Exhibit 10.40





	





Exhibit 10.40 






COMMON STOCK
PURCHASE WARRANT



THIS WARRANT AND THE
SHARES OF COMMON STOCK WHICH MAY BE PURCHASED PURSUANT TO THE EXERCISE OF THIS
WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE
SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE, OFFER, PLEDGE OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS UNLESS SOLD
PURSUANT TO RULE 144 OF THE ACT. 



Void after
May __, 2003



No. CS-__



The Gymboree
Corporation



WARRANT



THIS CERTIFIES THAT, in
consideration of the payment of $100.00 and for other good and valuable
consideration, __________________ (the “Holder”) is entitled to
subscribe for and purchase _____________ shares (as adjusted pursuant to
Section 3 hereof) of the fully paid and nonassessable Common Stock, par
value $0.001 per share (the “Shares”), of The Gymboree
Corporation, a Delaware corporation (the “Company”) at the
price of $2.97 per share (the “Exercise Price”) (as adjusted
pursuant to Section 3 hereof), subject to the provisions and upon the terms
and conditions hereinafter set forth. 



Method of
Exercise; Payment.



Cash Exercise.
Subject to Section 11 hereof, the purchase rights represented by this Warrant
may be exercised by the Holder after the date that is six (6) months after the
date hereof, in whole or in part, by the surrender of this Warrant (with the
notice of exercise form attached hereto as Exhibit A duly executed) at
the principal office of the Company, and by the payment to the Company, by
certified, cashier’s or other check acceptable to the Company, of an amount
equal to the aggregate Exercise Price of the shares being purchased. 



Net Exercise. In
lieu of exercising this Warrant in a cash exercise, after the date that is six
(6) months after the date hereof, the Holder may elect to exercise this Warrant
in whole or in part, on a “net exercise” basis, and upon such net
exercise shall be entitled to receive shares equal to the value of the portion
of this Warrant canceled upon such net exercise. Such net exercise shall be
effected by surrender of this Warrant at the principal office of the Company
together with notice of election to exercise by means of a net issuance
exercise, in which event the Company shall issue to the Holder a number of
shares of the Common Stock of the Company 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
to be canceled upon such net exercise. 






	 	     A   =
   the Fair Market Value of one share of Common Stock on the date of
exercise. 






	


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	 	B
   =   the Exercise Price (as adjusted to the date of such
calculation). For purposes of this Warrant, the Fair Market Value of the Common Stock
shall mean the closing sale price of the Common Stock on the principal market on which
the Common Stock is then traded on the date of exercise. 






	


Stock
Certificates. In the event of any exercise of the rights represented by this
Warrant, certificates representing the shares of Common Stock so purchased shall
be delivered to the Holder within a reasonable time and, unless this Warrant has
been fully exercised or has expired, a new Warrant representing the shares with
respect to which this Warrant shall not have been exercised shall also be issued
to the Holder within such time. 



Stock Fully Paid;
Reservation of Shares. All of the Shares issuable upon the exercise of the
rights represented by this Warrant will, upon issuance and receipt of the
Exercise Price therefor, be fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issue thereof. During the period
within which the rights represented by this Warrant may be exercised, the
Company shall at all times have authorized and reserved for issuance sufficient
shares of its Common Stock to provide for the exercise of the rights represented
by this Warrant. 



Adjustment of
Exercise Price and Number of Shares. Subject to the provisions of
Section 11 hereof, the number and kind of securities purchasable upon the
exercise of this Warrant and the Exercise Price therefor shall be subject to
adjustment from time to time upon the occurrence of certain events, as follows: 



Reclassification or
Consolidation. In case of any reclassification or change of the Common Stock
(other than a change in par value, or as a result of a subdivision or
combination), or in case of any consolidation or merger of the Company with or
into another corporation (other than a merger with another corporation subject
to Section 11 below or in which the Company is a continuing corporation and
which does not result in any reclassification or change of outstanding
securities issuable upon exercise of this Warrant), the Company, or such
successor or purchasing corporation as the case may be, shall execute a new
Warrant, providing that the holder of this Warrant shall have the right to
exercise such new Warrant, and procure upon such exercise and payment of the
same aggregate Exercise Price, in lieu of the shares of Common Stock theretofore
issuable upon exercise of this Warrant, the kind and amount of shares of stock,
other securities, money and property receivable upon such reclassification,
change, consolidation or merger by a holder of an equivalent number of shares of
Common Stock. Such new Warrant shall provide for adjustments which shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 3. The provisions of this subsection (a), subject to
Section 11 hereof, shall similarly apply to successive reclassifications,
changes, consolidations and mergers. 





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Stock Splits,
Dividends and Combinations. In the event that the Company shall at any time
subdivide the outstanding shares of Common Stock, or shall issue a stock
dividend on its outstanding shares of Common Stock, the number of Shares
issuable upon exercise of this Warrant immediately prior to such subdivision or
to the issuance of such stock dividend shall be proportionately increased, and
the Exercise Price shall be proportionately decreased, and in the event that the
Company shall at any time combine the outstanding shares of Common Stock, the
number of Shares issuable upon exercise of this Warrant immediately prior to
such combination shall be proportionately decreased, and the Exercise Price
shall be proportionately increased, effective at the close of business on the
date of such subdivision, stock dividend or combination, as the case may be. 



Notice of
Adjustments. Whenever the number of Shares purchasable hereunder or the
Exercise Price thereof shall be adjusted pursuant to Section 3 hereof, the
Company shall provide notice by first class mail to the holder of this Warrant
setting forth, in reasonable detail, the event requiring the adjustment, the
amount of the adjustment, the method by which such adjustment was calculated,
and the number of Shares which may be purchased and the Exercise Price therefor
after giving effect to such adjustment. 



Fractional
Shares. No fractional shares of Common Stock will be issued in connection
with any exercise hereunder. In lieu of such fractional shares the Company shall
make a cash payment therefor based upon the Exercise Price then in effect. 



Representations of
the Company. The Company represents that all corporate actions on the part
of the Company, its officers, directors and shareholders necessary for the sale
and issuance of the Shares pursuant hereto and the performance of the
Company’s obligations hereunder were taken prior to and are effective as of
the effective date of this Warrant. 



Representations and
Warranties by the Holder. The Holder represents and warrants to the Company
as follows: 



This Warrant and the
Shares issuable upon exercise thereof are being acquired for its own account,
for investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities Act
of 1933, as amended (the “Act”). Upon exercise of this Warrant,
the Holder shall, if so requested by the Company, confirm in writing, in a form
satisfactory to the Company, that the securities issuable upon exercise of this
Warrant are being acquired for investment and not with a view toward
distribution or resale. 





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The Holder understands
that the Warrant and the Shares have not been registered under the Act by reason
of their issuance in a transaction exempt from the registration and prospectus
delivery requirements of the Act pursuant to Section 4(2) thereof, and that
they must be held by the Holder indefinitely, and that the Holder must therefore
bear the economic risk of such investment indefinitely, unless a subsequent
disposition thereof is registered under the Act or is exempted from such
registration. The Holder further understands that the Warrant and the Shares
have not been qualified under the California Securities Law of 1968 (the
“California Law”) by reason of their issuance in a transaction
exempt from the qualification requirements of the California Law pursuant to
Section 25102(f) thereof, which exemption depends upon, among other things,
the bona fide nature of the Holder’s investment intent expressed above. 



The Holder has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of the purchase of this Warrant and the Shares
purchasable pursuant to the terms of this Warrant and of protecting its
interests in connection therewith. 



The Holder is able to
bear the economic risk of the purchase of the Shares pursuant to the terms of
this Warrant. 



Restrictive
Legend.



The Shares issuable upon exercise of
this Warrant (unless registered under the Act) shall be stamped or imprinted with a
legend in substantially the following form:  




THE SHARES REPRESENTED BY THIS
CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT. COPIES OF THE AGREEMENT COVERING THE
PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.  






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Restrictions
Upon Transfer and Removal of Legend.



The Company need not
register a transfer of Shares bearing the restrictive legend set forth in
Section 8 hereof, unless the conditions specified in such legend are
satisfied. The Company may also instruct its transfer agent not to register the
transfer of the Shares, unless one of the conditions specified in the legend
referred to in Section 8 hereof is satisfied. 



Notwithstanding the
provisions of paragraph (a) above, no opinion of counsel or
“no-action” letter shall be necessary for a transfer without
consideration by any holder (i) to an affiliate of the holder, (ii) if
such holder is a partnership, to a partner or retired partner of such
partnership who retires after the date hereof or to the estate of any such
partner or retired partner, (iii) if such holder is a corporation, to a
shareholder of such corporation, or to any other corporation under common
control, direct or indirect, with such holder, or (iv) by gift, will or
intestate succession of any individual holder to his spouse or siblings, or to
the lineal descendants or ancestors of such holder or his spouse, if the
transferee agrees in writing to be subject to the terms hereof to the same
extent as if such transferee were the original holder hereunder. 



Rights of
Shareholders. No holder of this Warrant shall be entitled, as a Warrant
holder, to vote or receive dividends or be deemed the holder of Common Stock or
any other securities of the Company which may at any time be issuable on the
exercise hereof for any purpose, nor shall anything contained herein be
construed to confer upon the holder of this Warrant, as such, any of the rights
of a shareholder of the Company or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of stock, change of par
value, consolidation, merger, conveyance, or otherwise) or to receive notice of
meetings, or to receive dividends or subscription rights or otherwise until the
Warrant shall have been exercised and the Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein. 



Expiration of Warrant. This Warrant
shall expire and shall no longer be exercisable upon the earliest to occur of:  




5:00 p.m.,
California local time, on May __, 2003;






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The closing of the
merger or consolidation of the Company pursuant to which the Company’s
shareholders immediately prior to the transaction own less than fifty percent
(50%) of the surviving entity, provided that the Holder is notified at least 7
days or as soon as practicable before the scheduled closing; or 



The closing of the sale
of all or substantially all of the assets of the Company, provided that the
Holder is notified at least 7 days or as soon as practicable before the
scheduled closing. 



Notices, Etc. All
notices and other communications from the Company to the Holder shall be mailed
by first class registered or certified mail, postage prepaid, at such address as
may have been furnished to the Company in writing by the Holder. 



Governing Law,
Headings. This Warrant is being delivered in the State of California and
shall be construed and enforced in accordance with and governed by the laws of
such State. The headings in this Warrant are for purposes of reference only, and
shall not limit or otherwise affect any of the terms hereof. 




Issued this ____ day of
May, 2000. 











			THE GYMBOREE CORPORATION



By:    
     ——————————————

Print Name:  Lawrence H. Meyer  
Title:  Chief Financial Officer 






	


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EXHIBIT A
 NOTICE OF
EXERCISE 





TO:    THE GYMBOREE CORPORATION
           700
Airport Boulevard 
           Suite 200 
           Burlingame, CA 94010

           Attention: Chief Financial Officer 





1.  The undersigned hereby
elects to purchase __________ shares of Common Stock of The Gymboree Corporation pursuant
to the terms of the attached Warrant.  



2. Method of Exercise (Please
initial the applicable blank):  











	___ 		The
undersigned elects to exercise the attached Warrant by means of a cash payment, and
tenders herewith payment in full for the purchase price of the shares being purchased,
together with all applicable transfer taxes, if any.  







	___ 		The
undersigned elects to exercise the attached Warrant by means of the net exercise
provisions of Section 1(b) of the Warrant. 3. Please issue a certificate or certificates
representing said shares of Common Stock in the name of the undersigned or in such other
name as is specified below:  






	


Name: 
        ————————————



Address:
        ————————————



4.  The undersigned hereby
represents and warrants that the aforesaid shares of Common Stock are being
acquired for the account of the undersigned for investment and not with a view
to, or for resale, in connection with the distribution thereof, and that the
undersigned has no present intention of distributing or reselling such shares
and all representations and warranties of the undersigned set forth in
Section 7 of the attached Warrant are true and correct as of the date
hereof. In support thereof, the undersigned agrees to execute an Investment
Representation Statement in a form substantially similar to the form attached to
the Warrant as Exhibit B. 










		
	Date:___________	 	Signature:_______________________________	 
	 	 	Title:___________________________________	 





	


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EXHIBIT B
INVESTMENT
REPRESENTATION STATEMENT 



PURCHASER:_________________________

SELLER: THE GYMBOREE CORPORATION 
COMPANY: THE GYMBOREE CORPORATION 
SECURITY: COMMON STOCK
ISSUED UPON EXERCISE OF THE WARRANT 
ISSUED ON MAY __, 2000 
AMOUNT: __________ SHARES
DATE: MAY ___, 2000 




In connection with the
purchase of the above-listed Securities, I, the Purchaser, represent to the
Seller and to the Company the following: 



I am aware of the
Company’s business affairs and financial condition, and have acquired
sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Securities. I am purchasing these Securities for my own
account for investment purposes only and not with a view to, or for the resale
in connection with, any “distribution” thereof for purposes of the
Securities Act of 1933, as amended (the “Securities Act”). 



I understand that the
Securities have not been registered under the Securities Act in reliance upon a
specific exemption therefrom, which exemption depends upon, among other things,
the bona fide nature of my investment intent as expressed herein. In this
connection, I understand that, in the view of the Securities and Exchange
Commission (the “SEC”), the statutory basis for such exemption may be
unavailable if my representation was predicated solely upon a present intention
to hold these Securities for the minimum capital gains period specified under
tax statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other fixed
period in the future. 



I further understand
that the Securities must be held indefinitely unless subsequently registered
under the Securities Act or unless an exemption from registration is otherwise
available. Moreover, I understand that the Company is under no obligation to
register the Securities. In addition, I understand that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel for the Company. 



     (d) I
am familiar with the provisions of Rule 144, promulgated under the Securities Act, which,
in substance, permits limited public resale of “restricted securities” acquired,
directly or indirectly, from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. 



The Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which requires among
other things: (1) the availability of certain public information about the Company, (2)
the resale occurring not less than one year after the party has purchased, and made full
payment for, within the meaning of Rule 144, the securities to be sold; and, in the case
of an affiliate, or of a non-affiliate who has held the securities less than two years,
(3) the sale being made through a broker in an unsolicited “broker’s transaction” or
in transactions directly with a market maker (as said term is defined under the
Securities Exchange Act of 1934) and the amount of securities being sold during any three
month period not exceeding the specified limitations stated therein, if applicable. 



     (e) I
agree not to sell, make short sale of, loan, grant any options for the purchase of, or
otherwise dispose of any shares of Common Stock of the Company held by me for one hundred
eighty (180) days from the date of the issuance of the warrant. 



     (f) I
further understand that in the event all of the applicable requirements of Rule 144 are
not satisfied, registration under the Securities Act, compliance with Regulation A, or
some other registration exemption will be required; and that, notwithstanding the fact
that Rule 144 are not exclusive, the Staff of the SEC has expressed its opinion that
persons proposing to sell private placement securities other than in a registered
offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof
in establishing that an exemption from registration is available for such offers or
sales, and that such persons and their respective brokers who participate in such
transactions do so at their own risk. 



By: 
        ———————————— 
Title:
        
————————————
Date: 
         ————————————  





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