THIS WARRANT AND THE RIGHTS REPRESENTED HEREBY SHALL NOT BE TRANSFERABLE AT
ANY TIME UNLESS (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED, SHALL BE IN EFFECT WITH RESPECT TO THIS WARRANT OR THE
SHARES ISSUABLE HEREUNDER AT SUCH TIME, OR (II) THE TRANSFER IS MADE IN
COMPLIANCE WITH THE PROVISIONS OF SECTION 5.
NUMBER: 25,000 SHARES
WARRANT
TO PURCHASE SHARES
OF
TIPPERARY CORPORATION
This certifies that, for value received, Xxxxxxxx X. Xxxx, an individual
residing in Wilmette, Illinois ("Lees"), or his registered assigns, is
entitled to purchase from TIPPERARY CORPORATION, a Texas corporation (the
"Company"), twenty-five thousand (25,000) Shares, at the price of Four
Dollars and 25/100 ($4.25) per Share (as defined in Section 3) at any time,
or in part from time to time in accordance with the following Vesting
Schedule ("Vesting Schedule"):
Date: Total Shares Subject to Exercise
From and after August 26, 1998 8,334
From and after August 26, 1999 8,333
From and after August 26, 2000 8,333
This Warrant shall expire, if not exercised prior thereto, two (2) years
after the resignation or removal of Xxxx as a director of the Company. If
Xxxx should resign or be removed as a director from the Company, then this
Warrant shall be vested only to the extent vested on such date of resignation
or removal according to the Vesting Schedule. The provisions as to
adjustment of the initial exercise price set forth above and the number of
Shares to be issued upon the occurrence of certain events (the Provisions as
to Adjustment) are more fully set forth in Annex I hereto. (Hereinafter, the
initial exercise price set forth above in this paragraph for the purchase of
Shares upon the exercise of this Warrant, as adjusted pursuant to the
Provisions as to Adjustment, is referred to as the "Exercise Price"). This
Warrant is subject to the following provision, terms and conditions:
1. EXERCISE OF WARRANT.
(a) The rights represented by this Warrant may be exercised by the
holder hereof, in whole or in part, (but not as to a fractional Share), by
the surrender of this Warrant at the Company's principal office located in
Denver, Colorado (or such other office or agency of the Company as the
Company may designate by notice in writing to the holder hereof at the
address of such holder appearing on the books of the Company at any time
within the period above named) and delivery of a completed subscription form
in the form attached to this Warrant as Exhibit A, and upon payment to the
Company of the Exercise Price for such Shares.
(b) Payment of the Exercise Price shall be made by a combination of any
one or more of the following:
(i) By application, to the extent permitted by applicable law, of
Shares or other securities of the Company owned by the holder
thereof, the value of which for such purpose shall be the fair
market value thereof determined in good faith by the Company and
the holder hereof at the time of such exercise; provided,
however, that in order to apply such Shares or other securities
of the Company in the exercise hereof, each of the following
conditions must be met:
(A) Such Shares or other securities of the Company shall have
been owned, without material encumbrance, contingency or
risk of forfeiture relating to the ownership rights, for at
least six months and at all times during said six month
period by the holder hereof, and within said six month
period such Shares or other securities of the Company shall
not have been obtained through exercise of any option,
warrant or right to obtain such Shares of other securities
or through the conversion of any other security; and
(B) Such Shares or other securities shall not be or include: (1)
options, warrants or similar rights to acquire Shares or
other securities of the Company by the holder hereof; or (2)
securities owned by the holder hereof which are convertible
in whole or in part into Shares or other securities of the
Company.
(ii) in cash or by certified check or bank draft in New York Clearing
House funds.
(c) The Company agrees that any Shares so purchased by the exercise of
this Warrant shall be deemed to be issued to the holder hereof as the record
owner of such Shares as of the close of business on the date on which this
Warrant shall have been surrendered, the completed subscription form
delivered, and payment in full is made and delivered to the Company for such
Shares as aforesaid.
(d) Stock certificates evidencing Shares so purchased shall be
delivered to the holder hereof as promptly as practicable, after the rights
represented by this Warrant shall have been so exercised. If this Warrant
shall have been exercised only in part, and unless this Warrant has expired,
a new Warrant representing the number of Shares with respect to which this
Warrant shall not then have been exercised shall also be delivered to the
holder hereof within such time. Notwithstanding the foregoing, however, the
Company shall not be required to deliver any stock certificate evidencing
Shares upon exercise of this Warrant except in accordance with the
provisions, and subject to the limitations, of Section 5. The Company will
pay all expenses and charges payable
Page 2 - Warrant to Purchase Shares
in connection with the preparation, execution and delivery of stock
certificates and any new Warrants or promissory notes.
2. CERTAIN COVENANTS OF THE COMPANY. The Company covenants and agrees
as follows:
(a) All Shares which may be issued upon the exercise of the rights
represented by this Warrant (all such Shares, whether previously issued or
subject to issuance upon the exercise of this Warrant, are from time to time
referred to herein as "Warrant Shares") will, upon issuance, be duly
authorized and issued, fully paid and nonassessable and free from all taxes,
liens and charges with respect to the issuance thereof.
(b) During the period within which the rights represented by this
Warrant may be exercised, and only insofar as the Vesting Schedule herein
permits the exercise of this Warrant, the Company will at all times have
authorized and reserved free of preemptive or other rights for the exclusive
purpose of issuance upon exercise of the purchase rights evidenced by this
Warrant, a sufficient number of Shares to provide for the exercise of rights
represented by this Warrant.
(c) The Company will not, by amendment or restatement of the Articles
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, issuance or sale of securities or otherwise, avoid or
take any action which would have the effect of avoiding the performance of
any of the terms to be performed hereunder by the Company, but will at all
times in good faith carry out all of the provisions of this Warrant and take
all such action as may be necessary or appropriate to protect the rights of
the holder hereof against dilution or other impairment and, in particular,
will not permit the par value of any Share to be or become greater than the
then effective Exercise Price.
3. DEFINITION OF SHARES. As used herein, the term "Shares" shall mean
and include shares of the Common Stock, par value $.02 per share, of the
Company as are constituted and exist on the date hereof, and shall also
include any other class of the capital stock of the Company hereafter
authorized which shall neither be limited to a fixed sum or percentage of par
value in respect to the rights of the holders thereof to receive dividends
and to participate in the distribution of assets upon the voluntary or
involuntary liquidation, dissolution or winding up of the Company, nor be
subject at any time to redemption by the Company; provided that the Shares
receivable upon exercise of this Warrant shall include only Shares of the
type as are constituted and exist on the date hereof or Shares resulting from
any reclassification of the Shares as provided for in paragraph (C) of the
Provisions as to Adjustment.
4. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the holder hereof as such to any rights whatsoever, including,
without limitation, voting rights, as a holder of Shares of the Company. No
provisions hereof, in the absence of affirmative action by the holder hereof
to purchase Shares, and no mere enumeration herein of the rights or
privileges of such holder, shall give rise to any liability of such holder as
a holder of Shares of the Company, regardless of who may assert such
liability.
Page 3 - Warrant to Purchase Shares
5. RESTRICTIONS ON TRANSFER.
(a) This Warrant shall not be exercisable by a transferee hereof and/or
transferable and the Warrant Shares shall not be transferable except upon the
conditions specified in this Section 5, which conditions are intended, among
other things, to ensure compliance with the provisions of the Securities Act
of 1933, as amended, and the rules and regulations of the Securities and
Exchange Commission (the "Commission") thereunder (collectively the
"Securities Act"), in respect of the exercise and/or transfer of this Warrant
and/or transfer of such Warrant Shares.
(b) This Warrant and the Warrant Shares shall not be transferable
(except for a transfer of this Warrant or the Warrant Shares in an offering
registered under the Securities Act, including, without limitation, a
transfer in a registered offering effected pursuant to Section 6, and any
subsequent transfer) unless, prior to any transfer, the holder hereof shall
have received from its transferee reasonable assurances that such person is
aware that this Warrant and the Warrant Shares have not been registered under
the Securities Act and that such person is acquiring this Warrant or the
Warrant Shares for investment only and not with the view to the disposition
or public offering thereof (unless in an offering registered under the
Securities Act of 1933 or exempt therefrom), and that such person is aware
that the stock certificates evidencing the Warrant Shares shall bear a legend
restricting transfer and disposition thereof in accordance with the
Securities Act unless, in the opinion of counsel to the Company, such legend
may be omitted. In the event of any transfer of this Warrant (other than a
transfer in an offering registered under the Securities Act, including,
without limitation, a transfer in a registered offering effected pursuant to
Section 6, and any subsequent transfer), the holder hereof shall provide an
opinion of counsel, who shall be reasonably satisfactory to the Company, that
an exemption from the registration requirements of the Securities Act is
available.
(c) Any permitted subsequent holder of this Warrant shall be subject to
all the terms and conditions herein, and shall acknowledge, in writing, upon
receipt of this Warrant his or her acceptance of the terms and conditions
herein.
(d) To facilitate sales by a holder of this Warrant or Warrant Shares
in transactions qualifying under Rule 144 promulgated by the Commission under
the Securities Act, if available, the Company agrees to satisfy the current
public information requirements of said Rule 144, for as long as the Shares
remain registered under the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission thereunder (collectively the
"Exchange Act"), and to provide said holder upon request with such other
information as such holder may require for compliance with the provisions of
said Rule 144.
6. REGISTRATION UNDER SECURITIES ACT.
(a) If the Company at any time proposes to register any issuance of its
securities under the Securities Act (other than a registration on Form S-8 in
connection with an employee stock purchase or option plan or on Form S-4 in
connection with mergers, acquisitions or exchange
Page 4 - Warrant to Purchase Shares
offerings), the Company will at such time give prompt written notice to the
holder hereof and to the holders of all other Warrant Shares issuable from
any outstanding Warrants (such holders are hereinafter referred to as the
"Prospective Sellers") of its intention to do so. Upon the written request
of a Prospective Seller, given within 30 days after receipt of any such
notice (which request shall state the intended method of disposition of the
Warrant Shares to be transferred by such Prospective Seller), the Company
shall use its best efforts to cause all Warrant Shares, the holders of which
(or of the Warrants to which the same are related), to the extent vested in
accordance with the Vesting Schedule, shall have so requested registration of
the transfer thereof, to be registered under the Securities Act, all to the
extent requisite to permit the sale or other disposition (in accordance with
the intended method thereof as aforesaid) by the Prospective Sellers of such
Warrant Shares. The rights granted pursuant to this Section 6(a) shall not
be effective with respect to the Prospective Seller in the case of an
underwritten public offering of securities of the Company by the Company
unless each Prospective Seller agrees to the terms and conditions, including
underwriting discounts and allowances, specified by the managing underwriter
of such offering with respect to such Warrant Shares. The Company shall have
the right to reduce the number of Warrant Shares of the Prospective Sellers
to be included in a registration statement pursuant to the exercise of the
rights granted by this Section 6(a) if, and to the extent, that the managing
underwriter of such offering is of the good faith opinion, supported by
written reasons therefor, that the inclusion of such Warrant Shares would
materially adversely affect the marketing of the securities of the Company to
be offered; provided, that any such reduction of the number of Warrant Shares
the transfer of which is to be registered on behalf of the Prospective
Sellers shall be made on the basis of a pro rata reduction of all Warrant
Shares of all Prospective Sellers.
(b) If and whenever the Company is required by the provisions of this
Section 6 to use its best efforts to effect the registration of any transfer
of Warrant Shares under the Securities Act, the Company will, as
expeditiously as possible,
(i) prepare and file with the Commission a registration statement
with respect to such transfer and use its best efforts to cause
such registration statement to become and remain effective, but
not for any period longer than nine months;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective, and to comply with the
provisions of the Securities Act with respect to the transfer of
all securities covered by such registration statement, including,
without limitation, taking all necessary actions whenever the
Prospective Sellers of the Warrant Shares covered by such
registration statement shall desire to dispose of the same;
(iii) furnish to each Prospective Seller such number of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other
documents, as such Prospective Seller may
Page 5 - Warrant to Purchase Shares
reasonably request in order to facilitate the disposition of the
Warrant Shares owned by such Prospective Seller and covered by
such registration statement;
(iv) use its best efforts to register or qualify the securities
covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each
Prospective Seller shall request, and use its best efforts to do
any and all other acts and things which may be reasonably
necessary to enable such Prospective Seller to consummate the
disposition in such jurisdiction of the Warrant Shares owned by
such Prospective Seller and covered by such registration
statement; provided that, notwithstanding the foregoing, the
Company shall not be required to register in any jurisdiction as
a broker or dealer of securities or to grant its consent to
service of process in any such jurisdiction solely on account of
such intended disposition by such Prospective Seller;
(v) furnish to the Prospective Sellers whose intended dispositions
are registered a signed copy of an opinion of counsel for the
Company, in form and substance acceptable to such Prospective
Sellers, to the effect that: (A) a registration statement
covering such dispositions of Warrant Shares has been filed with
the Commission under the Securities Act and has been made
effective by order of the Commission, (B) such registration
statement and the prospectus contained therein and any amendments
or supplements thereto comply as to form in all material respects
with the requirements of the Securities Act, and nothing has come
to such counsel's attention which would cause him to believe that
the registration statement or such prospectus, amendment or
supplement, at the time such registration statement or amendment
became effective or such supplement was filed with the
Commission, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein (in the case of such
prospectus, amendment or supplement, in the light of the
circumstances under which they were made) not misleading
(provided that such counsel need not render any opinion with
respect to the financial statements and other financial,
engineering and statistical data included therein), and (C) to
the best of such counsel's knowledge, no stop order has been
issued by the Commission suspending the effectiveness of such
registration statement and no proceedings for the issuance of
such a stop order are threatened or contemplated;
(vi) furnish to the Prospective Sellers whose intended dispositions
are required a blue sky survey in the form and of the substance
customarily prepared by counsel for the Company and accepted by
sellers of securities in similar offerings, discussing and
describing the application provisions of the securities or blue
sky laws of each state or jurisdiction in which the Company
Page 6 - Warrant to Purchase Shares
shall be required, pursuant to Section 6(c)(iv), to register or
qualify such intended dispositions of such Warrant Shares, or, in
the event counsel for the underwriters in such offering shall be
preparing a blue sky survey, cause such counsel to furnish such
survey to, and to allow reliance thereon by, such Prospective
Sellers;
(vii) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission under the Securities Act
and the Exchange Act, insofar as they relate to such registration
and such registration statement; and
(viii) use its best efforts to list such Warrant Shares on any
securities exchange on which any securities of the Company are
then listed or to admit such Warrant Shares for trading in any
national market system in which any securities of the Company are
then admitted for trading, if the listing or admission of such
securities is then permitted under the rules of such exchange or
system.
(c) With respect to the registration by the Company of transfers of
Warrant Shares under the Securities Act pursuant to Section 6(a), the Company
shall pay all expenses incurred by it in complying with this Section 6
(including, without limitation, all registration and filing fees, printing
expenses, blue sky fees and expenses, costs and expenses of audits, and
reasonable fees and disbursements of counsel for the Company and special
counsel designated by Prospective Sellers owning a majority of the Warrant
Shares covered by such registration, but specifically excluding any
underwriting discounts and allowances that are allocable to the Warrant
Shares being sold by, and which shall be paid by, the Prospective Sellers;
provided, however, that if any registration statement filed with the
Commission by the Company under Section 6(a) shall not be declared effective
by the Commission, such attempted registration shall not constitute a
registration under this Section 6(c).
(d) It shall be a condition precedent to the obligations of the Company
to take any action pursuant to this Section 6 that each Prospective Seller,
the transfer of whose Warrant Shares is registered or to be registered under
each such registration, shall furnish to the Company such written information
regarding the securities held by such Prospective Seller as the Company shall
reasonably request and as shall be required in connection with the action to
be taken by the Company.
(e) (i) In the event of any registration of any transfer of Warrant
Shares under the Securities Act pursuant to this Section 6, the Company will
indemnify and hold harmless each Prospective Seller of such securities, each
of its officers, directors and partners, and each other person, if any, who
controls such Prospective Seller within the meaning of the Securities Act,
and each underwriter, if any, who participates in the offering of such
securities, against any losses, claims, damages or liabilities (or actions in
respect thereof), joint or several, to which each Prospective Seller,
officer, director or partner, controlling person or underwriter may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue
Page 7 - Warrant to Purchase Shares
statement of any material fact contained, on the effective date thereof, in
any registration statement under which such transfer of securities was
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, or any violation by the Company of the
Securities Act, and will reimburse such Prospective Seller and each of its
officers, directors and partners, and each such controlling person or
underwriter, for any legal or any other expenses reasonably incurred by such
Prospective Seller or its officers, directors and partners or controlling
persons or by each such underwriter, in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
an untrue statement or alleged untrue statement or omission or alleged
omission made in such registration statement, preliminary prospectus or
prospectus or such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly
executed by such Prospective Seller specifically for use in the preparation
thereof. In the event of any registration by the Company or any transfer of
securities under the Securities Act pursuant to this Section 6, each
Prospective Seller of Warrant Shares covered by such registration will
indemnify and hold harmless the Company, each other person, if any, who
controls the Company within the meaning of the Securities Act and each
officer and director of the Company and the other Prospective Sellers to the
same extent that the Company agrees to indemnify it, but only with respect to
the written information relating to such Prospective Seller furnished to the
Company by such Prospective Seller aforesaid.
(ii) Each indemnified party shall, as promptly as practicable upon
receipt of notice of the commencement of any action against such indemnified
party or its officers, directors or partners, or any controlling person of
such indemnified party, in respect of which indemnity may be sought from an
indemnifying party on account of the indemnity agreement contained in Section
6(e)(i), notify the indemnifying party in writing of the commencement
thereof. The omission of such indemnified party to so notify the indemnifying
party of any such action shall not relieve the indemnifying party from any
liability which it may have on account of the indemnity agreement contained
in Section 6(e)(i) to the extent that the failure to receive such notice
within a reasonable period of time shall not have caused harm, loss or damage
to the indemnifying party, provided that, conversely, if such failure to
receive notice shall have caused any harm, loss or damage to the indemnifying
party, such failure shall constitute a defense to any liability which such
indemnifying party may have on account of such agreement to the extent of the
harm, loss or damage so caused. In case any such action shall be brought
against any indemnified party, its officers, directors and partners, or any
such controlling person, and such indemnified party shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate in (and, to the extent that the indemnifying party
shall wish, to direct) the defense thereof at the indemnifying party's own
expense, in which event the defense shall be conducted by recognized counsel
chosen by the indemnifying party and approved by the indemnified party (whose
approval shall not unreasonably be withheld) and the indemnified party may
participate in such defense at its own expense (unless it is advised by
counsel that actual or potential differing interests or defenses exist
Page 8 - Warrant to Purchase Shares
or may exist, in which case such expenses shall be paid by the indemnifying
party, provided that the indemnifying party shall not be required to pay the
expenses for more than one counsel for all such indemnified parties).
7. TRANSFER; OWNERSHIP. Subject to Section 5, this Warrant and all
rights hereunder are transferable, in whole or in part, at the office or
agency of the Company referred to in Section 1 by the holder hereof in person
or by a duly authorized attorney, upon surrender of this Warrant, with an
assignment, acceptable to the Company, duly completed, at which time a new
Warrant shall be made and delivered by the Company, of the same tenor as this
Warrant but registered in the name of the transferee. The holder of this
Warrant, by taking or holding the same, consents and agrees that this
Warrant, when endorsed in blank, shall be deemed negotiable, and that the
holder hereof, when this Warrant shall have been so endorsed, may be treated
by the Company and all other persons dealing with this Warrant as the
absolute owner hereof for any purpose and as the person entitled to exercise
the rights represented by this Warrant and to transfer this Warrant on the
books of the Company, any notice to the contrary notwithstanding; but until
such transfer on such books, the Company may treat the registered holder
hereof as the owner hereof for all purposes. Any transfer of this Warrant
shall be made in compliance with the Securities Act and any applicable
statute securities or blue sky laws.
8. EXCHANGE AND REPLACEMENT. Subject to Section 7, this Warrant is
exchangeable, upon the surrender hereof by the holder hereof at the office or
agency of the Company referred to in Section 1, for new Warrants of like
tenor and date representing in the aggregate the right to purchase the number
of Shares which may be purchased hereunder, each of such new Warrants to
represent the right to purchase such number of Shares as shall be designated
by said holder hereof at the time of such surrender. Upon receipt by the
Company at the office or agency referred to in Section 1 of evidence
reasonably satisfactory to it of the loss, theft or destruction of this
Warrant and of indemnity or security reasonably satisfactory to it (provided
that the written indemnity of the holder hereof shall be deemed reasonably
satisfactory to the Company for such purposes), the Company will deliver a
new Warrant of like tenor and date in replacement of this Warrant. This
Warrant shall be promptly canceled by the Company upon the surrender hereof
in connection with any transfer, exchange or replacement. The Company will
pay all expenses and charges payable in connection with the preparation,
execution and delivery of Warrants pursuant to Section 7 and this Section 8.
9. NOTICES. Any notice or other document required or permitted to be
given or delivered to the holder hereof shall be delivered at, or sent by
certified or registered mail to, Xxxxxxxx X. Xxxx, 000 Xxxxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx 00000, or to such other address as shall have been
furnished to the Company in writing by the holder hereof. Any notice or
other document required or permitted to be given or delivered to the Company
shall be delivered at, or sent by certified or registered mail to, 000
Xxxxxxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, or to such other address as
shall have been furnished in writing to the holder hereof by the Company.
Any notice so addressed and mailed by registered or certified mail or
otherwise delivered, shall be deemed to be given when actually received by
the addressee.
Page 9 - Warrant to Purchase Shares
10. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
11. MISCELLANEOUS. This Warrant will be binding upon any entity
succeeding to the Company by consolidation or acquisition of all or
substantially all of the Company's assets, and upon any successor or assign of
the holder hereto. This Warrant and any provision hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party (or any predecessor in interest thereof) against whom enforcement of the
same is sought. The headings in this Warrant are for purposes of reference only
and shall not affect the meaning or construction of any of the provisions
hereon.
IN WITNESS WHEREOF, Tipperary Corporation has caused this Warrant to be
signed by its duly authorized officers, under its corporate seal, to be dated
October 21, 1997.
TIPPERARY CORPORATION
BY: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------------
ITS: President
(CORPORATE SEAL)
ATTEST:
/s/ Xxxxxx X. Xxxxxx
-------------------------------
ITS: Secretary
Page 10 - Warrant to Purchase Shares
Annex 1
TIPPERARY CORPORATION
PROVISIONS AS TO ADJUSTMENT OF
EXERCISE PRICE AND NUMBER OF SHARES
ISSUED UPON OCCURRENCE OF CERTAIN EVENTS
The Exercise Price and the number of Shares issuable upon the exercise of the
annexed Warrant to purchase shares of TIPPERARY CORPORATION, a Texas corporation
(herein and in this Warrant referred to as the "Company"), shall be subject to
adjustment from time to time as hereinafter provided; that in no event shall the
Exercise Price be increased to a price greater than Four Dollars and 25/100
($4.25) per Share, except as provided by paragraph (C). Upon each adjustment of
the Exercise Price, the holder of this Warrant shall thereafter be entitled to
purchase, at the Exercise Price resulting from such adjustment, the number of
Shares obtained by multiplying the number of Shares purchasable pursuant hereto
immediately prior to such adjustment by a fraction, the numerator of which is
the Exercise Price in effect immediately prior to such adjustment and the
denominator of which is the Exercise Price resulting from such adjustment. In
making the adjustments to the Exercise Price and the number of Shares issuable
upon the exercise of this Warrant, the following provisions shall be applicable:
(A) If and whenever the Company shall issue or sell any Shares for
consideration per Share that is less than the Exercise Price in effect
immediately prior to the time of such issue or sale at less than the Market
Price (as hereinafter defined) of such Shares on the date of such issue or sale,
then forthwith upon such issue or sale the Exercise Price in effect immediately
prior thereto shall be adjusted to an amount (calculated to the nearest cent)
determined by dividing (i) an amount equal to the sum of (a) the number of
Shares outstanding immediately prior to such issue or sale multiplied by the
Exercise Price in effect immediately prior to such issue or sale, and (b) the
consideration, if any, received by the Company upon such issue or sale by (ii)
the total number of Shares outstanding immediately after such issue or sale;
provided, however, that no adjustment shall be made hereunder by reason of:
(i) the grant of this Warrant or the issuance of Shares upon the
exercise of this Warrant or any other outstanding Warrant;
(ii) the grant by the Company of options to purchase shares in
connection with any purchase or option plan for the benefit of
employees of the Company, or any affiliates or subsidiaries
thereof; or
(iii) the issuance (whether directly or by assumption in a merger or
otherwise) or sale (including any issuance or sale to holders of
Shares) of any securities convertible into or exchangeable for
Shares (such convertible or exchangeable securities are herein
referred to as "Convertible Securities," or the grant of rights
to subscribe for or to purchase, or of options for the
purchase of (including any grant of such rights or options to
holders of shares, other than pursuant to a dividend on Shares),
Shares of Convertible Securities, regardless of whether the right
to convert or exchange such Convertible Securities or such rights
or options are immediately exercisable.
No adjustment of the Exercise Price shall be required to be made by the Company
and no notice hereunder must be given if the amount of any required adjustment
is less than 5% of the Exercise Price. In such case any such adjustment shall
be carried forward and shall be made (and notice thereof shall be given
hereunder) at the time of and together with the next subsequent adjustment
which, together with any adjustment so carried forward, shall amount to not less
than 5% of the Exercise Price.
(B) For the purposes of paragraph (A), the following provisions (i)
through (vi), inclusive, shall also be applicable:
(i) If, at the time Shares are issued and sold upon the conversion or
exchange of Convertible Securities or upon the exercise of rights
or options previously granted by the Company, the price per Share
for which such Shares are issued (determined by dividing (a) the
total amount, if any, received by the Company as consideration
for such Convertible Securities or for the granting of such
rights or options, plus the aggregate amount of additional
consideration paid to the Company upon the conversion or exchange
of such Convertible Securities (which, if so provided in such
Convertible Securities, shall be deemed to be equal to the
outstanding principal amount of the indebtedness represented by
such Convertible Securities) or upon the exercise of such rights
or options, by (b) the total number of Shares issued upon the
conversion or exchange of such Convertible Securities or upon the
exercise of such rights or options) shall be less than the
Exercise Price in effect immediately prior to such issue, sale or
exercise, then the adjustments provided for by the first
paragraph of this Annex 1 and paragraph (A) shall be made. In
making the adjustment of the Exercise Price provided for by
paragraph (A), the amount described in clause (a) of this
paragraph (B)(i) shall be considered the consideration received
by the Company upon the issue or sale of the Shares for purposes
of clause (i)(b) of paragraph (A).
(ii) In case at any time any Shares or Convertible Securities or any
rights or options to purchase any Shares or Convertible
Securities shall be issued or sold for cash, the consideration
received therefor shall be deemed to be the amount received by
the Company therefor without deduction therefrom of any expenses
incurred or any underwriting commissions or concessions paid or
allowed by the Company in connection therewith. In case any
Shares or Convertible Securities or any rights or options to
Purchase any Shares or Convertible Securities shall be issued or
sold, in whole or in part, for
Page 2 - Annex 1
consideration other than cash, the amount of the consideration
other than cash received by the Company in exchange for the issue
or sale of such Convertible Securities shall be deemed to be the
fair value of such consideration as determined in good faith by
the board of directors of the Company, without deduction
therefrom of any expenses incurred or any underwriting
commissions or concessions paid or allowed by the Company in
connection therewith; provided that if the holder or holders of
at least 66-2/3% of the Warrant Shares purchasable under this
Warrant shall request in writing, the value of such consideration
shall be determined by an independent expert selected by such
holders, the costs and expenses of which shall be borne by the
Company, and, if the value of such consideration as so determined
is less than the value determined by the board of directors of
the Company, the lesser value shall be utilized in calculating
the consideration per Share received by the Company for purposes
of making the adjustment provided by paragraph (A). In the event
of any merger or consolidation of the Company in which the
Company is not the surviving corporation or in the event of any
sale of all or substantially all of the assets of the Company for
stock or other securities of any corporation, the Company shall
be deemed to have issued a number of Shares for stock or
securities of such other corporation computed on the basis of the
actual exchange ratio on which the transaction was predicated and
for consideration that is equal to the fair market value on the
date of such transaction of such stock or securities of the other
corporation, and if any such calculation results in adjustment of
the Exercise Price, the determination of the number of Shares
issuable upon exercise of this Warrant immediately prior to such
merger, consolidation or sale, for purposes of paragraph (A),
shall be made after giving effect to such adjustment of the
Exercise Price.
(iii) The number of Shares outstanding at any given time shall not
include Shares that have been redeemed by the Company and not
canceled, if any, and that are thus owned or held by or for the
account of the Company, and the disposition of any such Shares
shall be considered an issue or sale of Shares for purposes of
paragraph (A).
(iv) "Market Price" shall mean the lower of (a) the average closing
sales prices of Shares recorded on the principal national
securities exchange on which the Shares are listed or in a
national market system for securities in which the Shares are
admitted to trading or (b) the average of the closing bid and
asked prices of Shares reported in the domestic over-the-counter
market, for the 20 trading days immediately prior to the day as
of which the Market Price is being determined. If the Shares are
not listed on any national securities exchange or admitted for
trading in any national market system or traded in the domestic
over-the-counter market, the Market Price shall be the higher of
Page 3 - Annex 1
(y) the book value of the Shares as determined by a firm of
independent public accountants of recognized standing selected by
the board of directors of the Company as of the last day of any
month ending within 60 days preceding the date as of which the
determination is to be made or (z) the fair market value of the
Shares determined in good faith by the board of directors of the
Company, provided that if the holder or holders of at least
66-2/3% of the Warrant Shares purchasable under the Warrant shall
request in writing, the fair market value of the Shares shall be
determined by an independent investment banking firm or other
independent expert selected by such holders and reasonably
satisfactory to the Company, which determination shall be as of a
date which is within 15 days of the date as of which the
determination is to be made.
(v) Anything herein to the contrary notwithstanding, in case the
Company shall issue any Shares in connection with the acquisition
by the Company of the stock or assets of any other corporation or
the merger of any other corporation into the Company under
circumstances where, on the date of the issuance of such Shares,
the consideration received for such Shares is less than the
Market Price of the Shares, but on the date the number of Shares
was determined, the consideration received for such Shares would
not have been less than the Market Price thereof, such Shares
shall not be deemed to have been issued for less than the Market
Price.
(vi) Anything in clause (ii) of this paragraph (B) to the contrary
notwithstanding, in the case of an acquisition where all or part
of the purchase price is payable in Shares or Convertible
Securities but is stated as a dollar amount, where the Company
upon making the acquisition pays only part of a maximum dollar
purchase price which is payable in Shares or Convertible
Securities and where the balance of such purchase price is
deferred or is contingently payable under a formula related to
earnings over a period of time, (a) the consideration received
for any Shares or Convertible Securities delivered at the time of
the acquisition shall be deemed to be such part of the total
consideration as the portion of the dollar purchase price then
paid in Shares or Convertible Securities bears to the total
maximum dollar purchase price payable in Shares or Convertible
Securities and (b) in connection with each issuance of additional
Shares or Convertible Securities pursuant to the terms of the
agreement relating to such acquisition, the consideration
received shall be deemed to be such part of the total
consideration as the portion of the dollar purchase price then
and theretofore paid in Shares or Convertible Shares bears to the
total maximum dollar purchase price payable in Shares or
Convertible Securities multiplied by a fraction, the numerator of
which shall be the number of Shares (or in the case of
Convertible Securities other than capital stock of the Company,
the aggregate principal amount of such
Page 4 - Annex 1
Convertible Securities) then issued and the denominator of which
shall be the total number of shares (or in the case of
Convertible Securities other than capital stock of the Company,
the aggregate principal amount of such Convertible Securities)
then and theretofore issued under such acquisition agreement. In
the event only a part of the purchase price for an acquisition is
paid in Shares or Convertible Securities in the manner referred
to in this clause (vi), the term "total consideration" as used in
this clause (vi) shall mean that part of the aggregate
consideration as is fairly allocable to the purchase price paid
in Shares or Convertible Securities in the manner referred to in
this clause (vi), as determined by the board of directors of the
Company.
(C) In the case at any time the Company shall subdivide its outstanding
Shares into a greater number of Shares, then from and after the record date for
such subdivision the Exercise Price in effect immediately prior to such
subdivision shall be proportionately reduced and the number of Shares
purchasable upon the exercise of this Warrant shall be correspondingly
increased, and, conversely, in case the outstanding Shares shall be combined
into a smaller number of Shares, then from and after the record date for such
combination the Exercise Price in effect immediately prior to such combination
shall be proportionately increased and the number of Shares purchasable upon the
exercise of this Warrant shall be correspondingly decreased.
(D) Unless the provisions of paragraph (E) apply, if any capital
reorganization or reclassification of the capital stock of the Company, or
consolidation or merger of the Company with another corporation, or sale of all
or substantially all of its assets to another corporation, shall be effected in
such a way that holders of Shares (or any other securities of the Company then
issuable upon the exercise of this Warrant) shall be entitled to receive stock,
securities or assets with respect to or exchange for Shares (or such other
securities) then, as a condition of such reorganization, reclassification,
consolidation, merger or sale, lawful and adequate provision shall be made
whereby the holder hereof shall thereafter have the right to purchase and
receive upon the basis and upon the terms and conditions specified in this
Warrant and in lieu of the Shares (or other securities) of the Company
immediately theretofore purchasable and receivable upon the exercise of the
rights represented hereby, such shares of stock, securities or assets as may be
issued or payable with respect to or in exchange for a number of outstanding
Shares (or other securities) equal to the number of Shares (or other securities)
immediately theretofore so purchasable and receivable had such reorganization,
reclassification, consolidation, merger or sale not taken place, and in any such
case appropriate provision shall be made with respect to the rights and
interests of the holder of this Warrant to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the Exercise Price
and of the number of Shares (or other securities) purchasable upon the exercise
of this Warrant and for the registration thereof as provided in Section 6 of
this Warrant) shall thereafter be applicable, as nearly as may be, in relation
to any shares of stock, securities or assets thereafter deliverable upon the
exercise hereof (including an immediate adjustment, by reason of such
consolidation, merger or sale, of the Exercise Price to the value of the Shares
(or other securities) reflected by the terms of such consolidation, merger or
sale if the value so reflected is less than the Exercise Price in effect
immediately prior to such consolidation, merger or sale). In the
Page 5 - Annex 1
event of a consolidation or merger of the Company with or into another
corporation as a result of which a greater or lesser number of securities of the
surviving corporation are issuable to holders of Shares in respect of the number
of Shares outstanding immediately prior to such consolidation or merger, then
the Exercise Price in effect immediately prior to such consolidation or merger
shall be adjusted in the same manner as though there were a subdivision or
combination of the outstanding Shares. The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof the surviving or successor corporation (if other than the
Company) resulting from such consolidation or merger of the corporation
purchasing such assets shall assume, by written instrument executed and mailed
to the registered holder hereof at the last address of such holder appearing on
the books of the Company, the obligation to deliver to such holder such Shares
of stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to purchase, and containing the express assumption
of such surviving or successor corporation of the due performance of every
provision of this Warrant to be performed by the Company and of all liabilities
and obligations of the Company hereunder.
(E) In the event of a change in control of the Company, as defined in this
paragraph (E), then the Board of Directors shall accelerate the exercise date of
the Warrant or make this Warrant fully vested and exercisable and, in its sole
discretion, may take any or all of the following actions: (a) grant a cash bonus
award to any holder of this Warrant in an amount necessary to pay the Exercise
Price of all or any portion of the Warrant then held by such person; (b) pay
cash to any holder of this Warrant in exchange for the cancellation of the
holder's Warrant in an amount equal to the difference between the Exercise Price
of such Warrant and the greater of the tender offer price for the underlying
Shares or the Market Price of the Shares on the date of the cancellation of the
Warrant; and (c) make any other adjustments or amendments to this Warrant. For
purposes of this paragraph (E), a "change in control" shall be deemed to have
occurred if (a) any "person" or "group" (within the meaning of Sections 13(d)
and 14(d)(2) of the Securities Exchange Act of 1934, as amended ("1934 Act"),
other than a trustee or other fiduciary holding securities under an employee
benefit plan of the Company is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of more than 50% of the
then outstanding voting stock of the Company; or (b) at any time during any
period of three consecutive years after the date of this Warrant, individuals
who at the beginning of such period constitute the Board (and any new director
whose election by the Board or whose nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved) cease for
any reason to constitute a majority thereof; or (c) the stockholders of the
Company approve a merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least 50% of the combined
voting power of the voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation.
Page 6 - Annex 1
(F) In case at any time the Company shall pay any dividend on or make any
other distribution with respect to Shares (or any other securities of the
Company then issuable upon the exercise of the Warrant) that is payable in
Shares, Convertible Securities, any other securities of the Company or other
stock, securities or assets, other than cash, then thereafter, and in lieu of
any adjustment of the Exercise Price and the number of Shares issuable upon the
exercise of this Warrant, the holder of this Warrant, upon any exercise of the
rights represented hereby, shall be entitled to receive the number of Shares (or
other securities) being purchased upon such exercise and, in addition to and
without further payment, the Shares, Convertible Securities, other securities of
any company or other stock, securities or assets which the holder of this
Warrant would have received by way of such distributions if continuously since
the date of the Warrant (or, if this Warrant shall have been issued pursuant to
Section 7 of this Warrant, the date of the predecessor Warrant to which this
Warrant relates) such holder had been the record holder of the number of Shares
(or other securities), then being purchased and had retained all such Shares,
Convertible Securities, other securities of the Company or other stock,
securities or assets distributable with respect to such Shares (or other
securities) and, furthermore, all cash, stock, securities or assets payable as
dividends or distributions with respect to the foregoing and originating
directly or indirectly therefrom. The Company shall reserve and retain in
escrow from any such dividend or distribution of Shares, Convertible Securities,
other securities of the Company or other stock, securities or assets, and from
any such dividends or distributions with respect thereto and originating
directly or indirectly therefrom, such Shares, Convertible Securities, other
securities of the Company and other stock, securities, assets and cash as shall
be necessary to fulfill its obligations to the holder hereof pursuant to this
paragraph (F).
(G) If at any time conditions arise by reason of action taken by the
Company, which in the good faith opinion of the board of directors of the
Company, are not adequately covered by the provisions of this Annex 1, and which
might materially adversely affect the rights of the holder of this Warrant, the
Company shall appoint a firm of independent public accountants of recognized
standing (which may be the regular accountants or auditors of the Company),
which shall give their opinion as to the adjustments, if any, in the Exercise
Price and the number of Shares purchasable upon the exercise of this Warrant, or
other change in the rights of the holder hereof, on a basis consistent with the
other provisions of this Annex 1, necessary to preserve without diminution the
rights of the holder hereof. Upon receipt of such opinion, the Company shall
forthwith make the adjustments described therein.
(H) (i) Within ten (10) days of any adjustment of the Exercise Price or
change in the number of Shares purchasable upon the exercise of
this Warrant made pursuant to paragraphs (A), (B), (C) , or (F)
or any change in the rights of the holder of this Warrant by
reason of the occurrence of events described in paragraphs (D),
(E), or (F), the Company shall give written notice by certified
or registered mail to the registered holder of this Warrant at
the address of such holder as shown on the books of the Company,
which notice shall describe the event requiring such adjustments
(with respect to any adjustment made pursuant to paragraphs (C),
(D), (E) or (F), the Exercise Price resulting
Page 7 - Annex 1
from such adjustment, the increase or decrease, if any, in the
number of Shares purchasable upon the exercise of this Warrant,
or the other change in the rights of such holder, and set forth
in reasonable detail the method of calculation of such
adjustments and the facts upon which such calculations are based.
Within two (2) days of receipt from the holder of this Warrant
upon the surrender hereof for exercise pursuant to Section 1 of
this Warrant, and within three (3) days of receipt from the
holder hereof a written request therefor (which request shall not
be made more than once each calendar quarter), the Company shall
give written notice by certified or registered mail to such
holder at his address as shown on the books of the Company of the
Exercise Price in effect as of the date of receipt by the Company
of this Warrant for exercise, or the date of receipt of such
written request, and the number of Shares purchasable or the
number or amount of other shares of stock, securities or assets
receivable as of such date, and set forth in reasonable detail
the method of calculation of such numbers; provided that no
further adjustments to the Exercise Price or the number of Shares
purchasable or number or amount of shares, securities or assets
receivable on exercise of this Warrant shall be made after
receipt of this Warrant by the Company for exercise.
ii) Upon each adjustment of the Exercise Price and each change in the
number of Shares purchasable upon the exercise of this Warrant,
and change in the rights of the holder of this Warrant by reason
of the occurrence of other events herein set forth, then and in
each case, upon written request of the holder of this Warrant
(which request shall be made not more often than once each
calendar year), the Company will at its expense promptly obtain
an opinion of independent public accountants reasonably
satisfactory to each holder stating the then effective Exercise
Price and the number of Shares then purchasable, or specifying
the other shares of stock, securities or assets and the amount
thereof then receivable, and setting forth in reasonable detail
the method of calculation of such numbers and the facts upon
which such calculations are based. The Company will promptly
mail a copy of such opinion to the registered holder hereof.
(I) In case at any time:
(i) The Company shall pay any dividend payable in capital stock
on its outstanding Shares or make any distribution (other
than regular cash dividends) to the holders of Shares;
(ii) The Company shall offer for subscription pro rata to the
holders of Shares any additional capital stock or other
rights;
Page 8 - Annex 1
(iii) There shall be authorized any capital reorganization or
reclassification of the capital stock of the Company, or
consolidation or merger of the Company with, or sale of all
or substantially all of its assets to, another corporation;
or
(iv) There shall be authorized or commence a voluntary or involuntary
dissolution, liquidation or winding up of the Company.
then, in one or more of said cases, the Company shall given written notice by
certified or registered mail to Lees at the address of Xxxx as shown on the
books of the Company on the date on which (1) the books of the Company shall
close or a record shall be taken for such dividend, distribution, or
subscription rights, or (2) such reorganization, reclassification,
consolidation, merger, sale, dissolution, liquidation or winding up shall take
place or be voted upon by the shareholders of the Company, as the case may be.
Such notice shall also specify the date as of which the holders of record of
Shares shall participate in such dividend, distribution or subscription rights,
or shall be entitled to exchange their Shares for securities or other property
deliverable upon such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding up, as the case may be. Such written
notice shall be given at least thirty (30) days prior to the action in question
and no less than thirty (30) days prior to the record date or the date on which
the Company's books are closed in respect thereto.
Page 9 - Annex 1
EXHIBIT A
SUBSCRIPTION FORM
To be Executed by the Registered Holder
Desiring to Exercise the Within Warrant of
TIPPERARY CORPORATION
The undersigned registered holder hereby exercises the right to purchase
__________ Shares covered by the within Warrant according to the conditions
thereof, and herewith makes payment of the Exercise Price of such Shares,
$__________.
Name of Registered Holder:
----------------------------------------------------
Signature:
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Title of Signing Officer
or Agent (if any):
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Address of Registered Holder:
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Tax I.D. No.:
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Dated: , 19 .
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