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: 15,000 SHARES
WARRANT
TO PURCHASE SHARES
OF
TIPPERARY CORPORATION
This certifies that, for value received, Xxxxxxx X. Xxxxxx, an
individual residing in Houston, Texas ("Xxxxxx"), or his registered assigns,
is entitled to purchase from TIPPERARY CORPORATION, a Texas corporation (the
"Company"), fifteen thousand (15,000) 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 5,000
From and after August 26, 1999 5,000
From and after August 26, 2000 5,000
This Warrant shall expire, if not exercised prior thereto, two (2) years
after the resignation or removal of Xxxxxx as a director of the Company. If
Xxxxxx 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
hereof, 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
Page 4 - Warrant to Purchase Shares
purchase or option plan or on Form S-4 in connection with mergers,
acquisitions or exchange 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
Page 5 - Warrant to Purchase Shares
the Securities Act, and such other documents, as such Prospective
Seller may 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
Page 6 - Warrant to Purchase Shares
securities or blue sky laws of each state or jurisdiction in
which the Company 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
(Page 7 - Warrant to Purchase Shares
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue 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
Page 8 - Warrant to Purchase Shares
expense (unless it is advised by counsel that actual or potential differing
interests or defenses exist 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, Xxxxxxx X. Xxxxxx, 0000 Xxxxx Xxxxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 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
Page 9 - Warrant to Purchase Shares
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.
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 consideration other than cash, the
amount of the consideration other than cash
Page 2 - Annex 1
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
(y) the book value of the Shares as determined by a firm of
independent
Page 3 - Annex 1
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 Convertible Securities)
then issued and the denominator of which shall be the
Page 4 - Annex 1
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 event of a
consolidation or merger of the Company with or into another corporation as a
result of
Page 5 - Annex 1
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.
(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
Page 6 - Annex 1
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 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
Page 7 - Annex 1
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 Xxxxxx at the address of Xxxxxx 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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