<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or Rule 14a-12
Tipperary Corporation
- --------------------------------------------------------------------------------
(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):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(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):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
[ ] 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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<PAGE> 2
TIPPERARY CORPORATION
633 SEVENTEENTH STREET
SUITE 1550
DENVER, COLORADO 80202
- --------------------------------------------------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
JANUARY 25, 2000
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 25, 2000, at 10:00
a.m., MST, for the purpose of taking action on:
1. The election of five directors to serve until the next Annual Meeting
of Shareholders or until their successors shall be duly elected and
qualified;
2. The ratification of the reappointment of PricewaterhouseCoopers LLP
("PricewaterhouseCoopers") as the Company's independent accountants for
fiscal 2000;
3. A proposal to increase the number of shares reserved for issuance under
the 1997 Long-Term Incentive Plan (the "Plan") from 250,000 shares of
Common Stock to 500,000 shares of Common Stock;
4. A proposal to amend the Articles of Incorporation to increase the
Company's authorized shares of Common Stock from 20,000,000 shares to
50,000,000 shares; and
5. 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 1,
1999, 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 are first being mailed to shareholders on or about December 27, 1999.
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 17, 1999
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> 3
PAGE 2 TIPPERARY CORPORATION
- --------------------------------------------------------------------------------
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 to
be held on Tuesday, January 25, 2000, ("Annual Meeting") 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 are first being mailed to
the shareholders on or about December 27, 1999, will be borne by the Company. It
is contemplated that solicitation of proxies will be primarily by mail, but may
be supplemented with 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 a
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 1, 1999, 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 15,152,157 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 will be entitled
to cast one vote for each share of Common Stock held by him or her.
A quorum for the Annual Meeting will consist of attendance, either in person or
by proxy, of a majority of outstanding shares of Common Stock. 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 ratify the reappointment of PricewaterhouseCoopers as the Company's
independent accountants for fiscal 2000 and to adopt the proposal to increase
the number of shares of Common Stock to be reserved for issuance under the
Company's 1997 Long-Term Incentive Plan. A vote of two-thirds of the outstanding
shares of Common Stock is required to amend the Articles of Incorporation to
increase the Company's authorized shares of Common Stock.
<PAGE> 4
PAGE 3 TIPPERARY CORPORATION
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of December 1, 1999, 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. 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.
<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership Percentage of Class
------------------- -------------------- -------------------
<S> <C> <C>
Texland Oil, Inc.(1) 3,117,514(2) 20.6%
33 West Monroe Street
Chicago, Illinois 60603
Slough Estates USA Inc.(1) 6,898,920(3) 45.5%
33 West Monroe Street
Chicago, Illinois 60603
Thomson Horstmann & Bryant, Inc. 957,100 6.3%
Park 80 West, Plaza Two
Saddle Brook, New Jersey 07663
The Acorn Fund 800,000 5.3%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
Wanger Asset Management, L.P. 800,000(4) 5.3%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
</TABLE>
- --------------------
(1) Slough Estates USA Inc. ("Slough"), a Delaware
corporation, owns 100% of the Common Stock of Texland Oil, Inc.
("Texland"). Slough is a wholly-owned, U.S. subsidiary of Slough Estates
plc ("SEL"). 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. SEL is a publicly held limited liability company, whose
principal office is located at 234 Bath Road, Trading Estate, Slough SL1
4EE, England.
(2) Texland is the record owner of the indicated shares.
(3) Of the 6,898,920 shares noted, Slough is the record owner of 3,564,835 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.
(4) Wanger Asset Management, L.P. is the beneficial owner of 800,000 shares
held by The Acorn Fund.
<PAGE> 5
PAGE 4 TIPPERARY CORPORATION
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SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth information as of December 1, 1999, regarding
shares of the Company's Common Stock beneficially owned by each nominee for
director, each executive officer 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 or her respective shares of
Common Stock.
<TABLE>
<CAPTION>
Amount and Nature of
Title of Class Name of Beneficial Owner Beneficial Ownership Percentage of Class(1)
-------------- ------------------------ -------------------- ----------------------
<S> <C> <C>
Common Stock David L. Bradshaw 405,169(2) 2.6%
Kenneth L. Ancell 60,000(3) *
Eugene I. Davis 60,000(4) *
Douglas Kramer 0
Marshall D. Lees 16,667(5) *
Jeff T. Obourn 202,481(6) 1.3%
Lisa S. Wilson 46,914(7) *
Larry G. Sugano 55,449(8) *
Roger C. Wiggin 41,296(9) *
Executive officers and
directors as a group, 9 in
number 887,976 5.6%
</TABLE>
- -------------
* 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 381,901 shares issuable pursuant to options and warrants which are
currently exercisable or exercisable within 60 days of December 1, 1999.
(3) Represents 60,000 shares issuable pursuant to a warrant which is currently
exercisable or exercisable within 60 days of December 1, 1999.
(4) Represents 60,000 shares issuable pursuant to a warrant which is currently
exercisable or exercisable within 60 days of December 1, 1999.
(5) Represents 16,667 shares issuable pursuant to a warrant which is currently
exercisable or exercisable within 60 days of December 1, 1999.
(6) Includes 121,667 shares issuable pursuant to options which are currently
exercisable or exercisable within 60 days of December 1, 1999.
(7) Includes 38,734 shares issuable pursuant to options which are currently
exercisable or exercisable within 60 days of December 1, 1999.
(8) Includes 51,667 shares issuable pursuant to options which are currently
exercisable or exercisable within 60 days of December 1, 1999.
(9) Includes 23,334 shares issuable pursuant to options which are currently
exercisable or exercisable within 60 days of December 1, 1999.
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors was aided by four standing committees during the fiscal
year ended September 30, 1999. 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 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, 1999, Messrs. Davis (Chairman) and Ancell served
on the Audit Committee. The Nominating Committee was composed of Messrs.
Bradshaw and Lees. Messrs. Kramer, Lees and Davis served on the Compensation
Committee and all Board members served on the Executive Committee.
Based solely upon a review of Forms 3 and 4 furnished to the Company during the
fiscal year ended September 30, 1999, 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.
<PAGE> 6
PAGE 5 TIPPERARY CORPORATION
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DIRECTORS MEETINGS AND ATTENDANCE
During the fiscal year ended September 30, 1999, there were six meetings of the
Company's Board of Directors. All directors attended at least 75% of the
meetings. The Audit Committee and the Compensation Committee each met twice.
COMPENSATION OF DIRECTORS
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, 1999, the Company compensated its nonemployee, outside directors
at the rate of $8,000 annually and $1,000 for each board meeting attended. In
January 1999, the Directors agreed to accept a 10% reduction in their
compensation in conjunction with a decrease in budgeted expenses. The rate was
increased to $8,000 again beginning October 1, 1999 due to improved operating
cash flows. Directors are not compensated for attendance at Board committee
meetings.
EXECUTIVE COMPENSATION
The table below presents the compensation awarded to, earned by, or paid to the
Company's President and Chief Executive Officer, its Senior Vice President -
Operations and its Chief Financial Officer for the fiscal years ended September
30, as indicated. No other executive officer of the Company received total
annual salary and bonus for each year in excess of $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
------------
Awards
------------
Annual Compensation Securities
--------------------------------------- Underlying
Name and Principal Fiscal Other Annual Options All Other
Position Year Salary Bonus Compensation(1) /SARs(2) Compensation(3)
------------------ ------ -------- ------- --------------- ---------- ---------------
<S> <C> <C> <C> <C> <C> <C>
David L. Bradshaw, 1999 $181,731 $ -- -- 50,000 $1,503
President & Chief 1998 $181,731 $50,000 -- -- $4,809
Executive Officer 1997 $157,521 $20,000 -- 75,000 $4,188
Jeff T. Obourn, 1999 $124,615 $25,000 -- 40,000 $1,348
Sr. Vice President -- 1998 $119,423 $20,000 -- 25,000 $2,984
Operations 1997 $109,038 $15,000 -- 20,000 $1,801
Lisa S. Wilson, 1999 $103,077 $10,000 -- 30,000 $1,062
Chief Financial Officer
</TABLE>
- ------------------
(1) In addition to the amounts listed, the Company furnished other various
benefits, the value of which are not reported in this column because the
Company has concluded that the aggregate amount of these benefits is less
than 10% of cash compensation paid.
(2) No SARs were granted to any of the named officers during the last three
years.
(3) Represents the Company's matching contribution to the Section 401(k)
Retirement Savings Plan.
<PAGE> 7
PAGE 6 TIPPERARY CORPORATION
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The following table sets forth certain information with respect to stock
warrants and options granted to the named executive officers during the fiscal
year ended September 30, 1999:
WARRANT AND OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
- ----------------------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL
NUMBER OF SECURITIES WARRANTS/OPTIONS
UNDERLYING GRANTED TO EXERCISE OR
WARRANTS/OPTIONS EMPLOYEES IN FISCAL BASE PRICE
NAME GRANTED YEAR ($/SHARE) EXPIRATION DATE
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
David L. Bradshaw 50,000 27% $1.50 2 years after termination of employment
Jeff T. Obourn 20,000 11% $2.50 10/1/08
20,000 11% $1.50 9/24/09
Lisa S. Wilson 15,000 8% $2.50 10/1/08
15,000 8% $1.50 9/24/09
</TABLE>
The following table sets forth information with respect to stock warrants and
option exercises during the fiscal year ended September 30, 1999, by the named
executive officers and the value of such officer's unexercised stock options and
warrants at September 30, 1999.
AGGREGATED WARRANTS AND OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END WARRANTS AND OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF UNEXERCISED IN-
NUMBER OF UNEXERCISED WARRANTS THE-MONEY WARRANTS AND
AND OPTIONS/SARS HELD AT FISCAL OPTIONS/SARS
SHARES YEAR END (#) AT FISCAL YEAR END
ACQUIRED ON ---------------------------------- ----------------------------------
NAME EXERCISE VALUE REALIZED Exercisable Unexercisable Exercisable Unexercisable
- ---------------------- --------------- --------------- ----------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
David L. Bradshaw -- -- 381,901 74,999 -- $3,125
Jeff T. Obourn -- -- 121,667 43,333 -- $1,250
Lisa S. Wilson -- -- 36,067 35,333 -- $ 938
</TABLE>
<PAGE> 8
PAGE 7 TIPPERARY CORPORATION
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In December 1998, the Company received debt and equity financing of $11,700,000
from Slough Estates USA Inc. ("Slough"), the Company's largest shareholder. This
financing was comprised of a loan in the amount of $6,000,000 to be used for
development of the Comet Ridge project in Queensland, Australia; $4,000,000 from
the issuance of 2,000,000 shares of Common Stock and an additional loan in the
amount of $1,700,000. Amounts drawn by the Company on the $6,000,000 development
loan through September 30, 1999 were $3,219,000.
The commitment for the $6,000,000 loan was made to the Company's Australian
subsidiary and the proceeds from this loan are being used to fund the drilling
of eight wells and to expand the gathering system on the Comet Ridge project.
The loan is evidenced by a five-year note due December 2003 bearing interest at
the rate of 10% per annum. The terms of the note also provide that Slough will
receive additional payments based upon a royalty of 7% of gross revenues from
both the existing and eight proposed wells until the loan is paid in full, after
which it will be on the eight new wells for the life of those wells. In addition
to the promissory note for $6,000,000, the Company transferred to Slough 10% of
the Common Stock of the Australian subsidiary.
The loan of $1,700,000, together with a $2,700,000 note payable to Slough as of
September 30, 1998, and an additional $2,100,000 borrowed subsequent to
September 30, 1998, are due under the terms of a note for $6,500,000 due on
March 11, 2002, which bears interest at the London Interbank Offered Rate
("LIBOR") plus 3.5%. The $1,700,000 proceeds from this loan and the $4,000,000
proceeds from the issuance of Common Stock were used to reduce bank debt by
$4,700,000, which reduced the loan balance due the bank to the new borrowing
base level of $11,800,000. The remaining proceeds have been used by the Company
for working capital. In connection with this debt and equity financing, the
Company also issued to Slough warrants to purchase 500,000 shares of the
Company's Common Stock at $3.00 per share, exercisable during a five-year period
beginning in December 2000 and ending in December 2005.
On November 19, 1999 the Company and Slough entered into a letter agreement
regarding additional financing to be provided by Slough. At a closing
contemplated to be held in December 1999, Slough agreed to purchase 6,329,114
newly-issued shares of the Company's preferred stock for total consideration of
$10 million, or $1.58 per share. The purchase price per share represented 128%
of the average closing price of the Company's Common Stock for the 20 trading
days ended November 15, 1999. Also, at the closing, the Company will issue to
Slough warrants for 1,200,000 shares of Common Stock at an exercise price of
$2.00 per share. The warrants may be exercised during an eight-year period
beginning two years from the date of the closing and ending 10 years from the
date of closing. The preferred stock will accrue cumulative dividends of 7.75%
of the face value per share ($1.58) per year payable semi-annually in arrears,
on June 30 and December 31. Dividends on the preferred stock may be payable in
Common Stock at the option of the Company based on the greater of the per share
book value as set forth in its most recent published financial statements or the
average closing market price of the Common Stock during the preceding 10 trading
days. The preferred stock plus accumulated but unpaid dividends will be
convertible into Common Stock at any time after issuance at the option of the
holder and prior to maturity or earlier redemption. Each share of preferred
stock will be convertible into one share of Common Stock. The number of shares
of Common Stock issuable upon conversion of the preferred stock will be subject
to customary anti-dilution provisions. Accumulated but unpaid dividends will be
converted into Common Stock based on the greater of the per share book value as
set forth in the Company's most recent published financial statements or the
average closing market price of the Common Stock during the preceding 10 trading
days. The preferred stock will be callable or redeemable by the Company at face
amount plus accumulated but unpaid dividends, upon 60 days written notice, five
years after issuance of the preferred stock, with mandatory redemption 10 years
after issuance at this price. The preferred stock will be subordinated to all
existing and future debt. The preferred stock will have no voting rights, other
than as a class as provided by Texas law. The Company intends to use $4,000,000
of proceeds from this financing to reduce bank debt and the remaining proceeds
for general corporate purposes.
In addition, at the closing of the transaction, Slough will convert
approximately 3,000,000 shares of convertible preferred stock into approximately
3,000,000 shares of Common Stock currently authorized but unissued. Before the
remaining shares of preferred stock may be converted into shares of Common
Stock, the Company must first receive shareholder approval to increase the
Company's authorized common shares (see Proposal 4 herein). Should the requisite
vote not be obtained at the Annual Meeting on January 25, 2000, Slough will be
unable to convert additional shares of preferred stock into Common Stock until
such time as the authorization of additional shares is subsequently approved by
the shareholders. In addition, without sufficient shares authorized for
issuance, Slough would not be able to exercise the warrants received and
described above and would hold the preferred shares through the 10-year term.
Also, the Company would be unable to exercise its option to pay any accrued
dividends on the preferred stock in shares of Common Stock.
<PAGE> 9
PAGE 8 TIPPERARY CORPORATION
- --------------------------------------------------------------------------------
The issuance of the shares of preferred stock and the issuance of shares of
Common Stock upon conversion of the preferred stock, including dividends, will
further increase the control by Slough of the Company. It can be expected that
Slough, as the largest stockholder of the Company, will have final authority
with respect to all matters regarding shareholder approval. For example,
assuming that Slough were to convert all of the preferred stock into Common
Stock, Slough would own 61.6% of the outstanding Common Stock of the Company,
and would be in sole position to elect the Board of Directors.
The above transaction was approved by the non-interested directors of the Board
of the Company on November 18, 1999, but is subject to receipt by the
non-interested members of the Board of Directors of an opinion from an
independent financial adviser that the above transactions are fair, from a
financial view, to the shareholders of the Company other than Slough.
In connection with the transaction, the Company agreed to employ best efforts,
including the retention of Hanifen, Imhoff Inc., an investment banking firm, to
market and sell substantially all of its domestic oil and gas assets. The
proceeds from the asset sales will be dedicated to the repayment of senior debt
(anticipated to be $7.8 million) and then to repay the existing $6.5 million
promissory note to Slough discussed above.
During the fiscal year ended September 30, 1999, two of the Company's directors
were compensated for services other than as director. Mr. Ancell provided
consulting services related to the Company's coalbed methane project in
Australia at his standard rates for a total of $7,427. Mr. Davis received
$40,000 for his services in assisting the Company with its public relations and
equity financing efforts.
Other than as set forth above, 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.
PROPOSAL I
ELECTION OF DIRECTORS
The Company's By-Laws authorize the Board of Directors to be comprised of not
less than three nor more than 15 members. The Company's Board of Directors has
presently determined that the Board shall be comprised of five members, but
reserves the right to increase the number of directors if the need arises. The
five 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
five 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 1, 1999, with respect to
each nominee for director:
David L. Bradshaw, 45, has been a director of the Company since January 23,
1990, and became President and Chief Executive Officer of the Company on January
16, 1996. Mr. Bradshaw, a certified public accountant, began his employment with
the Company in January 1986 as tax manager, and has held various positions with
the Company, including Chief Financial Officer and Chief Operating Officer,
prior to his current position. 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. His last position in public
accounting was tax manager, serving oil and gas clients, in the Midland, Texas
office of Price Waterhouse.
Kenneth L. Ancell, 57, was elected to the Board of Directors on July 11, 1996,
and became Executive Vice President - Corporate Development of the Company on
November 18, 1999. Before joining the Company as an employee, Mr. Ancell was 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 has served as a senior project
advisor for the United Nations' coalbed methane project in China, and was a
Distinguished Lecturer on coalbed methane reserves for the Society of Petroleum
Engineers. Mr. Ancell has expertise in oil and gas recovery processes and 20
years of coalbed methane expertise.
Eugene I. Davis, 44, was elected to the Board of Directors on September 2, 1992.
Mr. Davis had served as independent legal counsel to the Company since 1984.
Beginning in 1999, he has been Chairman and Chief Executive Officer of Pirinate
<PAGE> 10
PAGE 9 TIPPERARY CORPORATION
- --------------------------------------------------------------------------------
Consulting Group, L.L.C., a privately held consulting firm specializing in
crisis and turn-around management, merger and acquisition consulting, hostile
and friendly takeovers, proxy contests and strategic planning advisory services
for public and private business entities. In November 1999, Mr. Davis became a
director of PhoneTel Technologies, Inc., a NASDAQ listed company. In May 1999,
he was appointed the Chief Executive Officer of SmarTalk Teleservices, Inc.
after the company filed a petition under Chapter 11 of the Federal Bankruptcy
Code in March 1999. He was Chief Operating Officer of TotalTel USA
Communications, Inc. in 1998. Both SmarTalk Teleservices, Inc. and TotalTel USA
Communications, Inc. are NASDAQ listed companies. Mr. Davis has been Vice
Chairman and Director of Sports Supply Group Inc., a New York Stock Exchange
company, since 1997 and was Chief Executive Officer during 1997. He has also
been Vice Chairman since 1997 and a Director since 1990 of Emerson Radio Corp.,
an American Stock Exchange company with a class of equity securities registered
under the Securities Exchange Act of 1934. He served as president of Emerson
Radio Corp. from 1994 to 1997.
Douglas Kramer, 63, 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
and mortgage banking company headquartered in Chicago. He is also Director of
Slough Estates plc, a London-based property company. He is also Chairman and
Director of Slough Estates USA Inc., a wholly-owned subsidiary of Slough Estates
plc, which beneficially owned approximately 45.5% of the Company's Common Stock
as of December 1, 1999.
Marshall D. Lees, 46, was elected to the Board of Directors on September 30,
1995. Mr. Lees joined Slough Estates plc in 1987 and is the Chief Executive
Officer of Slough Estates North America, which includes Slough Estates USA Inc.,
and Slough Estates Canada Limited. He became an Executive Director of Slough
Estates plc in 1998. 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 Messrs. Bradshaw and Ancell shown above, the following sets forth
information with respect to the remainder of the Company's executive officers:
Jeff T. Obourn, 41, 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.
Lisa S. Wilson, 40, has been Chief Financial Officer of the Company since March
1, 1998. Ms. Wilson joined the Company as tax manager in 1991. From 1985 to
1990, Ms. Wilson, a certified public accountant, was employed in public
accounting, most recently as tax manager in the Dallas, Texas, office of Price
Waterhouse.
Roger C. Wiggin, 41, became employed as the Company's Vice President -
Exploration and Development on April 1, 1997. From 1983 until joining the
Company in 1997, Mr. Wiggin was employed by Mitchell Energy and Development
Corporation, The Woodlands, Texas, as a geologist. Prior experience also
includes a position with Chevron, USA, in Denver.
Larry G. Sugano, 46, a petroleum engineer, was employed by the Company as its
Engineering Manager on October 10, 1994. Mr. Sugano held that position until he
became Vice President - Engineering on January 24, 1995. During 1994 until his
employment with the Company, he served as a consultant to 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.
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
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors, subject to ratification by the shareholders at the
Annual Meeting, has reappointed PricewaterhouseCoopers as independent
accountants of the Company for the fiscal year ending September 30, 2000.
PricewaterhouseCoopers has been the Company's independent accounting firm since
1971. The Company has been advised that neither PricewaterhouseCoopers nor any
member thereof has any direct financial interest or any material indirect
interest in the Company.
<PAGE> 11
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SHAREHOLDERS ARE REQUESTED TO VOTE FOR THE RATIFICATION OF THE REAPPOINTMENT OF
PRICEWATERHOUSECOOPERS AS THE COMPANY'S INDEPENDENT ACCOUNTANTS FOR FISCAL 2000.
Representatives of PricewaterhouseCoopers 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.
<PAGE> 12
PAGE 11 TIPPERARY CORPORATION
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PROPOSAL 3
TO INCREASE THE NUMBER OF SHARES RESERVED FOR ISSUANCE
UNDER THE 1997 LONG-TERM INCENTIVE PLAN
Pursuant to a shareholder vote in January 1997, the 1997 Long-Term Incentive
Plan (the "1997 Plan") was adopted to replace a prior option plan that had
expired. 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 on file at the offices of the Company.
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 reserves 250,000 shares of Common Stock for issuance for a period ending
January 2007. The Board is proposing that an additional 250,000 shares of Common
Stock be authorized for issuance under the 1997 Plan.
The 1997 Plan is administered by the Board of Directors. The Board, in its sole
discretion, selects participants from the eligible employees to whom awards are
granted, the amount of each award and other terms and conditions of each award
as the Board may determine necessary or desirable and consistent with the terms
of the 1997 Plan.
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 Board
will 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 Board, are performing, or 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, Board members (who are 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 Board in its sole discretion determines 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 are determined by the Board, 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 the holder 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 Board), or
(iii) by a combination of (i) and (ii) (only with permission of the Board).
The 1997 Plan also allows the Board to award stock appreciation rights ("SARs")
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
<PAGE> 13
PAGE 12 TIPPERARY CORPORATION
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date of the grant and the date of the exercise. SAR's issued in tandem with a
stock option will 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 Board will 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 entities the participant
upon exercise to the payment (in cash, Common Stock or a combination thereof)
equal to the book value of one share 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 Board;
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 Board 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 Board 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 Board. 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 Board 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 Board; provided,
however, that such consideration may not be less than the par value of the
restricted stock issued. The Board 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 Board 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 Board will 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 Board, 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 Company currently has 17 employees, all of whom may be granted options under
the 1997 Plan, including all executive officers who are also employees. To date,
there have been 252,500 options to purchase Common Stock granted under the 1997
Plan of which 29,000 have expired. None have been exercised. There are currently
outstanding 42,000 options to purchase
<PAGE> 14
PAGE 13 TIPPERARY CORPORATION
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Common Stock at an exercise price of $4.38 per share, 20,000 options to purchase
Common Stock at an exercise price of $4.44, 12,500 options to purchase Common
Stock at an exercise price of $4.56 per share, 25,000 options to purchase Common
Stock at an exercise price of $4.00, 89,000 options to purchase Common Stock at
an exercise price of $2.50 and 35,000 options to purchase Common Stock at an
exercise price of $1.50.
The Board believes that an increase in the number of shares reserved for
issuance under the 1997 Plan should be increased from 250,000 to 500,000 will be
beneficial to the Company because it will allow the Company to be in a position
to retain its executive officers and provide incentives for key employees to
remain with the Company. As of December 1, 1999 the closing price of the Common
Stock as reported by American Stock Exchange was $1.25 per share. The Board has
determined that stockholder approval of this proposal should be solicited.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE ADOPTION OF THE
PROPOSAL TO INCREASE THE NUMBER OF SHARES RESERVED UNDER THE 1997 PLAN FROM
250,000 TO 500,000 SHARES.
PROPOSAL 4
TO AMEND THE ARTICLES OF INCORPORATION TO INCREASE
THE COMPANY'S AUTHORIZED COMMON SHARES
To provide for future capital needs of the Company, the Board of Directors on
November 18, 1999, unanimously adopted a resolution, subject to shareholder
approval, to amend Article Four of the Company's Articles of Incorporation to
provide additional authorized shares of Class A Common Stock (a copy of Article
Four, as it is proposed to be amended, is attached to this proxy statement as
Exhibit A). The proposal provides for an increase in the authorized capital
stock as follows:
<TABLE>
<CAPTION>
Shares Proposed
Currently to be
Title Authorized Authorized
-------------- ---------- -----------
<S> <C> <C>
Common Stock, 20,000,000 50,000,000
$.02 par value
Cumulative 10,000,000 No change
Preferred Stock,
$1.00 par value
Non-cumulative 10,000,000 No change
Preferred Stock,
$1.00 par value
</TABLE>
Of the 20,000,000 shares currently authorized, 15,161,755 have been issued and
approximately 1.8 million shares are reserved for issuance under options and
warrants previously granted, leaving approximately 3 million shares currently
available for issuance. Should Slough convert its preferred stock into
approximately 3 million shares of Common Stock, as contemplated, following the
financing transaction scheduled to close in December 1999, there will be few, if
any, shares of Common Stock authorized for issuance. Other than the proposed
transaction described above under "Certain Relationships and Related
Transactions," there is no pending or planned transaction which would require
the issuance of any of the newly authorized Common Stock. The additional stock,
if authorized, will be used to consummate the transaction with Slough Estates
USA Inc. described under "Certain Relationships and Related Transactions," and
from time to time on terms and conditions as then determined by the Board of
Directors of the Company in accordance with applicable Texas law. While the
Board of Directors has no foreseeable plans to issue proposed additional
authorized stock other than as discussed above, it believes the Company should
have the ability to do so if and when the Board determines that such issuance
would be in the best interest of its shareholders. The Board believes that by
enabling the Company to issue additional stock, the Company will be in a better
position to take advantage of future expansion or capital funding opportunities.
Provisions in Article Four concerning the Preferred Stock are not proposed to be
amended.
In accordance with the Articles of Incorporation, no holder of shares of Common
Stock shall be entitled, as such, to any preemptive right or preferential right
to subscribe to any unissued stock or any other securities which the Company may
now or hereafter be authorized to issue.
<PAGE> 15
PAGE 14 TIPPERARY CORPORATION
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The proposal is not part of a plan by the Company's management to adopt a series
of anti-takeover amendments over a period of time, nor does management presently
intend to propose other anti-takeover measures in future proxy solicitations.
The proposal is not the result of management's knowledge of any specific effort
to accumulate securities of the company or to obtain control of the Company be
means of a merger, tender offer, solicitation and opposition to management or
otherwise. The measure is being proposed for the reasons set forth above.
At present the Company's Articles of Incorporation and Bylaws do not contain
other provisions having anti-takeover effect.
As indicated, there is no specific transaction pending or planned for the
issuance of the additional Common Stock proposed to be authorized. It is
contemplated that such stock, when issued, may be used to acquire additional
capital and to fund the future growth of the Company.
If approved by two-thirds of the issued and outstanding shares of Common Stock,
the proposed amendment will become effective upon filing of an Amendment to the
Company's Articles of Incorporation with the Texas Secretary of State.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE PROPOSAL TO AMEND THE
ARTICLES OF INCORPORATION TO INCREASE THE COMPANY'S AUTHORIZED SHARES.
ANNUAL REPORT
An Annual Report containing the Company's audited Consolidated Financial
Statements as of September 30, 1999, accompanies this Proxy Statement. The
following items from the Annual Report are incorporated herein by reference: (i)
the audited consolidated balance sheets of the Company as of September 30, 1999
and 1998; audited statements of operations, cash flows and stockholders equity
for each of the three fiscal years ended September 30, 1999; and Notes to the
Consolidated Financial Statements; and (ii) Management's Discussion and Analysis
of Financial Condition and Results of Operations. No other part of the Annual
Report is or shall be deemed to be incorporated by reference into this proxy
statement. No other 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, 1999, 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, OR THROUGH A LINK ON THE
COMPANY'S WEBSITE AT WWW.TIPPERARYCORP.COM.
SHAREHOLDER PROPOSALS
Shareholders desiring to submit proposals for action at the Company's 2001
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 August 15,
2000.
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 17, 1999
<PAGE> 16
EXHIBIT A
(AS PROPOSED TO BE AMENDED)
ARTICLE FOUR
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is seventy million (70,000,000) shares, consisting
of ten million (10,000,000) shares of Cumulative Preferred Stock of the par
value of one dollar ($1.00) per share, ten million (10,000,000) shares of
Non-cumulative Preferred Stock of the par value of one dollar ($1.00) per share,
and fifty million (50,000,000) shares of Common Stock of the par value of two
cents ($.02) per share. The Cumulative Preferred Stock and Non-cumulative
Preferred Stock are sometimes hereinafter referred to jointly as the "Preferred
Stock" and shall be equal in rights and preferences and in all respects
identical except as specifically set forth in the preferences, limitations and
relative rights of the Preferred Stock. The preferences, limitations and
relative rights of the Preferred Stock and Common Stock shall be as follows:
(A) PREFERRED STOCK
(1) The shares of each class of Preferred Stock may be divided into and
issued in series. Each such series shall be so designated as to distinguish the
shares thereof from the shares of all other series and classes, and all shares
of the Preferred Stock shall be identical, except as set forth in Section 3(a)
and Section 4 hereof and as to the following relative rights and preferences, as
to which there may be variations between different series:
(a) The rate of dividend;
(b) The price at, and the terms and conditions on which, shares may be
redeemed;
(c) The amount payable upon shares in the event of involuntary
liquidation;
(d) The amount payable upon shares in the event of voluntary
liquidation;
(e) Mandatory or optional sinking fund provisions, if any, for the
redemption or purchase of shares;
(f) The terms and conditions on which shares may be converted, if the
shares of any series are issued with the privilege of conversion; and
(g) Voting rights, including the number of votes per share, or any
fraction thereof, the matters on which such shares can vote and the
contingencies which make such voting rights effective.
(2) The Board of Directors of the Corporation is hereby authorized, from
time to time, by resolution or resolutions providing for the issuance thereof,
to divide the shares of Cumulative Preferred Stock and Non-cumulative Preferred
Stock into and to establish series thereof, to designate each such series, to
fix and determine the relative rights and preferences of the shares of any
series so established, and to issue and sell any and all of the authorized and
unissued shares of Preferred Stock as shares of any series thereof established
by action of the Board of Directors pursuant hereto.
(3) Except as specifically noted, the following provisions shall apply to
all shares of the Preferred Stock irrespective of class or series:
(a) To the extent that the resolution or resolutions creating any
series of either class of Preferred Stock shall provide that any dividends shall
be paid thereon, the holders of Preferred Stock of each such class and series
shall be entitled to receive on the dates and for the periods hereafter
specified by the Board of Directors, dividends in cash, payable when, if, and as
declared by the Board of Directors out of any funds legally available therefor,
at such rates as shall be determined by the Board of Directors for the
respective series, from the date upon which such shares shall have been
originally issued.
(i) With respect to Cumulative Preferred Stock, such dividends
if any, shall be cumulative from the date of issue, and no dividend (other than
a dividend payable in Common Stock of the Corporation) or other distribution
shall be paid or declared or made on, and no amounts shall be applied to the
purchase or redemption of, Non-cumulative Preferred Stock, the Common Stock or
any other class of stock ranking junior to the Cumulative Preferred Stock as to
dividends or assets unless (i) full cumulative dividends for all past dividend
periods shall have been paid or declared and set apart for payment, and full
dividends for the then current dividend period shall have been or simultaneously
therewith shall be paid or declared and set apart
A-1
<PAGE> 17
for payment on outstanding Cumulative Preferred Stock of all series entitled to
receive dividends at the rates determined for the respective series; and (ii)
after giving effect to such payment of dividends, other distribution, purchase,
or payment of dividends, other distribution, purchase, or redemption, the
aggregate capital of the Corporation applicable to all capital stock of the
Corporation then outstanding, plus the consolidated earned and capital surplus
of the Corporation, shall exceed the aggregate amount payable on involuntary
dissolution, liquidation or winding up of the Corporation on all shares of the
Preferred Stock and all stock ranking prior to or on a parity with the Preferred
Stock as to dividends or assets outstanding after the payment of such dividends,
other distribution, purchase, or redemption. Accumulations of dividends shall
not bear interest. Dividends shall not be paid or declared and set apart for
payment on the Cumulative Preferred Stock of any one series for any dividend
period unless dividends have been or are contemporaneously paid or declared and
set apart for payment on the Cumulative Preferred Stock of all series entitled
thereto for all dividend periods terminating on the same or earlier date.
(ii) With respect to Non-cumulative Preferred Stock, no
dividend (other than a dividend payable in Common Stock of the Corporation) or
other distribution shall be paid or declared or made on, and no amounts shall be
applied to the purchase or redemption of the Common Stock or any other class of
stock ranking junior to the Non-cumulative Preferred Stock as to dividends or
assets unless (i) full cumulative dividends for all past dividend periods shall
have been paid or declared and set apart for payment, and full dividends for the
then current dividend period shall have been or simultaneously therewith shall
be paid or declared and set apart for payment, on outstanding Cumulative
Preferred Stock of all series entitled to receive dividends at the rates
determined for the respective series (ii) full dividends for the then current
dividend period shall have been or simultaneously therewith shall be paid or
declared and set apart for payment, on outstanding Noncumulative Preferred Stock
of all series entitled to receive dividends at the rates determined for the
respective series; and (iii) after giving effect to such payment of dividends,
other distribution, purchase, or redemption, the aggregate capital of the
Corporation applicable to all capital stock of the Corporation then outstanding,
plus the consolidated earned and capital surplus of the Corporation, shall
exceed the aggregate amount payable on involuntary dissolution, liquidation or
winding up of the Corporation on all shares of the Preferred Stock and all stock
ranking prior to or on a parity with the Preferred Stock as to dividends or
assets outstanding after the payment of such dividends, other distribution,
purchase, or redemption. Dividends shall not be paid or declared and set apart
for payment on the Non-cumulative Preferred Stock of any one series for any
dividend period unless dividends have been or are contemporaneously paid or
declared and set apart for the payment on Non-cumulative Preferred Stock of all
series entitled thereto for all dividend periods terminating on the same or
earlier date.
(b) In the event of any dissolution, liquidation or winding up of the
Corporation, whether voluntarily, or involuntarily, the holders of Preferred
Stock of each class and series then outstanding, without any preference for the
shares of any class or series of Preferred Stock over the shares of any other
class or series of Preferred Stock, shall be entitled to receive in cash out of
the assets of the Corporation, whether capital or surplus or otherwise, before
any distribution of the assets shall be made to the holders of Common Stock or
of any other class of stock ranking junior to the Preferred Stock as to
dividends or assets, the amount determined by the Board of Directors, pursuant
to the authority granted in Paragraph (A)(2) of this Article, to be payable on
the shares of such series in the event of voluntary or involuntary dissolution,
liquidation or winding up, as the case may be, together, in all cases involving
the Cumulative Preferred Stock with unpaid accumulated dividends, if any,
whether such dividends are earned, declared or otherwise, to the date fixed on
all shares of the Preferred Stock. In the event of such voluntary or involuntary
dissolution, liquidation or winding up, as the case may be, then the assets
available for payment shall be distributed ratably among the holders of the
Preferred Stock of all classes and series in accordance with the amounts so
determined to be payable on the shares of each series in the event of voluntary
or involuntary dissolution, liquidation or winding up, as the case may be, in
proportion to the full preferential amounts, together with any and all dividend
arrearages to which they are respectively entitled. After payment to the holders
of the Preferred Stock of the full preferential amounts hereinbefore provided
for, the holders of Preferred Stock will have no other rights or claims to any
of the remaining assets of the Corporation either upon distribution of such
assets or upon dissolution, liquidation, or winding up. The sale of all or
substantially all of the property of the Corporation to, or the merger,
consolidation or reorganization of the Corporation into or with, any other
corporation, or the purchase or redemption by the Corporation of the shares of
its Preferred Stock or its Common Stock or any other class of its stock shall
not be deemed to be a distribution of assets or a dissolution, liquidation or
winding up for the purposes of this paragraph.
(c) So long as full cumulative dividends on all outstanding shares of
Cumulative Preferred Stock for all dividend periods ending on or prior to the
date fixed for redemption and full dividends on all outstanding shares of
Non-cumulative Preferred Stock for the then current dividend period shall have
been paid or declared and set apart for payment and subject to any applicable
requirements of Texas law, the Corporation may (i) at the option of the Board of
Directors of the Corporation, redeem the whole or any part of the shares of any
class or series of Preferred Stock determined by it to be redeemable pursuant to
the authority granted in Paragraph (A) (2) of this Article, and without
redeeming the shares of any other class or series
A-2
<PAGE> 18
thereof; or (ii) redeem the whole or any part of any class or series of
Preferred Stock to meet any sinking fund requirement determined pursuant to the
authority granted in Paragraph (A) (2) of this Article, and without redeeming
the shares of any other class or series thereof, in each case on the terms and
conditions and at the redemption price so determined for such series, plus the
amount of unpaid accumulated dividends, if any, to the date of such redemption.
All such redemptions of Preferred Stock shall be effected in accordance with the
procedure for redemptions set forth in the Texas Business Corporation Act in
effect at the times of such redemptions.
On or before the date fixed for redemption, the Corporation may provide for
payment of a sum sufficient to redeem the shares called for redemption either
(1) by setting aside the sum, separate from its other funds, in trust for the
benefit of the holders of the shares to be redeemed; or (2) by depositing such
sum in a bank or trust company (either such a financial institution located in
Texas having capital and surplus of at least ten million dollars ($10,000,000)
according to its latest statement of condition, or in such other financial
institution which is now or hereafter duly appointed and acting as transfer
agent of the Corporation) as a trust fund, with irrevocable instructions and
authority to the bank or trust company to give or complete the notice of
redemption and to pay, on or after the date fixed for redemption, the redemption
price on surrender of certificates evidencing the shares of Preferred Stock
called for redemption. From and after the date fixed for redemption, (a) the
share shall be deemed to be redeemed; (b) dividends thereon shall cease to
accumulate; (c) such setting aside or deposit shall be deemed to constitute full
payment for the shares; (d) the shares shall no longer be deemed to be
outstanding; (e) the holders thereof shall cease to be shareholders with respect
to such shares; and (f) the holders shall have no right with respect thereto,
except the right to receive their proportionate shares of the funds set aside
pursuant hereto or deposited upon surrender of the respective certificates, and
any right to convert such shares which may exist. Any interest accrued on funds
set aside or deposited pursuant hereto shall belong to the Corporation. If the
holders of shares do not, within six (6) years after such deposit, claim any
amount so deposited for redemption thereof, the bank or trust company shall upon
demand pay over to the Corporation the balance of the funds so deposited and the
bank or trust company shall thereupon be relieved of all responsibility to such
holders.
(d) So long as full cumulative dividends on all outstanding shares of
Cumulative Preferred Stock for all dividend periods and full dividends on all
shares of Non-cumulative Preferred Stock for the then current dividend period
ending on or prior to the date of purchase shall have been paid or declared and
set apart for payment and subject to any applicable requirements of Texas law,
the Corporation may purchase, directly or indirectly, shares of Preferred Stock
of any class or series to the extent of the aggregate of unrestricted capital
surplus and unrestricted reduction surplus available therefor.
(e) Upon any issue for money or other consideration of any stock of the
Corporation that may be authorized from time to time, or treasury stock, no
holder of Preferred Stock shall have any preemptive or other right to subscribe
for, purchase, or receive any proportionate or other share of the stock so
issued, but rather the Board of Directors may dispose of all or any portion of
such stock as and when it may determine, free of any such rights, whether by
offering the same to shareholders or by sale to other disposition as said Board
of Directors may deem advisable.
(4) Voting Powers
(a) Except as provided by law, as set forth herein or as may be
provided with respect to any series by the Board of Directors pursuant to the
authority granted in Paragraph (A) (2) of this Article, the holders of Preferred
Stock shall not have any right to vote for any purpose or on any matter
whatsoever, all such voting power being vested exclusively in the shares of
Common Stock. Holders of Preferred Stock shall not be entitled to receive notice
of any meeting of shareholders of the Corporation at which they are not entitled
to vote.
(b) The holders of shares of any and all series of Cumulative Preferred
stock outstanding on the record date for any such meeting of the shareholders
shall be entitled to vote, as a single class, upon any proposed amendment to
these Articles of Incorporation, if such amendment would (i) increase or
decrease the aggregate number of authorized shares of Cumulative Preferred
Stock; (ii) increase or decrease the par value of shares of Cumulative Preferred
Stock; (iii) effect an exchange, reclassification, or cancellation of all or a
part of the shares of Cumulative Preferred Stock; (iv) effect an exchange, or
create a right of exchange, of all or any part of the shares of another class
into shares of Cumulative Preferred Stock; (v) change the designations,
preferences, limitations, or relative rights of any series of Cumulative
Preferred Stock at the time outstanding in those respects in which the shares
thereof vary from shares of other series of Cumulative Preferred Stock at the
time outstanding; (vi) change the shares of Cumulative Preferred Stock, whether
with or without par value, into the same or a different number of shares either
with or without par value, of the same class or another class or classes; (vii)
create a new class of Preferred Stock having rights and preferences equal,
prior, or superior to the shares of the Cumulative Preferred Stock, or increase
the rights and preferences of any class having rights, and preferences equal,
prior or superior to the shares of the Cumulative Preferred Stock, or increase
the rights and preferences of any class having rights or preferences later or
inferior to the shares of the Cumulative Preferred Stock in such a manner as to
become equal, prior or superior to the shares of the Cumulative Preferred Stock;
or (viii) cancel or otherwise affect accumulated but undeclared dividends on the
shares of Cumulative Preferred Stock, and no such proposed amendment shall be
deemed to have been adopted and approved without the affirmative vote of holders
of that number
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<PAGE> 19
of shares of Cumulative Preferred Stock then outstanding which shall be required
pursuant to the provisions of the Texas Business Corporation Act in effect at
the time of such vote.
(c) The holders of shares of any and all series of Non-cumulative
Preferred Stock outstanding on the record date for any such meeting of the
shareholders shall be entitled to vote, as a single class, upon any proposed
amendment to these Articles of Incorporation, if such amendment would (i)
increase or decrease the aggregate number of authorized shares of Non-cumulative
Preferred Stock; (ii) increase or decrease the par value of shares of
Noncumulative Preferred Stock; (iii) effect an exchange, reclassification, or
cancellation of all or a part of the shares of Noncumulative Preferred Stock;
(iv) effect an exchange, or create a right of exchange, of all or any part of
the shares of another class into shares of Non-cumulative Preferred Stock; (v)
change the designations, preferences, limitations, or relative rights of any
series of Non-cumulative Preferred Stock at the time outstanding in those
respects in which the shares thereof vary from shares of other series of
Non-cumulative Preferred Stock at the time outstanding; (vi) change the shares
of Non-cumulative Preferred Stock, whether with or without par value, into the
same or a different number of shares either with or without par value, of the
same class or another class or classes; or (vii) create a new class of Preferred
Stock having rights and preferences equal, prior, or superior to the shares of
the Non-cumulative Preferred Stock, or increase the rights and preferences of
any class having rights and preferences equal, prior or superior to the shares
of the Noncumulative Preferred Stock, or increase the rights and preferences of
any class having rights or preferences later or inferior to the shares of the
Non-cumulative Preferred Stock, and no such proposed amendment shall be deemed
to have been adopted and approved without the affirmative vote of holders of
that number of shares of Noncumulative Preferred Stock then outstanding which
shall be required pursuant to the provisions of the Texas Business Corporation
Act then in effect at the time of such vote.
(d) The holders of shares of any and all classes and series of
Preferred Stock outstanding on the record date fixed for any such meeting of the
shareholders shall be entitled to vote, as a single class, upon any resolution
authorizing (i) any plan of merger or consolidation involving the Corporation;
(ii) the dissolution of the Corporation; and (iii) the sale, lease, exchange, or
other disposition of all, or substantially all, of the property and assets of
the Corporation, if not made in the regular course of business, and no such
resolution shall be deemed to have been adopted and approved without the
affirmative vote of holders of that number of shares of Preferred Stock then
outstanding which shall be required pursuant to the provisions of the Texas
Business Corporation Act in effect at the time of such vote.
(B) COMMON STOCK
(1) Dividends
Subject to the provisions of Paragraph (A)(3)(a) of this Article, and after
making such provisions, if any, as may be required for any mandatory sinking
fund applicable to any class or series of Preferred Stock, cash dividends may be
paid on the Common Stock to the exclusion of the Preferred Stock as and when
declared by the Corporation out of any funds legally available for the payment
of cash dividends.
(2) Voting Rights
The holders of shares of Common Stock issued and outstanding, except where
otherwise provided by law or by these Articles of Incorporation, shall have and
possess the exclusive rights to notice of stockholders' meeting and the
exclusive voting rights and powers. Each holder of Common Stock shall be
entitled to cast one vote for each share of stock registered in the name of the
holder on the books of the Corporation.
(3) Distribution of Assets
In the event of any dissolution, liquidation or winding up of the
Corporation, whether voluntary or involuntary, after there shall have been paid
or set aside in cash for the holders of Preferred Stock the full preferential
amounts, together with any and all dividend arrearages, to which they are
entitled pursuant to the provisions of Part (A) of this Article, the funds,
assets, and property of the Corporation shall be distributed pro rata to the
holders of Common Stock.
A-4
<PAGE> 20
TIPPERARY CORPORATION
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 25, 2000
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 25, 2000, and the Proxy Statement in connection therewith, each dated
December 17, 1999, (b) appoints 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 1, 1999, 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 ratification of the reappointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending September 30,
2000;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. A proposal to increase the shares of Common Stock reserved for issuance
under the Company's 1997 Long-Term Incentive Plan from 250,000 to 500,000;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. A proposal to amend the Articles of Incorporation to increase the Company's
authorized shares of Common Stock from 20,000,000 shares to 50,000,000
shares;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. In his 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)
<PAGE> 21
(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 PROPOSALS NO. 2, 3 AND 4, 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: , . Signature(s):
-------------------------- -------
-----------------------------------
-----------------------------------
-----------------------------------
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.
