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: 50,000 Shares
AMENDED WARRANT
TO PURCHASE SHARES
OF
TIPPERARY CORPORATION
This Amended Warrant to Purchase Shares of Tipperary Corporation hereby
replaces in full and voids that certain Warrant to Purchase Shares of Tipperary
Corporation dated October 29, 1990 in the amount of 50,000 shares of Common
Stock of Tipperary Corporation.
This certifies that, for value received, James A. McAuley, an individual
residing in Dallas, Texas ("McAuley") , or his registered assigns, is entitled
to purchase from TIPPERARY CORPORATION, a Texas corporation (the "Company"),
fifty thousand (50,000) Shares, at the price of Two Dollars and No/100 ($2.00)
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 February 1, 1990 25,000
From and after February 1, 1991 37,500
From and after February 1, 1992 50,000
This Warrant shall expire, if not exercised prior thereto, two (2) years after
the resignation or removal of McAuley from the Board of Directors of the
Company. If McAuley should resign or be removed from the Board of Directors
of 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 provisions, 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, subject to the Vesting
Schedule, (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 (A) Shares or other securities of the Company owned by the
holder hereof , (B) Warrant Shares (as hereinafter defined) issuable upon the
exercise of this Warrant, (C) options, warrants or similar rights to acquire
Shares or other securities of the Company owned by the holder hereof, or (D)
other securities owned by the holder hereof which are convertible into Shares
or other securities of the Company, the value of any 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; or (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 made 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
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
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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.
-3-
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 regulation 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 exempt therefrom), an 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, including without limitation the Vesting
Schedule and the continuing service of McAuley on the Board of Directors of the
Company 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 of 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
-4-
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 if Double-Double
Partners II, a Texas joint venture (which together with any of its affiliates or
subsidiaries shall hereinafter be referred to as "Double-Double"), at any
time proposes to register any sale of securities of the Company owned by
Double-Double, the Company or Double-Double, as the case may be, 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 Shares") 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 or Double-Double, as the case may be, 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
herein) 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 or Double-Double 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 and Double-Double 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 or Double-Double, as the case may be, is
required by the provisions of this Section 6 to use its best efforts to effect
the registration of any transfer of Warrant
-5-
Shares under the Securities Act, the Company or Double-Double 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 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, neither the Company nor Double-Double shall 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
or Double-Dou-
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ble, 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 or Double-Double 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
-7-
(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) With respect to the registration by Double-Double of transfers of
Warrant Shares under the Securities Act pursuant to Section 6(a) (including,
for purposes of this Section 6(d), an attempted registration pursuant to the
filing of a registration statement with the Commission by Double-Double under
Section 6(A), which registration statement thereafter is not declared
effective by the Commission) , Double-Double and the Prospective Sellers
shall each pay their proportionate share, based upon the respective amount of
securities being registered by each, of all expenses incurred by
Double-Double 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, reasonable fees and
disbursements of counsel for Double-Double and underwriting discounts and
allowances, but specifically excluding any fees and disbursements of special
counsel designated by Prospective Sellers owning a majority of the Warrant
Shares covered by each such registration, which shall be allocable to the
Warrant Shares being sold by and shall be paid by the Prospective Sellers) .
(e) It shall be a condition precedent to the obligations of the Company
and Double-Double 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 or
Double-Double, as the case may be, such written information regarding the
securities held by such Prospective Seller as the Company or Double-Double
shall
-8-
reasonably request and as shall be required in connection with the action to be
taken by the Company or Double-Double.
(f) (i) In the event of any registration of any transfer of Warrant
Shares under the Securities Act pursuant to this Section 6, the Company or
Double-Double, as the case may be, 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 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 or Double-Double 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 or Double-Double, as the case may
be, 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 or Double-Double 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 or Double-Double, each other person,
if any, who controls the Company or Double-Double within the meaning of the
Securities Act and each officer and director of the Company and the general
partners of Double-Double and the other Prospective Sellers to the same
extent that the Company or Double-Double agrees to indemnify it, but only with
respect to the written information relating to such Prospective Seller
furnished to the Company or Double-Double by such Prospective Seller
aforesaid.
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(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 (f ) (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 (f ) (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 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 and the Vesting Schedule
herein, 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,
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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, James A. McAuley, 9400 N. Central
Expressway, Suite 1620, LB 108, Dallas, Texas 75231, 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, 633 Seventeenth, Suite 1550, Denver, Colorado 80202, 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.
10. Limitation on Interest. McAuley, for himself and on behalf of each
other person or entity that directly or indirectly (through one or more
intermediaries or otherwise) controls, is controlled by, or is under common
control with, McAuley, and the Company hereby stipulates and agrees that this
Warrant is being issued solely as compensation for the continued service of
McAuley as a member of the Board of Directors of the Company for a term of
five years from the date of grant hereof, or until McAuley is removed from
the Board of Directors of the Company, whichever is earlier.
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11. GOVERNING LAW. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
12. MISCELLANEOUS. This Warrant will be binding upon any partnership or
corporation 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
February 1st, 1995.
TIPPERARY CORPORATION
By /s/ Carter G. Mathies
-------------------------------------
Carter G. Mathies
Chief Executive Officer
(CORPORATE SEAL)
ATTEST: /s/ Elaine Treece
----------------------------
Elaine Treece
Secretary
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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 _________________ ($________) 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;
(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 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
cancelled, 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 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 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 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 Period 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) 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 of sale). In the 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 or 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 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 this 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 this Warrant (or, if this Warrant shall have been issued
pursuant to Section I(C) or 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 (E).
(F) 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.
(G) (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 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 of 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.
(H) 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;
(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 give written notice by
certified or registered mail to Roulier at the address of Roulier 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.
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: ____________________________________________________________________
Title of Signing Officer
or Agent (if any): __________________________________________________________
Address of Registered Holder: _________________________________________________
Tax I.D. No.: _________________________________________________________________
Dated: ___________________, 19____
corp/419.01