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Sample Business Contracts

Warrant for the Purchase of Shares of Common Stock - Vermont Teddy Bear Co. Inc.

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               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

June 28, 1996                                                 ___________ Shares

     THIS CERTIFIES  that, for good and valuable  consideration,  the receipt of
which  is  hereby  acknowledged,  ___________________  (the  "Holder"),  or  his
registered  assigns,  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 one (1) year after
the date hereof,  and before 5:00 P.M. on June 28,  1999,  New York time or such
earlier time as set forth herein (the "Exercise  Period"),  _________  shares of
the Company's  Common Stock,  par value $.05 per share ("Common  Stock"),  at an
original  exercise price of $_______ 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.

     1. 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 his 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 his 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,  he 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 so that it
is equal to such lesser exercise price.  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 so that it equals 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. 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) equal to such lower exercise  price. 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 his 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 his
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.

     10. This Warrant  shall not entitle the holder  hereof to any voting rights
or other rights as a stockholder  of the Company.  No provision  hereof,  in the
absence of affirmative  action by the Holder hereof to purchase shares of Common
Stock, and no mere enumeration  herein of the rights or privileges of the Holder
hereof shall give rise to any  liability of such Holder for the Warrant Price or
as a  stockholder  of the  Company,  whether  such  liability is asserted by the
company or by creditors of the Company.

     11. Any notice of other  communication  to be given  hereunder  shall be in
writing and mailed via certified first class mail,  return receipt requested and
an additional copy sent via facsimile to such party at the address or number set
forth below:

     If to the Company:            2236 Shelburne Road
                                   PO Box 965
                                   Shelburne, VT 05482
                                   Attention:  Elisabeth Robert
                                   Facsimile No.:  (802) 985-1304

     If to the Holder:             _____________________________________________

                                   _____________________________________________

                                   _____________________________________________

                                   Facsimile No.:  (_____) _____________________

or to such other person,  address or number as the party entitled to such notice
or  communication  shall have  specified  by notice to the other  party given in
accordance  with  the  provisions  of this  Section.  Any such  notice  or other
communication  shall be  deemed  given  when  deposited  in the  mail,  properly
addressed and with postage prepaid.

     12. This Warrant shall be governed by and construed in accordance  with the
laws of the State of  Vermont,  without  giving  effect  to such  jurisdiction's
principles of conflict of laws.


Dated: _________________  ___, 1996

                                        THE VERMONT TEDDY BEAR CO., INC


                                        By: ____________________________________
                                            Its Duly Authorized Agent


___________________________________
Secretary



                               FORM OF ASSIGNMENT

(To be executed by the Holder if he desires to transfer the attached Warrant.)

     FOR VALUE  RECEIVED,  ______________________  hereby  sells,  assigns,  and
transfers  unto  _________________________  a Warrant to  purchase  ____________
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
his 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.
      PO Box 965
      2236 Shelburne Road, #5
      Shelburne, Vermont  05482


                              ELECTION TO EXERCISE

The undersigned  hereby exercises his 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