Price shall be readjusted (but only with respect to that portion
of this Warrant exercised after such expiration or termination) to such
Exercise Price as would have obtained had the adjustments made upon the
issuance of such rights, options, warrants, or convertible or exchangeable
securities been made upon the basis of the delivery of only the number of
shares of Common Stock actually delivered upon the exercise of such rights,
options, or warrants or upon the conversion or exchange of any such securities;
and on any change of the number of shares of Common Stock deliverable upon the
exercise of any such rights, options, or warrants or conversion or exchange of
such convertible or exchangeable securities or any change in the consideration
to be received by the Company upon such exercise, conversion, or exchange,
including, but not limited to, a change resulting from the antidilution
provisions thereof, the Exercise Price, as then in effect, shall forthwith be
readjusted (but only with respect to that portion of this Warrant exercised
after such change) to such Exercise Price as would have been obtained had an
adjustment been made upon the issuance of such rights, options, or warrants not
exercised prior to such change, or securities not converted or exchanged prior
to such change, on the basis of such change. In case the Company shall issue
shares of Common Stock or any such rights, options, warrants, or convertible or
exchangeable securities for a consideration consisting, in whole or in part, of
property other than cash or its equivalent, then the "price per share" and the
"consideration received by the Company" for purposes of the first sentence of
this Section 5(d) shall be as determined in good faith by the Company's Board
of Directors, whose determination shall be conclusive absent manifest error.
Shares of Common Stock owned by or held for the account of the Company or any
majority-owned subsidiary shall not be deemed outstanding for the purpose of
any such computation.
(e) No adjustment in the Exercise Price shall be required if such
adjustment is less than $.05; provided, however, that any adjustments which by
reason of this Section 5 are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under
this Section 5 shall be made to the nearest cent or to the nearest one-
thousandth of a share, as the case may be.
(f) In any case in which this Section 5 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer, until the occurrence of such event,
issuing to the Holder, if the Holder exercised this Warrant after such record
date, the shares of Common Stock, if any, issuable upon such exercise over and
above the shares of Common Stock, if any, issuable upon such exercise on the
basis of the Exercise Price in effect prior to such adjustment; provided,
however, that the Company shall deliver to the Holder a due bill or other
appropriate instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.
(g) Upon each adjustment of the Exercise Price as a result of the
calculations made in Sections 5(b), 5(c), or 5(d) hereof, this Warrant shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of shares (calculated to the nearest thousandth) obtained by dividing
(A) the product obtained by multiplying the number of shares purchasable upon
exercise of this Warrant prior to adjustment of the number of shares by the
Exercise Price in effect prior to adjustment of the Exercise Price by (B) the
Exercise Price in effect after such adjustment of the Exercise Price.
(h) Whenever there shall be an adjustment as provided in this Section 5,
the Company shall promptly cause written notice thereof to be sent by
registered mail, postage prepaid, to the Holder, at her then-current address,
which notice shall be accompanied by an officer's certificate setting forth the
number of Warrant Shares purchasable upon the exercise of this Warrant and the
Exercise Price after such adjustment and setting forth a brief statement of the
facts requiring such adjustment and the computation thereof, which officer's
certificate shall be conclusive evidence of the correctness of any such
adjustment absent manifest error.
6. (a) In case of any consolidation with or merger of the Company with or
into another corporation (other than a merger or consolidation in which the
Company is the surviving or continuing corporation), or in case of any sale,
lease, or conveyance to another corporation of the property and assets of any
nature of the Company as an entirety or substantially as an entirety, such
successor, leasing, or purchasing corporation, as the case may be, shall (i)
execute with the Holder an agreement providing that the Holder shall have the
right thereafter to receive upon exercise of this Warrant solely the kind and
amount of shares of stock and other securities, property, cash, or any
combination thereof receivable upon such consolidation, merger, sale, lease, or
conveyance by a holder of the number of shares of Common Stock for which this
Warrant might have been exercised immediately prior to such consolidation,
merger, sale, lease, or conveyance and (ii) make effective provision in its
certificate of incorporation or otherwise, if necessary, to effect such
agreement. Such agreement shall provide for adjustments which shall be as
nearly equivalent as practicable to the adjustments in Section 5.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than a change in par value,
or as a result of a subdivision or combination, but including any change in the
shares into two or more classes or series of shares), or in case of any
consolidation or merger of another corporation into the Company in which the
Company is the continuing corporation and in which there is a reclassification
or change (including a change to the right to receive cash or other property)
of the shares of Common Stock (other than a change in par value, or as a result
of a subdivision or combination, but including any change in the shares into
two or more classes or series of shares), the Holder shall have the right
thereafter to receive upon exercise of this Warrant solely the kind and amount
of shares of stock and other securities, property, cash, or any combination
thereof receivable upon such reclassification, change, consolidation, or merger
by a holder of the number of shares of Common Stock for which this Warrant
might have been exercised immediately prior to such reclassification, change,
consolidation, or merger. Thereafter, appropriate provision shall be made for
adjustments which shall be as nearly equivalent as practicable to the
adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly apply to
successive reclassifications and changes of shares of Common Stock and to
successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose:
(a) to pay any dividend or make any distribution on shares of Common
Stock in shares of Common Stock or make any other distribution (other than
regularly scheduled cash dividends which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or
(b) to issue any rights, warrants, or other securities to all holders of
Common Stock entitling them to purchase any additional shares of Common Stock
or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of outstanding shares of
Common Stock, or any consolidation, merger, sale, lease, or conveyance of
property, described in Section 6; or
(d) to effect any liquidation, dissolution, or winding-up of the Company;
or
(e) to take any other action which would cause an adjustment to the
Exercise Price;
then, and in any one or more of such cases, the Company shall give written
notice thereof, by registered mail, postage prepaid, to the Holder at her then-
current address, mailed at least 15 days prior to (i) the date as of which the
holders of record of shares of Common Stock to be entitled to receive any such
dividend, distribution, rights, warrants, or other securities are to be
determined, (ii) the date on which any such reclassification, change of
outstanding shares of Common Stock, consolidation, merger, sale, lease,
conveyance of property, liquidation, dissolution, or winding-up is expected to
become effective, and the date as of which it is expected that holders of
record of shares of Common Stock shall be entitled to exchange their shares for
securities or other property, if any, deliverable upon such reclassification,
change of outstanding shares, consolidation, merger, sale, lease, conveyance of
property, liquidation, dissolution, or winding-up, or (iii) the date of such
action which would require an adjustment to the Exercise Price.
8. Certificates evidencing the Warrant Shares issued upon exercise of the
Warrants shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. SUCH
SHARES MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT, OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
9. Upon receipt of evidence satisfactory to Company of the loss, theft,
destruction, or mutilation of this Warrant (and upon surrender of this Warrant
if mutilated), and upon reimbursement of the Company's reasonable incidental
expenses, the Company shall execute and deliver to the Holder hereof a new
Warrant of like date, tenor, and denomination.
Dated: April 12, 1996
THE VERMONT TEDDY BEAR CO., INC
By: /s/ R. PATRICK BURNS
----------------------------------------
Its Duly Authorized Agent
/s/ SPENCER C. PUTNAM
--------------------------------
Secretary
FORM OF ASSIGNMENT
(To be executed by the Holder if she desires to transfer the attached Warrant.)
FOR VALUE RECEIVED, Joan Hixon Martin hereby sells, assigns, and transfers unto
_________________________ a Warrant to purchase 43,826.087 shares of Common
Stock, $.05 par value per share of The Vermont Teddy Bear Co., Inc. (the
"Company"), together with all right, title, and interest therein, and does
hereby irrevocably constitute and appoint ___________________________ as her
attorney to transfer such Warrant on the books of the Company, with full power
of substitution.
Dated: __________________ __________________________________________
Signature
NOTICE
The signature on the foregoing Assignment must correspond to the name as
written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.
To: The Vermont Teddy Bear Co., Inc.
P.O. Box 965
2236 Shelburne Road, #5
Shelburne, Vermont 05482
ELECTION TO EXERCISE
The undersigned hereby exercises her rights to purchase
__________________________ Warrant Shares covered by the within Warrant and
tenders payment herewith in the amount of $________________ in accordance with
the terms thereof, and requests that certificates for such securities be issued
in the name of, and delivered to: _______________________________
______________________________________________________________________________
______________________________________________________________________________
(Print Name, Address and Social Security or Tax Identification Number)
and, if such number of Warrant Shares shall not be all the Warrant Shares
covered by the within Warrant, that a new Warrant for the balance of the
Warrant Shares covered by the within Warrant be prepared in the name of, and
delivered to, the undersigned at the address stated below.
Dated: __________________ Name: ________________________________________
Address:
______________________________________________________________________________
______________________________________________________________________________
___________________________________________
(Signature)