SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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TIPPERARY CORPORATION
633 SEVENTEENTH STREET
SUITE 1550
DENVER, COLORADO 80202
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JANUARY 28, 1997
TO THE SHAREHOLDERS:
Notice is hereby given that the Annual Meeting of Shareholders (the "Annual
Meeting") of Tipperary Corporation (the "Company"), a Texas corporation, will
be held in the Management Briefing Center on the fourth floor of Wells Fargo
Bank, 633 Seventeenth Street, Denver, Colorado, on Tuesday, January 28, 1997,
at 10:00 a.m., MST, for the purpose of taking action on:
1. The election of 5 directors to serve until the next Annual Meeting of
Shareholders or until their successors shall be duly elected and qualified;
2. A proposal to adopt the 1997 Long-Term Incentive Plan;
3. The ratification of the reappointment of Price Waterhouse LLP ("Price
Waterhouse") as the Company's independent accountants for fiscal 1997; and
4. The transaction of such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The Company's Board of Directors has fixed the close of business on December
2, 1996, as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting and any adjournment thereof. These
materials were first mailed to shareholders on or about January 3, 1997. Both
the principal executive office and mailing address of the Company is 633
Seventeenth Street, Suite 1550, Denver, Colorado 80202.
Information concerning the matters to be acted upon at the Annual Meeting is
set forth in the accompanying Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
Elaine R. Treece
Corporate Secretary
Date: December 23, 1996
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON. PLEASE
COMPLETE AND PROMPTLY RETURN YOUR SIGNED PROXY IN THE POSTAGE-PAID ENVELOPE.
THE PROXY IS REVOCABLE AT ANY TIME PRIOR TO ITS USE. IF YOU ATTEND THE
MEETING YOU CAN REVOKE YOUR PROXY AND VOTE IN PERSON.
PAGE 2 TIPPERARY CORPORATION
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TIPPERARY CORPORATION
PROXY STATEMENT
SOLICITATION OF PROXY
The accompanying proxy is solicited on behalf of the Board of Directors of
Tipperary Corporation in connection with the Annual Meeting of Shareholders
on Tuesday, January 28, 1997, ("Annual Meeting") to be held in the Management
Briefing Center on the fourth floor of Wells Fargo Bank, 633 Seventeenth
Street, Denver, Colorado, at 10:00 a.m., MST.
The cost of preparing, assembling and mailing the Notice of Annual Meeting of
Shareholders, Proxy Statement and form of proxy, which were first mailed to
the shareholders on or about January 3, 1997, will be borne by the Company. It
is contemplated that solicitation of proxies will be primarily by mail, but may
be supplemented by personal solicitation by the Company's officers, directors
and other regular employees to whom no additional compensation will be paid.
REVOCATION OF PROXY
Any shareholder giving a proxy may revoke it at any time prior to its use by
notifying the Company either in person or by written notice of the revocation.
Each notice must specifically revoke the power to use and vote the proxy.
Shareholder attendance at the Annual Meeting may revoke any proxy given by
such shareholder. If no specification is made on the proxy, the shares will
be voted in accordance with the recommendation of the Board of Directors, as
stated herein, or at the discretion of the named proxy with regard to any
other matter that may properly come before the Annual Meeting.
VOTING AT THE ANNUAL MEETING
The close of business on December 2, 1996, has been fixed by the Company's
Board of Directors as the record date for the determination of shareholders
entitled to vote at the Annual Meeting. As of that date, the Company had
issued and outstanding 13,050,271 shares of Common Stock, par value $.02 per
share.
The Company's Articles of Incorporation do not permit cumulative voting by
shareholders. The Common Stock is the Company's only class of voting
securities. Accordingly, each holder of Common Stock as of the record date
shall be entitled to cast one vote for each share of Common Stock held by him.
Of the votes cast at the Annual Meeting, a vote of the holders of a majority
of the Common Stock present, either in person or by proxy, is required to
elect each director nominee, to adopt the 1997 Long-Term Incentive Plan and
to ratify the reappointment of Price Waterhouse as the Company's independent
accountants for fiscal 1997.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of December 2, 1996, regarding
the beneficial ownership of the voting securities of the Company by persons
and entities known by the Company to beneficially own more than 5% of the
outstanding Common Stock of the Company, its only outstanding class of voting
securities. Except as otherwise indicated, to the knowledge of the Company,
each person or entity whose name appears below has sole voting and investment
power over its respective shares of Common Stock.
PAGE 3 TIPPERARY CORPORATION
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Amount and Nature of Beneficial
Name and Address of Beneficial Owner Ownership Percentage of Class
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Texland Oil, Inc.(1) 3,117,514 (2) 23.9%
33 West Monroe Street
Chicago, Illinois 60603
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SDK Incorporated (1) 4,898,920 (3) 37.5%
33 West Monroe Street
Chicago, Illinois 60603
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Slough Parks, Inc.(1) 4,898,920 (4) 37.5%
33 West Monroe Street
Chicago, Illinois 60603
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Thomson Horstmann & Bryant, Inc. 1,129,000 8.7%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
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The Acorn Fund 800,000 6.1%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
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Heartland Advisors, Inc. 1,324,100 10.1%
790 North Milwaukee
Milwaukee, Wisconsin 53202
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(1) SDK Incorporated ("SDK"), a Delaware corporation, owns 100% of the Common
Stock of Texland Oil, Inc. ("Texland"). According to Amendment No. 9 to
its Statement on Schedule 13D, dated July 31, 1995, the following entities
may be deemed to beneficially own the Common Stock of Texland, through
control of SDK: Slough Parks, Inc., a Delaware corporation ("Slough
Parks"), the controlling shareholder of SDK; Slough Parks Holding, Inc.
("SPH"), a Delaware corporation, the sole shareholder of Slough Parks;
Slough Trading Estate Limited, a limited liability company formed under
the laws of the United Kingdom ("STEL"), the sole shareholder of SPH;
Slough Properties Limited ("SPL"), a limited liability company formed under
the laws of the United Kingdom, the sole shareholder of STEL; Slough
Estates PLC ("SEL"), a public limited liability company formed under the
laws of the United Kingdom, the sole shareholder of SPL. The board of
directors of SEL ultimately exercises voting and dispositive power with
regard to the shares of the Company's Common Stock held by Texland.
According to the above referenced Schedule 13D, SEL is a publicly held
limited liability company, whose principal office is located at 234 Bath
Road, Trading Estate, Slough SL1 4EE, England. Pursuant to Amendment
No. 9 of Schedule 13D, to the knowledge of SEL, no shareholder owns more
than 5% of its outstanding shares.
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(2) Texland is the record owner of the indicated shares.
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(3) Of the 4,898,920 shares noted, SDK is the record owner of 1,564,835 of the
shares; is the indirect owner of 3,117,514 of the shares through its
wholly-owned subsidiary Texland; and holds 216,571 shares as collateral
for a loan to a former director of the Company.
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(4) Indirectly owned through its 80% ownership of the voting securities of
SDK.
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Page 4 Tipperary Corporation
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of December 2, 1996, regarding
shares of the Company's Common Stock beneficially owned by each director,
nominee for director and executive officers and directors as a group. Except
as otherwise indicated, to the knowledge of the Company, each person has sole
voting and investment power over his respective shares of Common Stock.
Name of Beneficial Amount and Nature of
Title of Class Owner Beneficial Ownership Percentage of Class(1)
- -------------- ------------------ -------------------- ----------------------
Common Stock David L. Bradshaw 306,771 (2) 2.3%
Kenneth L. Ancell 0 (3) *
Eugene I. Davis 50,000 (4) *
Douglas Kramer 0 *
Marshall D. Lees 0 *
Jeff T. Obourn 40,666 (5) *
Paul C. Slevin 13,333 (6) *
Robert T. Larson, Jr. 14,333 (7) *
Larry G. Sugano 14,333 (8) *
Wayne W. Kahmeyer 11,667 (9) *
Executive officers and
directors as a group, 10 in
number 451,103 3.3%
*less than 1%
(1) Securities not outstanding, but included in the beneficial ownership of
each such person are deemed to be outstanding for the purpose of
computing the percentage of outstanding securities owned by such person,
but are not deemed to be outstanding for the purpose of computing the
percentage of the class owned by any other person.
(2) Includes 302,917 shares issuable pursuant to options/warrants which are
currently exercisable or exercisable within 60 days of December 2, 1996.
(3) Includes a warrant to acquire 50,000 shares of the Common Stock at an
exercise price of $4.31 per share none of which will be exercisable within
60 days of December 2, 1996.
(4) Includes a warrant to acquire 50,000 shares of the Common Stock at an
exercise price of $2.75 per share which will be exercisable within 60 days
of December 2, 1996.
(5) Includes 40,666 shares issuable pursuant to the Company's 1987 Employee
Stock Option Plan which are currently exercisable or exercisable within
60 days of December 2, 1996.
(6) Includes 8,333 shares issuable pursuant to the Company's 1987 Employee
Stock Option Plan which are currently exercisable or exercisable within
60 days of December 2, 1996. Includes 5,000 shares of Common Stock owned
by Mr. Slevin's wife, to which he disclaims beneficial ownership.
(7) Includes 14,333 shares issuable pursuant to the Company's 1987 Employee
Stock Option Plan which are currently exercisable or exercisable within
60 days of December 2, 1996.
(8) Includes 13,333 shares issuable pursuant to the Company's 1987 Employee
Stock Option Plan which are currently exercisable or exercisable within
60 days of December 2, 1996.
(9) Includes 11,667 shares issuable pursuant to the Company's 1987 Employee
Stock Option Plan which are currently exercisable or exercisable within
60 days of December 2, 1996.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors was aided by four standing committees during the
fiscal year ended September 30, 1996. The Audit Committee assesses the
Company's system of internal control and assists in considering the
recommendations and performance of the Company's independent
accountants; the Compensation Committee evaluates the performance and
compensation of the Company's officers and employees; the Nominating
Committee is responsible for consideration of nominations to the Board
of
Page 5 Tipperary Corporation
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Directors from shareholders of the Company; and the Executive Committee
performs certain duties and responsibilities as delegated by the Board
concerning the day-to-day operations of corporate business. During the
fiscal year ended September 30, 1996, Messrs. Davis (Chairman) and
Ancell served on the Audit Committee. Messrs. Kramer, Lees and Davis
served on the Compensation Committee and all Board members serve on the
Executive Committee. The Nominating Committee is composed of Messrs.
Bradshaw and Lees.
Based solely upon a review of Forms 3 and 4 furnished to the Company
during the fiscal year ended September 30, 1996, and Forms 5 with
respect to such fiscal year, the Company is unaware of any officer,
director or beneficial owner who failed to file any reports timely as
required by Section 16 of the Securities Exchange Act of 1934.
DIRECTORS MEETINGS AND ATTENDANCE
During the fiscal year ended September 30, 1996, there were seven
regular, special and telephonic meetings of the Company's Board of
Directors. All directors attended at least 75% of the meetings except
Mr. Lees who was unable to attend three meetings. The Audit Committee
and the Compensation Committee each met twice.
EXECUTIVE COMPENSATION
The table below presents the compensation awarded to, earned by, or paid
to the Company's Chief Executive Officer for the fiscal years ended
September 30, 1996, 1995 and 1994. No other executive officer of the
Company received total annual salary and bonus for each year in excess
of $100,000.
Summary Compensation Table
Annual Compensation Long-Term Compensation
----------------------------------- --------------------------------------
Awards Payouts
-------------------------- -------
Other Annual Restricted All Other
Name and Principal Fiscal Compen- Stock Warrants LTIP Compen-
Position Year Salary Bonus sation (1) Awards /Options (2) Payouts sation(3)
- --------------------- ------ -------- ------- ------------- ---------- ------------ ------- ----------
David L. Bradshaw,(4) 1996 $141,250 - - - 50,000 - $2,982
President & Chief 1995 $108,333 $10,000 $ 44,025 (6) - - - $1,666
Executive Officer 1994 $100,000 $30,000 - - 100,000 - $1,367
Carter G. Mathies,(5) 1996 $ 43,750 - $1,352,084 (6) - - - $ 532
President & Chief 1995 $150,000 - - - 50,000 - $2,242
Executive Officer 1994 $150,000 $50,000 - - 150,000 - $2,625
(1) In addition to the amounts listed, the Company furnished other various
benefits, the value of which are not reported in this column because the
Company has concluded that the aggregate amount of these benefits is less
than 10% of cash compensation paid.
(2) No SARs were granted to any of the named officer during the last 3 years.
(3) Represents the Company's matching contribution to the Section 401(k)
Retirement Savings Plan.
(4) Mr. Bradshaw became President and Chief Executive Officer of the Company on
January 16, 1996, prior to such date, Mr. Bradshaw was the Chief Operating
Officer and Chief Financial Officer of the Company.
(5) Mr. Mathies was President and Chief Executive Officer during fiscal 1994,
1995 and until his resignation on January 15, 1996.
(6) Includes amounts resulting from the exercise of warrants/options, equal to
the difference between exercise price of options and market price of Common
Stock on date of exercise.
PAGE 6 TIPPERARY CORPORATION
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The following table shows certain information with respect to stock warrants
and options granted to the named executive officers during the fiscal year
ended September 30, 1996:
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WARRANT AND OPTION/SAR GRANTS IN LAST FISCAL YEAR
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INDIVIDUAL GRANTS POTENTIAL REALIZABLE
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NUMBER OF ANNUAL RATES OF
SECURITIES PERCENT OF TOTAL STOCK PRICE
UNDERLYING WARRANT/OPTIONS APPRECIATION FOR
WARRANTS/ GRANTED TO EXERCISE OR WARRANT/OPTION TERM
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ---------------------
NAME GRANTED FISCAL YEAR ($/SHARE) DATE 5% 10%
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David L. Bradshaw 50,000 23.7% $4.63 (1) $146,000 $369,000
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Carter G. Mathies - - - - - -
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(1) Expires 2 years after termination of employment; term assumed to be ten
years.
The following table shows information with respect to stock warrants and
option exercises during the fiscal year ended September 30, 1996, by the
named executive officers and the value of such officer's unexercised stock
options and warrants at September 30, 1996.
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AGGREGATED WARRANTS AND OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END WARRANTS AND OPTION/SAR VALUES
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SHARES VALUE OF UNEXERCISED
ACQUIRED NUMBER OF UNEXERCISED IN-THE-MONEY WARRANTS
ON VALUE WARRANTS AND OPTIONS/SARS AND OPTIONS/SARS
NAME EXERCISE REALIZED HELD AT FISCAL YEAR END (#) AT FISCAL YEAR END
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EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
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David L. Bradshaw - - 252,916 83,334 $405,704 $33,334
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Carter G. Mathies 436,667 $1,352,084 - - - -
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The Company granted to Mr. Bradshaw warrants to acquire 225,000 shares of the
Common Stock of the Company at an exercise price of $2.00 per share, which
became fully vested on October 1, 1992. Mr. Bradshaw exercised 20,000 shares
under the warrant on July 8, 1993. The remaining warrants expire, if not
exercised prior thereto, six months after termination of Mr. Bradshaw's
employment with the Company. The Company granted to Mr. Bradshaw warrants to
acquire 50,000 shares of the Common Stock of the Company at an exercise price
of $4.63 per share which vest ratably over a three-year period and expire, if
not exercised prior thereto, two years after termination of Mr. Bradshaw's
employment with the Company. Pursuant to the Company's 1987 Employee Stock
Option Plan, Mr. Bradshaw was granted options to acquire 1,250 shares of the
Company's Common Stock which are currently exercisable at an exercise price
of $3.52, and 100,000 shares of the Company's Common Stock at an exercise
price of $2.75 per share which vest ratably over a three-year period, of
which 20,000 shares were exercised in August, 1995.
The Company granted to Mr. Mathies, its former Chief Executive Officer,
warrants to acquire 450,000 shares of the Common Stock of the Company at an
exercise price of $2.00 per share, which became fully vested on October 1,
1992. Mr. Mathies exercised 30,000 shares under the warrant on July 8, 1993.
In 1994, Mr. Mathies was granted a nonqualified warrant to acquire
PAGE 7 TIPPERARY CORPORATION
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50,000 shares of the Company's Common Stock at an exercise price of $2.75 per
share which vested ratably over a three-year period. Subsequent to his
resignation on January 15, 1996, Mr. Mathies exercised 436,667 shares under
these warrants. Also in 1994, pursuant to the 1987 Employee Stock Option
Plan, he was granted an Option to acquire 100,000 shares of the Company's
Common Stock at an exercise price of $2.75 per share, which expired
unexercised upon his resignation.
Directors who are officers or employees of the Company are not compensated
for serving as directors or for attending meetings. During the fiscal year
ended September 30, 1996, the Company compensated its nonemployee, outside
directors, Messrs. Ancell, Davis, Kramer, Lees and McAuley at the rate of
$8,000 annually and $1,000 for each board meeting attended. Directors are not
compensated for attendance at Board committee meetings.
PERFORMANCE GRAPH
The following graph compares the annual percentage change in the Company's
cumulative total shareholder return (stock price appreciation plus reinvested
dividends) on Common Stock with the cumulative total return of the American
Stock Exchange (AMEX) Market Value Index and the Media General Industry Group
Index No. 353, "Oil, Natural Gas Exploration" (which includes 140 companies
comparable with the Company) for the period from October 1, 1991, through
September 30, 1996. The graph assumes that the value of an investment in the
Company's Common Stock and each index was $100 at October 1, 1991. Regulation
S-K, Item 402(k), requires the disclosure of such information for a five-year
period. Numerical comparisons are presented following the graph.
COMPARISON OF TOTAL RETURN
AMONG TIPPERARY CORPORATION,
AMEX MARKET INDEX AND PEER GROUP INDEX
[GRAPH]
ASSUMES $100 INVESTED ON OCTOBER 1, 1991
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDED SEPTEMBER 30, 1996
PAGE 8 TIPPERARY CORPORATION
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FISCAL YEARS ENDING SEPTEMBER 30
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1991 1992 1993 1994 1995 1996
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Tipperary 100.00 76.00 220.00 120.00 148.00 120.00
Peer Group 100.00 84.92 104.96 104.33 105.57 135.03
Broad Market 100.00 104.36 122.51 124.86 150.45 156.58
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COMPENSATION COMMITTEE REPORT
The Compensation Committee, which is composed of three nonemployee directors,
makes recommendations to the Board concerning the compensation of the
Company's executive officers. In order to make such recommendations, at the
end of each year, the Committee evaluates the Company's performance relative
to its business plan and its peer group performance. Additionally, each
executive officer's contribution to the Company's achievements during the
year is evaluated.
The goal of the Compensation Committee is to ensure that the Company employs
qualified, experienced executive officers whose financial interest is aligned
with that of the shareholders. The Committee considers general industry
practice, tax effects and other factors in structuring executive compensation
awards. The following is a discussion of forms of compensation currently
being utilized.
Base salaries for each of the Company's executive officers are determined by
taking into consideration performance, length of tenure with the Company,
compensation by industry competitors for comparable positions and career
achievements. Salaries paid within the industry are weighted more heavily in
setting base salary levels. In order to determine comparable salary levels
paid within the industry, the Committee reviews various industry surveys and
publicly filed information of its competitors.
In addition to their base salaries, the Company's executive officers may be
awarded an annual bonus, depending on Company performance relative to its
business plan and the Committee's assessment of the executive officer's
personal contribution to such performance. Such performance may be measured
by several criteria that are considered important to the Company's success.
These criteria are not specifically weighted in the determination of whether
to award an annual bonus to an executive officer, since the relative
importance of such criteria may change from year to year and the relative
responsibilities of each executive officer in the achievement of each of the
objectives may differ. Examples of criteria considered are: quantity of oil
and gas reserves added; finding cost of oil and gas reserves; control of
lifting costs; efficiency of general and administrative expenses; management
of exploration projects; and overall financial management.
The Company also utilizes stock warrants/options ("Options") as an incentive
for executive officers. The size of Option grants is dependent on individual
performance, level of responsibility and base salary and the number of shares
covered by all outstanding Options in relation to the total number of
outstanding shares of Common Stock and Common Stock equivalents. Options are
used in order to align the benefits received by the executive officers with
the amount of appreciation realized by the stockholders. Options granted to
current officers and directors have been at exercise prices not less than the
fair market value of the stock on the date of the grant.
David L. Bradshaw, Chief Executive Officer, was elected on January 16, 1996.
The Company's former Chief Executive Officer, Carter G. Mathies, resigned on
January 15, 1996. Mr. Bradshaw and the Company entered into an initial
three-year employment agreement on October 1, 1990. This contract was
extended for an additional two years and expired September 30, 1995. Thus,
Mr. Bradshaw is currently employed by the Company on an "at-will" basis.
Since October 1, 1990, Mr. Bradshaw's base salary has been increased from
$75,000 as Vice President & Chief Financial Officer to $100,000 until May 1,
1995, when he assumed the additional responsibilities of Chief Operating
Officer and to $150,000 as President and Chief Executive Officer on January
16, 1996. Mr. Bradshaw was granted Incentive Stock Options pursuant to the
Company's 1987 Employee Stock Option Plan in March, 1988 to acquire 1,250
shares of the Company's Common Stock at an exercise price of $3.52 per share,
and in January 1994, 100,000 shares at an exercise price of $2.75 per share
vesting over a five-year and a three-year period, respectively. Of this total
20,000 were exercised during fiscal 1995. In 1990, Mr. Bradshaw was granted a
warrant to acquire 225,000 shares of the Company's Common Stock at $2.50 per
share which is fully vested. Of the 225,000 share issuance, 20,000 were
exercised
PAGE 9 TIPPERARY CORPORATION
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during fiscal 1993. In 1996, he was granted an additional warrant to acquire
50,000 shares at $4.63 per share, which warrant vests over a three-year
period.
COMPENSATION COMMITTEE
Eugene I. Davis
Douglas Kramer
Marshall D. Lees
December 2, 1996
1987 EMPLOYEE STOCK OPTION PLAN
In 1987, the Company adopted the 1987 Employee Stock Option Plan ("the 1987
Plan") for the purpose of promoting the growth and general prosperity of the
Company by attracting and retaining the best available personnel and by
providing such employees with additional incentive to contribute to the
success of the Company.
The Plan currently allows the grant of a maximum of 383,000 incentive stock
options and nonstatutory stock options (together, the "Options") to
employees, including officers and directors who are also employees, of the
Company or any parent or subsidiary corporation of the Company, to purchase
shares of the Common Stock, $.02 par value, of the Company. The Company
currently has 20 employees, all of which may be granted Options under the
1987 Plan, including all executive officers who are also employees.
To date, there have been 377,250 Options to purchase Common Stock granted, of
which 25,600 have been exercised. There are currently outstanding 124,400
options to purchase Common Stock at an exercise price of $2.75 per share,
1,250 options to purchase Common Stock at an exercise price of $3.52 per
share, 15,000 options to purchase Common Stock at an exercise price of $5.13
per share, 15,000 options to purchase Common Stock at an exercise price of
$3.69 per share, 40,000 options to purchase Common Stock at an exercise price
of $4.63 per share, 71,000 options to purchase Common Stock at an exercise
price of $4.75 per share, and 85,000 options to purchase Common Stock at an
exercise price of $3.63 per share. The market value of the Common Stock
underlying the Options as of December 2, 1996, was $4.56 per share.
Mr. Bradshaw has a presently exercisable option to acquire 1,250 shares under
the 1987 Plan at an exercise price of $3.52. Mr. Bradshaw also has an option
to acquire 100,000 shares under the 1987 Plan at an exercise price of $2.75.
He exercised 20,000 shares during fiscal 1995 and 46,666 unexercised shares
are vested as of December 2, 1996.
The 1987 Plan expires on December 31, 1996. In connection therewith, the
Board of Directors has adopted a new employee compensatory plan entitled the
1997 Long-Term Incentive Plan which will become effective if approved by the
Shareholders at the Annual Meeting. See "Proposal 2, Approval of the 1997
Long-Term Incentive Plan."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Subsequent to September 30, 1996, the Company reached an agreement for a
$2,300,000 bridge loan from Slough Parks, Inc., the controlling shareholder
of SDK, which beneficially owns 37.5% of the Company's common stock. The loan
is for one year, will bear interest at 8.5% per year, and the Company is
obligated to pay an $80,500 commitment fee upon funding of the loan. The loan
will be secured by 10% ownership in the Comet Ridge coalbed methane project
in Queensland, Australia. The funds will be used in January 1997 to acquire
an additional 5% ownership interest in the Comet Ridge coalbed methane
project.
Other than as set forth above and under "Executive Compensation," the Company
is not aware of any transaction, or series of similar transactions to which
the Company or any of its subsidiaries is or will be a party, in which
nominees for election as a director, any principal security holder or any
member of the immediate family of any of the foregoing persons has a direct
or indirect material interest.
PAGE 10 TIPPERARY CORPORATION
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PROPOSAL I
ELECTION OF DIRECTORS
The Company's By-Laws authorize the Board of Directors to be comprised of not
less than 3 nor more than 15 members. The Company's Board of Directors has
presently determined that the Board shall be comprised of 5 members, but
reserves the right to increase the number of directors if the need arises.
The 5 nominees listed below have been recommended by the Nominating Committee
and approved by the full Board of Directors. Upon election, they shall
constitute at that date the Company's entire Board of Directors.
It is intended that the enclosed proxy will be voted FOR the election of the
5 nominees named below to the Company's Board of Directors, unless authority
to so vote is withheld on the proxy. In the event any nominee is unable to
serve as a director for any reason not currently known or contemplated, the
person named as Proxy will have discretionary authority in that instance to
vote the proxy for any substitute nominee that the Board of Directors may
designate. Each nominee elected to serve as director will hold office until
the next Annual Meeting or until his successor is elected and qualified.
The following sets forth information as of December 2, 1996, with respect to
each nominee for director:
DAVID L. BRADSHAW, 42, a certified public accountant, has been Vice President
and Chief Financial Officer of the Company since November 3, 1989, and a
director since January 23, 1990. Mr. Bradshaw was additionally appointed
Chief Operating Officer on January 24, 1995. He held that position until his
election as President and Chief Executive Officer on January 16, 1996. He
served as Treasurer of the Company from January 1, 1987, through November 2,
1989. Mr. Bradshaw joined the Company as tax manager in January, 1986. Prior
to joining the Company, Mr. Bradshaw was an officer and owner in a privately
held oil and gas company. From 1977 to 1983, Mr. Bradshaw was employed in
public accounting, most recently as tax manager in the Midland, Texas office
of Price Waterhouse.
KENNETH L. ANCELL, 53, was elected to the Board of Directors on July 11,
1996. Mr. Ancell is a petroleum engineer and a principal in the
Houston-based consulting engineering firm of Fairchild, Ancell and Wells.
Prior to forming this consulting firm, Mr. Ancell was employed as a petroleum
engineer by various energy companies researching coalbed methane development.
He presently serves as a senior project advisor for the United Nations'
coalbed methane project in China, is a Distinguished Lecturer on coalbed
methane reserves for the Society of Petroleum Engineers, has expertise in oil
and gas recovery processes and 20 years of coalbed methane expertise.
EUGENE I. DAVIS, 41, was elected to the Board of Directors on September 2,
1992. Mr. Davis had served as outside legal counsel to the Company since
1984. He is currently President and Director of Emerson Radio Corp., an
American Stock Exchange company with a class of equity securities registered
under the Securities Exchange Act of 1934. Emerson Radio Corp. filed a
petition under Chapter 11 under federal bankruptcy laws in 1993 which was
discharged on March 31, 1994. Mr. Davis is also Chief Executive Officer and
Director of Sports Supply Group Inc., a New York Stock Exchange company. He
practiced law with Holmes, Millard and Duncan, Dallas, Texas, from June 1989
to August 1992. From February 1988 to May 1989, he was a partner in the law
firm of Arter & Hadden of Dallas, Texas. Prior to that time, Mr. Davis was
with Exxon Corporation and Amoco Corporation and then the Dallas, Texas,
office of the law firm Akin, Gump, Strauss, Hauer & Feld.
DOUGLAS KRAMER, 60, was elected to the Board of Directors on August 19, 1996.
Mr. Kramer is chairman and director of Draper and Kramer, Inc., a real estate
company headquartered in Chicago. He is also director of Slough Estates, PLC,
a public, London-based real estate company and major shareholder in SDK
Incorporated, which owns 37.5% of the Company's Common Stock.
MARSHALL D. LEES, 43, was elected to the Board of Directors on September 30,
1995. Mr. Lees joined Slough Estates in 1987 and is the President and
Director of SDK Incorporated, Slough Parks, Inc. and Slough Estates Canada.
Prior to 1987, Mr. Lees held various management positions with Imperial Group
plc and BAT (UK & Export) Ltd., in the United Kingdom.
EXECUTIVE OFFICERS
In addition to Mr. Bradshaw shown above, the following sets forth information
with respect to the remainder of the Company's executive officers:
PAGE 11 TIPPERARY CORPORATION
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JEFF T. OBOURN, 38, became employed as the Company's Vice President - Land on
February 1, 1993, and was appointed Senior Vice President - Operations on
January 16, 1996. From 1987 to 1993, Mr. Obourn was President of Obourn
Brothers, Inc., of Englewood, Colorado, an oil and gas land brokerage
business.
PAUL C. SLEVIN, 49, was employed by the Company as its Chief Financial
Officer on January 29, 1996. From 1994 to 1995, Mr. Slevin was CFO of the
Black Fox Group, a private investment holding company. From 1992 to 1994, he
was vice president corporate finance with Hanifen Imhoff, Inc., an investment
banking firm. From 1991 to 1992, he was CFO and vice president of McData
Corporation, a privately held high technology company. Prior experience
includes positions in the oil and gas industry with The Gary-Williams Company
and Forest Oil Corporation and in public accounting with Price Waterhouse.
ROBERT T. LARSON, JR., 50, was Manager - Oil & Gas Operations from January
15, 1992, until October 9, 1994, at which time he became Manager of
Exploration and Development. He held that position until his election as
Vice President - Exploration and Development on January 24, 1995. Prior to
joining the Company, Mr. Larson was Vice President/Exploration Manager of
Q2 Exploration, Inc./Quest Energy Corporation an oil and gas company located
in Denver, Colorado.
LARRY G. SUGANO, 43, a petroleum engineer, was employed by the Company as its
Engineering Manager on October 10, 1994. Mr. Sugano held that position until
his election as Vice President - Engineering on January 24, 1995. During 1994
until his employment with the Company, he was a consultant for several oil
and gas companies. Mr. Sugano was employed by Graham Royalty, Ltd., Denver,
Colorado, from 1984 to 1991 as Senior Petroleum Engineer and from 1991 to
1993 as District Manager.
WAYNE W. KAHMEYER, 62, was employed by the Company as its Controller on June
1, 1993. In addition to that position, Mr. Kahmeyer was elected as Principal
Accounting Officer on January 24, 1995. From 1982 until his employment with
the Company, Mr. Kahmeyer was Vice President, Finance of Coors Energy
Company, Golden, Colorado.
There are no family relationships between or among the executive officers and
nominees to the Board of Directors of the Company. There are no arrangements
or understandings between any of the directors or nominees or any other
person pursuant to which any person was or is to be elected as a director or
nominee.
PROPOSAL 2
APPROVAL OF THE 1997 LONG-TERM INCENTIVE PLAN
In 1987, the Company adopted the 1987 Employee Stock Option Plan (the "1987
Plan"). The 1987 Plan provided for the grant of a maximum of 383,000 options
to employees, including officers and directors who are also employees, of the
Company or any parent or subsidiary corporation of the Company, to purchase
shares of the Common Stock of the Company. To date, there are currently
351,650 options to purchase Common Stock outstanding. The 1987 Plan expires
December 31, 1996. Upon expiration of the 1987 Plan, outstanding options will
remain in full force and effect pursuant to each option's terms.
In connection with the expiration of the 1987 Plan on December 31, 1996, the
Board of Directors unanimously adopted the 1997 Long-Term Incentive Plan (the
"1997 Plan") to replace the expired 1987 Plan, subject to shareholder
approval. The Board of Directors believes that employee incentive plans
promote the growth and general prosperity of the Company by attracting and
retaining talented personnel. Awards under the 1997 Plan may be in the form
of stock options, stock appreciation rights, restricted stock or performance
awards, as more fully described below.
THE FOLLOWING DISCUSSION OF THE TERMS AND CONDITIONS OF THE 1997 PLAN IS
QUALIFIED IN ITS ENTIRETY BY THE COMPLETE TEXT OF THE 1997 PLAN, A COPY OF
WHICH IS ATTACHED HERETO AS EXHIBIT A.
The purpose of the 1997 Plan is to provide key management employees of the
Company with added incentives to continue in the long-term service of the
Company and to create in such employees a more direct interest in the future
success of the Company by relating compensation to increases in stockholder
value, so that the income of key management employees is more closely aligned
with the income of the stockholders of the Company. The 1997 Plan is also
designed to attract key employees and to retain and motivate participating
employees by providing an opportunity for investment in the Company.
The 1997 Plan will be administered by the Board of Directors or through an
Incentive Plan Committee (the "Committee") appointed by the Board of
Directors and consisting of not less than two persons, all of whom must be
non-employee directors. (Since the full Board of Directors may administer the
Plan, references to the Committee in this discussion shall also include the
PAGE 12 TIPPERARY CORPORATION
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Board of Directors). The Committee, in its sole discretion, will select
participants from the eligible employees to whom awards will be granted, the
amount of each award and other terms and conditions of each award as the
Committee may determine necessary or desirable and consistent with the terms
of the 1997 Plan.
The 1997 Plan reserves 250,000 shares of Common Stock for issuance. Any
shares that are the subject of an award under the 1997 Plan which has lapsed
or expired unexercised or unissued will automatically become available for
reissue under the 1997 Plan. If the Company shall at any time increase or
decrease the number of its outstanding shares of stock or change in any way
the rights and privileges of the shares by means of a stock dividend or any
other distribution payable upon shares of Common Stock, or through a stock
split or like combination or reclassification or reorganization of the
Company, the Committee shall make adjustments to the numbers, rights and
privileges of any outstanding awards as it deems appropriate.
Participants in the 1997 Plan will be eligible employees who, in the judgment
of the Committee, are performing, or during the term of their incentive
arrangement will perform, important services in the management, operation and
development of the Company, and who significantly contribute, or are expected
to significantly contribute to the achievement of the long-term corporate
economic objectives of the Company. Participants may be granted from time to
time one or more awards under the 1997 Plan. Directors who are also
employees of the Company are eligible to participate in the 1997 Plan;
however, Committee members (who must be non-employee directors) cannot
participate under the 1997 Plan unless an award is granted to such member by
the full Board of Directors.
The 1997 Plan provides that participants may be granted awards in the form of
one or more stock options. The Committee in its sole discretion will
determine whether an option is to be considered an incentive stock option as
defined in the Internal Revenue Code of 1986 (the "Code") or a non-qualified
stock option as defined in the Code. The exercise prices, vesting schedules
and other pertinent terms will be determined by the Committee, but no
exercise price for an incentive stock option will be less than the fair
market value of the stock on the date the option is granted. Unless
otherwise provided in the 1997 Plan, option periods must expire not more than
10 years from the date an option is granted. If the employment of an option
holder is terminated within the option period for cause, as determined by the
Company, all options granted to such person will be void for all purposes.
The term "cause" means a gross violation, as determined by the Company, of
the Company's established policies and procedures. If an option holder dies
or becomes disabled during the option period while still employed, his or her
options may be exercised by those entitled to do so for up to three months
following the option holder's death and for up to 12 months following the
option holder's disability. If the employment of the option holder is
terminated within the option period for any reason other than cause,
disability, or the option holder's death, the option may be exercised by the
option holder within three months following the date of termination. In any
such case, an option may be exercised only up to the number of shares which
were exercisable on or before the date of the option holder's termination,
death or disability. No option granted under the 1997 Plan will be
transferable by the option holder except by will or pursuant to the laws of
descent and distribution. Each option shall be exercisable during the option
holder's lifetime only by him or her, or in the event of death, disability or
incapacity, by his or her guardian or legal representative. Options may be
exercised by (i) payment in cash, (ii) by delivery of certificates
representing the number of shares owned by the option holder, the fair market
value of which equals the purchase price of the stock purchased pursuant to
an option (only with the permission of the Committee), or (iii) by a
combination of (i) and (ii) (only with permission of the Committee).
The 1997 Plan also allows the Committee to award stock appreciation rights
("SAR") either in tandem with a stock option or as a separate award. In
general, a SAR is a right to the amount of appreciation over a set period of
time represented by a certain number of shares of the Company's Common Stock.
Upon a participant's exercise of an SAR, the Company pays the participant
an amount equal to the appreciation in market value or book value of the
shares underlying the SAR for the period between the date of the grant and
the date of the exercise. SAR's issued in tandem with a stock option shall be
exercisable to the extent the option is exercisable; SAR's issuable
independently will be exercisable pursuant to the terms established in the
grant. An exercisable SAR granted in tandem with a stock option entitles the
participant to surrender unexercised the option, or any portion thereof, to
which the SAR is attached, and to receive in exchange a payment (in cash,
Common Stock or a combination thereof) equal to the fair market value of one
share of Common Stock at the date of exercise minus the exercise price of the
option times the number of shares covered by the SAR (or portion thereof)
which is exercised. With respect to an independently issued SAR, the
Committee shall designate whether the SAR is a "regular" SAR or a "book
value" SAR. A "regular" SAR entitles the participant upon exercise to the
payment (in cash, Common Stock or a combination thereof) equal to the fair
market value of one share of Common Stock at the date of exercise minus the
fair market value of one share of Common Stock at the date of grant times the
number of shares covered by the SAR (or portion thereof) which is exercised.
A "book value" SAR entitles the participant upon exercise to the payment (in
cash, Common Stock or a combination thereof) equal to the book value of one
share
PAGE 13 TIPPERARY CORPORATION
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of Common Stock at the date of exercise minus the book value of one share of
Common Stock at the date of grant times the number of shares covered by the
SAR (or portion thereof) which is exercised. SAR's will be subject to
transfer restrictions as imposed by the Committee; provided, however, that
SAR's issued pursuant to an Incentive Stock Option must contain the same
transfer restrictions as the Incentive Stock Option. Outstanding SAR's which
have not been exercised on the last day prior to expiration will be
automatically redeemed by the Company for an amount equal to the payment that
would otherwise have been made if the participant had chosen to exercise the
SAR on the last day prior to expiration. The rules discussed above with
respect to stock options concerning termination of a participant's
employment for cause, disability, death or otherwise equally apply to SAR's.
The Committee is also authorized to grant performance awards relating to the
Company's operations. Performance awards are to be granted in the form of
Common Stock, subject to terms and conditions as set forth by the Committee
not inconsistent with the Plan. In general, performance awards will be based
upon the attainment of specified criteria within certain time parameters as
set by the Committee. Such criteria may include, without limitation, the
attainment of certain performance levels by the individual participant, the
Company, individual departments or other similar groupings.
The 1997 Plan also allows the Committee to grant awards in the nature of
restricted stock. Pursuant to such an award, shares of Common Stock will be
issued to a participant upon payment of consideration as determined by the
Committee; provided, however, that such consideration may not be less than
the par value of the restricted stock issued. The Committee is empowered to
impose any such restrictions and/or conditions on each restricted stock award
as it deems appropriate; provided, however, that such restrictions and/or
conditions shall not be for more than 10 years from the date of grant. Shares
of restricted stock are to be issued in the name of the participant bearing a
restrictive legend prohibiting the sale or transfer of the shares until the
expiration of the restriction period. The Committee may require that shares
of restricted stock remain in the custody of the Company while the
restrictions remain in effect. Cessation of employment during a restriction
period, subject to the terms of each particular restricted stock award,
subjects the shares to forfeiture. Any consideration paid by a participant
will be returned, without interest, to the participant upon forfeiture.
The 1997 Plan will be discontinued in the event of dissolution or liquidation
of the Company, or in the event of a reorganization of the Company in which
the Company is not the surviving or acquiring company, or in which the
Company becomes a wholly owned subsidiary of another company and the
agreement respecting the reorganization does not specifically provide for
continuation of the 1997 Plan. Upon dissolution of the 1997 Plan, all awards
shall become fully vested and immediately exercisable and unexercised stock
appreciation rights will be redeemed. In the event of a reorganization of
the Company in which the Company is not the surviving or acquiring company,
or in which the Company becomes a wholly owned subsidiary of another company
and the agreement respecting the reorganization specifically provides for
continuation of the 1997 Plan, then the 1997 Plan shall continue and the
Committee shall adjust the awards in a manner consistent with the
reorganization provisions and the 1997 Plan provisions regarding adjustment,
change, conversion or exchange of such awards.
The Committee, in its discretion, may waive the forfeiture, termination, or
lapse of an award pursuant to the 1997 Plan in the event of retirement or
disability of a participant. Awards granted under the 1997 Plan will be
subject to all conditions required under Rule 16b-3 adopted under the
Securities Exchange Act of 1934. The Company may require any person to whom
an award is granted as a condition of the award or exercise of the award to
give written assurances satisfactory to the Company that such person is
acquiring the securities subject to the award for his own account for
investment and not with a present intention of selling or otherwise
distributing the same. Furthermore, the Board of Directors is permitted to
amend, alter, suspend or terminate the 1997 Plan from time to time, subject
to limited exceptions. The 1997 Plan automatically terminates on January 31,
2007 (outstanding awards on that date will remain in full force and effect,
however, pursuant to each awards individual terms).
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF THE 1997
LONG-TERM INCENTIVE PLAN.
PROPOSAL 3
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, subject to ratification by the shareholders at the
Annual Meeting, has reappointed Price Waterhouse as independent accountants
of the Company for the fiscal year ending September 30, 1997. Price
Waterhouse has been the Company's independent accounting firm since 1971.
The Company has been advised that neither Price Waterhouse nor any member
thereof has any direct financial interest or any material indirect interest
in the Company.
PAGE 14 TIPPERARY CORPORATION
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Shareholders are requested to vote FOR the ratification of the reappointment
of Price Waterhouse as the Company's independent accountants for fiscal 1997.
Representatives of Price Waterhouse are expected to be present at the Annual
Meeting and will be afforded an opportunity to make a statement, if they
desire to do so. It is expected that such representatives will be available
to respond to appropriate shareholder questions.
ANNUAL REPORT
An Annual Report containing the Company's certified Consolidated Financial
Statements as of September 30, 1996, accompanies this Proxy Statement. No
part of such Annual Report is incorporated herein by reference and no part
thereof is to be considered proxy soliciting material.
FORM 10-K
SHAREHOLDERS MAY OBTAIN, WITHOUT CHARGE, THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996, AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION BY WRITING TO THE SECRETARY OF THE COMPANY
AT 633 SEVENTEENTH STREET, SUITE 1550, DENVER, COLORADO 80202.
SHAREHOLDER PROPOSALS
Shareholders desiring to submit proposals for action at the Company's 1998
Annual Meeting of Shareholders, including nominations for the Board of
Directors to be considered by the Company's Nominating Committee, must submit
such proposals to the Company at its principal offices not later than October
15, 1997.
DISCRETIONARY AUTHORITY
The Company's Board of Directors does not know of any other business to be
presented at the Annual Meeting. If any other matter properly comes before
the Annual Meeting, however, it is intended that the person named in the
enclosed proxy will vote said proxy in accordance with his best judgment.
BY ORDER OF THE BOARD OF DIRECTORS
Elaine R. Treece
Corporate Secretary
Date: December 23, 1996
EXHIBIT A
TIPPERARY CORPORATION
1997 LONG-TERM INCENTIVE PLAN
SECTION I
DESIGNATION AND PURPOSE OF PLAN
The purpose of the Tipperary Corporation (the "Company") 1997 Long-Term
Incentive Plan (the "Plan") is to provide key management employees who are
mainly responsible for the continued growth, development, and financial success
of the Company and its subsidiaries with added incentives to continue in the
long-term service of the Company and to create a direct interest in the future
success of the Company. The Plan also enables the Company to attract and retain
such employees and reward them for the continued performance beneficial to the
Company.
SECTION II
DEFINITIONS
The following definitions are applicable herein:
A. "AWARD" - Individually or collectively, Options, Stock Appreciation
Rights, Performance Shares or Restricted Stock granted hereunder.
B. "AWARD PERIOD" - the period of time during which a Stock Appreciation
Right which has not been granted pursuant to an Option may be exercised. The
Award Period shall be set forth in the document issuing the Stock Appreciation
Right to the selected Eligible Person.
C. "BOARD" - the Board of Directors of the Company.
D. "BOOK VALUE" - the book value of a share of Stock determined in
accordance with the Company's regular accounting practices as of the last
business day of the month immediately preceding the month in which a Stock
Appreciation Right is exercised as provided in Section IX(D).
E. "CODE" - the Internal Revenue Code of 1986, as amended. Reference in
the Plan to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any regulations promulgated thereunder.
F. "COMMITTEE" - the Incentive Plan Committee appointed to administer the
Plan pursuant to Section IV.
G . "COMPANY" - Tipperary Corporation, including any present or future
"subsidiary corporation" as such term is defined in Section 424(f) of the 1986
Internal Revenue Code, as amended.
H. "COVERED EMPLOYEE" - an individual described in Section 162(m)(3) of
the Code.
I. "DATE OF GRANT" - the date on which the granting of an Award is
authorized by the Committee or Board or such later date as may be specified by
the Committee or Board in such authorization.
J. "ELIGIBLE PERSON" - any person who satisfies all of the requirements
of Section VI.
K. "EXERCISE PERIOD" - the period or periods during which a Stock
Appreciation Right is exercisable as described in Section IX(B).
L. "FAIR MARKET VALUE" - the fair market value of the Stock as determined
in accordance with Section VIII(D).
M. "INCENTIVE STOCK OPTION" - an incentive stock option within the
meaning of Section 422 of the Code.
N. "OPTION" OR "STOCK OPTION" - either a non-qualified stock option or an
Incentive Stock Option granted under Section VIII. It also means any Option
which remains after a Participant has exercised his Option with respect to part
of the shares covered by a Stock Option Agreement as described in Section
VIII(B).
O. "OPTION PERIOD" OR "OPTION PERIODS" - the period or periods during
which an Option is exercisable as described in Section VIII(E).
P. "OPTION PRICE" - the price, expressed on a per share basis, for which
the Company Stock can be acquired by the holder of an Option pursuant to the
exercise of such Option.
Q. "PARTICIPANT" - an Eligible Person of the Company or a Subsidiary who
has been granted an Option, a Stock Appreciation Right, a Performance Share
Award or a Restricted Stock Award under this Plan.
R. "PERFORMANCE SHARE" - an Award granted under Section X.
S. "RESTRICTED STOCK" - an Award granted under Section VII.
T. "STOCK" AND "COMPANY STOCK" - the common stock of the Company.
U. "STOCK APPRECIATION RIGHT" - an Award granted under Section IX.
V. "STOCK OPTION AGREEMENT" - shall have the meaning set forth in Section
VIII(B).
W. "SUBSIDIARY" - any corporation of which fifty percent (50%) or more of
its outstanding voting stock or voting power is beneficially owned, directly or
indirectly, by the Company.
X. "TEN PERCENT SHAREHOLDER" - a Participant who, at the Date of Grant,
owns directly or indirectly (within the meaning of Section 424(d) of the
Internal Revenue Code) stock possessing more then ten percent (10%) of the total
combined voting power of all classes of stock of the Company or a subsidiary
thereof.
Y. Wherever appropriate, words used in this Plan in the singular may mean
the plural, the plural may mean the singular, and the masculine may mean the
feminine.
SECTION III
EFFECTIVE DATE, DURATION AND STOCKHOLDER APPROVAL
A. EFFECTIVE DATE AND STOCKHOLDER APPROVAL. Subject to the approval of
the Plan by a majority of the outstanding shares of Stock, the Plan shall be
effective as of February 1, 1997.
B. PERIOD FOR GRANT OF AWARDS. Awards may be made as provided herein for
a period of ten (10) years.
2
SECTION IV
ADMINISTRATION
A. APPOINTMENT OF COMMITTEE. The Plan shall be administered by the Board
or an Incentive Plan Committee appointed by the Board. Such Committee shall
consist of not less than two (2) members of the Board and such members shall be
non-employee directors as defined in Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (or such greater number of members which may be required
by Rule 16b-3). In addition, the Board shall designate a member of the
Committee to act as Chairman of the Committee, and the Board may remove any
member of the Committee at any time and appoint any non-employee director to
fill any vacancy on the Committee.
B. COMMITTEE MEETINGS. The Committee, if any, shall hold its meetings at
such times and places as specified by the Committee Chairman. A majority of the
Committee shall constitute a quorum. All actions of the Committee shall be
taken by all of the members of the meeting duly called by its Chairman;
provided, however, any action taken by a written document signed by a majority
of the members of the Committee shall be as effective as action taken by the
Committee at a meeting duly called and held.
C. COMMITTEE POWERS. References in the Plan to the Committee shall also
mean the Board insofar as the Board administers the Plan rather than appointing
a Committee. Subject to the provisions of this Plan, the Committee shall have
full authority in its discretion to (i) designate the Participants to whom
Awards shall be granted, (ii) determine the number of shares to be made
available under each such Award, (iii) determine the period or periods in which
the Participant may exercise such Award, (iv) determine the date when such Award
expires, (v) determine the price for Stock under such Award, and (vi) determine
the grounds of forfeiture of an Award. The Committee shall have all powers
necessary to administer the Plan in accordance with its terms, including the
power to interpret this Plan and resolve all questions arising thereunder. The
Committee may prescribe such rules and regulations for administering this Plan
as the Committee deems appropriate.
SECTION V
GRANT OF AWARDS AND
LIMITATION OF NUMBER OF SHARES SUBJECT TO AWARD
The Committee may, from time to time, grant Awards to one or more Eligible
Persons, provided that (i) subject to any adjustment pursuant to Section XI, the
aggregate number of shares of Stock subject to Stock Options, Stock Appreciation
Rights, Performance Share Awards or Restricted Stock Awards under this Plan may
not exceed 250,000 shares; (ii) to the extent that a Stock Option, Stock
Appreciation Right, Performance Share Award or Restricted Stock Award lapses or
the rights of the Participant to whom it was granted terminate, expire or are
canceled for any other reason, in whole or in part, shares of Stock (or
remaining shares) subject to such Award shall again be available for the grant
of an Award under the Plan; and (iii) shares delivered by the Company under the
Plan may be authorized and unissued Stock, Stock held in the treasury of the
Company or Stock purchased on the open market (including private purchases) in
accordance with applicable securities laws. In determining the size of Awards,
the Committee shall take into account the responsibility level, performance,
potential, and cash compensation level of a Participant, and the Fair Market
Value of the Stock at the time of Awards, as well as such other considerations
it deems appropriate.
SECTION VI
ELIGIBILITY
Key employees and directors of the Company and its Subsidiaries (including
employees who are members of the Board) who, in the opinion of the Committee,
are mainly responsible for the continued growth and development and financial
success of the business of the Company or one or more of its Subsidiaries shall
be eligible to be granted Awards under the Plan. Subject to the provisions of
the Plan, the Committee may from time to time select from such eligible persons
those to whom Awards shall be granted and determine the nature and amount of
each Award. No employee of
3
the Company or its Subsidiaries shall have any right to be granted an Award
under this Plan. A member of the Committee shall not be eligible for any
Award hereunder, unless such Award is granted by the full Board.
SECTION VII
RESTRICTED STOCK AWARDS
A. GRANTS OF SHARES OF RESTRICTED STOCK. An Award made pursuant to this
Section VII shall be granted in the form of shares of Stock, restricted as
provided in this Section VII. Shares of Restricted Stock shall be issued to the
Participant upon the payment of consideration as determined by the Committee;
provided, however, that such consideration may not be less than the par value of
the Stock. The shares of Restricted Stock shall be issued in the name of the
Participant and shall bear a restrictive legend prohibiting sale, transfer,
pledge or hypothecation of the shares of Restricted Stock until the expiration
of the restriction period.
The Committee may also impose such other restrictions and conditions on the
shares of Restricted Stock as it deems appropriate, including but not limited to
requiring the participant to keep the restricted stock certificates, duly
endorsed, in the custody of the Company while the restrictions remain in effect.
B. RESTRICTION PERIOD. At the time a Restricted Stock Award is made, the
Committee may establish a restriction period applicable to such Award which
shall not be more than ten (10) years. Each Restricted Stock Award may have a
different restriction period, at the discretion of the Committee. In addition
to or in lieu of a restriction period, the Committee may establish a performance
goal which must be achieved as a condition to the retention of the Restricted
Stock. The performance goal may be based on the attainment of specified types
of performance measurement criteria, which may differ as to various Participants
or classes or categories of Participants. Such criteria may include, without
limitation, the attainment of certain performance levels by the individual
Participant, the Company, a department or division of the Company and/or a group
or class of participants. Any such performance goals, together with the ranges
of Restricted Stock Awards for which the Participants may be eligible shall be
set from time to time by the Committee and shall be timely communicated in
writing to the Eligible Persons in advance of the commencement of the
performance of services to which such performance goals relate.
C. FORFEITURE OR PAYOUT OF AWARD. In the event a Participant ceases
employment during a restriction period, or in the event performance goals
attributable to a Restricted Stock Award are not achieved, subject to the terms
of each particular Restricted Stock Award, and subject to discretionary action
by the Committee as set forth below in Section XIII, a Restricted Stock Award is
subject to forfeiture of the shares of Stock which had not previously been
removed from restriction under the terms of the Award.
Any shares of Restricted Stock which are forfeited will be transferred to
the Company. Any consideration paid by the Participant for the Restricted
Stock shall be returned, without interest, to the Participant upon forfeiture.
Upon completion of the restriction period and satisfaction of any
performance-goal criteria, all restrictions upon the Award will expire and new
certificates representing the Award will be issued or released without the
restrictive legend described in Section VII (A). As a condition precedent to
receipt of the certificates, the Participant (or the designated beneficiary or
personal representative of the Participant) will agree to make payment to the
Company in the amount of any taxes, payable by the Participant, which are
required to be withheld with respect to such shares of Stock.
SECTION VIII
STOCK OPTIONS
A. GRANT OF OPTION. One or more Options may be granted to any Eligible
Person. Upon the grant of an Option to an Eligible Person, the Committee shall
specify whether the Option is intended to constitute a non-qualified stock
option or an Incentive Stock Option.
4
B. STOCK OPTION AGREEMENT. Each Option granted under the Plan shall be
evidenced by a written Stock Option Agreement between the Company and the
Participant containing such terms and conditions as the Committee determines,
including, without limitation, provisions to qualify Incentive Stock Options as
such under Section 422 of the Code. Such agreements shall incorporate the
provisions of this Plan by reference. The date of granting an Option is the
date specified in the written Stock Option Agreement which is signed by the
Participant and the Company.
C. DETERMINATION OF OPTION PRICE. The Option Price for shares of Stock
shall be determined by the Committee, but in no event shall the Option Price for
each share covered by an Incentive Stock Option be less than the Fair Market
Value of the Stock on the date of grant; the Option Price for shares covered by
a non-statutory Option may be less than Fair Market Value. Notwithstanding the
foregoing, in the case of an Option which is designed to qualify as an Incentive
Stock Option (as defined in Section 422 of the Code) which is granted to a Ten
Percent Shareholder, the Option Price shall not be less than 110% of such Fair
Market Value.
D. DETERMINATION OF FAIR MARKET VALUE. The Fair Market Value of the
Stock on the date of granting an Option shall be the officially quoted mean of
the high and low prices at which the Stock was sold on the market on such date.
If there are no Stock transactions on such date, the Fair Market Value shall be
determined as of the immediately preceding date on which there were Stock
transactions. In the event the Stock is not publicly traded, the Fair Market
Value of the Stock shall be determined by the Committee in accordance with
applicable regulations of the Internal Revenue Service.
E. TERM OF OPTION. The term of an Option may vary within the Committee's
discretion; provided, however, that the term of an Option shall not exceed ten
(10) years from the date of granting the Option to the Participant, and, to this
end, all Options granted pursuant to this Plan must provide that each such
Option cannot be exercised after the expiration of ten (10) years from the date
each such Option is granted. Notwithstanding the foregoing, in the case of any
Option which is designed to qualify as an Incentive Stock Option (as defined in
Section 422 of the Code) which is granted to a Ten Percent Shareholder, the term
of such Option may not exceed five (5) years from the date of grant of such
Option.
F. VESTING OF OPTIONS. The Committee may limit an Option by restricting
its exercise in whole or in part for specified periods in its sole discretion.
G. METHOD OF EXERCISING AN OPTION. Subject to the terms of a particular
Option, a Participant may exercise it in whole or in part by written notice to
the Secretary of the Company stating in such written notice the number of shares
of Stock such Participant elects to purchase under his Option. Such written
notice shall be in a form satisfactory to the Committee and shall specify the
particular Option (or portion there of) which is being exercised.
H. NO OBLIGATION TO EXERCISE OPTION. A Participant is under no
obligation to exercise an Option or any part thereof.
I. PAYMENT FOR OPTION STOCK. Stock purchased pursuant to an Option shall
be paid in full at the time of purchase. Payment may be made (a) in cash, (b)
with the approval of the Committee, by delivery to the Company of shares of
Stock having an aggregate fair market value equal to the exercise price, or (c)
a combination of (a) and (b). Payment may also be made, in the discretion of
the Committee, by delivery (including by facsimile transmission) to the Company
or its designated agent of an executed irrevocable Option exercise form together
with irrevocable instructions to a broker-dealer to sell (or margin) a
sufficient portion of the shares and deliver the sale (or margin loan) proceeds
directly to the Company to pay for the exercise price. Upon receipt of payment
and subject to paragraph J of this Section VIII, the Company shall, without
transfer or issue tax to the Participant or other person entitled to exercise
the Option, deliver to the Participant (or other person entitled to exercise the
Option) a certificate or certificates for such shares.
J. DELIVERY OF STOCK TO PARTICIPANT. The Company shall undertake and
follow all necessary procedures to make prompt delivery of the number of shares
of Stock which the Participant elects to purchase upon exercise of an Option
granted under this Plan. Such delivery, however, may be postponed, at the sole
discretion of the Company, to
5
enable the Company to comply with any applicable procedures, regulations or
listing requirements of any government agency, stock exchange or quotation
system, or regulatory authority.
K. FAILURE TO ACCEPT DELIVERY OF STOCK. If a Participant refuses to pay
for Stock which he has elected to purchase under his Option, in accordance with
the terms of payment which had previously been agreed upon, his Option shall
thereupon, at the sole discretion of the Committee, terminate, and such funds
previously paid for unissued Stock shall be refunded. Stock which has been
previously issued to the Participant and been fully paid for shall remain the
property of the Participant and shall be unaffected by such termination.
L. NON-TRANSFERABILITY OF OPTIONS. During the lifetime of a Participant,
an Option granted to him may be exercised only by him. It may not be sold,
assigned, pledged or otherwise transferred except by will or by the laws of
descent and distribution.
M. PURCHASE FOR INVESTMENT.
(a) WRITTEN AGREEMENT BY PARTICIPANTS. Unless a registration
statement under the Securities Act of 1933 is then in effect with respect to the
Stock a Participant receives upon exercise of his Option, a Participant shall
acquire the Stock he receives upon exercise of his Option for investment and not
for resale or distribution, and he shall furnish the Company with a written
statement to that effect when he exercises his Option and a reference to such
investment warranty shall be inscribed on the Stock certificate(s).
(b) REGISTRATION REQUIREMENT. Each Option shall be subject to the
requirement that, if at any time the Committee determines that the listing,
registration or qualification of the Stock subject to the Option upon any
securities exchange or quotation system, or under any state or Federal law is
necessary or desirable as a condition of, or in connection with, the issuance of
the Stock thereunder, the Option may not be exercised in whole or in part unless
such listing, registration or qualification shall have been effected or obtained
(and the same shall have been free of any conditions not acceptable to the
Committee).
N. SPECIAL LIMITATIONS ON EXERCISE OF INCENTIVE STOCK OPTIONS. The
aggregate Fair Market Value (determined at the time the Incentive Stock Option
is granted) of the Stock with respect to which any Incentive Stock Option is
first exercisable during any calendar year shall not exceed $100,000.
SECTION IX
STOCK APPRECIATION RIGHTS
A. GRANT OF STOCK APPRECIATION RIGHTS. Stock Appreciation Rights may be
granted under the Plan in tandem with an Option either at the time of grant or
by amendment or may be separately awarded. Stock Appreciation Rights shall be
subject to such terms and conditions not inconsistent with the Plan as the
Committee shall impose.
B. RIGHT TO EXERCISE; EXERCISE PERIOD. A Stock Appreciation Right issued
in tandem with an Option shall be exercisable to the extent the Option is
exercisable. A Stock Appreciation Right issued independent of an Option shall
be exercisable pursuant to such terms and conditions established in the grant.
C. AUTOMATIC REDEMPTION OF UNEXERCISED STOCK APPRECIATION RIGHTS. If on
the last day of the Option Period, in the case of a Stock Appreciation Right
granted in tandem with an Option, or the specified Award Period, in the case of
a Stock Appreciation Right issued independent of an Option, the Participant has
not exercised such Stock Appreciation Right, then such Stock Appreciation Right
shall be automatically redeemed by the Company for an amount equal to the
payment that would otherwise have been made to the Participant if the
Participant had chosen to exercise the Stock Appreciation Right on the last day
of the Option Period or the specified Award Period, as the case may be.
D. RIGHTS UPON EXERCISE. An exercisable Stock Appreciation Right granted
in tandem with an Option shall entitle the Participant to surrender unexercised
the Option or any portion thereof to which the Stock Appreciation
6
Right is attached, and to receive in exchange for the Stock Appreciation Right
a payment (in cash or Stock or a combination thereof as described below)
equal to the Fair Market Value of one share of Stock at the date of exercise
minus the Option Price times the number of shares called for by the Stock
Appreciation Right (or portion thereof) which is so exercised. For example,
assume that a Participant is granted a tandem Award of an Option to purchase
1,000 shares of Stock at an Option Price of $2.00 per share and 1,000 Stock
Appreciation Rights. In such a case, the exercise of 700 Options by the
Participant would relinquish and terminate 700 Stock Appreciation Rights;
similarly, the exercise of the remaining 300 Stock Appreciation Rights would
relinquish and terminate the remaining 300 Options. If the Fair Market Value
of the Stock was $5.00 per share at both the time of the exercise of the
Options and Stock Appreciation Rights, then the Participant would receive 700
shares of Stock upon payment of $1,400 (700 times the Option Price of $2.00)
and the Company would pay the Participant $900 upon the exercise of the 300
Stock Appreciation Rights (($5.00 minus $2.00) times 300).
With respect to the issuance of Stock Appreciation Rights which are not
granted in tandem with an Option, the Committee shall specify upon the Date of
Grant of the Stock Appreciation Right whether the Stock Appreciation Right is a
"regular" Stock Appreciation Right or a "book value" Stock Appreciation Right.
Upon the exercise of a "regular" Stock Appreciation Right, the Participant will
receive a payment equal to the Fair Market Value of one share of Stock at the
date of exercise minus the Fair Market Value of one share of Stock as of the
Date of Grant of the Stock Appreciation Right times the number of shares called
for by the Stock Appreciation Right (or portion thereof) which is so exercised.
Upon the exercise of a "book value" Stock Appreciation Right, the Participant
will receive a payment equal to the Book Value of one share of Stock at the date
of exercise minus the Book Value of one share of Stock as of the Date of the
Grant of the Stock Appreciation Right times the number of shares called for by
the Stock Appreciation Right (or portion thereof) which is so exercised.
The value of any Stock to be received upon exercise of a Stock Appreciation
Right shall be the Fair Market Value of the Stock on such date of exercise. To
the extent that a Stock Appreciation Right issued in tandem with an Option is
exercised, such Option shall be deemed to have been exercised, and shall not be
deemed to have lapsed.
E. TRANSFERABILITY. The Committee may impose such restrictions on
transferability of Stock Appreciation Rights, if any, as it may in its sole
discretion determine; provided however, that Stock Appreciation Rights issued in
tandem with the grant of an Incentive Stock Option must be subject to the same
transferability restriction as the Incentive Stock Option itself.
SECTION X
PERFORMANCE SHARES
A. GRANT OF PERFORMANCE SHARE UNITS. Awards made pursuant to this
Section X shall be granted in the form of Performance Shares, subject to such
terms and conditions not inconsistent with the Plan as the Committee shall
impose. Performance Shares shall be issued to the Participant without the
payment of consideration by the Participant. Awards shall be based on the
attainment of specified types and combination of performance measurement
criteria, which may differ as to various Participants or classes or categories
of Participants. Such criteria may include, without limitation, the attainment
of certain performance levels by the individual Participant, the Company, a
department or division of the Company and/or a group or class of Participants.
Such criteria, together with the ranges of Performance Shares from which
employees may be eligible shall be set from time to time by the Committee and
shall be communicated in writing to the Eligible Persons.
B. PERFORMANCE PERIOD. The measuring period to establish the performance
criteria set forth in a Performance Share Award shall be determined by the
Committee. A Performance Share Award may initially provide, or the Committee
may at any time thereafter, but no more frequently than once in any six (6)
month period, amend it to provide, for waiver or reduction of the measuring
period and, if appropriate, for adjustment of the performance criteria set forth
in the Performance Share Award, upon the occurrence of events determined by the
Committee in its sole discretion to justify such waiver, reduction or
adjustment.
7
C. FORM OF PAYMENT. Upon the completion of the applicable measuring
period, a determination shall be made by the Committee in accordance with the
Award as to (i) the extent to which performance criteria have been attained,
(ii) the satisfaction of any other terms and conditions with respect to the
award, and (iii) the number of shares of Stock to be awarded to the Participant.
The appropriate number of shares of Stock shall thereupon be issued to the
Participant in accordance with the Award in satisfaction of such Performance
Share Award.
SECTION XI
CHANGES IN CAPITAL STRUCTURE OR SHARES
In the event any reorganization, merger, consolidation, recapitalization,
liquidation, reclassification, stock dividend, stock split, combination of
shares, rights offering, or extraordinary dividend or divestiture (including a
spin-off), or any other change in the capital structure or shares of the
Company, the Committee shall make adjustments, determined by the Committee in
its discretion to be appropriate, as to the number and kind of securities
subject to this Plan as specified in Section V herein, and as to the number and
kind of securities covered by each outstanding Award and, where applicable, the
price per share thereunder; provided, however, that with respect to Incentive
Stock Options, such adjustments shall be made in accordance with Section 424(h)
of the Code (and any other applicable sections or regulations of the Code)
unless the Committee determines otherwise.
SECTION XII
CORPORATE REORGANIZATION OR DISSOLUTION
A. DISCONTINUATION OF THE PLAN. The Plan shall be discontinued in the
event of the dissolution or liquidation of the Company or in the event of a
Reorganization (as hereinafter defined) in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization and no plan or agreement respecting the Reorganization is
established which specifically provides for the continuation of the Plan and the
change, conversion, or exchange of the Stock relating to existing Awards under
this Plan for securities of another corporation. Upon the dissolution of the
Plan in connection with an event described in this Paragraph A, all Awards shall
become fully vested and all outstanding Options and Stock Appreciation Rights
shall become immediately exercisable by the holder thereof. Any Options or
Stock Appreciation Rights granted under the Plan may be terminated as of a date
fixed by the Committee, provided that no less than fifteen (15) days written
notice of the date so fixed shall be given to each Participant and each such
Participant shall have the right during such period to exercise all or any
portion of such Options or Stock Appreciation Rights. Any Stock Appreciation
Right not so exercised shall be redeemed.
B. CONTINUATION OF THE PLAN UPON A REORGANIZATION. In the event of a
Reorganization (as hereinafter defined) (i) in which the Company is not the
surviving or acquiring company, or in which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization, and (ii) with respect to which there is a reorganization
agreement which undertakes to continue the Plan and to provide for the change,
conversion or exchange of the Stock attributable to outstanding Awards for
securities of another corporation, then the Plan shall continue and the
Committee shall adjust the shares under such outstanding Awards (and shall
adjust the shares remaining under the Plan which are then to be available for
the grant of additional Awards under the Plan, if the reorganization agreement
makes specific provisions therefor), in a manner not inconsistent with the
provisions of the reorganization agreement and this Plan for the adjustment,
change, conversion or exchange of such Awards.
The term "Reorganization" as used in this Section XII shall mean any
statutory merger, statutory consolidation, sale of all or substantially all of
the assets of the Company, or sale, pursuant to an agreement with the Company,
of securities of the Company pursuant to which the Company is or becomes a
wholly-owned subsidiary of another company after the effective date of the
Reorganization.
8
C. ADJUSTMENTS AND DETERMINATIONS. Adjustments and determinations under
this Section XII shall be made by the Committee, whose decisions as to what
adjustments or determinations shall be made, and the extent thereof, shall be
final, binding, and conclusive.
SECTION XIII
RETIREMENT AND DISABILITY
The Committee may, in its discretion, waive the forfeiture, termination, or
lapse of an Award in the event of retirement or disability of a Participant
(each as determined by the Committee, in its discretion). Exercise of such
discretion by the Committee in any individual case, however, shall not be deemed
to require, or to establish a precedent suggesting such waiver in any other
case.
SECTION XIV
MISCELLANEOUS PROVISIONS
A. NON-TRANSFERABILITY. The Committee may impose such restrictions on
the transferability of an Award, if any, as it may in its sole discretion
determine.
B. NO EMPLOYMENT RIGHT. Neither this Plan nor any action taken hereunder
shall be construed as giving any right to the Participants to be retained as an
officer or employee of the Company or any of its Subsidiaries.
C. TAX WITHHOLDING. Either the Company or a Subsidiary, as appropriate,
shall have the right to deduct from all Awards paid in cash any federal, state
or local taxes as it deems to be required by law to be withheld with respect to
such cash payments. In the case of Awards paid in Stock, the employee or other
person receiving such Stock may be required to pay to the Company or a
Subsidiary, as appropriate, the amount of any such taxes which the Company or
Subsidiary is required to withhold with respect to such Stock. At the request
of a Participant, or as required by law, such sums as may be required for the
payment of any estimated or accrued income tax liability may be withheld and
paid over to the governmental entity entitled to receive the same. The
Committee may from time to time establish procedures for withholding of Stock.
D. FRACTIONAL SHARES. Any fractional shares concerning Awards shall be
eliminated at the time of payment by rounding down for fractions of less than
one-half and rounding up for fractions of equal to or more than one-half. No
cash settlements shall be made with respect to fractional shares eliminated by
rounding.
E. GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to
make payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by any government agency as
may be required. The Company shall be under no obligation to register under the
Securities Act of 1933, as amended ("Act"), any of the shares of Stock issued,
delivered or paid in settlement under the Plan. If Stock awarded under the Plan
may in certain circumstances be exempt from registration under the Act, the
Company may restrict its transfer in such manner as it deems advisable to ensure
such exempt status.
F. TERMINATION OF EMPLOYMENT, DEATH , DISABILITY, ETC. Except as
otherwise determined by the Committee, each Option shall provide as follows with
respect to the exercise of the Option and/or Stock Appreciation Right upon the
termination of employment or the death or disability of the Participant:
(a) if the employment of the Participant is terminated within the
Option or Exercise Period for cause, as determined by the Company, the Option
and/or Stock Appreciation Right shall thereafter be void for all purposes. As
used in this Section XIV(F)(a) "cause" shall mean a gross violation, as
determined by the Company, of the Company's established policies and procedures.
The effect of this Section XIV(F)(a) shall be limited to determining the
consequences of a termination, and nothing in this Section XIV(F)(a) shall
restrict or otherwise interfere with the Company's discretion with respect to
the termination of any employee.
9
(b) If the Participant dies during the Option or Exercise Period
while still employed, the Option and/or Stock Appreciation Right may be
exercised by those entitled to do so under the Participant's will or by the laws
of descent and distribution within three (3) months following the Participant's
death, but not thereafter. In any such case, the Option and/or Stock
Appreciation Right may be exercised only as to the number of shares of Stock as
to which the Option and/or Stock Appreciation Right had become exercisable on or
before the date of the Participant's death (provided that such exercise occurs
within the Option or Exercise Period).
(c) If the Participant becomes disabled (within the meaning of
section 22(e) of the Code) during the Option or Exercise Period while still
employed, the Option and/or Stock Appreciation Right may be exercised by the
Participant (or legal representative) within twelve (12) months following the
disability, but not thereafter. In any such case, the Option and/or Stock
Appreciation Right may be exercised only as to those number of shares of Stock
which had become exercisable on or before the date of the Participant's
disability (provided that such exercise occurs within the Option or Exercise
Period).
(d) If employment of the Participant by the Company is terminated
within the Option or Exercise Period for any reason other than cause, or the
Participant's disability or death, the Option and/or Stock Appreciation Right
may be exercised by the Participant within three (3) months following the date
of such termination (provided that such exercise must occur within the Option
Period), but not thereafter. In any such case, the Option and/or Stock
Appreciation Right may be exercised only as to the number of shares of Stock
which had become exercisable on or before the date of termination of employment
(provided that such exercise occurs within the Option or Exercise Period).
G. LIMITATION. In no event may an Option be exercised by anyone after
the expiration date set forth in the Stock Option Agreement.
H. LIMITS ON DISCRETION. Anything in this Plan to the contrary
notwithstanding, if the Award so provides, the Committee shall not have any
discretion to increase the amount of compensation payable under the Award to the
extent such discretion would cause the Award to lose its qualification as
performance-based compensation for purposes of Section 162(m)(4)(C) of the Code
and the regulations thereunder.
I. GOVERNING LAW. All matters relating to the Plan or to Awards granted
hereunder shall be governed by the laws of the State of Colorado.
J. TITLES AND HEADINGS. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles and headings, shall control.
SECTION XV
AMENDMENT OF PLAN
A. DISCRETION OF THE BOARD. The Board may at any time and from time to
time alter, amend, suspend or terminate the Plan in whole or in part, except (i)
any such action affecting Options granted or to be granted under this Plan which
are intended to qualify as Incentive Stock Options shall be subject to
stockholder approval to the extent such stockholder approval is required
pursuant to Section 422 of the Internal Revenue Code and (ii) no such action may
be taken without the consent of the Participant to whom any Award shall
theretofore have been granted, which adversely affects the rights of such
Participant concerning such Award, except as such termination or amendment of
the Plan is required by statute, or rules and regulations promulgated
thereunder.
B. AUTOMATIC TERMINATION. This Plan shall terminate on January 31, 2006.
Awards may be granted under this Plan at any time and from time to time prior to
the termination of the Plan. Any Award outstanding at the time the Plan is
terminated shall remain in effect until said Award is exercised or expires
pursuant to its terms.
10
TIPPERARY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD January 28, 1997
The undersigned hereby (a) acknowledges receipt of the Notice of Annual
Meeting of Shareholders ("Notice") of Tipperary Corporation ("the Company")
to be held on January 28, 1997, and the Proxy Statement in connection
therewith, each dated December 23, 1996, (b) appoint David L. Bradshaw, with
the power to act alone or to appoint his substitute, as attorney and proxy to
represent and vote, as designated below, all the shares of Common Stock, par
value $0.02 per share, of the Company held of record by the undersigned on
December 2, 1996, at such Annual Meeting and at any adjournment(s) thereof;
and (c) revokes any proxy heretofore given.
1. The election of five (5) directors to serve until the next
Annual Meeting of Shareholders or until their successors shall
be duly elected and qualified -
Nominees: David L. Bradshaw, Kenneth L. Ancell,
Eugene I. Davis, Douglas Kramer, and Marshall D. Lees.
/ / For all nominees, except those / / WITHHOLD AUTHORITY
whose name(s) is (are) written below. to vote for all nominees.
- -------------------------------------------------------------------------------
2. The approval and adoption of the 1997 Long-Term Incentive Plan.
/ / FOR / / AGAINST / / ABSTAIN
3. The ratification of the reappointment of Price Waterhouse as
the Company's independent accountants for the fiscal year
ending September 30, 1997;
/ / FOR / / AGAINST / / ABSTAIN
4. In their discretion, the Proxy is authorized to vote upon such
other business as may properly come before the Annual Meeting
or any adjournment(s) thereof.
(Continued, and to be signed, on page 2)
(Continued from other side)
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS INDICATED, THIS
PROXY WILL BE VOTED FOR THE ELECTION TO THE BOARD OF DIRECTORS OF THE
NOMINEES LISTED ON THIS PROXY, FOR PROPOSAL NO. 2 AND NO. 3, AND IN THE
DISCRETION OF THE PROXY ON ANY OTHER BUSINESS.
If your shares are registered in the name of a brokerage firm or bank, only
your bank or broker can vote your stock and only after receiving your
specific instruction.
This proxy revokes all prior proxies.
Dated: ________________, 19____. Signature(s):
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Important: please date this proxy and
sign exactly as your name appears to
the left. When signing as attorney,
administrator, trustee or guardian,
please give your full title as such.
When stock is in the name of more
than one person, each such person
should sign the proxy.