View:
As filed with the Securities and Exchange Commission on December 16, 2003
Registration No. 333-____________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
COMSTOCK RESOURCES, INC.
(and certain subsidiaries indentified in footnote (*) below)
(Exact name of registrant as specified in its charter)
NEVADA 1311 94-1667468
State or other jurisdiction of (Primary Standard Industries (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
5300 Town and Country Blvd., Suite 500 M. Jay Allison
Frisco, Texas 75034 President and Chief Executive Officer
(972) 668-8800 5300 Town and Country Blvd., Suite 500
Frisco, Texas 75034
(Address, including zip code, and (972) 668-8800
telephone number, including area code, (Name, Address, including zip
of Registrant's principal executive offices) code, and telephone number, including area
code, of agent for service)
Copies to:
Jack E. Jacobsen
Locke Liddell & Sapp LLP
2200 Ross Avenue, Suite 2200
Dallas, Texas 75201
(214) 740-8000
Approximate date of commencement of proposed sale to the public: From time to
time after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment, plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
Calculation of Registration Fee:
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1)(2)(3)(4) REGISTRATION FEE
Debt Securities (5) -- --
Common Stock, par value $0.50 per share (6) -- --
Preferred Stock, par value $10.00 per share (7) -- --
Warrants (8) -- --
Units (9) -- --
Guarantees of Debt Securities (10) -- --
Total $300,000,000 $24,270
(footnotes on next page)
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
(footnotes from previous page)
(1) The proposed maximum offering price per unit will be determined from time
to time by Comstock Resources, Inc. in connection with, and at the time of,
the issuance of the securities registered hereunder. The maximum offering
price per unit has been omitted pursuant to Securities Act Release No.
6964.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.
(3) In no event will the aggregate initial offering price of all securities
issued from time to time pursuant to this registration statement exceed
$300,000,000. This amount is exclusive of accrued interest, distributions
and dividends, if any. Securities registered hereunder may be sold
separately, together or as units with other securities registered
hereunder. This total amount also includes such securities as may, from
time to time, be issued upon conversion or exchange of securities
registered hereunder, to the extent any such securities are, by their
terms, convertible into or exchangeable for other securities.
(4) Not specified as to each class of securities to be registered pursuant to
General Instruction II.D. of Form S-3 under the Securities Act of 1933.
(5) If any debt securities are issued at an original issue discount, then the
offering price of the debt securities shall be in such amount as shall
result in an aggregate initial offering price not to exceed $300,000,000,
less the offering price of any securities previously issued hereunder by
the Registrant.
(6) Subject to note (3) above, an indeterminate number of shares of common
stock as may be sold from time to time are being registered hereunder. Also
includes such indeterminate number of shares of common stock as may be (a)
issued upon conversion, redemption or exchange for any debt securities or
preferred stock that provide for conversion or exchange into common stock
or (b) issued upon exercise and settlement of any warrants. The aggregate
amount of common stock registered under this registration statement is
limited to that which is permissible under Rule 415(a)(4) promulgated under
the Securities Act of 1933.
(7) Subject to note (3) above, an indeterminate number of shares of preferred
stock as may be sold from time to time are being registered hereunder. Also
includes such indeterminate number of shares of preferred stock as may be
(a) issued upon conversion, redemption or exchange for any debt securities
that provide for conversion or exchange into preferred stock or (b) issued
upon exercise and settlement of any warrants.
(8) Subject to note (3) above, an indeterminate number of warrants as may be
sold from time to time are being registered hereunder. Warrants may be
exercised to purchase any of the other securities registered hereby.
(9) Subject to note (3) above, an indeterminate number of units as may be sold
from time to time are being registered hereunder. Units may consist of any
combination of the securities being registered hereunder.
(10) No separate consideration will be received for any guarantee of debt
securities; accordingly, pursuant to Rule 457(n) of the Securities Act of
1933, no separate filing fee is required.
(*) The following subsidiaries are co-registrants incorporated in the states
and having the I.R.S. Employer Identification Numbers indicated: (i)
Comstock Oil &Gas, Inc., a Nevada corporation (75- 2272352); (ii) Comstock
Oil & Gas-Louisiana, LLC, a Nevada limited liability company (28- 0012430);
Comstock Offshore, LLC, a Nevada limited liability company (75-2733811);
and Comstock Oil & Gas Holdings, Inc. a Nevada corporation (75-2968982).
2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, Dated December 16, 2003
PROSPECTUS
$300,000,000
COMSTOCK RESOURCES, INC.
DEBT SECURITIES
COMMON STOCK
PREFERRED STOCK
WARRANTS
UNITS
Comstock Resources, Inc. may offer and sell from time to time debt
securities, common stock, preferred stock, warrants or units. We will provide
specific terms of these securities in supplements to this prospectus. The terms
of the securities will include the initial offering price, aggregate amount of
the offering, listing on any securities exchange or quotation system, risk
factors and the agents, dealers or underwriters, if any, to be used in
connection with the sale of these securities. You should read this prospectus
and any supplement carefully before you invest.
Our common stock is traded on the New York Stock Exchange under the symbol
"CRK."
This prospectus may not be used to sell securities unless accompanied by a
supplement to this prospectus.
__________
This investment involves a high degree of risk. Please see the section in
this prospectus entitled "Risk Factors" beginning on page 8.
__________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
__________
The date of this prospectus is ____________, 2003
TABLE OF CONTENTS
PAGE
About this Prospectus...................................................3
Forward-Looking Statements..............................................4
Comstock Resources, Inc.................................................5
Risk Factors............................................................8
Use of Proceeds........................................................13
Ratio of Earnings to Fixed Charges.....................................14
Description of Debt Securities.........................................14
Description of Capital Stock...........................................23
Description of Warrants............................................... 28
Description of Units...................................................29
Plan of Distribution...................................................30
Legal Matters..........................................................32
Experts................................................................32
Where You Can Find More Information....................................33
2
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission, or SEC, utilizing a "shelf" registration
process. Under this shelf registration process, we may sell any combination of
the securities described in this prospectus in one or more offerings up to a
total offering price of $300,000,000. This prospectus provides you with a
general description of the securities we may offer. Each time we offer to sell
securities, we will provide a prospectus supplement that will contain specific
information about the terms of that offering and the securities offered by us in
that offering. The prospectus supplement may also add, update or change
information contained in this prospectus. If there is any inconsistency between
the information in this prospectus and any prospectus supplement, you should
rely on the information provided in the prospectus supplement. This prospectus
does not contain all of the information included in the registration statement.
The registration statement filed with the SEC includes exhibits that provide
more details about the matters discussed in this prospectus. You should
carefully read this prospectus, the related exhibits filed with the SEC and any
prospectus supplement, together with the additional information described below
under the heading "Where You Can Find More Information."
You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus supplement. We
have not authorized any other person to provide you with different information.
If anyone provides you with different or inconsistent information, you should
not rely on it. We are not making an offer of the securities covered by this
prospectus in any state where the offer is not permitted. You should assume that
the information appearing in this prospectus, any prospectus supplement and any
other document incorporated by reference is accurate only as of the date on the
front cover of those documents. Our business, financial condition, results of
operations and prospects may have changed since those dates.
Under no circumstances should the delivery to you of this prospectus create
any implication that the information contained in this prospectus is correct as
of any time after the date of this prospectus.
Unless otherwise indicated or unless the context otherwise requires, all
references in this prospectus to "Comstock," "we," "us," and "our" mean Comstock
Resources, Inc. and its consolidated subsidiaries. In this prospectus, we
sometimes refer to the debt securities, common stock, preferred stock, warrants
and units collectively as the "securities."
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FORWARD-LOOKING STATEMENTS
The information contained in this prospectus, including the documents
incorporated by reference herein and our public releases include
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
forward- looking statements are identified by their use of terms such as
"expect," "estimate," "anticipate," "project," "plan," "believe" and similar
terms. All statements, other than statements of historical facts, included in or
incorporated by reference to this prospectus, are forward-looking statements,
including statements under the caption "Risk Factors," regarding:
o budgeted capital expenditures;
o increases in oil and natural gas production;
o the number of anticipated wells to be drilled after the date hereof;
o our financial position;
o oil and natural gas reserve estimates;
o business strategy; and
o other plans and objectives for future operations.
Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we can give no assurance that these
expectations will prove to be correct. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including, among others:
o the risks described in the sections captioned "Risk Factors" in this
prospectus;
o the timing and success of our drilling activities;
o the volatility of prices and supply of, and demand for, oil and
natural gas;
o the numerous uncertainties inherent in estimating quantities of oil
and natural gas reserves and actual future production rates and
associated costs;
o our ability to successfully identify, execute or effectively integrate
future acquisitions;
o the usual hazards associated with the oil and gas industry, including
fires, well blowouts, pipe failure, spills, explosions and other
unforeseen hazards;
o our ability to effectively market our oil and natural gas;
o the availability of rigs, equipment, supplies and personnel;
o our ability to acquire or discover additional reserves;
o our ability to satisfy future capital requirements;
o changes in regulatory requirements;
o general economic and competitive conditions;
o our ability to retain key members of our senior management and key
employees; and
o continued hostilities in the Middle East and other sustained military
campaigns and acts of terrorism or sabotage.
4
There are numerous uncertainties inherent in estimating quantities of
proved oil and natural gas reserves and in projecting future rates of production
and timing of development expenditures, including many factors beyond our
control. Reserve engineering is a subjective process of estimating underground
accumulations of oil and natural gas that cannot be precisely measured.
Furthermore, the accuracy of any reserve estimate is a function of the quality
of available data and of engineering and geological interpretation and judgment.
As a result, estimates made by different engineers often vary from one to
another. In addition, results of drilling, testing and production subsequent to
the date of an estimate may justify revisions of the estimate and the revisions,
if significant, would change the schedule of any further production and
development drilling. Accordingly, reserve estimates are generally different
from the quantities of oil and natural gas that are ultimately recovered.
Additional important factors that could cause actual results to differ
materially from our expectations are discussed in "Risk Factors" and elsewhere
in this prospectus. Should one or more of these risks or uncertainties occur, or
should underlying assumptions prove incorrect, our actual results and plans for
2003 and beyond could differ materially from those expressed in the
forward-looking statements. All subsequent written and oral forward-looking
statements attributable to us or persons acting on our behalf are expressly
qualified in their entirety by such factors.
COMSTOCK RESOURCES, INC.
We are an independent energy company engaged in the acquisition,
development, production and exploration of oil and natural gas properties. Our
oil and natural gas operations are concentrated in the Gulf of Mexico, East
Texas / North Louisiana, Southeast Texas and South Texas regions. In addition,
we have properties in the Illinois Basin region in Kentucky and in the
Mid-Continent regions located in the Texas panhandle, Oklahoma and Kansas. Our
oil and natural gas properties are estimated to have proved reserves of 613.9
Bcfe as of December 31, 2002. Our proved oil and natural gas reserve base is 80%
natural gas and 66% proved developed on a Bcfe basis as of December 31, 2002.
Our proved reserves at December 31, 2002 and our 2002 average daily
production are summarized below:
Proved Reserves at December 31, 2002 2002 Daily Production
--------------------------------------- -------------------------------------
% of % of
Oil Gas Total Total Oil Gas Total Total
------- ------- ------- ------- -------- ------- -------- --------
(MMBbls) (Bcf) (Bcfe) (MBbls/d) (MMcf/d) (MMcfe/d)
Gulf of Mexico 15.6 96.1 189.7 30.9 2.2 20.7 33.6 29.8
East Texas / North Louisiana 1.1 182.0 188.5 30.7 0.3 32.4 34.2 30.4
Southeast Texas 3.1 107.1 125.5 20.4 0.9 24.3 29.5 26.2
South Texas 0.7 47.0 51.3 8.4 0.1 6.5 7.0 6.2
Other Regions 0.3 56.6 58.9 9.6 0.1 7.2 8.3 7.4
------- ------- ------- ------- ----- ----- ----- -----
Total 20.8 488.8 613.9 100.0% 3.6 91.1 112.6 100.0%
======= ======= ======= ======= ===== ===== ===== =====
Strengths
Quality Properties. Our operations are focused in four geographically
concentrated areas: the Gulf of Mexico, East Texas / North Louisiana, Southeast
Texas and South Texas regions, which account for approximately 31%, 31%, 20% and
8% of our proved reserves, respectively. We have high price realizations
relative to benchmark prices for natural gas and crude oil production. We also
have favorable operating costs which result in us having high cash margins.
Finally, our properties have an average reserve life of approximately 15.0 years
and have extensive development and exploration potential.
5
Successful Exploration and Development Program. In 2002, we spent $35.3
million on the exploitation and development of our oil and natural gas
properties for development drilling, recompletions, workovers and production
facilities. Overall, we drilled 27 development wells, 11.7 net to us, with a 96%
success rate. We also had a successful exploratory drilling program in 2002,
spending a total of $31.1 million to drill 20 wells, 7.6 net to us, with a 75%
success rate. We spent an additional $4.3 million in acquiring new acreage in
2002 to support our exploration program.
Successful Acquisitions. We have had significant growth over the years as a
result of acquisitions. Since 1991, we have added 711.7 Bcfe of proved oil and
natural gas reserves from 29 acquisitions at an average cost of $0.84 per Mcfe.
Our application of strict economic and reserve risk criteria have enabled us to
successfully evaluate and integrate our previous acquisitions.
Efficient Operator. We operate 60% of our proved oil and natural gas
reserve base as of December 31, 2002. This allows us to control operating costs,
the timing and plans for future development, the level of drilling and lifting
costs and the marketing of production. As an operator, we receive reimbursements
for overhead from other working interest owners, which reduces our general and
administrative expenses.
High Price Realizations. The majority of our wells are located in areas
which can access attractive natural gas and crude oil markets. In addition, our
natural gas production has a relatively high Btu content of approximately 1,079
Btu. Our crude oil production has a favorable API gravity of approximately 40
degrees. Due to these factors, we have relatively high price realizations
compared to benchmark prices. In 2002 our average natural gas price, before
gains from hedging activities, was $3.26 per Mcf, which represented a $0.04
premium to the 2002 NYMEX average monthly settlement price. Also in 2002, our
average crude oil price was $24.95 per barrel, which represented a $2.04 barrel
premium to the average monthly West Texas Intermediate crude oil price for 2002
posted by Koch Industries, Inc.
High Cash Margins. As a result of our quality properties, higher price
realizations and efficient operations, we believe we have higher cash margins
than most of our competitors. Consequently, our oil and natural gas reserves
have a higher value per Mcfe than reserves that generate lower cash margins.
Business Strategy
Exploit Existing Reserves. We seek to maximize the value of our oil and
natural gas properties by increasing production and recoverable reserves through
active workover, recompletion and exploitation activities. We utilize advanced
industry technology, including 3-D seismic data, improved logging tools, and
formation stimulation techniques. During 2002, we spent approximately $22.9
million to drill 27 development wells, 11.7 net to us, of which 26 wells, 10.7
net to us, were successful, representing a success rate of 96%. In addition, we
spent approximately $12.4 million for new production facilities, leasehold costs
and for recompletion and workover activities. For 2003, we have budgeted $49.0
million for development drilling and for workover and recompletion activity.
Pursue Exploration Opportunities. We conduct exploration activities to grow
our reserve base and to replace our production each year. In 2002 we replaced
131% of our 2002 production from new discoveries. In 2002, we spent
approximately $31.1 million to drill 20 exploratory wells, 7.6 net to us, of
which 15 wells, 5.3 net to us, were successful, representing a success rate of
75%. We also spent $4.3 million in acquiring new acreage in 2002 to support our
exploration program. We have budgeted $51.0 million in 2003 for exploration
activities which will be focused primarily in the Gulf of Mexico, Southeast
Texas and South Texas regions.
6
Maintain Low Cost Structure. We seek to increase cash flow by carefully
controlling operating costs and general and administrative expenses. Our average
oil and gas operating costs per Mcfe were $0.82 in 2002 and our general and
administrative expenses per Mcfe averaged only $0.12 in 2002.
Acquire High Quality Properties at Attractive Costs. We have a successful
track record of increasing our oil and natural gas reserves through
opportunistic acquisitions. Since 1991, we have added 711.7 Bcfe of proved oil
and natural gas reserves from 29 acquisitions at a total cost of $598.3 million,
or $0.84 per Mcfe. The acquisitions were acquired at an average of 63% of their
present value of proved reserves in the year the acquisitions were completed. We
apply strict economic and reserve risk criteria in evaluating acquisitions. We
target properties in our core operating areas with established production and
low operating costs that also have potential opportunities to increase
production and reserves through exploration and exploitation activities.
Maintain Flexible Capital Expenditure Budget. The timing of most of our
capital expenditures is discretionary because we have not made any significant
long-term capital expenditure commitments. Consequently, we have a significant
degree of flexibility to adjust the level of such expenditures according to
market conditions. We anticipate spending approximately $100.0 million on
development and exploration projects in 2003. We intend to primarily use
operating cash flow to fund our drilling expenditures in 2003. We may also make
additional property acquisitions in 2003 that would require additional sources
of funding. Such sources may include borrowings under our bank credit facility
or sales of our equity or debt securities.
7
RISK FACTORS
The securities to be offered by this prospectus may involve a high degree
of risk. When considering an investment in any of the securities, you should
consider carefully all of the risk factors described below and any similar
information contained in any Annual Report on Form 10-K or other document filed
by us with the SEC after the date of this prospectus. If applicable, we will
include in any prospectus supplement a description of those significant factors
that could make the offering described in the prospectus supplement speculative
or risky.
Our revenues, profitability and cash flow is dependent upon the prices for
oil and natural gas and these prices are volatile.
Our business is dependent upon the prices of, and demand for, oil and
natural gas. Historically, the prices for oil and natural gas have been volatile
and are likely to remain volatile in the future. The prices we receive for our
oil and natural gas production and the level of such production are subject to
wide fluctuations and depend on numerous factors beyond our control, including,
without limitation:
o seasonality;
o imports of crude oil and natural gas;
o political conditions in other oil-producing and natural gas-producing
countries;
o the actions of the Organization of Petroleum Exporting Countries;
o domestic government regulation, legislation and policies;
o price and availability of alternative fuels; and
o overall economic conditions.
Any continued and extended decline in the price of crude oil or natural gas
will adversely affect our:
o revenues, profitability and cash flow from operations;
o value of our proved oil and natural gas reserves;
o the economic viability of certain of our drilling prospects; o
borrowing capacity; and
o ability to obtain additional capital.
In order to reduce our exposure to price risks, we may enter into oil and
natural gas price swap arrangements to hedge a portion of our anticipated sales.
Such arrangements may limit our ability to benefit from increases in oil and
natural gas prices. Although we are not currently experiencing any significant
involuntary curtailment of our natural gas production, market, economic and
regulatory factors may in the future materially affect our ability to sell our
natural gas production.
We plan to pursue acquisitions as part of our growth strategy and there are
risks in connection with acquisitions.
Our growth in recent years is attributable in part to acquisitions of
producing properties and companies. We expect to continue to evaluate and, where
appropriate, pursue acquisition opportunities on terms we consider favorable.
However, we cannot assure you that suitable acquisition candidates will be
identified in the future, or that we will be able to finance such acquisitions
on favorable terms. In addition, we compete against other companies for
8
acquisitions, and we cannotassure you that we will successfully acquire any
material property interests. Further, we cannot assure you that future
acquisitions by us will be integrated successfully into our operations or will
increase our profits.
The successful acquisition of producing properties requires an assessment
of numerous factors beyond our control, including, without limitation:
o recoverable reserves;
o exploration potential;
o future oil and natural gas prices;
o operating costs; and
o potential environmental and other liabilities.
In connection with such an assessment, we perform a review of the subject
properties that we believe to be generally consistent with industry practices.
The resulting assessments are inexact and their accuracy uncertain, and such a
review may not reveal all existing or potential problems, nor will it
necessarily permit us to become sufficiently familiar with the properties to
fully assess their merits and deficiencies. Inspections may not always be
performed on every well, and structural and environmental problems are not
necessarily observable even when an inspection is made.
Additionally, significant acquisitions can change the nature of our
operations and business depending upon the character of the acquired properties,
which may be substantially different in operating and geologic characteristics
or geographic location than our existing properties. While our current
operations are focused in the Gulf of Mexico, East Texas/North Louisiana,
Southeast Texas, South Texas, the Illinois Basin and the Mid-Continent regions,
we may pursue acquisitions or properties located in other geographic areas.
We have substantial debt and debt service requirements which could adversely
affect our operations and limit our growth.
Large Amount of Debt
We have substantial debt and debt service requirements. As of September 30,
2003, our ratio of total debt to total capitalization was approximately 53%.
Consequences of Debt
Our substantial debt will have important consequences, including, without
limitation:
o a substantial portion of our cash flow from operations will be
required to make debt service payments;
o our ability to borrow additional amounts for working capital, capital
expenditures (including acquisitions) or other purposes will be
limited; and
o our debt could limit our ability to capitalize on significant business
opportunities, our flexibility in planning for or reacting to changes
in market conditions and our ability to withstand competitive
pressures and economic downturns.
9
In addition, future acquisition or development activities may require us to
alter our capitalization significantly. These changes in capitalization may
significantly increase our debt. Moreover, our ability to meet our debt service
obligations and to reduce our total debt will be dependent upon our future
performance, which will be subject to general economic conditions and financial,
business and other factors affecting our operations, many of which are beyond
our control. If we are unable to generate sufficient cash flow from operations
in the future to service our indebtedness and to meet other commitments, we will
be required to adopt one or more alternatives, such as refinancing or
restructuring our indebtedness, selling material assets or seeking to raise
additional debt or equity capital. We cannot assure you that any of these
actions could be effected on a timely basis or on satisfactory terms or that
these actions would enable us to continue to satisfy our capital requirements.
Restrictive Debt Covenants
Our bank credit facility contains a number of significant covenants. These
covenants will limit our ability to, among other things:
o borrow additional money;
o merge, consolidate or dispose of assets;
o make certain types of investments;
o enter into transactions with our affiliates; and
o pay dividends.
Our failure to comply with any of these covenants would cause a default
under our bank credit facility and the indenture governing the notes. A default,
if not waived, could result in acceleration of our indebtedness, in which case
the debt would become immediately due and payable. If this occurs, we may not be
able to repay our debt or borrow sufficient funds to refinance it. Even if new
financing is available, it may not be on terms that are acceptable to us.
Complying with these covenants may cause us to take actions that we otherwise
would not take or not take actions that we otherwise would take.
We may not have sufficient funds to meet our substantial capital requirements.
We make, and will continue to make, substantial capital expenditures for
the acquisition, development and exploration of oil and natural gas reserves.
Historically, we have financed these expenditures primarily with cash generated
by operations, bank borrowings and the sale of equity securities and non-
strategic assets. We believe that we will have sufficient cash provided by
operating activities to fund anticipated capital expenditures other than
significant acquisitions. We intend to borrow under our bank credit facility or
to obtain other debt or equity financing as needed to finance future
acquisitions. If revenues or our borrowing base decrease as a result of lower
oil and natural gas prices, operating difficulties or declines in reserves, our
ability to obtain the capital necessary to undertake or complete future
development programs and to pursue acquisition opportunities may be limited. We
cannot assure you that additional debt or equity financing or cash generated
from operations will be available to meet these requirements. If we need
additional funds, our inability to raise such funds may adversely affect our
operations.
Our future production and revenues depend on our ability to replace our
reserves.
Our future production and revenues depend upon our ability to find, develop
or acquire additional oil and natural gas reserves that are economically
recoverable. Our proved reserves will generally decline as reserves are
10
depleted, except to the extent that we conduct successful exploration or
development activities or acquire properties containing proved reserves, or
both. To increase reserves and production, we must continue our acquisition and
drilling activities. We cannot assure you, however, that our acquisition and
drilling activities will result in significant additional reserves or that we
will have continuing success drilling productive wells at low finding and
development costs. Furthermore, while our revenues may increase if prevailing
oil and natural gas prices increase significantly, our finding costs for
additional reserves could also increase.
Our drilling activities are subject to many risks.
Our drilling activities are subject to many risks, including the risk that
no commercially productive reservoirs will be encountered. We cannot assure you
that new wells we drill will be productive or that we will recover all or any
portion of our investment. Drilling for oil and natural gas may involve
unprofitable efforts, not only from dry wells, but from wells that are
productive but do not produce sufficient net revenues to return a profit after
drilling, operating and other costs. The cost of drilling, completing and
operating wells is often uncertain. Our drilling operations may be curtailed,
delayed or canceled as a result of numerous factors, many of which are beyond
our control, including, without limitation:
o title problems;
o adverse weather conditions;
o compliance with governmental requirements; and
o shortages or delays in the delivery of equipment and services.
Our operations are subject to operating hazards and uninsured risks.
Our operations are subject to all of the risks normally associated with the
exploration for and the production of oil and natural gas, including, without
limitation, blowouts, cratering, oil spills and fires, each of which could
result in damage to or destruction of oil and natural gas wells, production
facilities or other property, or injury to persons. In addition, we may from
time to time conduct relatively deep drilling which will involve increased
drilling risks of high pressures and mechanical difficulties, including stuck
pipe, collapsed casing and separated cable. We cannot assure you that our
insurance will adequately cover any losses or liabilities. Furthermore, we
cannot predict the continued availability of insurance, or availability at
commercially acceptable prices.
We operate in a highly competitive industry, and our failure to remain
competitive with our competitors, many of which have greater resources than us,
could adversely affect our results of operations.
The oil and natural gas industry is highly competitive in the search for
and development and acquisition of reserves. Our competitors for the
acquisition, development and exploration of oil and natural gas properties and
capital to finance such activities, include companies that have greater
financial and personnel resources than we do. These resources could allow those
competitors to price their products and services more aggressively than we can,
which could hurt our profitability. Moreover, our ability to acquire additional
properties and to discover reserves in the future will be dependent upon our
ability to evaluate and select suitable properties and to close transactions in
a highly competitive environment.
11
There are many uncertainties in estimating reserves and future net cash flows.
There are many uncertainties in estimating quantities and values of proved
reserves, projecting future rates of production and timing of development
expenditures, including many factors beyond our control. Reserve engineering is
a subjective process of estimating the recovery from underground accumulations
of oil and natural gas that cannot be precisely measured. The accuracy of any
reserve estimate depends on the quality of available data, production history
and engineering and geological interpretation and judgment. Because all reserve
estimates are to some degree speculative, the quantities of oil and natural gas
that are ultimately recovered, production and operating costs, the amount and
timing of future development expenditures and future oil and natural gas prices
may all differ materially from those assumed in these estimates. In addition,
different reserve engineers may make different estimates of reserve quantities
and cash flows based upon the same available data. The present value of the
future net cash flows attributable to our proved oil and natural gas reserves
set forth in this prospectus and in documents incorporated into this prospectus
are estimates only and should not be construed as the current market value of
the estimated oil and natural gas reserves attributable to our properties. Thus,
the information set forth in this prospectus includes revisions of certain
reserve estimates attributable to proved properties included in the preceding
year's estimates. Such revisions reflect additional information from subsequent
activities, production history of the properties involved and any adjustments in
the projected economic life of such properties resulting from changes in product
prices. Any future downward revisions could adversely affect our financial
condition, borrowing base under our bank credit facility, future prospects and
the market value of our securities.
If we are unsuccessful at marketing our oil and gas at commercially acceptable
prices, our profitability will decline.
Our ability to market oil and gas at commercially acceptable prices depends
on, among other factors, the following:
o the availability and capacity of gathering systems and pipelines;
o federal and state regulation of production and transportation;
o changes in supply and demand; and
o general economic conditions.
Our inability to respond appropriately to changes in these factors could
negatively effect our profitability.
We are subject to extensive governmental regulation, including environmental
regulations, that may adversely affect our costs.
Our business is affected by certain federal, state and local laws and
regulations relating to the development, production, marketing, pricing,
transportation and storage of oil and natural gas. Our business is also subject
to extensive and changing environmental and safety laws and regulations
governing plugging and abandonment of wells, the discharge of materials into the
environment or otherwise relating to environmental protection. Sanctions for
noncompliance with these laws and regulations may include administrative, civil
and criminal penalties, revocation of permits and corrective action orders.
These laws sometimes apply retroactively. In addition, a party can be liable for
environmental damage without regard to that party's negligence or fault.
Therefore, we could have liability for the conduct of others, or for acts that
were in compliance with all applicable laws at the time we performed them.
Environmental laws have become more stringent over the years. In addition, the
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modification or interpretation of existing laws or regulations or the adoption
of new laws or regulations curtailing exploratory or development drilling for
oil and gas could limit well servicing opportunities. We cannot assure you that
present or future regulation will not adversely affect our operations.
We depend on our key personnel and the loss of any of these individuals could
have a material adverse effect on our operations.
We believe that the success of our business strategy and our ability to
operate profitably depend on the continued employment of M. Jay Allison,
President and Chief Executive Officer, and a limited number of other senior
management personnel. Loss of the services of Mr. Allison or any of those other
individuals could have a material adverse effect on our operations.
Shortage of rigs, equipment, supplies or qualified personnel may restrict our
operations.
Our industry is cyclical and, from time to time, there is a shortage of
drilling rigs, equipment, supplies or qualified personnel. During these periods,
the costs and delivery times of rigs, equipment and supplies are substantially
greater. In addition, demand for, and wage rates of, qualified drilling rig
crews rise with increases in the number of active rigs in service. Shortages of
drilling rigs, equipment or supplies could delay or restrict our exploration and
development operations, which in turn could adversely affect our financial
condition and results of operations.
Terrorist attacks and continued hostilities in the Middle East or other
sustained military campaigns may adversely impact our business.
The terrorist attacks that took place in the United States on September 11,
2001 were unprecedented events that have created many economic and political
uncertainties, some of which may materially adversely impact our business. The
long-term impact that terrorist attacks and the threat of terrorist attacks may
have on our business is not known at this time. Uncertainties surrounding
continued hostilities in the Middle East or other sustained military campaigns
may adversely impact our business in unpredictable ways. USE OF PROCEEDS
Unless otherwise specified in an accompanying prospectus supplement, we
expect to use the net proceeds from the sale of the securities offered by this
prospectus:
o to refinance certain existing indebtedness, including $220.0 million
of our 11 1/4% Senior Notes which may be redeemed by us on or after
May 1, 2004;
o to finance acquisitions; and
o for general corporate purposes.
We may invest funds not required immediately for these purposes in marketable
securities and short-term investments. The precise amount and timing of the
application of these proceeds will depend upon our funding requirements and the
availability and cost of other funds.
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RATIO OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratios of earnings to fixed charges on a
consolidated basis for the periods shown. You should read these ratios of
earnings to fixed charges in connection with our consolidated financial
statements, including the notes to those statements, incorporated by reference
into this prospectus.
Nine Months
Ended
Years Ended December 31, September 30,
------------------------------------------- ----------------
1998 1999 2000 2001 2002 2002 2003
------- ------- ------- ------- ------- ------- -------
Ratio of earnings -- -- 3.2x 3.3x 1.5x 1.1x 4.1x
to fixed charges
The ratios were computed by dividing earnings by fixed charges. For this
purpose, "earnings" represent the aggregate of (i) income from continuing
operations before income taxes and (ii) fixed charges. "Fixed charges" consists
of interest expense, capitalized interest expense, preferred stock dividends and
that portion of non-capitalized rental expense deemed to be the equivalent of
interest. Earnings were insufficient to cover fixed charges by $29.3 million and
$6.9 million for the years ended December 31, 1998 and 1999, respectively.
DESCRIPTION OF DEBT SECURITIES
This section describes the general terms and provisions of the debt
securities which may be offered by us from time to time. The applicable
prospectus supplement will describe the specific terms of the debt securities
offered by that prospectus supplement.
We may issue debt securities either separately or together with, or upon
the conversion of, or in exchange for, other securities. The debt securities are
to be either our senior obligations issued in one or more series and referred to
herein as the senior debt securities, or our subordinated obligations issued in
one or more series and referred to herein as the subordinated debt securities.
The debt securities will be general obligations of Comstock. Each series of debt
securities will be issued under an agreement, or indenture, between Comstock and
an independent third party, usually a bank or trust company, known as a trustee,
who will be legally obligated to carry out the terms of the indenture. The
name(s) of the trustee(s) will be set forth in the applicable prospectus
supplement. We may issue all the debt securities under the same indenture, as
one or as separate series, as specified in the applicable prospectus
supplement(s).
This summary of certain terms and provisions of the debt securities and
indentures is not complete. If we refer to particular provisions of an
indenture, the provisions, including definitions of certain terms, are
incorporated by reference as a part of this summary. The indentures are or will
be filed as an exhibit to the registration statement of which this prospectus is
a part, or as exhibits to documents that we may file under the Securities
Exchange Act of 1934 which are incorporated by reference into this prospectus.
The indentures are subject to and governed by the Trust Indenture Act of 1939.
You should refer to the applicable indenture for the provisions which may be
important to you.
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General
The indentures may not limit the amount of debt securities which we may
issue. We may issue debt securities up to an aggregate principal amount as we
may authorize from time to time. The applicable prospectus supplement will
describe the terms of any debt securities being offered, including:
o the title and aggregate principal amount;
o the date(s) when principal is payable;
o the interest rate, if any, and the method for calculating the interest
rate;
o the interest payment dates and the record dates for the interest
payments;
o the places where the principal and interest will be payable;
o any mandatory or optional redemption or repurchase terms or
prepayment, conversion, sinking fund or exchangeability or
convertibility provisions;
o whether such debt securities will be senior debt securities or
subordinated debt securities and, if subordinated debt securities, the
subordination provisions and the applicable definition of senior
indebtedness;
o additional provisions, if any, relating to the defeasance and covenant
defeasance of the debt securities;
o if other than denominations of $1,000 or multiples of $1,000, the de
nominations the debt securities will be issued in;
o whether the debt securities will be issued in the form of global
securities, as discussed below, or certificates;
o whether the debt securities will be issuable in registered form,
referred to as registered securities, or in bearer form, referred to
as bearer securities, or both, and if bearer securities are issuable,
any restrictions applicable to the exchange of one form for another
and the offer, sale and delivery of bearer securities;
o any applicable material federal tax consequences;
o the dates on which premiums, if any, will be payable;
o our right, if any, to defer payment of interest and the maximum length
of such deferral period;
o any paying agents, transfer agents, registrars or trustees;
o any listing on a securities exchange;
o if convertible into common stock or preferred stock, the terms on
which such debt securities are convertible;
o the terms, if any, of the transfer, mortgage, pledge, or assignment as
security for any series of debt securities of any properties, assets,
proceeds, securities or other collateral, including whether certain
provisions of the Trust Indenture Act of 1939 are applicable, and any
corresponding changes to provisions of the indenture as then in
effect;
o restrictions on the declaration of dividends, if any;
o restrictions on issuing additional debt, if any;
o material limitations or qualifications on the debt securities imposed
by the rights of any of our other securities, if any;
15
o the initial offering price; and
o other specific terms, including covenants and any additions or changes
to the events of default provided for with respect to the debt
securities.
The terms of the debt securities of any series may differ, and without the
consent of the holders of the debt securities of any series, we may reopen a
previous series of debt securities and issue additional debt securities of such
series or establish additional terms of such series, unless otherwise indicated
in the applicable prospectus supplement.
Non-U.S. Currency
If the purchase price of any debt securities is payable in a currency other
than U.S. dollars or if principal of, or premium, if any, or interest, if any,
on any of the debt securities is payable in any currency other than U.S.
dollars, the specific terms with respect to such debt securities and such
foreign currency will be specified in the applicable prospectus supplement.
Original Issue Discount Securities
Debt securities may be issued as original issue discount securities to be
sold at a substantial discount below their principal amount. Original issue
discount securities may include "zero coupon" securities that do not pay any
cash interest for the entire term of the securities. In the event of an
acceleration of the maturity of any original issue discount security, the amount
payable to the holder thereof upon such acceleration will be determined in the
manner described in the applicable prospectus supplement. Material federal
income tax and other considerations applicable to original issue discount
securities will be described in the applicable prospectus supplement.
Covenants
Under the indentures, we will be required to:
o pay the principal, interest and any premium on the debt securities
when due;
o maintain a place of payment;
o deliver a report to the trustee at the end of each fiscal year
reviewing our obligations under the indentures; and
o deposit sufficient funds with any paying agent on or before the due
date for any principal, interest or any premium.
Any additional covenants will be described in the applicable prospectus
supplement.
Registration, Transfer, Payment and Paying Agent
Unless otherwise indicated in a prospectus supplement, each series of debt
securities will be issued in registered form only, without coupons. The
indentures, however, provide that we may also issue debt securities in bearer
form only, or in both registered and bearer form. Bearer securities must not be
offered, sold, resold or delivered in connection with their original issuance in
the United States or to any United States person other than offices located
outside the United States of certain United States financial institutions.
"United States person" means any citizen or resident of the United States, any
corporation, partnership or other entity created or organized in or under the
laws of the United States, any estate the income of which is subject to United
States federal income taxation regardless of its source, or any trust whose
administration is subject to the primary supervision of a United States court
16
and which has one or more United States fiduciaries who have the authority to
control all substantial decisions of the trust. "United States" means the United
States of America (including the states thereof and the District of Columbia),
its territories, its possessions and other areas subject to its jurisdiction.
Purchasers of bearer securities will be subject to certification procedures and
may be affected by certain limitations under United States tax laws. Such
procedures and limitations will be described in the prospectus supplement
relating to the offering of the bearer securities.
Unless otherwise indicated in a prospectus supplement, registered
securities will be issued in denominations of $1,000 or any integral multiple
thereof.
Unless otherwise indicated in a prospectus supplement, the principal,
premium, if any, and interest, if any, of or on the debt securities will be
payable, and debt securities may be surrendered for registration of transfer or
exchange, at an office or agency to be maintained by us in the City of New York,
provided that payments of interest with respect to any registered security may
be made at our option by check mailed to the address of the person entitled to
payment or by transfer to an account maintained by the payee with a bank located
in the United States. No service charge will be made for any registration of
transfer or exchange of debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge and any other expenses
that may be imposed in connection with the exchange or transfer.
Unless otherwise indicated in a prospectus supplement, payment of principal
of, premium, if any, and interest, if any, on bearer securities will be made,
subject to any applicable laws and regulations, at such office or agency outside
the United States as specified in the prospectus supplement and as we may
designate from time to time. Unless otherwise indicated in a prospectus
supplement, payment of interest due on bearer securities on any interest payment
date will be made only against surrender of the coupon relating to such interest
payment date. Unless otherwise indicated in a prospectus supplement, no payment
of principal, premium or interest with respect to any bearer security will be
made at any office or agency in the United States or by check mailed to any
address in the United States or by transfer to an account maintained with a bank
located in the United States; except that if amounts owing with respect to any
bearer securities shall be payable in U.S. dollars, payment may be made at the
Corporate Trust Office of the applicable trustee or at any office or agency
designated by us in the Borough of Manhattan, The City of New York, if (but only
if) payment of the full amount of such principal, premium or interest at all
offices outside of the United States maintained for such purpose by us is
illegal or effectively precluded by exchange controls or similar restrictions.
Unless otherwise indicated in the applicable prospectus supplement, we will
not be required to:
o issue, register the transfer of or exchange debt securities of any
series during a period beginning at the opening of business 15 days
before any selection of debt securities of that series of like tenor
to be redeemed and ending at the close of business on the day of that
selection;
o register the transfer of or exchange any registered security, or
portion thereof, called for redemption, except the unredeemed portion
of any registered security being redeemed in part;
o exchange any bearer security called for redemption, except to exchange
such bearer security for a registered security of that series and like
tenor that is simultaneously surrendered for redemption; or
o issue, register the transfer of or exchange any debt security which
has been surrendered for repayment at the option of the holder, except
the portion, if any, of the debt security not to be so repaid.
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Ranking of Debt Securities
The senior debt securities will be our unsubordinated obligations and will
rank equally in right of payment with all other unsubordinated indebtedness of
ours. The subordinated debt securities will be obligations of ours and will be
subordinated in right of payment to all existing and future senior indebtedness.
The prospectus supplement will describe the subordination provisions and set
forth the definition of senior indebtedness applicable to the subordinated debt
securities, and will set forth the approximate amount of such senior
indebtedness outstanding as of a recent date.
Global Securities
The debt securities of a series may be issued in whole or in part in the
form of one or more global securities that will be deposited with, or on behalf
of, a depository, such as the Depository Trust Company, identified in the
prospectus supplement relating to such series. Global debt securities may be
issued in either registered or bearer form and in either temporary or permanent
form. Unless and until it is exchanged in whole or in part for individual
certificates evidencing debt securities, a global debt security may not be
transferred except as a whole:
o by the depository to a nominee of such depository;
o by a nominee of such depository to such depository or another nominee
of such depository; or
o by such depository or any such nominee to a successor of such
depository or a nominee of such successor.
The specific terms of the depository arrangement with respect to a series
of global debt securities and certain limitations and restrictions relating to a
series of global bearer securities will be described in the applicable
prospectus supplement.
Outstanding Debt Securities
In determining whether the holders of the requisite principal amount of
outstanding debt securities have given any authorization, demand, direction,
notice, consent or waiver under the relevant indenture, the amount of
outstanding debt securities will be calculated based on the following:
o the portion of the principal amount of an original issue discount
security that shall be deemed to be outstanding for such purposes
shall be that portion of the principal amount thereof that could be
declared to be due and payable upon a declaration of acceleration
pursuant to the terms of such original issue discount security as of
the date of such determination;
o the principal amount of a debt security denominated in a currency
other than U.S. dollars shall be the U.S. dollar equivalent,
determined on the date of original issue of such debt security, of the
principal amount of such debt security; and
o any debt security owned by us or any obligor on such debt security or
any affiliate of us or such other obligor shall be deemed not to be
outstanding.
Redemption and Repurchase
The debt securities may be redeemable at our option, may be subject to
mandatory redemption pursuant to a sinking fund or otherwise, or may be subject
to repurchase by us at the option of the holders, in each case upon the terms,
at the times and at the prices set forth in the applicable prospectus
supplement.
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Conversion and Exchange
The terms, if any, on which debt securities of any series are convertible
into or exchangeable for common stock, preferred stock, or other debt securities
will be set forth in the applicable prospectus supplement. Such terms of
conversion or exchange may be either mandatory, at the option of the holders, or
at our option.
Consolidation, Merger and Sale of Assets
Each indenture generally will permit a consolidation or merger between us
and another corporation, if the surviving corporation meets certain limitations
and conditions. Subject to those conditions, each indenture may also permit the
sale by us of all or substantially all of our property and assets. If this
happens, the remaining or acquiring corporation shall assume all of our
responsibilities and liabilities under the indentures including the payment of
all amounts due on the debt securities and performance of the covenants in the
indentures.
We are only permitted to consolidate or merge with or into any other
corporation or sell all or substantially all of our assets according to the
terms and conditions of the indentures, as indicated in the applicable
prospectus supplement. The remaining or acquiring corporation will be
substituted for us in the indentures with the same effect as if it had been an
original party to the indenture. Thereafter, the successor corporation may
exercise our rights and powers under any indenture, in our name or in its own
name. Any act or proceeding required or permitted to be done by our board of
directors or any of our officers may then be done by the board or officers of
the successor corporation.
Events of Default
Unless otherwise specified in the applicable prospectus supplement, an
event of default, as defined in the indentures and applicable to debt securities
issued under such indentures, typically will occur with respect to the debt
securities of any series under the indentures upon:
o default for a period to be specified in the applicable prospectus
supplement in payment of any interest with respect to any debt
security of such series;
o default in payment of principal or any premium with respect to any
debt security of such series when due upon maturity, redemption,
repurchase at the option of the holder or otherwise;
o default in deposit of any sinking fund payment when due with respect
to any debt security of such series;
o default by us in the performance, or breach, of any other covenant or
warranty in such indentures, which shall not have been remedied for a
period to be specified in the applicable prospectus supplement after
notice to us by the applicable trustee or the holders of not less than
a fixed percentage in aggregate principal amount of the debt
securities of all series issued under the applicable indenture;
o certain events of bankruptcy, insolvency or reorganization of
Comstock; or
o any other event of default that may be set forth in the applicable
prospectus supplement, including an event of default based on other
debt being accelerated, known as a "cross- acceleration."
No event of default with respect to any particular series of debt
securities necessarily constitutes an event of default with respect to any other
series of debt securities. If the trustee considers it in the interest of the
holders to do so, the trustee under an indenture may withhold notice of the
19
occurrence of a default with respect to the debt securities to the holders of
any series outstanding, except a default in payment of principal, premium, if
any, or interest, if any.
Each indenture will provide that if an event of default with respect to any
series of debt securities issued thereunder shall have occurred and be
continuing, either the relevant trustee or the holders of at least a fixed
percentage in principal amount of the debt securities of such series then
outstanding may declare the principal amount of all the debt securities of such
series to be due and payable immediately. In the case of original issue discount
securities, the trustee may declare as due and payable such lesser amount as may
be specified in the applicable prospectus supplement. However, upon certain
conditions, such declaration and its consequences may be rescinded and annulled
by the holders of at least a fixed percentage in principal amount of the debt
securities of all series issued under the applicable Indenture.
The applicable prospectus supplement will provide the terms pursuant to
which an event of default shall result in acceleration of the payment of
principal of subordinated debt securities.
In the case of a default in the payment of principal of, or premium, if
any, or interest, if any, on any subordinated debt securities of any series, the
applicable trustee, subject to certain limitations and conditions, may institute
a judicial proceeding for the collection thereof.
No holder of any of the debt securities of any series will have any right
to institute any proceeding with respect to the indenture or any remedy
thereunder, unless the holders of at least a fixed percentage in principal
amount of the outstanding debt securities of such series:
o have made written request to the trustee to institute such proceeding
as trustee, and offered reasonable indemnity to the trustee;
o the trustee has failed to institute such proceeding within the time
period specified in the applicable prospectus supplement after receipt
of such notice; and
o the trustee has not within such period received directions
inconsistent with such written request by holders of a majority in
principal amount of the outstanding debt securities of such series.
Such limitations do not apply, however, to a suit instituted by a
holder of a debt security for the enforcement of the payment of the
principal of, premium, if any, or any accrued and unpaid interest on,
the debt security on or after the respective due dates expressed in
the debt security.
During the existence of an event of default under an indenture, the trustee
is required to exercise such rights and powers vested in it under the indenture
and use the same degree of care and skill in its exercise thereof as a prudent
person would exercise under the circumstances in the conduct of such person's
own affairs. Subject to the provisions of the indenture relating to the duties
of the trustee, if an event of default shall occur and be continuing, the
trustee is under no obligation to exercise any of its rights or powers under the
indenture at the request or direction of any of the holders, unless such holders
shall have offered to the trustee reasonable security or indemnity. Subject to
certain provisions concerning the rights of the trustee, the holders of at least
a fixed percentage in principal amount of the outstanding debt securities of any
series have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the trustee, or exercising any power
conferred on the trustee with respect to such series.
The indentures provide that the trustee will, within the time period
specified in the applicable prospectus supplement after the occurrence of any
default, give to the holders of the debt securities of such series notice of
such default known to it, unless such default shall have been cured or waived;
provided that the trustee shall be protected in withholding such notice if it
determines in good faith that the withholding of such notice is in the interest
of such holders, except in the case of a default in payment of principal of
20
or premium, if any, on any debt security of such series when due or in the case
of any default in the payment of any interest on the debt securities of such
series.
We will be required to furnish to the trustee annually a statement as to
compliance with all conditions and covenants under the indentures.
Modification and Waivers
From time to time, when authorized by resolutions of our board of directors
and by the trustee, we may, without the consent of the holders of debt
securities of any series, amend, waive or supplement the indentures and the debt
securities of such series for certain specified purposes, including, among other
things:
o to cure ambiguities, defects or inconsistencies;
o to provide for the assumption of our obligations to holders of the
debt securities of such series in the case of a merger or
consolidation;
o to add to our events of default or our covenants or to make any change
that would provide any additional rights or benefits to the holders of
the debt securities of such series;
o to add or change any provisions of such indenture to facilitate the
issuance of bearer securities;
o to establish the form or terms of debt securities of any series and
any related coupons;
o to add guarantors with respect to the debt securities of such series;
o to secure the debt securities of such series;
o to maintain the qualification of the indenture under the Trust
Indenture Act of 1939; or
o to make any change that does not adversely affect the rights of any
holder.
Other amendments and modifications of the indentures or the debt securities
issued thereunder may be made by the trustee and us with the consent of the
holders of not less than a fixed percentage of the aggregate principal amount of
the outstanding debt securities of each series affected, with each series voting
as a separate class; provided that, without the consent of the holder of each
outstanding debt security affected, no such modification or amendment may:
o reduce the principal amount of, or extend the fixed maturity of the
debt securities, or alter or waive any redemption, repurchase or
sinking fund provision of the debt securities;
o reduce the amount of principal of any original issue discount
securities that would be due and payable upon an acceleration of the
maturity thereof;
o change the currency in which any debt securities or any premium or the
accrued interest thereon is payable;
o reduce the percentage in principal amount outstanding of debt
securities of any series which must consent to an amendment,
supplement or waiver or consent to take any action under the indenture
or the debt securities of such series;
o impair the right to institute suit for the enforcement of any payment
on or with respect to the debt securities;
o waive a default in payment with respect to the debt securities or any
guarantee;
21
o reduce the rate or extend the time for payment of interest on the debt
securities;
o adversely affect the ranking of the debt securities of any series;
o release any guarantor from any of its obligations under its guarantee
or the indenture, except in compliance with the terms of the
indenture; or
o solely in the case of a series of subordinated debt securities, modify
any of the applicable subordination provisions or the applicable
definition of senior indebtedness in a manner adverse to any holders.
The holders of a fixed percentage in aggregate principal amount of the
outstanding debt securities of any series may waive compliance by us with
certain restrictive provisions of the relevant indenture, including any set
forth in the applicable prospectus supplement. The holders of a fixed percentage
in aggregate principal amount of the outstanding debt securities of any series
may, on behalf of the holders of that series, waive any past default under the
applicable indenture with respect to that series and its consequences, except a
default in the payment of the principal of, or premium, if any, or interest, if
any, on any debt securities of such series, or in respect of a covenant or
provision which cannot be modified or amended without the consent of a larger
fixed percentage of holders or by the holders of each outstanding debt security
of the series affected.
Discharge, Termination and Covenant Termination
When we establish a series of debt securities, we may provide that such
series is subject to the termination and discharge provisions of the applicable
indenture. If those provisions are made applicable, we may elect either:
o to terminate and be discharged from all of our obligations with
respect to those debt securities subject to some limitations; or
o to be released from our obligations to comply with specified covenants
relating to those debt securities, as described in the applicable
prospectus supplement.
To effect that termination or covenant termination, we must irrevocably
deposit in trust with the relevant trustee an amount which, through the payment
of principal and interest in accordance with their terms, will provide money
sufficient to make payments on those debt securities and any mandatory sinking
fund or similar payments on those debt securities. This deposit may be made in
any combination of funds or government obligations. On such a termination, we
will not be released from certain of our obligations that will be specified in
the applicable prospectus supplement.
To establish such a trust we must deliver to the relevant trustee an
opinion of counsel to the effect that the holders of those debt securities:
o will not recognize income, gain or loss for U.S. federal income tax
purposes as a result of the termination or covenant termination; and
o will be subject to U.S. federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if the
termination or covenant termination had not occurred.
If we effect covenant termination with respect to any debt securities, the
amount of deposit with the relevant trustee must be sufficient to pay amounts
due on the debt securities at the time of their stated maturity. However, those
debt securities may become due and payable prior to their stated maturity if
there is an event of default with respect to a covenant from which we have not
been released. In that event, the amount on deposit may not be sufficient to pay
all amounts due on the debt securities at the time of the acceleration.
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The applicable prospectus supplement may further describe the provisions,
if any, permitting termination or covenant termination, including any
modifications to the provisions described above.
Governing Law
The indentures and the debt securities will be governed by, and construed
in accordance with, the laws of the State of New York.
Regarding the Trustees
The Trust Indenture Act of 1939 contains limitations on the rights of a
trustee, should it become a creditor of ours, to obtain payment of claims in
certain cases or to realize on certain property received by it in respect of any
such claims, as security or otherwise. Each trustee is permitted to engage in
other transactions with us from time to time, provided that if such trustee
becomes subject to any conflicting interest, it must eliminate such conflict
upon the occurrence of an event of default under the relevant indenture, or else
resign as trustee.
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 50,000,000 shares of common stock,
par value $0.50 per share and 5,000,000 shares of preferred stock, $10.00 par
value per share. At December 16, 2003 we had 34,259,111 shares of common
stock and no shares of preferred stock issued and outstanding. We also had
options and warrants outstanding to purchase 5,399,000 shares of our
common stock outstanding at that date.
The following is a summary of the key terms and provisions of our equity
securities. You should refer to the applicable provision of our restated
articles of incorporation, bylaws, the General Corporation Law of Nevada and the
documents we have incorporated by reference for a complete statement of the
terms and rights of our capital stock.
Common Stock
Voting Rights. Each holder of common stock is entitled to one vote per
share. Subject to the rights, if any, of the holders of any series of preferred
stock pursuant to applicable law or the provision of the certificate of
designation creating that series, all voting rights are vested in the holders of
shares of common stock. Holders of shares of common stock have no right to
cumulate votes in the election of directors, thus the holders of a majority of
the shares of common stock can elect all of the members of the board of
directors standing for election.
Dividends. Dividends may be paid to the holders of common stock when, as
and if declared by the board of directors out of funds legally available for
their payment, subject to the rights of holders of any preferred stock. We have
never declared a cash dividend on our common stock and intend to continue our
policy of using retained earnings for expansion of our business.
Rights upon Liquidation. In the event of our voluntary or involuntary
liquidation, dissolution or winding up, the holders of common stock will be
entitled to share equally, in proportion to the number of shares of common stock
held by them, in any of our assets available for distribution after the payment
in full of all debts and distributions and after the holders of all series of
outstanding preferred stock, if any, have received their liquidation preferences
in full.
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Non-Assessable. All outstanding shares of common stock are fully paid and
non-assessable. Any additional common stock we offer and issue under this
prospectus and any related prospectus supplement will also be fully paid and
non-assessable.
No Preemptive Rights. Holders of common stock are not entitled to
preemptive purchase rights in future offerings of our common stock. Although our
restated articles of incorporation do not specifically deny preemptive rights,
pursuant to the Nevada General Corporation Law, our stockholders do not have
preemptive rights with respect to shares that are registered under Section 12 of
the Securities Exchange Act of 1934 and our common stock is so registered.
Listing. Our outstanding shares of common stock are listed on the New York
Stock Exchange under the symbol "CRK." Any additional common stock we issue will
also be listed on the NYSE and any other exchange on which our common stock is
then traded.
Preferred Stock
Our board of directors can, without approval of our stockholders, issue one
or more series of preferred stock and determine the number of shares of each
series and the rights, preferences and limitations of each series. The following
description of the terms of the preferred stock sets forth certain general terms
and provisions of our authorized preferred stock. If we offer preferred stock, a
description will be filed with the SEC and the specific designations and rights
will be described in a prospectus supplement, including the following terms:
o the series, the number of shares offered and the liquidation value of
the preferred stock;
o the price at which the preferred stock will be issued;
o the dividend rate, the dates on which the dividends will be payable
and other terms relating to the payment of dividends on the preferred
stock;
o the liquidation preference of the preferred stock;
o the voting rights of the preferred stock;
o whether the preferred stock is redeemable or subject to a sinking
fund, and the terms of any such redemption or sinking fund;
o whether the preferred stock is convertible or exchangeable for any
other securities, and the terms of any such conversion; and
o any additional rights, preferences, qualifications, limitations and
restrictions of the preferred stock.
The description of the terms of the preferred stock to be set forth in an
applicable prospectus supplement will not be complete and will be subject to and
qualified in its entirety by reference to the certificate of designation
relating to the applicable series of preferred stock. The registration statement
of which this prospectus forms a part will include the certificate of
designation as an exhibit or incorporate it by reference.
Undesignated preferred stock may enable our board of directors to render
more difficult or to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise, and to thereby protect the
continuity of our management. The issuance of shares of preferred stock may
adversely affect the rights of the holders of our common stock. For example, any
preferred stock issued may rank prior to our common stock as to dividend rights,
liquidation preference or both, may have full or limited voting rights and may
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be convertible into shares of common stock. As a result, the issuance of shares
of preferred stock may discourage bids for our common stock or may otherwise
adversely affect the market price of our common stock or any existing preferred
stock.
Any preferred stock will, when issued, be fully paid and non-assessable.
Stockholders' Rights Plan
On December 8, 2000, our board of directors adopted Comstock's
Stockholders' Rights Plan and we declared a dividend distribution of one
preferred stock purchase right for each outstanding share of our common stock.
Each purchase right entitles the registered holder to purchase from us one
one-hundredth of a share of our series A junior participating preferred stock,
$10.00 par value per share, at an exercise price of $15.00 per one one-hundredth
of a share of preferred stock, subject to adjustment. The description and terms
of the purchase rights are set forth in a rights agreement between us and
American Stock Transfer and Trust Company, as rights agent.
The purchase rights are initially evidenced by the common stock
certificates as no separate purchase rights certificates have been distributed.
The purchase rights separate from our common stock and a distribution date will
occur at the close of business on the earliest of:
o the tenth business day following a public announcement that a person
or group of affiliated or associated persons (Acquiring Person) has
acquired, or obtained the right to acquire, beneficial ownership of
20% or more of the outstanding shares of our common stock (Stock
Acquisition Date);
o the tenth business day (or such later date as may be determined by
action of our board of directors) following the commencement of a
tender offer or exchange offer that would result in a person or group
beneficially owning 20% or more of the outstanding shares of our
common stock, or;
o the tenth business day after our board of directors determines that
any individual, firm, corporation, partnership or other entity, alone
or together with its affiliates and associates, has become the
beneficial owner of an amount of our common stock which a majority of
the continuing directors who are not our officers determines to be
substantial (which amount shall in no event be less than 10% of the
shares of our common stock outstanding) and at least a majority of the
continuing directors who are not our officers, after reasonable
inquiry and investigation, including consultation with such adverse
person as the directors shall deem appropriate, shall determine that
such beneficial ownership by such adverse person is intended to cause
us to repurchase the common stock beneficially owned by such adverse
person or to cause pressure on us to take action or enter into a
transaction intended to provide such adverse person with short-term
financial gain under circumstances where the directors determine that
the best long-term interests of us and our stockholders would not be
served by taking such action or entering into such transaction or
series of transactions at that time, or that such beneficial ownership
is causing or is reasonably likely to cause a material adverse impact
on us.
The purchase rights are not exercisable until the distribution date
outlined above and will expire at the close of business on December 18, 2010,
unless earlier redeemed by us. If (i) a person becomes the beneficial owner of
20% or more of the then outstanding shares of our common stock (except (a)
pursuant to certain offers for all outstanding shares of common stock approved
by at least a majority of the continuing directors who are not our officers or
(b) solely due to a reduction in the number of shares of our common stock
outstanding as a result of the repurchase of shares of common stock by us) or
(ii) our board of directors determines that a person is an adverse person (as
discussed above), each holder of a purchase right will thereafter have the right
to receive, upon exercise, common stock (or, in certain circumstances, cash,
property or our other securities) having a value equal to two times the exercise
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price of the purchase right. Notwithstanding any of the foregoing, following the
occurrence of either of the events set forth in this paragraph, all purchase
rights that are, or (under certain circumstances specified in the rights
agreement) were, beneficially owned by any Acquiring Person or adverse person
(as discussed above) will be null and void.
If at any time following the Stock Acquisition Date, (i) we are acquired in
a merger or other business combination transaction in which we are not the
surviving corporation, or in which we are the surviving corporation, but our
common stock is changed or exchanged (other than a merger which follows an offer
for all outstanding shares of common stock approved by at least a majority of
the continuing directors who are not our officers), or (ii) more than 50% of our
assets, cash flow or earning power is sold or transferred, each holder of a
purchase right (except purchase rights which previously have been voided as set
forth above) shall thereafter have the right to receive upon exercise, common
stock of the acquiring company having a value equal to two times the exercise
price of the purchase right.
At any time after the earlier to occur of (i) an Acquiring Person becoming
such or (ii) the date on which our board of directors declares an adverse person
to be such, our board of directors may cause us to exchange the purchase rights
(other than purchase rights owned by the adverse person or Acquiring Person, as
the case may be, which will have become null and void), in whole or in part, at
an exchange ratio of one share of common stock per purchase right (subject to
adjustment). Notwithstanding the foregoing, no such exchange may be effected at
any time after any person becomes the beneficial owner of 50% or more of our
outstanding common stock.
The rights plan has certain anti-takeover effects including making it
prohibitively expensive for a raider to try to control or take us over
unilaterally without negotiation with our board of directors. Although intended
to preserve for stockholders our long term value, the rights plan may make it
more difficult for stockholders to benefit from certain transactions which are
opposed by the incumbent board of directors
Anti-Takeover Provisions
In addition to the rights plan, our restated articles of incorporation and
bylaws and the Nevada General Corporation Law include certain provisions which
may have the effect of delaying or deterring a change in control or in our
management or encouraging persons considering unsolicited tender offers or other
unilateral takeover proposals to negotiate with our board of directors rather
than pursue non-negotiated takeover attempts. These provisions include a
classified board of directors, authorized blank check preferred stock,
restrictions on business combinations and the availability of authorized but
unissued common stock. Please see "Preferred Stock" above.
Our bylaws contain provisions dividing the board of directors into classes
with only one class standing for election each year. A staggered board of
directors makes it more difficult for stockholders to change the majority of the
directors and instead promotes a continuity of existing management.
Nevada's "Combinations with Interested Stockholders Statute," which applies
to any Nevada corporation subject to the reporting requirements of Section 12 of
the Securities Exchange Act of 1934, including us, prohibits an "interested
stockholder" from entering into a "combination" with the corporation for three
years, unless certain conditions are met. A "combination" includes:
o any merger of the corporation or a subsidiary of the corporation with
an "interested stockholder," or any other corporation which is or
after the merger would be, an affiliate or associate of the interested
stockholder;
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o any sale, lease, exchange, mortgage, pledge, transfer or other
disposition, in one transaction or a series of transactions, to or
with an "interested stockholder," of assets:
(i) having an aggregate market value equal to 5% or more of the
aggregate market value of the corporation's assets;
(ii) having an aggregate market value equal to 5% or more of the
aggregate market value of all outstanding shares of the
corporation; or
(iii) representing 10% or more of the earning power or net income of
the corporation;
o any issuance or transfer of shares of the corporation or its
subsidiaries, to the "interested stockholder," having an aggregate
market value equal to 5% or more of the aggregate market value of all
of the outstanding shares of the corporation;
o the adoption of any plan or proposal for the liquidation or
dissolution of the corporation proposed by the "interested
stockholder;"
o certain transactions which would result in increasing the
proportionate share of shares of the corporation owned by the
"interested stockholder;"
o a recapitalization of the corporation; or
o the receipt by an "interested stockholder," except proportionately as
a stockholder, of the benefits of any loans, advances or other
financial benefits provided by the corporation.
An "interested stockholder" is a person who:
o directly or indirectly owns 10% or more of the voting power of the
outstanding voting shares of the corporation or
o an affiliate or associate of the corporation which at any time within
three years before the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the voting power of the then
outstanding shares of the corporation.
A corporation to which the Combinations with Interested Stockholders
statute applies may not engage in a "combination" within three years after the
interested stockholder acquired its shares, unless the combination or the
interested stockholder's acquisition of shares was approved by the board of
directors before the interested stockholder acquired the shares. If this
approval is not obtained, the combination may be consummated after the three
year period expires if either (a)(i) the board of directors of the corporation
approved, prior to such person becoming an interested stockholder, the
combination or the purchase of shares by the interested stockholder or (ii) the
combination is approved by the affirmative vote of holders of a majority of
voting power not beneficially owned by the interested stockholder at a meeting
called no earlier than three years after the date the interested stockholder
became such or (b) the aggregate amount of cash and the market value of
consideration other than cash to be received by holders of shares of common
stock and holders of any other class or series of shares meets the minimum
requirements set forth in the statue, and prior to the completion of the
combination, except in limited circumstances, the "interested stockholder" has
not become the beneficial owner of additional voting shares of the corporation.
Combinations with Interested Stockholders
In addition to the foregoing statute, Nevada has an "Acquisition of
Controlling Interest " statute, which prohibits an acquiror, under certain
circumstances, from voting shares of a target corporation's stock after
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crossing certain threshold ownership percentages, unless the acquiror obtains
the approval of the target corporation's stockholders. The Acquisition of
Controlling Interest Statute only applies to Nevada corporations with at least
200 stockholders, including at least 100 record stockholders who are Nevada
residents, and which do business directly or indirectly in Nevada and whose
articles of incorporation or bylaws in effect 10 days following the acquisition
of a controlling interest by an acquiror does not prohibit its application. We
do not intend to "do business" in Nevada within the meaning of the Acquisition
of Controlling Interest statute. Therefore, we believe it is unlikely that the
Acquisition of Controlling Interest statute will apply to us. The statute
specifies three thresholds: at least one-fifth but less than one-third, at least
one-third but less than a majority, and a majority or more, of the outstanding
voting power. Once an acquiror crosses one of the above thresholds, shares which
it acquired in the transaction taking it over the threshold or within ninety
days preceding the date thereof become "control shares" which could be deprived
of the right to vote until a majority of the disinterested stockholders restore
that right. A special stockholders' meeting may be called at the request of the
acquiror to consider the voting rights of the acquiror's shares. If the acquiror
requests a special meeting and gives an undertaking to pay the expenses of said
meeting, then the meeting must take place no earlier than 30 days (unless the
acquiror requests that the meeting be held sooner) and no more than 50 days
(unless the acquiror agrees to a later date) after the delivery by the acquiror
to the corporation of an information statement which sets forth the range of
voting power that the acquiror has acquired or proposes to acquire and certain
other information concerning the acquiror and the proposed control share
acquisition. If no such request for a stockholders' meeting is made,
consideration of the voting rights of the acquiror's shares must be taken at the
next special or annual stockholders' meeting. If the stockholders fail to
restore voting rights to the acquiror, or if the acquiror fails to timely
deliver an information statement to the corporation, then the corporation may,
if so provided in its articles or bylaws, call certain of the acquiror's shares
for redemption at the average price paid for the control shares by the acquiror.
Our articles of incorporation and bylaws do not currently permit us to redeem an
acquiror's shares under these circumstances. The Acquisition of Controlling
Interest statute also provides that in the event the stockholders restore full
voting rights to a holder of control shares that owns a majority of the voting
stock, then all other stockholders who do not vote in favor of restoring voting
rights to the control shares may demand payment for the "fair value" of their
shares (which is generally equal to the highest price paid by the acquiror in
the transaction subjecting the acquiror to the statute.)
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock
Transfer & Trust Company.
DESCRIPTION OF WARRANTS
We may issue warrants to purchase debt or equity securities. Warrants may
be issued independently or together with any other securities and may be
attached to, or separate from, such securities. Each series of warrants will be
issued under a separate warrant agreement to be entered into between us and a
warrant agent. The terms of any warrants to be issued and a description of the
material provisions of the applicable warrant agreement will be set forth in the
applicable prospectus supplement.
The applicable prospectus supplement will specify the following terms of
any warrants in respect of which this prospectus is being delivered:
o the title of such warrants;
o the aggregate number of such warrants;
o the price or prices at which such warrants will be issued;
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o any changes or adjustments to the exercise price;
o the securities or other rights, including rights to receive payment in
cash or securities based on the value, rate or price of one or more
specified commodities, currencies, securities or indices, or any
combination of the foregoing, purchasable upon exercise of such
warrants;
o the price at which, and the currency or currencies in which the
securities or other rights purchasable upon exercise of, such warrants
may be purchased;
o the date on which the right to exercise such warrants shall commence
and the date on which such right shall expire;
o if applicable, the minimum or maximum amount of such warrants that may
be exercised at any one time;
o if applicable, the designation and terms of the securities with which
such warrants are issued and the number of such warrants issued with
each such security;
o if applicable, the date on and after which such warrants and the
related securities will be separately transferable;
o information with respect to book-entry procedures, if any;
o if applicable, a discussion of any material United States federal
income tax considerations; and
o any other terms of such warrants, including terms, procedures and
limitations relating to the exchange and exercise of such warrants.
DESCRIPTION OF UNITS
As specified in the applicable prospectus supplement, we may issue units
consisting of one or more debt securities, shares of common stock, shares of
preferred stock or warrants or any combination of such securities.
The applicable prospectus supplement will specify the following terms of
any units in respect of which this prospectus is being delivered:
o the terms of the units and of any of the debt securities, common
stock, preferred stock and warrants comprising the units, including
whether and under what circumstances the securities comprising the
units may be traded separately;
o a description of the terms of any unit agreement governing the units;
and
o a description of the provisions for the payment, settlement, transfer
or exchange of the units.
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PLAN OF DISTRIBUTION
We may sell the securities offered by this prospectus and applicable
prospectus supplements in one or more of the following ways from time to time:
o through underwriters or dealers;
o through agents;
o directly to purchasers, including institutional investors; or
o through a combination of any such methods of sale.
Any such underwriter, dealer or agent may be deemed to be an underwriter
within the meaning of the Securities Act of 1933.
The applicable prospectus supplement relating to the securities will set
forth:
o the offering terms, including the name or names of any underwriters,
dealers or agents;
o the purchase price of the securities and the proceeds to us from such
sales;
o any underwriting discounts, commissions and other items constituting
compensation to underwriters, dealers or agents;
o any initial public offering price, if applicable;
o any discounts or concessions allowed or reallowed or paid by
underwriters or dealers to other dealers;
o in the case of debt securities, the interest rate, maturity and
redemption provisions; and
o any securities exchanges on which the securities may be listed.
If underwriters or dealers are used in the sale, the securities will be
acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions:
o at a fixed price or prices, which may be changed;
o at market prices prevailing at the time of sale;
o at prices related to such prevailing market prices; or
o at negotiated prices.
The securities may be offered to the public either through underwriting
syndicates represented by one or more managing underwriters or directly by one
or more of such firms. Unless otherwise stated in an applicable prospectus
supplement, the obligations of underwriters or dealers to purchase the
securities will be subject to certain customary closing conditions and the
underwriters or dealers will be obligated to purchase all the securities if any
of the securities are purchased. Any public offering price and any discounts or
concessions allowed or reallowed or paid by underwriters or dealers to other
dealers may be changed from time to time.
Securities may be sold directly by us or through agents designated by us
from time to time. Any agent involved in the offer or sale of the securities in
respect of which this prospectus and a prospectus supplement is delivered will
30
be named, and any commissions payable by us to such agent will be set forth, in
the prospectus supplement. Unless otherwise indicated in the prospectus
supplement, any such agent will be acting on a best efforts basis for the period
of its appointment.
If so indicated in the prospectus supplement, we will authorize
underwriters, dealers or agents to solicit offers from certain specified
institutions to purchase securities from us at the public offering price set
forth in the prospectus supplement pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. Such
contracts will be subject to any conditions set forth in the prospectus
supplement and the prospectus supplement will set forth the commission payable
for solicitation of such contracts. The underwriters and other persons
soliciting such contracts will have no responsibility for the validity or
performance of any such contracts.
Underwriters, dealers and agents may be entitled under agreements entered
into with us to be indemnified by us against certain civil liabilities,
including liabilities under the Securities Act of 1933, or to contribution by us
to payments which they may be required to make. The terms and conditions of such
indemnification will be described in an applicable prospectus supplement.
Underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for, us in the ordinary course of business.
Each class or series of securities will be a new issue of securities with
no established trading market, other than the common stock, which is listed on
the New York Stock Exchange. We may elect to list any other class or series of
securities on any exchange, other than the common stock, but we are not
obligated to do so. Any underwriters to whom securities are sold by us for
public offering and sale may make a market in such securities, but such
underwriters will not be obligated to do so and may discontinue any market
making at any time without notice. No assurance can be given as to the liquidity
of the trading market for any securities.
Certain persons participating in any offering of securities may engage in
transactions that stabilize, maintain or otherwise affect the price of the
securities offered in accordance with Regulation M under the Securities Exchange
Act of 1934. In connection with any such offering, the underwriters or agents,
as the case may be, may purchase and sell securities in the open market. These
transactions may include over- allotment and stabilizing transactions and
purchases to cover syndicate short positions created in connection with the
offering. Stabilizing transactions consist of certain bids or purchases for the
purpose of preventing or retarding a decline in the market price of the
securities; and syndicate short positions involve the sale by the underwriters
or agents, as the case may be, of a greater number of securities than they are
required to purchase from us, as the case may be, in the offering. The
underwriters may also impose a penalty bid, whereby selling concessions allowed
to syndicate members or other broker-dealers for the securities sold for their
account may be reclaimed by the syndicate if such securities are repurchased by
the syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the securities,
which may be higher than the price that might otherwise prevail in the open
market, and if commenced, may be discontinued at any time. These transactions
may be effected on the New York Stock Exchange in the over-the-counter market or
otherwise. These activities will be described in more detail in the sections
entitled "Plan of Distribution" or "Underwriting" in the applicable prospectus
supplement.
The prospectus supplement or pricing supplement, as applicable, will set
forth the anticipated delivery date of the securities being sold at that time.
LEGAL MATTERS
Locke Liddell & Sapp LLP, will issue an opinion for us regarding the
legality of the securities offered by this prospectus and applicable prospectus
31
supplement. If the securities are being distributed in an underwritten offering,
certain legal matters will be passed upon for the underwriters by counsel
identified in the applicable prospectus supplement.
EXPERTS
Our consolidated financial statements as of December 31, 2001 and 2002, and
for each of the years in the three-year period ended December 31, 2002, have
been incorporated by reference herein in reliance upon the report of KPMG LLP,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing. The audit report
contains an explanatory note that refers to a restatement of the consolidated
financial statements as of December 31, 2002 and for the two-year period then
ended. The audit report covering the December 31, 2001 consolidated financial
statements also refers to a change in our method for accounting for derivative
financial instruments.
With respect to the unaudited interim financial information for the periods
ended March 31, 2003, incorporated by reference herein, the independent
accountants have reported that they applied limited procedures in accordance
with professional standards for a review of such information. However, their
separate report included in our Quarterly Report on Form 10-Q for the quarter
ended March 31, 2003, and incorporated by reference herein, stated that they did
not audit and they do not express an opinion on that interim financial
information. Accordingly, the degree of reliance on their report on such
information should be restricted in light of the limited nature of the review
procedures applied. The accountants are not subject to the liability provisions
of Section 11 of the Securities Act of 1933 for their report on the unaudited
interim financial information because that report is not a "report" or a "part"
of the registration statement prepared or certified by the accountants within
the meaning of Sections 7 and 11 of the Securities Act of 1933. The review
report covering the March 31, 2003 financial statements refers to a change in
the method of accounting for asset retirements obligations related to the
adoption of Statement of Financial Accounting Standards No. 143, "Accounting for
Asset Retirement Obligations."
On May 16, 2003, we filed a Current Report on Form 8-K announcing that our
audit committee engaged Ernst & Young LLP as our independent public
accountants for fiscal 2003, replacing KPMG LLP. The decision to change
independent public accountants was not the result of any disagreement with KPMG
LLP on matters of accounting principles or practices, financial statement
disclosure or auditing scope and procedure. With respect to the unaudited
interim financial information for the periods ended June 30, 2003 and September
30, 2003, which are included in our Form 10-Q`s for the periods ended June 30,
2003 and September 30, 2003 and which are incorporated herein by reference,
Ernst & Young LLP has applied limited procedures in accordance with
professional standards for a review of such information. However, as stated in
their report included in our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2003 and Form 10-Q for the quarter ended September 30, 2003
incorporated by reference herein, they did not audit and they do not express an
opinion on that interim financial information. Accordingly, the degree of
reliance on their report on such information should be restricted in light of
the limited nature of the review procedures applied. Ernst & Young LLP is
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial information because
those reports are not "reports" or a "part" of the registration statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Securities Act of 1933.
Certain estimates of our oil and natural gas reserves and related
information incorporated by reference in this prospectus have been derived from
engineering reports prepared by Lee Keeling & Associates as of December 31,
2000, 2001 and 2002, and all such information has been so included on the
authority of such firm as an expert regarding the matters contained in its
reports.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and therefore we file annual, quarterly and current reports, proxy
statements and other documents with the SEC. You may read and copy any of the
reports, proxy statements and any other information that we file at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC- 0330. In addition, the SEC maintains a website at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the SEC.
We also maintain a website at http://www.comstockresources.com; however, the
information contained at this website does not constitute part of this
prospectus. Reports, proxy and information statements and other information
about us may be inspected at the New York Stock Exchange, 20 Broad Street, New
York, New York 10005.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, with respect to the securities offered in this
prospectus. This prospectus is part of that registration statement and, as
permitted by the SEC's rules, does not contain all of the information set forth
in the registration statement. For further information about us and the
securities that may be offered, we refer you to the registration statement and
the exhibits that are filed with it. You can review and copy the registration
statement and its exhibits and schedules from the SEC at the address listed
above or from its web site.
The SEC allows us to "incorporate by reference" into this prospectus
certain information we file with the SEC in other documents. This means that we
can disclose important information to you by referring you to other documents
that we file with the SEC. The information may include documents filed after the
date of this prospectus which update and supersede the information you read in
this prospectus. We incorporate by reference the documents listed below, except
to the extent information in those documents is different from the information
contained in this prospectus, and all future documents filed by us with the SEC
under Sections 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934
until the offering of the securities described herein is terminated:
o Our Annual Report on Form 10-K for the year ended December 31, 2002;
o Our Quarterly Report on Form 10-Q for the three months ended March 31,
2003;
o Our Quarterly Report on Form 10-Q for the six months ended June 30,
2003;
o Our Quarterly Report on Form 10-Q for the nine months ended September
30, 2003;
o Our Proxy Statement on Schedule 14A filed with the SEC on April 22,
2003 for the 2003 annual meeting of stockholders;
o Our Current Report on Form 8-K dated February 18, 2003;
o Our Current Report on Form 8-K dated March 21, 2003;
o Our Current Report on Form 8-K dated May 7, 2003;
o Our Current Report on Form 8-K dated May 5, 2003;
o Our Current Report on Form 8-K dated May 13, 2003;
o Our Current Report on Form 8-K dated May 16, 2003;
33
o Our Current Report on Form 8-K dated August 7, 2003;
o Our Current Report on Form 8-K dated November 5, 2003;
o Our Current Report on Form 8-K/A dated November 7, 2003; and
o Our Registration Statement on Form 8-A registering our common stock
filed with the SEC on September 6, 1996.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed modified,
superseded or replaced for purposes of this prospectus to the extent that a
statement contained in this prospectus or in any subsequently filed document
that also is or is deemed to be incorporated by reference in this prospectus
modifies, supersedes or replaces such statement. Any statement so modified,
superseded or replaced shall not be deemed, except as so modified, superseded or
replaced, to constitute a part of this prospectus.
We will provide without charge to each person, including any beneficial
owner, to whom a copy of this prospectus is delivered, upon that person's
written or oral request, a copy of any or all of the information incorporated by
reference in this prospectus (other than exhibits to those documents, unless the
exhibits are specifically incorporated by reference into the information that
this prospectus incorporates). Requests should be directed to:
Comstock Resources, Inc.
Attention: Roland O. Burns, Senior Vice President
5300 Town and County Blvd., Suite 500
Frisco, Texas 75034
Telephone number: (972) 668-8800
34
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses, other than selling
or underwriting discounts and commissions, to be incurred by us in connection
with the issuance and distribution of the securities being registered hereby.
With the exception of the SEC registration fee, all fees and expenses set forth
below are estimates.
SEC registration fee $ 24,270
Printing and engraving expenses 40,000
Legal fees and expenses 20,000
Trustee fees and expenses 5,000
Rating agency fees 50,000
Accounting fees and expenses 15,000
Miscellaneous 5,730
--------
Total $160,000
========
Item 15. Indemnification of Directors and Officers.
Section 78.7502 of the General Corporation Law of Nevada permits a
corporation to indemnify any person who was, or is, or is threatened to be made
a party in a completed, pending or threatened proceeding, whether civil,
criminal, administrative or investigative (except an action by or in the right
of the corporation), by reason of being or having been an officer, director,
employee or agent of the corporation or serving in certain capacities at the
request of the corporation. Indemnification may include attorneys' fees,
judgments, fines and amounts paid in settlement. The person to be indemnified
must have acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and, with respect
to any criminal action, such person must have had no reasonable cause to believe
his or her conduct was unlawful.
With respect to actions by or in the right of the corporation,
indemnification may not be made for any claim, issue or matter as to which such
a person has been finally adjudged by a court of competent jurisdiction to be
liable to the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action was brought or
other court of competent jurisdiction determines upon application that in view
of all circumstances the person is fairly and reasonably entitled to indemnity
for such expenses as the court deems proper.
Unless indemnification is ordered by a court, the determination to pay
indemnification must be made by the stockholders, by a majority vote of a quorum
of our board of directors who were not parties to the action, suit or
proceeding, or in certain circumstances by independent legal counsel in a
written opinion. Section 78.751 of the General Corporation law of Nevada permits
the articles of incorporation or bylaws to provide for payment to an indemnified
person of the expenses of defending an action as incurred upon receipt of an
undertaking to repay the amount if it is ultimately determined by a court of
competent jurisdiction that the person is not entitled to indemnification.
II-1
Section 78.7502 also provides that to the extent a director, officer,
employee or agent has been successful on the merits or otherwise in the defense
of any such action, he or she must be indemnified by the corporation against
expenses, including attorneys' fees, actually and reasonably incurred in
connection with the defense.
Article VI, "Indemnification of Directors, Officers, Employees and Agents",
of our bylaws provides as follows with respect to indemnification of our
directors, officers, employees and agents:
"Section 1. To the fullest extent allowed by Nevada law, any director of
the Corporation shall not be liable to the Corporation or its stockholders for
monetary damages for an act or omission in the director's capacity as a
director, except that this Article VI does not eliminate or limit the liability
of a director for:
(a) an act or omission which involves intentional misconduct,
fraud or a knowing violation of law; or
(b) the payment of dividends in violation of N.R.S. 78.300.
Section 2. The Corporation shall indemnify each director, officer, employee
and agent, now or hereafter serving the Corporation, each former director,
officer, employee and agent, and each person who may now or hereafter serve or
who may have heretofore served at the Corporation's request as a director,
officer, employee or agent of another corporation or other business enterprise,
and the respective heirs, executors, administrators and personal representatives
of each of them against all expenses actually and reasonably incurred by, or
imposed upon, him in connection with the defense of any claim, action, suit or
proceeding, civil or criminal, against him by reason of his being or having been
such director, officer, employee or agent, except in relation to such matters as
to which he shall be adjudged by a court of competent jurisdiction after
exhaustion of all appeals therefrom in such action, suit or proceeding to be
liable for gross negligence or willful misconduct in the performance of duty.
For purposes hereof, the term "expenses" shall include but not be limited to all
expenses, costs, attorneys' fees, judgements (including adjudications other than
on the merits), fines, penalties, arbitration awards, costs of arbitration and
sums paid out and liabilities actually and reasonably incurred or imposed in
connection with any suit, claim, action or proceeding, and any settlement or
compromise thereof approved by the Board of Directors as being in the best
interests of the Corporation. However, in any case in which there is no
disinterested majority of the Board of Directors available, the indemnification
shall be made: (1) only if the Corporation shall be advised in writing by
counsel that in the opinion of counsel (a) such officer, director, employee or
agent was not adjudged or found liable for gross negligence or willful
misconduct in the performance of duty as such director, officer, employee or
agent or the indemnification provided is only in connection with such matters as
to which the person to be indemnified was not so liable, and in the case of
settlement or compromise, the same is in the best interests of the Corporation;
and (b) indemnification under the circumstances is lawful and falls within the
provisions of these Bylaws; and (2) only in such amount as counsel shall advise
the Corporation in writing is, in his opinion, proper. In making or refusing to
make any payment under this or any other provision of these Bylaws, the
Corporation, its directors, officers, employees and agents shall be fully
protected if they rely upon the written opinion of counsel selected by, or in
the manner designated by, the Board of Directors.
Section 3. Expenses incurred in defending a civil or criminal action, suit
or proceeding may be paid by the Corporation in advance of the final disposition
of such action, suit or proceeding as authorized by the Board of Directors upon
receipt of an undertaking by or on behalf of the director, officer, employee or
agent to repay such amount unless it shall ultimately be determined that he is
entitled to be indemnified by the Corporation as authorized in these Bylaws.
II-2
Section 4. The Corporation may indemnify each person, though he is not or
was not a director, officer, employee or agent of the Corporation, who served at
the request of the Corporation on a committee created by the Board of Directors
to consider and report to it in respect of any matter. Any such indemnification
may be made under the provisions hereof and shall be subject to the limitations
hereof, except that (as indicated) any such committee member need not be nor
have been a director, officer, employee or agent of the Corporation.
Section 5. The provisions hereof shall be applicable to actions, suits or
proceedings (including appeals) commenced after the adoption hereof, whether
arising from acts or omissions to act occurring before or after the adoption
hereof.
Section 6. The indemnification provisions herein provided shall not be
deemed exclusive of any other rights to which those indemnified may be entitled
under any bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, or by law or statute, both as to action in his official capacity and
as to action in another capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
Section 7. The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, and persons described in Section 4 of this
Article VI above, against any liability asserted against him and incurred by him
in any such capacity or arising out of his status as such, whether or not the
Corporation would have the power to indemnify him against such liability under
the provisions of these Bylaws."
Item 16. Exhibits.
Exhibit No. Description
1.1** Form of Underwriting Agreement for each of the securities
registered hereby.
3.1(a) Restated Articles of Incorporation of Comstock
(incorporated by reference to Exhibit 3.1 to Comstock's
Annual Report on Form 10-K for the year ended December 31,
1995).
3.1(b) Certificate of Amendment to the Restated Articles of
Incorporation of Comstock dated July 1, 1997 (incorporated
herein by reference to Exhibit 3.1 to Comstock's Quarterly
Report on Form 10-Q for the quarter ended June 30, 1997).
3.2 Bylaws of Comstock (incorporated by reference to Exhibit 3.2
to Comstock's Registration Statement on Form S-3, dated
October 25, 1996).
4.1* Specimen Stock Certificate.
4.2 Rights Agreement dated as of December 14, 2000, by and
between Comstock and American Stock Transfer and Trust
Company, as Rights Agent (incorporated herein by reference
to Exhibit 1 to our Registration Statement on Form 8-A dated
January 11, 2001).
4.3 Certificate of Designation, Preferences and Rights of Series
B Junior Participating Preferred Stock (incorporated herein
by reference to Exhibit 2 to our Registration Statement on
Form 8-A dated January 11, 2001).
II-3
4.4 Indenture dated April 29, 1999 between Comstock, the
subsidiary guarantors party thereto, and U.S. Trust Company
of Texas, N.A., Trustee for the 11 1/4 % Senior Notes due
2007 (incorporated herein by reference to Exhibit 10.5 to
our Current Report on Form 8-K dated April 29, 1999).
4.5 First Supplemental Indenture, dated March 7, 2002, between
Comstock, the subsidiary guarantors party thereto, and U.S.
Trust Company of Texas, N.A., Trustee for the 11 1/4% Senior
Notes due 2007 (incorporated by reference to Exhibit 4.1 to
our Current Report on Form 8-K dated March 12, 2002).
4.6* Form of Indenture between Comstock Resources, Inc. and
Trustee to be designated therein covering Debt Securities to
be offered hereunder, including form of Note or Debenture
attached thereto.
4.7** Form of Certificate of Designation for Preferred Stock,
including specimen certificate.
4.8** Form of Warrant Agreement covering Common Stock Warrants to
be offered hereunder, including Form of Common Stock Warrant
attached thereto.
5.1* Opinion of Locke Liddell & Sapp LLP as to the validity of
the securities being registered hereunder.
12.1* Computation of Ratio of Earnings to Fixed Charges.
15.1* Letter of Ernst & Young LLP as to unaudited interim
financial information.
15.2* Letter of KPMG LLP as to unaudited interim
financial information.
23.1* Consent of Locke Liddell & Sapp LLP (Included in Exhibit
5.1).
23.2* Consent of KPMG LLP.
24.1* Power of Attorney (Included on the Signature Page to the
Registration Statement).
25** Statement on Form T-1 of eligibility of Trustee for the Debt
Securities.
- -----------------
* Filed herewith.
** To be filed by amendment or on Form 8-K.
II-4
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in this registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Company pursuant to
Section 13 or Section 15 (d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in
the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Frisco, State of Texas, on December 16, 2003.
COMSTOCK RESOURCES, INC.
By: /s/M. JAY ALLISON
--------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
- -------------------- Chairman of the Board of Directors,
M. Jay Allison Director (Principal Executive Office)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
- -------------------- Officer, Director (Principal Financial
Roland O. Burns and Accounting Officer)
/s/DAVID K. LOCKETT Director December 16, 2003
- --------------------
David K. Lockett
/s/CECIL E. MARTIN, JR. Director December 16, 2003
- --------------------
Cecil E. Martin, Jr.
/s/DAVID W. SLEDGE Director December 16, 2003
- --------------------
David W. Sledge
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003
COMSTOCK OIL & GAS, INC.
By: /s/M. JAY ALLISON
--------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
- -------------------- Chairman of the Board of Directors,
M. Jay Allison Director (Principal Executive Office)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
- -------------------- Officer, Director (Principal Financial
Roland O. Burns and Accounting Officer)
/s/DAVID K. LOCKETT Director December 16, 2003
- --------------------
David K. Lockett
/s/CECIL E. MARTIN, JR. Director December 16, 2003
- --------------------
Cecil E. Martin, Jr.
/s/DAVID W. SLEDGE Director December 16, 2003
- --------------------
David W. Sledge
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003
COMSTOCK OIL & GAS - LOUISIANA, LLC
By: /s/M. JAY ALLISON
-------------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
- -------------------- Chairman of the Board of Managers
M. Jay Allison (Principal Executive Officer)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
- -------------------- Officer, Secretary, Treasurer and Manager
Roland O. Burns (Principal Financial and Accounting Officer)
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003.
COMSTOCK OFFSHORE, LLC
By: /s/M. JAY ALLISON
-------------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
- -------------------- Chairman of the Board of Managers
M. Jay Allison (Principal Executive Officer)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
- -------------------- Officer, Secretary, Treasurer and Manager
Roland O. Burns (Principal Financial and Accounting Officer)
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Frisco, State of Texas,
on December 16, 2003
COMSTOCK OIL & GAS HOLDINGS, INC.
By: /s/M. JAY ALLISON
--------------------
M. Jay Allison
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints M. Jay Allison and Roland O. Burns, each
his true and lawful attorney-in-fact and agent, with full power of substitution
and resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and any registration statement related to the
offering contemplated by this registration statement that is to be effective
upon filing pursuant to Rule 462(b) under the Securities Act of 1933, and to
file the same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission and any state or other
securities authority, granting unto each said attorney-in-fact and agent full
power and authority to do and perform each and every act in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them or their or his substitute or substitutes may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/M. JAY ALLISON President, Chief Executive Officer, December 16, 2003
- -------------------- Chairman of the Board of Directors,
M. Jay Allison Director (Principal Executive Office)
/s/ROLAND O. BURNS Senior Vice President, Chief Financial December 16, 2003
- -------------------- Officer, Director (Principal Financial
Roland O. Burns and Accounting Officer)
/s/DAVID K. LOCKETT Director December 16, 2003
- --------------------
David K. Lockett
/s/CECIL E. MARTIN, JR. Director December 16, 2003
- --------------------
Cecil E. Martin, Jr.
/s/DAVID W. SLEDGE Director December 16, 2003
- --------------------
David W. Sledge
II-10
SPECIMEN STOCK CERTIFICATE
[FACE]
COMMON STOCK PAR VALUE $.50 PER SHARE
INCORPORATED UNDER THE LAWS OF THE STATE OF NEVADA
NUMBER - DC _____
CUSIP 205768 20 3
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
THIS CERTIFIES THAT ______________________________________ IS THE OWNER OF
FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF
Comstock Resources, Inc. hereinafter called "Corporation" transferable only on
the books of the Corporation by the holder thereof in person or by duly
authorized attorney, upon the surrender of this certificate properly endorsed.
This Certificate is not valid until countersigned and registered by the Transfer
Agent and Registrar. In Witness Whereof, the Corporation has caused this
certificate to be signed by the facsimile signatures of its duly authorized
officers. Dated:
PRESIDENT
SECRETARY
COUNTERSIGNED AND REGISTERED:
AMERICAN STOCK TRANSFER & TRUST COMPANY
TRANSFER AGENT AND REGISTRAR.
BY
AUTHORIZED SIGNATURE
E-1
[BACK]
COMSTOCK RESOURCES, INC.
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH STOCKHOLDER WHO SO
REQUESTS THE DESIGNATIONS, PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
OR OTHER SPECIAL RIGHTS OF EACH CLASS OF STOCK OR SERIES THEREOF OF THE
CORPORATION AND THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS OF SUCH
PREFERENCES AND/OR RIGHTS. SUCH REQUEST MAY BE MADE TO THE CORPORATION AT
ITS PRINCIPAL PLACE OF BUSINESS OR TO THE TRANSFER AGENT.
The following abbreviations, when used in the inscription on the face of
this certificate, shall be constructed as though they were written out in full
according to applicable laws or regulations:
TEN COM--as tenants in common
TEN ENT--as tenants by the entireties
JT TEN--as joint tenants with right of survivorship and not as tenants in common
UNIF GIFT MIN ACT____________ (Cust) Custodian____________ (Minor) under Uniform
Gifts to Minors Act _________ (State)
Additional abbreviations may also be used though not in the above list.
For value received,____________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS INCLUDING POSTAL ZIP CODE OF
ASSIGNEE
Shares represented by the within Certificate, and do hereby irrevocably
constitute and appoint _______________________________________
Attorney to transfer the said shares on the books of the within-named
Corporation with full power of substitution in the premises. Dated,
NOTICE:
THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.
(SIGNATURE)
(SIGNATURE)
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
SIGNATURE(S) GUARANTEED BY:
E-2
================================================================================
COMSTOCK RESOURCES, INC.
GUARANTORS
NAMED HEREIN
AND
[ ]
TRUSTEE
--------------------------------------------
INDENTURE
DATED AS OF -----------
--------------------------------------------
DEBT SECURITIES
================================================================================
COMSTOCK RESOURCES, INC.
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED,
AND INDENTURE, DATED AS OF ________________
TRUST INDENTURE ACT SECTION INDENTURE SECTION
- --------------------------- -----------------
Section 310(a)(1)........................................... 6.9
(a)(2)................................................. 6.9
(a)(3)................................................. Not Applicable
(a)(4)................................................. Not Applicable
(a)(5)................................................. 6.9
(b).................................................... 6.8
Section 311................................................. 6.13
Section 312(a).............................................. 7.1, 7.2(a)
(b).................................................... 7.2(b)
(c).................................................... 7.2(c)
Section 313(a).............................................. 7.3
(b).................................................... *
(c).................................................... *
(d).................................................... 7.3
Section 314(a).............................................. 7.4
(a)(4)................................................. 10.7
(b).................................................... Not Applicable
(c)(1)................................................. 1.3
(c)(2)................................................. 1.3
(c)(3)................................................. Not Applicable
(d).................................................... Not Applicable
(e).................................................... 1.3
Section 315(a).............................................. 6.1(a)
(b).................................................... 6.2
(c).................................................... 6.1(b)
(d).................................................... 6.1(c)
(d)(1)................................................. 6.1(a)(1)
(d)(2)................................................. 6.1(c)(2)
(d)(3)................................................. 6.1(c)(3)
(e).................................................... 5.14
Section 316(a).............................................. 1.1, 1.2
(a)(1)(A).............................................. 5.2, 5.12
(a)(1)(B).............................................. 5.13
(a)(2)................................................. Not Applicable
(b).................................................... 5.8
(c).................................................... 1.5(f)
TRUST INDENTURE ACT SECTION INDENTURE SECTION
- --------------------------- -----------------
Section 317(a)(1)........................................... 5.3
(a)(2)................................................. 5.4
(b).................................................... 10.3
Section 318(a).............................................. 1.8
NOTE: This reconciliation and tie shall not, for any purpose, be deemed to be a
part of the Indenture.
* Deemed included pursuant to Section 318(c) of the Trust Indenture Act
TABLE OF CONTENTS
PARTIES.................................................................... 1
RECITALS OF THE COMPANY:................................................... 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION........ 1
Section 1.1. Definitions............................................. 1
Section 1.2. Incorporation by Reference of Trust Indenture Act....... 8
Section 1.3. Compliance Certificates and Opinions.................... 8
Section 1.4. Form of Documents Delivered to Trustee.................. 9
Section 1.5. Acts of Holders; Record Dates........................... 9
Section 1.6. Notices, Etc., to Trustee, Company and Guarantors....... 10
Section 1.7. Notice to Holders; Waiver............................... 11
Section 1.8. Conflict with Trust Indenture Act....................... 11
Section 1.9. Effect of Headings and Table of Contents................ 11
Section 1.10. Successors and Assigns.................................. 11
Section 1.11. Separability Clause..................................... 11
Section 1.12. Benefits of Indenture................................... 11
Section 1.13. Governing Law........................................... 12
Section 1.14. Legal Holidays.......................................... 12
Section 1.15. Securities in a Composite Currency, Currency
Unit or Foreign Currency................................ 12
Section 1.16. Payment in Required Currency; Judgment Currency......... 13
Section 1.17. Language of Notices, Etc. .............................. 13
Section 1.18. Incorporators, Shareholders, Officers and Directors
of the Company and the Guarantors Exempt from
Individual Liability................................... 14
ARTICLE TWO SECURITY FORMS................................................ 14
Section 2.1. Forms Generally........................................ 14
Section 2.2. Form of Face of Security............................... 14
Section 2.3. Form of Reverse of Security............................ 16
Section 2.4. Global Securities...................................... 21
Section 2.5. Form of Trustee's Certificate of Authentication........ 22
ARTICLE THREE THE SECURITIES.............................................. 22
Section 3.1. Amount Unlimited; Issuable in Series................... 22
Section 3.2. Denominations.......................................... 25
Section 3.3. Execution, Authentication, Delivery and Dating......... 25
Section 3.4. Temporary Securities................................... 26
Section 3.5. Registration, Registration of Transfer and Exchange.... 27
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities....... 29
Section 3.7. Payment of Interest; Interest Rights Preserved......... 30
Section 3.8. Persons Deemed Owners.................................. 31
Section 3.9. Cancellation........................................... 31
Section 3.10. Computation of Interest................................ 31
Section 3.11. CUSIP or CINS Numbers.................................. 32
i
ARTICLE FOUR SATISFACTION AND DISCHARGE................................... 32
Section 4.1. Satisfaction and Discharge of Indenture................ 32
Section 4.2. Application of Trust Money............................. 33
ARTICLE FIVE REMEDIES..................................................... 33
Section 5.1. Events of Default...................................... 33
Section 5.2. Acceleration of Maturity; Rescission and Annulment..... 34
Section 5.3. Collection of Indebtedness and Suits for
Enforcement by Trustee................................. 35
Section 5.4. Trustee May File Proofs of Claim....................... 36
Section 5.5. Trustee May Enforce Claims Without
Possession of Securities............................... 36
Section 5.6. Application of Money Collected......................... 36
Section 5.7. Limitation on Suits.................................... 37
Section 5.8. Unconditional Right of Holders to Receive Principal,
Premium and Interest................................... 37
Section 5.9. Restoration of Rights and Remedies..................... 37
Section 5.10. Rights and Remedies Cumulative......................... 38
Section 5.11. Delay or Omission Not Waiver........................... 38
Section 5.12. Control by Holders..................................... 38
Section 5.13. Waiver of Past Defaults................................ 38
Section 5.14. Undertaking for Costs.................................. 39
Section 5.15. Waiver of Stay or Extension Laws....................... 39
ARTICLE SIX THE TRUSTEE................................................... 39
Section 6.1. Certain Duties and Responsibilities.................... 39
Section 6.2. Notice of Defaults..................................... 40
Section 6.3. Certain Rights of Trustee.............................. 41
Section 6.4. Not Responsible for Recitals or
Issuance of Securities................................. 42
Section 6.5. May Hold Securities.................................... 42
Section 6.6. Money Held in Trust.................................... 42
Section 6.7. Compensation and Reimbursement......................... 42
Section 6.8. Disqualification; Conflicting Interests................ 43
Section 6.9. Corporate Trustee Required; Eligibility................ 43
Section 6.10. Resignation and Removal; Appointment of Successor...... 43
Section 6.11. Acceptance of Appointment by Successor................. 45
Section 6.12. Merger, Conversion, Consolidation or
Succession to Business................................. 46
Section 6.13. Preferential Collection of Claims Against Company...... 46
Section 6.14. Appointment of Authenticating Agent.................... 46
ARTICLE SEVEN HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY........... 48
Section 7.1. Company to Furnish Trustee Names and
Addresses of Holders................................... 48
Section 7.2. Preservation of Information;
Communications to Holders.............................. 48
Section 7.3. Reports by Trustee..................................... 49
Section 7.4. Reports by Company..................................... 49
ARTICLE EIGHT CONSOLIDATION, AMALGAMATION, MERGER AND SALE................ 50
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms... 50
Section 8.2. Successor Substituted.................................. 50
ii
ARTICLE NINE SUPPLEMENTAL INDENTURES...................................... 51
Section 9.1. Supplemental Indentures Without Consent of Holders..... 51
Section 9.2. Supplemental Indentures with Consent of Holders........ 52
Section 9.3. Execution of Supplemental Indentures................... 53
Section 9.4. Effect of Supplemental Indentures...................... 53
Section 9.5. Conformity with Trust Indenture Act.................... 53
Section 9.6. Reference in Securities to Supplemental Indentures..... 53
ARTICLE TEN COVENANTS..................................................... 54
Section 10.1. Payment of Principal, Premium and Interest............. 54
Section 10.2. Maintenance of Office or Agency........................ 54
Section 10.3. Money for Securities Payments to Be Held in Trust...... 54
Section 10.4. Existence.............................................. 55
Section 10.5. Statement by Officers as to Default.................... 55
Section 10.6. Waiver of Certain Covenants............................ 56
Section 10.7. Additional Amounts..................................... 56
ARTICLE ELEVEN REDEMPTION OF SECURITIES................................... 57
Section 11.1. Applicability of Article............................... 57
Section 11.2. Election to Redeem; Notice to Trustee.................. 57
Section 11.3. Selection. by Trustee of Securities to Be Redeemed..... 57
Section 11.4. Notice of Redemption................................... 58
Section 11.5. Deposit of Redemption Price............................ 58
Section 11.6. Securities Payable on Redemption Date.................. 58
Section 11.7. Securities Redeemed in Part............................ 59
ARTICLE TWELVE SINKING FUNDS.............................................. 59
Section 12.1. Applicability of Article............................... 59
Section 12.2. Satisfaction of Sinking Fund Payments
with Securities........................................................ 59
Section 12.3. Redemption of Securities for Sinking Fund.............. 59
ARTICLE THIRTEEN DEFEASANCE............................................... 60
Section 13.1. Applicability of Article............................... 60
Section 13.2. Legal Defeasance....................................... 60
Section 13.3. Covenant Defeasance.................................... 61
Section 13.4. Deposited Money and U.S. Government
Obligations to be Held in Trust........................ 63
Section 13.5. Repayment to Company; Qualifying Trustee............... 63
ARTICLE FOURTEEN GUARANTEE OF SECURITIES.................................. 63
Section 14.1. Unconditional Guarantee................................ 63
Section 14.2. Execution and Delivery of Notation of Guarantee........ 65
Section 14.3. Reports by Guarantor................................... 66
Section 14.4. Subordination of Guarantees............................ 66
ARTICLE FIFTEEN SUBORDINATION OF SECURITIES............................... 66
Section 15.1. Securities Subordinated to Senior Debt................. 66
Section 15.2. Distribution on Dissolution, Liquidation
and Reorganization; Subrogation of Securities.......... 67
iii
Section 15.3. Payments on Securities Permitted....................... 69
Section 15.4. Authorization of Holders of Securities
to Trustee to Effect Subordination..................... 69
Section 15.5. Notices to Trustee..................................... 69
Section 15.6. Trustee as Holder of Senior Debt. ..................... 70
Section 15.7. Modification of Terms of Senior Debt. ................. 70
NOTE: This table of contents shall not, for any purpose, be deemed to be a part
of the Indenture.
iv
PARTIES
INDENTURE, dated as of ____________, among COMSTOCK RESOURCES, INC., a
corporation duly organized and existing under the laws of the State of Nevada
(herein called the "Company"), having an office at 5300 Town and Country Blvd.,
Suite 500, Frisco, Texas 75034, the GUARANTORS (as defined hereinafter) and [ ],
a [ ] banking corporation, as Trustee (the "Trustee").
RECITALS OF THE COMPANY:
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Securities"), which may but are not required to be guaranteed by the
Guarantors, to be issued in one or more series as in this Indenture provided.
The Company directly or indirectly owns 100% of the capital stock of the
Guarantors.
All things necessary to make this Indenture a valid agreement of the
Company and of the Guarantor, in accordance with its terms, have been done.
This Indenture is subject to the provisions of the Trust Indenture Act that
are required to be a part of this Indenture and, to the extent applicable, shall
be governed by such provisions.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Securities
by the Holders thereof, it is mutually covenanted and agreed, for the equal and
proportionate benefit of all Holders of the Securities or of series thereof, as
follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.1. Definitions.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(2) all terms used in this Indenture that are defined in the Trust
Indenture Act, defined by a Trust Indenture Act reference to another
statute or defined by a Commission rule under the Trust Indenture Act have
the meanings so assigned to them;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with GAAP;
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(5) the words "Article" and "Section" refer to an Article and Section,
respectively, of this Indenture; and
(6) the word "includes" and its derivatives means "includes, but is
not limited to" and corresponding derivative definitions.
Certain terms, used principally in Article Six, are defined in that
Article.
"Act", when used with respect to any Holder, has the meaning specified in
Section 1.5.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Authenticating Agent" means any Person authorized by the Trustee to act on
behalf of the Trustee to authenticate Securities.
"Banking Day" means, in respect of any city, any date on which commercial banks
are open for business in that city.
"Bankruptcy Law" means any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law.
"Board of Directors" means either the board of directors of the Company or of a
Guarantor, as applicable, or any duly authorized committee of that board to
which the powers of that board have been lawfully delegated. "Board Resolution"
means a copy of a resolution certified by the Secretary or an Assistant
Secretary of the Company, the principal financial officer of the Company or a
Guarantor, any other authorized officer of the Company or a Guarantor, or a
person duly authorized by any of them, in each case as applicable, to have been
duly adopted by the Board of Directors and to be in full force and effect on the
date of such certification, and delivered to the Trustee. Where any provision of
this Indenture refers to action to be taken pursuant to a Board Resolution
(including the establishment of any series of the Securities and the forms and
terms thereof), such action may be taken by any committee, officer or employee
of the Company or a Guarantor, as applicable, authorized to take such action by
the Board of Directors as evidenced by a Board Resolution.
"Business Day", when used with respect to any Place of Payment or other
location, means, except as otherwise provided as contemplated by Section 3.1
with respect to any series of Securities, each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in that
Place of Payment or other location are authorized or obligated by law, executive
order or regulation to close.
"CINS" means CUSIP International Numbering System.
"Commission" means the Securities and Exchange Commission, as from time to time
constituted, created under the Securities Exchange Act of 1934, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
2
"Company" means the Person named as the "Company" in the first paragraph of this
instrument until a successor or resulting corporation shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor or resulting corporation.
"Company Request" or "Company Order" means, in the case of the Company, a
written request or order signed in the name of the Company by its Chairman of
the Board, its Chief Executive Officer, its President, any of its Vice
Presidents or any other duly authorized officer of the Company or any person
duly authorized by any of them, and delivered to the Trustee and, in the case of
a Guarantor, a written request or order signed in the name of such Guarantor by
its Chairman of the Board, its Chief Executive Officer, its President, any of
its Vice Presidents or any other duly authorized officer of such Guarantor or
any person duly authorized by any of them, and delivered to the Trustee.
"Consolidated Net Worth" means, at any date of determination, the amount of
total shareholders' equity shown in most recent consolidated statement of
financial position of the Company, including any preferred stock not reflected
as a liability on such consolidated statement of financial position.
"Corporate Trust Office" means the office of the Trustee at which at any
particular time its corporate trust business shall be principally administered
and which, at the date hereof, is located at [ ].
"corporation" includes corporations, companies, associations, partnerships,
limited partnerships, limited liability companies, joint-stock companies and
trusts.
"covenant defeasance" has the meaning specified in Section 13.3.
"CUSIP" means the Committee on Uniform Securities Identification Procedures.
"Custodian" means any receiver, trustee, assignee, liquidator or similar
official under any Bankruptcy Law.
"Debt" means any obligation created or assumed by any Person for the repayment
of money borrowed and any purchase money obligation created or assumed by such
Person and any guarantee of the foregoing.
"Default" means, with respect to a series of Securities, any event that is, or
after notice or lapse of time or both would be, an Event of Default.
"Defaulted Interest" has the meaning specified in Section 3.7.
"defeasance" has the meaning specified in Section 13.2.
"Definitive Security" means a security other than a Global Security or a
temporary Security.
"Depositary" means, with respect to the Securities of any series issuable or
issued in whole or in part in the form of one or more Global Securities, a
clearing agency registered under the Exchange Act that is designated to act as
Depositary for such Securities as contemplated by Section 3.1, until a successor
Depositary shall have become such pursuant to the applicable provisions of this
Indenture, and thereafter shall mean or include each Person which is a
Depositary hereunder, and if at any time there is more than one such Person,
shall be a collective reference to such Persons.
"Dollar" or "$" means the coin or currency of the United States of America,
which at the time of payment is legal tender for the payment of public and
private debts.
3
"Event of Default" has the meaning specified in Section 5.1.
"Foreign Currency" means a currency used by the government of a country other
than the United States of America.
"GAAP" means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, as in effect from time to time.
"Global Security" means a Security in global form that evidences all or part of
a series of Securities and is authenticated and delivered to, and registered in
the name of, the Depositary for the Securities of such series or its nominee.
"Guarantee" has the meaning specified in Section 14.1.
"Guarantor" means (i) Comstock Oil & Gas, Inc., a corporation duly organized and
existing under the laws of the State of Nevada, (ii) Comstock Oil &
Gas-Louisiana, LLC, a limited liability company duly organized and existing
under the laws of the State of Nevada, (iii) Comstock Offshore, LLC, a limited
liability company duly organized and existing under the laws of the State of
Nevada, (iv) Comstock Oil & Gas Holdings, Inc., a corporation duly organized and
existing under the laws of the State of Nevada and (v) any Person that becomes a
successor guarantor pursuant to the applicable provisions of this Indenture.
"Guarantor Senior Debt" means, unless otherwise provided with respect to the
Securities of a series as contemplated by Section 3.1, (1) all Debt of a
Guarantor, whether currently outstanding or hereafter issued, unless, by the
terms of the instrument creating or evidencing such Debt, it is provided that
such Debt is not superior in right of payment to the Guarantee or to other Debt
which is pari passu with or subordinated to the Guarantee, and (2) any
modifications, refunding, deferrals, renewals or extensions of any such Debt or
securities, notes or other evidence of Debt issued in exchange for such Debt;
provided that in no event shall "Guarantor Senior Debt" include (a) Debt of a
Guarantor owed or owing to any Subsidiary of such Guarantor or any officer,
director or employee of such Guarantor or any Subsidiary of such Guarantor, (b)
Debt to trade creditors or (c) any liability for taxes owed or owing by a
Guarantor.
"Holder" means a Person in whose name a Security is registered in the Security
Register.
"Indenture" means this instrument as originally executed or as it may from time
to time be supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, including, for all
purposes of this instrument, and any such supplemental indenture, the provisions
of the Trust Indenture Act that are deemed to be part of and govern this
instrument and any such supplemental indenture, respectively. The term
"Indenture" also shall include the terms of particular series of Securities
established as contemplated by Section 3.1.
"interest", when used with respect to an Original Issue Discount Security which
by its terms bears interest only after Maturity, means interest payable after
Maturity.
"Interest Payment Date", when used with respect to any Security, means the
Stated Maturity of an installment of interest on such Security.
"Judgment Currency" has the meaning specified in Section 1.16.
"Lien" means any mortgage, pledge, security interest, charge, lien or other
encumbrance of any kind, whether or not filed, recorded or perfected under
applicable law.
4
"mandatory sinking fund payment" has the meaning specified in Section 12.1.
"Maturity", when used with respect to any Security, means the date on which the
principal of such Security or an installment of principal becomes due and
payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption or otherwise. "Notice of
Default" means a written notice of the kind specified in Section 5.1(3) or
Section 5.1(4).
"Officer's Certificate" means, in the case of the Company, a certificate signed
by the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President or any other duly authorized officer of the Company, or a person
duly authorized by any of them, and delivered to the Trustee and, in the case of
a Guarantor, a certificate signed by the Chairman of the Board, the Chief
Executive Officer, the President, any Vice President or any other duly
authorized officer of such Guarantor, or a person duly authorized by any of
them, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel, who may be an employee
of or counsel for the Company or a Guarantor, as the case may be, and who shall
be reasonably acceptable to the Trustee.
"optional sinking fund payment" has the meaning specified in Section 12.1.
"Original Issue Discount Security" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 5.2.
"Outstanding", when used with respect to Securities, means, as of the date of
determination, all Securities theretofore authenticated and delivered under this
Indenture, except:
(i) Securities theretofore canceled by the Trustee or delivered
to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or
any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its
own Paying Agent) for the Holders of such Securities; provided,
however, that, if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Securities which have been paid pursuant to Section 3.6 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by
a bona fide purchaser in whose hands such Securities are valid
obligations of the Company; and
(iv) Securities, except to the extent provided in Section 13.2
and 13.3, with respect to which the Company has effected defeasance or
covenant defeasance as provided in Article Thirteen, which defeasance
or covenant defeasance then continues in effect; provided, however,
that in determining whether the Holders of the requisite principal
amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, (A) the
principal amount of an Original Issue Discount Security that shall be
deemed to be Outstanding shall be the amount of the principal thereof
that would be due and payable as of the date
5
of such determination upon acceleration of the Maturity thereof on
such date pursuant to Section 5.2, (B) the principal amount of a
Security denominated in one or more currencies or currency units other
than U.S. dollars shall be the U.S. dollar equivalent of such
currencies or currency units, determined in the manner provided as
contemplated by Section 3.1 on the date of original issuance of such
Security or by Section 1.15, if not otherwise so provided pursuant to
Section 3.1, of the principal amount (or, in the case of an Original
Issue Discount Security, the U.S. dollar equivalent (as so determined)
on the date of original issuance of such Security of the amount
determined as provided in Clause (A) above) of such Security, and (C)
Securities owned by the Company, any Guarantor or any other obligor
upon the Securities or any Affiliate of the Company or of such other
obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying
upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so
owned shall be so disregarded. Securities so owned as described in
Clause (C) of the immediately preceding sentence which have been
pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Trustee the pledgee's right so
to act with respect to such Securities and that the pledgee is not the
Company, a Guarantor or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay the principal
of and any premium or interest on any Securities on behalf of the Company.
"Periodic Offering" means an offering of Securities of a series from time to
time, the specific terms of which Securities, including, without limitation, the
rate or rates of interest or formula for determining the rate or rates of
interest thereon, if any, the Stated Maturity or Stated Maturities thereof, the
original issue date or dates thereof, the redemption provisions, if any, with
respect thereto, and any other terms specified as contemplated by Section 3.1
with respect thereto, are to be determined by the Company upon the issuance of
such Securities.
"Person" means any individual, corporation, company, limited liability company,
partnership, limited partnership, joint venture, association, joint-stock
company, trust, other entity, unincorporated organization or government or any
agency or political subdivision thereof.
"Place of Payment", when used with respect to the Securities of any series,
means, unless otherwise specifically provided for with respect to such series as
contemplated by Section 3.1, the office or agency of the Company in the City of
New York and such other place or places where, subject to the provisions of
Section 10.2, the principal of and any premium and interest on the Securities of
that series are payable as contemplated by Section 3.1.
"Predecessor Security" of any particular Security means every previous Security
evidencing all or a portion of the same Debt as that evidenced by such
particular Security; and, for the purposes of this definition, any Security
authenticated and delivered under Section 3.6 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Security shall be deemed to evidence the
same debt as the mutilated, destroyed, lost or stolen Security.
"Redemption Date", when used with respect to any Security to be redeemed, means
the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price", when used with respect to any Security to be redeemed, means
the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" for the interest payable on any Interest Payment Date on
the Securities of any series means the date specified for that purpose as
contemplated by Section 3.1.
6
"Required Currency" has the meaning specified in Section 1.16.
"Securities" has the meaning stated in the first recital of this Indenture and
more particularly means any Securities authenticated and delivered under this
Indenture.
"Security Register" and "Security Registrar" have the respective meanings
specified in Section 3.5.
"Senior Debt" means (1) all Debt of the Company, whether currently outstanding
or hereafter issued, unless, by the terms of the instrument creating or
evidencing such Debt, it is provided that such Debt is not superior in right of
payment to the Securities, and (2) any modifications, refunding, deferrals,
renewals or extensions of any such Debt or securities, notes or other evidence
of Debt issued in exchange for such Debt; provided that in no event shall
"Senior Debt" include (a) Debt of the Company owed or owing to any Subsidiary of
the Company or any officer, director or employee of the Company or any
Subsidiary of the Company, (b) Debt to trade creditors or (c) any liability for
taxes owned or owing by the Company.
"Special Record Date" for the payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 3.7.
"Stated Maturity", when used with respect to any Security or any installment of
principal thereof or interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
principal or interest is due and payable.
"Subsidiary" means (i) a corporation more than 50% of the outstanding voting
stock of which is owned, directly or indirectly, by the Company or by one or
more other Subsidiaries, or by the Company and one or more other Subsidiaries or
(ii) any partnership or similar business organization more than 50% of the
ownership interests having ordinary voting power of which shall at the time be
so owned. For the purposes of this definition, "voting stock" means capital
stock or equity interests which ordinarily have voting power for the election of
directors, whether at all times or only so long as no senior class of stock has
such voting power by reason of any contingency.
"Trustee" means the Person named as the "Trustee" in the first paragraph of this
instrument until a successor Trustee shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean or
include each Person who is then a Trustee hereunder, and if at any time there is
more than one such Person, "Trustee" as used with respect to the Securities of
any series shall mean the Trustee with respect to Securities of that series.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended, as in
force at the date as of which this instrument was executed, except as provided
in Section 9.5; provided, however, that if the Trust Indenture Act of 1939 is
amended after such date, "Trust Indenture Act" means, to the extent required by
any such amendment, the Trust Indenture Act of 1939 as so amended.
"U.S. Person" shall have the meaning assigned to such term in Section
7701(a)(30) of the Internal Revenue Code of 1986, as amended.
"U.S. Government Obligations" means securities which are (i) direct obligations
of the United States for the payment of which its full faith and credit is
pledged, or (ii) obligations of a Person controlled or supervised by and acting
as an agency or instrumentality of the United States, the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States, each of which are not callable or redeemable at the option of the issuer
thereof.
7
"Vice President", when used with respect to the Company, the Guarantor or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president."
Section 1.2. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the Trust Indenture Act,
the provision is incorporated by reference in and made a part of this Indenture.
The following Trust Indenture Act terms used in this Indenture have the
following meanings:
"commission" means the Commission.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company, the Guarantor
(if applicable) or any other obligor on the indenture securities.
All terms used in this Indenture that are defined by the Trust Indenture
Act, defined by a Trust Indenture Act reference to another statute or defined by
a Commission rule under the Trust Indenture Act have the meanings so assigned to
them.
Section 1.3. Compliance Certificates and Opinions.
Upon any application or request by the Company or a Guarantor to the
Trustee to take any action under any provision of this Indenture, the Company or
such Guarantor, as the case may be, shall furnish to the Trustee an Officer's
Certificate stating that all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an Opinion
of Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture relating to such
particular application or request, no additional certificate or opinion need be
furnished except as required under Section 314(c) of the Trust Indenture Act.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture (except for certificates provided for in
Section 10.5) shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been complied with; and
8
(4) a statement as to whether, in the opinion of each such individual,
such condition or covenant has been complied with. Section 1.4. Form of
Documents Delivered to Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company or a Guarantor may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows or, in the
exercise of reasonable care, should know that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of counsel may
be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Company or the
Guarantor, as the case may be, stating that the information with respect to such
factual matters is in the possession of the Company or the Guarantor, as the
case may be, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Section 1.5. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be
given or taken by Holders may be embodied in and evidenced by one
or more instruments of substantially similar tenor signed (either
physically or by means of a facsimile or an electronic
transmission, provided that such electronic transmission is
transmitted through the facilities of a Depositary) by such
Holders in person or by agent duly appointed in writing; and,
except as herein otherwise expressly provided, such action shall
become effective when such instrument or instruments are
delivered to the Trustee and, where it is hereby expressly
required, to the Company or the Guarantors. Such instrument or
instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the
Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any
such agent shall be sufficient for any purpose of this Indenture
and (subject to Section 315 of the Trust Indenture Act)
conclusive in favor of the Trustee, the Company and, if
applicable, the Guarantors, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a
witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of
deeds, certifying that the individual signing such instrument or
writing acknowledged to him the execution thereof. Where such
execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date
of the execution of any such instrument or writing, or the
authority of the
9
Person executing the same, may also be proved in any other manner
which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of
Securities held by any Person, and the date of commencement of such
Person's holding of same, shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Security shall bind
every future Holder of the same Security and the Holder of every
Security issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee, the Company or, if
applicable, the Guarantors in reliance thereon, whether or not
notation of such action is made upon such Security.
(e) Without limiting the foregoing, a Holder entitled to give or
take any action hereunder with regard to any particular Security may
do so with regard to all or any part of the principal amount of such
Security or by one or more duly appointed agents each of which may do
so pursuant to such appointment with regard to all or any different
part of such principal amount.
(f) The Company may set any day as the record date for the
purpose of determining the Holders of Outstanding Securities of any
series entitled to give or take any request, demand, authorization,
direction, notice, consent, waiver or other Act provided or permitted
by this Indenture to be given or taken by Holders of Securities of
such series, but the Company shall have no obligation to do so. With
regard to any record date set pursuant to this paragraph, the Holders
of Outstanding Securities of the relevant series on such record date
(or their duly appointed agents), and only such Persons, shall be
entitled to give or take the relevant action, whether or not such
Holders remain Holders after such record date.
Section 1.6. Notices, Etc., to Trustee, Company and Guarantors.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder, a Guarantor or by the Company shall be
sufficient for every purpose hereunder if made, given, furnished or filed
in writing to or with the Trustee at its Corporate Trust Office, Attention:
[Corporate Trust Department],
(2) the Company by the Trustee, a Guarantor or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to the
Company addressed to it at the address of its principal office specified in
the first paragraph of this instrument to the attention of the Corporate
Secretary, or at any other address previously furnished in writing to the
Trustee by the Company, or
(3) a Guarantor by the Company, the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first-class postage prepaid, to such
Guarantor addressed to it at 5300 Town & Country Blvd., Suite 500, Frisco,
Texas 75034 to the attention of the Corporate Secretary, or at any other
address previously furnished in writing to the Trustee by the Guarantor.
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Section 1.7. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at his address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by the Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Holders shall be filed with the Trustee, but such filing
shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.
Section 1.8. Conflict with Trust Indenture Act.
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this Indenture, the latter provision shall control. If any provision of
this Indenture modifies or excludes any provision of the Trust Indenture Act
that may be so modified or excluded, the latter provision shall be deemed to
apply to this Indenture as so modified or excluded, as the case may be.
Section 1.9. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.10. Successors and Assigns.
All covenants and agreements in this Indenture by each of the Company and
the Guarantors shall bind their respective successors and assigns, whether so
expressed or not.
Section 1.11. Separability Clause.
In case any provision in this Indenture or in the Securities or, if
applicable, the Guarantee shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 1.12. Benefits of Indenture.
Nothing in this Indenture or in the Securities or, if applicable, the
Guarantee, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the holders of Senior Debt and the
Holders, any benefit or any legal or equitable right, remedy or claim under this
Indenture.
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Section 1.13. Governing Law.
THIS INDENTURE, THE SECURITIES AND THE GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
To the fullest extent permitted by applicable law, each of the Company and
the Guarantors hereby irrevocably submits to the jurisdiction of any Federal or
state court located in the Borough of Manhattan in The City of New York, New
York in any suit, action or proceeding based on or arising out of or relating to
this Indenture, any Securities or, if applicable, the Guarantee and irrevocably
agrees that all claims in respect of such suit or proceeding may be determined
in any such court. Each of the Company and the Guarantors irrevocably waives, to
the fullest extent permitted by law, any objection which it may have to the
laying of the venue of any such suit, action or proceeding brought in an
inconvenient forum. Each of the Company and the Guarantors hereby irrevocably
designates and appoints ______________________, New York, New York (the "Process
Agent") as its authorized agent for purposes of this Section 1.13, it being
understood that the designation and appointment of the Process Agent as such
authorized agent shall become effective immediately without any further action
on the part of the Company or a Guarantor, as the case may be. Each of the
Company and the Guarantors further agrees that, unless otherwise required by
law, service of process upon the Process Agent and written notice of said
service to the Company or a Guarantor, as the case may be, mailed by prepaid
registered first class mail or delivered to the Process Agent at its principal
office, shall be deemed in every respect effective service of process upon the
Company or such Guarantor, as the case may be, in any such suit or proceeding.
Each of the Company and the Guarantors further agrees to take any and all
action, including the execution and filing of any and all such documents and
instruments as may be necessary, to continue such designation and appointment of
the Process Agent in full force and effect so long as the Company or such
Guarantor, as the case may be, has any outstanding obligations under this
Indenture. To the extent the Company or a Guarantor, as the case may be, has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service of notice, attachment prior to judgment,
attachment in aid of execution, executor or otherwise) with respect to itself or
its property, each of the Company and such Guarantor hereby irrevocably waives
such immunity in respect of its obligations under this Indenture to the extent
permitted by law.
Section 1.14. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date or Stated
Maturity of any Security shall not be a Business Day at any Place of Payment,
then (notwithstanding any other provision of this Indenture or of the Securities
or, if applicable, the Guarantee (other than a provision of the Securities of
any series or, if applicable, the Guarantee that specifically states that such
provision shall apply in lieu of this Section 1.14)) payment of interest or
principal and any premium need not be made at such Place of Payment on such
date, but may be made on the next succeeding Business Day at such Place of
Payment with the same force and effect as if made on the Interest Payment Date
or Redemption Date, or at the Stated Maturity, provided that no interest shall
accrue for the period from and after such Interest Payment Date, Redemption Date
or Stated Maturity, as the case may be.
Section 1.15. Securities in a Composite Currency, Currency Unit or Foreign
Currency.
Unless otherwise specified in an Officer's Certificate delivered pursuant
to Section 3.1 of this Indenture with respect to a particular series of
Securities, whenever for purposes of this Indenture any action may be taken by
the Holders of a specified percentage in aggregate principal amount of
Securities of all series or all series affected by a particular action at the
time Outstanding and, at such time, there are Outstanding Securities of any
series which are denominated in a coin, currency or currencies other than
12
Dollars (including, but not limited to, any composite currency, currency units
or Foreign Currency), then the principal amount of Securities of such series
which shall be deemed to be Outstanding for the purpose of taking such action
shall be that amount of Dollars that could be obtained for such amount at the
Market Exchange Rate. For purposes of this Section 1.15, the term "Market
Exchange Rate" shall mean the noon Dollar buying rate in The City of New York
for cable transfers of such currency or currencies as published by the Federal
Reserve Bank of New York, as of the most recent available date. If such Market
Exchange Rate is not so available for any reason with respect to such currency,
the Trustee shall use, in its sole discretion and without liability on its part,
such quotation of the Federal Reserve Bank of New York as of the most recent
available date, or quotations or rates of exchange from one or more major banks
in The City of New York or in the country of issue of the currency in question,
which for purposes of euros shall be Brussels, Belgium, or such other quotations
or rates of exchange as the Trustee shall deem appropriate. The provisions of
this paragraph shall apply in determining the equivalent principal amount in
respect of Securities of a series denominated in a currency other than Dollars
in connection with any action taken by Holders of Securities pursuant to the
terms of this Indenture.
All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of manifest
error, be conclusive to the extent permitted by law for all purposes and
irrevocably binding upon the Issuer and all Holders.
Section 1.16. Payment in Required Currency; Judgment Currency.
Each of the Company and the Guarantors agrees, to the fullest extent that
it may effectively do so under applicable law, that (a) if for the purpose of
obtaining judgment in any court it is necessary to convert the sum due in
respect of the principal of or interest on the Securities of any series (the
"Required Currency") into a currency in which a judgment will be rendered (the
"Judgment Currency"), the rate of exchange used shall be the rate at which in
accordance with normal banking procedures the Trustee could purchase in The City
of New York the Required Currency with the Judgment Currency on the day on which
final unappealable judgment is entered, unless such day is not a Banking Day,
then, to the extent permitted by applicable law, the rate of exchange used shall
be the rate at which in accordance with normal banking procedures the Trustee
could purchase in The City of New York the Required Currency with the Judgment
Currency on the Banking Day next preceding the day on which final unappealable
judgment is entered and (b) its obligations under this Indenture to make
payments in the Required Currency (i) shall not be discharged or satisfied by
any tender, or any recovery pursuant to any judgment (whether or not entered in
accordance with subclause (a)), in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in the
actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be enforceable
as an alternative or additional cause of action for the purpose of recovering in
the Required Currency the amount, if any, by which such actual receipt shall
fall short of the full amount of the Required Currency so expressed to be
payable and (iii) shall not be affected by judgment being obtained for any other
sum due under this Indenture.
Section 1.17. Language of Notices, Etc.
Any request, demand, authorization, direction, notice, consent, waiver or
Act required or permitted under this Indenture shall be in the English language,
except that any published notice may be in an official language of the country
of publication.
13
Section 1.18. Incorporators, Shareholders, Officers and Directors of the Company
and the Guarantors Exempt from Individual Liability.
No recourse under or upon any obligation, covenant or agreement of or
contained in this Indenture or of or contained in any Security or, if
applicable, the Guarantee, or for any claim based thereon or otherwise in
respect thereof, or in any Security or, if applicable, the Guarantee, or because
of the creation of any indebtedness represented thereby, shall be had against
any incorporator, shareholder, member, officer, manager or director, as such,
past, present or future, of the Company, any Guarantor or any successor Person,
either directly or through the Company, any Guarantor or any successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly
understood that all such liability is hereby expressly waived and released as a
condition of, and as a part of the consideration for, the execution of this
Indenture and the issue of the Securities.
ARTICLE TWO
SECURITY FORMS
Section 2.1. Forms Generally.
The Securities of each series and, if applicable, the notation thereon
relating to the Guarantee, shall be in substantially the form set forth in this
Article Two, or in such other form or forms as shall be established by or
pursuant to a Board Resolution or in one or more indentures supplemental hereto,
in each case with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture, and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities and, if applicable, the Guarantee, as
evidenced by their execution thereof.
The definitive Securities shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers executing such Securities, as evidenced by their execution
thereof. If the form of Securities of any series is established by action taken
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person on behalf
of the Company and delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 3.3 for the authentication and delivery of
such Securities.
The forms of Global Securities of any series shall have such provisions and
legends as are customary for Securities of such series in global form, including
without limitation any legend required by the Depositary for the Securities of
such series.
Section 2.2. Form of Face of Security.
[If the Security is an Original Issue Discount Security, insert--FOR PURPOSES OF
SECTION 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED, THE
AMOUNT OF THE ORIGINAL ISSUE DISCOUNT IS . . . . . . . ., THE ISSUE DATE IS . .
.. . . ., 20. . . [AND] [,] THE YIELD TO MATURITY IS . . . . . . . . [,] [AND THE
ORIGINAL ISSUE DISCOUNT FOR THE SHORT ACCRUAL PERIOD IS . . . . . . . . AND THE
METHOD USED TO DETERMINE THE YIELD THEREFOR IS . . . . .]]
[Insert any other legend required by the United States Internal Revenue Code or
the regulations thereunder.]
14
[If a Global Security,--insert legend required by Section 204 of the Indenture]
[If applicable, insert -- UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.] COMSTOCK
RESOURCES, INC.
[TITLE OF SECURITY]
No . . . . . . . U.S. $. . . . . .
[CUSIP No. ]
COMSTOCK RESOURCES, INC., a company duly incorporated under the laws of the
State of Nevada (herein called the "Company ", which term includes any successor
or resulting Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to .......... . . . . . . . . . . . . . . . . .
.. . . . ., or registered assigns, the principal sum of . . . .
................................................. United States Dollars on
......................................... [If the Security is to bear interest
prior to Maturity, insert--, and to pay interest thereon from . . . . . . . . .
.. or from the most recent Interest Payment Date to which interest has been paid
or duly provided for, semi-annually on . . . . . . and . . . . . . in each year,
commencing . . . . . ., at the rate of . . . . % per annum, until the principal
hereof is paid or made available for payment [if applicable, insert--, and at
the rate of ___% per annum on any overdue principal and premium and on any
installment of interest (to the extent that the payment of such interest shall
be legally enforceable)]. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in such Indenture,
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest, which shall be the . . . . or . . . . (whether or not a
Business Day), as the case may be, next preceding such Interest Payment Date.
Any such interest not so punctually paid or duly provided for will forthwith
cease to be payable to the Holder on such Regular Record Date and may either be
paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities of this series not less than 10
days prior to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities exchange
on which the Securities of this series may be listed, and upon such notice as
may be required by such exchange, all as more fully provided in said Indenture].
[If the Security is not to bear interest prior to Maturity, insert--The
principal of this Security shall not bear interest except in the case of a
default in payment of principal upon acceleration, upon redemption or at Stated
Maturity and in such case the overdue principal of this Security shall bear
interest at the rate of . . . .% per annum (to the extent that the payment of
such interest shall be legally enforceable), which shall accrue from the date of
such default in payment to the date payment of such principal has been made or
duly provided for. Interest on any overdue principal shall be payable on demand.
Any such interest on any overdue principal that is not so paid on demand shall
bear interest at the rate of . . . . % per annum (to the extent that the payment
of such interest shall be legally enforceable), which shall accrue from the date
15
of such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest shall also be payable on demand.]
[If a Global Security, insert--Payment of the principal of (and premium, if any)
and [if applicable, insert--any such] interest on this Security will be made by
transfer of immediately available funds to a bank account in ___________
designated by the Holder in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts [state other currency].]
[If a Definitive Security, insert--Payment of the principal of (and premium, if
any) and [if applicable, insert--any such] interest on this Security will be
made at the office or agency of the Company maintained for that purpose in
_______________, in such coin or currency of the United States of America as at
the time of payment is legal tender for payment of public and private debts]
[state other currency] [or subject to any laws or regulations applicable thereto
and to the right of the Company (as provided in the Indenture) to rescind the
designation of any such Paying Agent, at the [main] offices of ________________
in _____________, or at such other offices or agencies as the Company may
designate, by [United States Dollar] [state other currency] check drawn on, or
transfer to a [United States Dollar] account maintained by the payee with, a
bank in The City of New York (so long as the applicable Paying Agency has
received proper transfer instructions in writing at least ___ days prior to the
payment date)] [if applicable, insert--; provided, however, that payment of
interest may be made at the option of the Company by [United States Dollar]
[state other currency] check mailed to the addresses of the Persons entitled
thereto as such addresses shall appear in the Security Register] [or by transfer
to a [United States Dollar] [state other currency] account maintained by the
payee with a bank in The City of New York [state other Place of Payment] (so
long as the applicable Paying Agent has received proper transfer instructions in
writing by the Record Date prior to the applicable Interest Payment Date)].]
Reference is hereby made to the further provisions of this Security set forth on
the reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the Trustee
referred to on the reverse hereof by manual signature, this Security shall not
be entitled to any benefit under the Indenture or be valid or obligatory for any
purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated:
COMSTOCK RESOURCES, INC.
By:_________________________________
Section 2.3. Form of Reverse of Security.
This Security is one of a duly authorized issue of subordinated securities of
the Company (herein called the "Securities"), issued and to be issued in one or
more series under an Indenture, dated as of _____________ [ ], 200__ (herein
called the "Indenture"), between the Company, the Guarantors and [ ], as Trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement, of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and the Holders of the Securities and of the terms upon which the
16
Securities are, and are to be, authenticated and delivered. As provided in the
Indenture, the Securities may be issued in one or more series, which different
series may be issued in various aggregate principal amounts, may mature at
different times, may bear interest, if any, at different rates, may be subject
to different redemption provisions, if any, may be subject to different sinking,
purchase or analogous funds, if any, may be subject to different covenants and
Events of Default and may otherwise vary as in the Indenture provided or
permitted. This Security is one of the series designated on the face hereof [,
limited in aggregate principal amount to $ . . . . . . . . . . ].
This security is the general, unsecured, subordinated obligation of the Company
[if applicable, insert--and is guaranteed pursuant to a guarantee (the
"Guarantee") by [insert name of each Guarantor] (the "Guarantors"). The
Guarantee is the general, unsecured, subordinated obligation of each Guarantor.]
[If applicable, insert--The Securities of this series are subject to redemption
upon not less than ... days' notice by mail, [if applicable, insert, --(1) on .
.. . . . . . . . . . . . . in any year commencing with the year . . . . and
ending with the year . . . . through operation of the sinking fund for this
series at a Redemption Price equal to 100% of the principal amount, and (2) ] at
any time [on or after . . . . . . . . . ., 20. . . ], as a whole or in part, at
the election of the Company, at the following Redemption Prices (expressed as
percentages of the principal amount): If redeemed [on or before . . . . . . . .
.. . . . . . . , . . . . . %, and if redeemed] during the 12-month period
beginning . . . . . . . . of the years indicated,
YEAR REDEMPTION PRICE YEAR REDEMPTION PRICE
and thereafter at a Redemption Price equal to . . . . . % of the principal
amount, together in the case of any such redemption [if applicable,
insert--(whether through operation of the sinking fund or otherwise)] with
accrued interest to the Redemption Date, but interest installments whose Stated
Maturity is on or prior to such Redemption Date will be payable to the Holders
of such Securities, or one or more Predecessor Securities, of record at the
close of business on the relevant Record Dates referred to on the face hereof,
all as provided in the Indenture.]
[If applicable, insert--The Securities of this series are subject to redemption
upon not less than... nor more than ... days' notice by mail, (1) on . . . . . .
.. . in any year commencing with the year . . . . and ending with the year . . .
.. through operation of the sinking fund for this series at the Redemption Prices
for redemption through operation of the sinking fund (expressed as percentages
of the principal amount) set forth in the table below, and (2) at anytime [on or
after . . . . . . . . . . ], as a whole or in part, at the election of the
Company, at the Redemption Prices for redemption otherwise than through
operation of the sinking fund (expressed as percentages of the principal amount)
set forth in the table below: If redeemed during the 12-month period beginning .
.. . . . . . . . . . . . . of the years indicated,
17
REDEMPTION PRICE FOR
REDEMPTION PRICE FOR REDEMPTION OTHERWISE THAN
REDEMPTION THROUGH THROUGH OPERATION OF THE
YEAR OPERATION OF THE SINKING FUND SINKING FUND
and thereafter at a Redemption Price equal to .... % of the principal amount,
together in the case of any such redemption (whether through operation of the
sinking fund or otherwise) with accrued interest to the Redemption Date, but
interest installments whose Stated Maturity is on or prior to such Redemption
Date will be payable to the Holders of such Securities, or one or more
Predecessor Securities, of record at the close of business on the relevant
Record Dates referred to on the face hereof, all as provided in the Indenture.]
[If applicable, insert--Notwithstanding the foregoing, the Company may not,
prior to .........., redeem any Securities of this series as contemplated by
[Clause (2) of] the preceding paragraph as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly, of moneys
borrowed having an interest cost to the Company (calculated in accordance with
generally accepted financial practice) of less than....% per annum.] [If
applicable, insert--The sinking fund for this series provides for the redemption
on ............ in each year beginning with the year .... and ending with the
year .... of [not less than] $............ [ ("mandatory sinking fund") and not
more than $............ ] aggregate principal amount of Securities of this
series. [Securities of this series acquired or redeemed by the Company otherwise
than through [mandatory] sinking fund payments may be credited against
subsequent [mandatory] sinking fund payments otherwise required to be made [If
applicable, insert--in the inverse order in which they become due].]
[If the Securities are subject to redemption in part of any kind, insert--In the
event of redemption of this Security in part only, a new Security or Securities
of this series and of like tenor for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.]
[If applicable, insert--The Securities of this series are not redeemable prior
to Stated Maturity.]
[If the Security is not an Original Issue Discount Security,--If an Event of
Default with respect to Securities of this series shall occur and be continuing,
the principal of the Securities of this series may be declared due and payable
in the manner and with the effect provided in the Indenture.]
[If the Security is an Original Issue Discount Security,--If an Event of Default
with respect to Securities of this series shall occur and be continuing, an
amount of principal of the Securities of this series may be declared due and
payable in the manner and with the effect provided in the Indenture. Such amount
shall be equal to --insert formula for determining the amount. Upon payment (i)
of the amount of principal so declared due and payable and (ii) of interest on
any overdue principal and overdue interest (in each case to the extent that the
payment of such interest shall be legally enforceable), all of the Company's
18
obligations in respect of the payment of the principal of and interest, if any,
on the Securities of this series shall terminate.]
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company [If applicable, insert--and the Guarantors] and the rights of the
Holders of the Securities of each series to be affected under the Indenture at
any time by the Company [If applicable, insert--and the Guarantors] and the
Trustee with the consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of each series to be affected. The Indenture
also contains provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time Outstanding, on
behalf of the Holders of all Securities of such series, to waive compliance by
the Company [If applicable, insert--and the Guarantors] with certain provisions
of the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall be
conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.
No reference herein to the Indenture and no provision of this Security or of the
Indenture shall alter or impair the obligation of the Company, which is absolute
and unconditional, to pay the principal of (and premium, if any) and interest on
this Security at the times, place(s) and rate, and in the coin or currency,
herein prescribed.
[If a Global Security, insert--This Global Security or portion hereof may not be
exchanged for Definitive Securities of this series except in the limited
circumstances provided in the Indenture. The holders of beneficial interests in
this Global Security will not be entitled to receive physical delivery of
Definitive Securities except as described in the Indenture and will not be
considered the Holders thereof for any purpose under the Indenture.]
[If a Definitive Security, insert--As provided in the Indenture and subject to
certain limitations therein set forth, the transfer of this Security is
registerable in the Security Register, upon surrender of this Security for
registration of transfer at the office or agency of the Company in [if
applicable, insert--any place where the principal of and any premium and
interest on this Security are payable] [if applicable, insert--The City of New
York [, or, subject to any laws or regulations applicable thereto and to the
right of the Company (limited as provided in the Indenture) to rescind the
designation of any such transfer agent, at the [main] offices of _______________
in ________________ or at such other offices or agencies as the Company may
designate]], duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series and of like tenor, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.]
The Securities of this series are issuable only in registered form without
coupons in denominations of U.S. $ ........ and any integral multiple thereof.
As provided in the Indenture and subject to certain limitations therein set
forth, Securities of this series are exchangeable for a like aggregate principal
amount of Securities of this series and of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
19
Prior to due presentment of this Security for registration of transfer, the
Company, [If applicable, insert--any Guarantor,] the Trustee and any agent of
the Company [If applicable, insert--, a Guarantor] or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and none of the Company, [If
applicable, insert--the Guarantors,] the Trustee nor any such agent shall be
affected by notice to the contrary.
This Security is subordinated in right of payment to Senior Debt [If applicable,
insert-and the Guarantee is subordinated in right of payment to Guarantor Senior
Debt], to the extent and in the manner provided in the Indenture. No recourse
under or upon any obligation, covenant or agreement of or contained in the
Indenture or of or contained in any Security, [If applicable, insert--, or the
Guarantee endorsed thereon,] or for any claim based thereon or otherwise in
respect thereof, or in any Security [If applicable, insert--or in the
Guarantee], or because of the creation of any indebtedness represented thereby,
shall be had against any incorporator, shareholder, member, officer, manager or
director, as such, past, present or future, of the Company [If applicable,
insert--or any Guarantor] or of any successor Person, either directly or through
the Company [If applicable, insert--or any Guarantor] or any successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment, penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released by
the acceptance hereof and as a condition of, and as part of the consideration
for, the Securities and the execution of the Indenture.
The Indenture provides that the Company [If applicable, insert--and the
Guarantors] (a) will be discharged from any and all obligations in respect of
the Securities (except for certain obligations described in the Indenture), or
(b) need not comply with certain restrictive covenants of the Indenture, in each
case if the Company [If applicable, insert--or a Guarantor] deposits, in trust,
with the Trustee money or U.S. Government Obligations (or a combination thereof)
which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money, in an amount sufficient to pay
all the principal of and interest on the Securities, but such money need not be
segregated from other funds except to the extent required by law. Except as
otherwise defined herein, all terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the Indenture.
[If a Definitive Security, insert as a separate page--
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s)and transfer(s) unto
_______________________________________________________________ (Please Print or
Typewrite Name and Address of Assignee) the within instrument of COMSTOCK
RESOURCES, INC. and does hereby irrevocably constitute and appoint
___________________ Attorney to transfer said instrument on the books of the
within-named Company, with full power of substitution in the premises.
Please Insert Social Security or Other Identifying Number of Assignee:
_______________________________________ ___________________________________
Dated:_________________________________ ___________________________________
(Signature)
20
NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever.]
[If a Security to which Article Fourteen has been made applicable, insert the
following Form of Notation on such Security relating to the Guarantee--
Each of the Guarantors (which term includes any successor Person in such
capacity under the Indenture), has fully, unconditionally and absolutely
guaranteed, to the extent set forth in the Indenture and subject to the
provisions in the Indenture, the due and punctual payment of the principal of,
and premium, if any, and interest on the Securities and all other amounts due
and payable under the Indenture and the Securities by the Company. The
obligations of the Guarantors to the Holders of Securities and to the Trustee
pursuant to the Guarantee and the Indenture are expressly set forth in Article
Fourteen of the Indenture and reference is hereby made to the Indenture for the
precise terms of the Guarantee.
Guarantors:
[NAME OF EACH GUARANTOR]
By: ____________________________
___________________________]
Section 2.4. Global Securities.
Every Global Security authenticated and delivered hereunder shall bear a
legend in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY
OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR
REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY
PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH
TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE INDENTURE.
EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF
TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE
A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED
CIRCUMSTANCES.
If Securities of a series are issuable in whole or in part in the form of
one or more Global Securities, as specified as contemplated by Section 3.1,
then, notwithstanding clause (9) of Section 3.1 and the provisions of Section
3.2, any Global Security shall represent such of the Outstanding Securities of
such series as shall be specified therein and may provide that it shall
represent the aggregate amount of Outstanding Securities from time to time
endorsed thereon and that the aggregate amount of Outstanding Securities
21
represented thereby may from time to time be reduced or increased, as the case
may be, to reflect exchanges. Any endorsement of a Global Security to reflect
the amount, or any reduction or increase in the amount, of Outstanding
Securities represented thereby shall be made in such manner and upon
instructions given by such Person or Persons as shall be specified therein or in
a Company Order. Subject to the provisions of Sections 3.3, 3.4 and 3.5, the
Trustee shall deliver and redeliver any Global Security in the manner and upon
instructions given by the Person or Persons specified therein or in the
applicable Company Order. Any instructions by the Company with respect to
endorsement or delivery or redelivery of a Global Security shall be in a Company
Order (which need not comply with Section 1.3 and need not be accompanied by an
Opinion of Counsel).
The provisions of the last sentence of Section 3.3 shall apply to any
Security represented by a Global Security if such Security was never issued and
sold by the Company and the Company delivers to the Trustee the Global Security
together with a Company Order (which need not comply with Section 1.3 and need
not be accompanied by an Opinion of Counsel) with regard to the reduction or
increase, as the case may be, in the principal amount of Securities represented
thereby, together with the written statement contemplated by the last sentence
of Section 3.3.
Section 2.5. Form of Trustee's Certificate of Authentication.
The Trustee's certificate(s) of authentication shall be in substantially
the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
[ ],
as Trustee
By: _______________________________
Authorized Officer
ARTICLE THREE
THE SECURITIES
Section 3.1. Amount Unlimited; Issuable in Series.
The aggregate principal amount of Securities which may be authenticated and
delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. There shall be
established in or pursuant to a Board Resolution, and set forth, or determined
in the manner provided, in an Officer's Certificate, or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of any
series,
(1) the title of the Securities of the series (which shall distinguish
the Securities of the series from all other Securities and which may be
part of a series of Securities previously issued);
(2) any limit upon the aggregate principal amount of the Securities of
the series which may be authenticated and delivered under this Indenture
(except for Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other Securities of the
22
series pursuant to Sections 3.4, 3.5, 3.6, 9.6 or 11.7 and except for any
Securities which, pursuant to Section 3.3, are deemed never to have been
authenticated and delivered hereunder);
(3) the Person to whom any interest on a Security of the series shall
be payable, if other than the Person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest;
(4) the date or dates on which the principal of the Securities of the
series is payable or the method of determination thereof;
(5) the rate or rates at which the Securities of the series shall bear
interest, if any, or the formula, method or provision pursuant to which
such rate or rates are determined, the date or dates from which such
interest shall accrue or the method of determination thereof, the Interest
Payment Dates on which such interest shall be payable and the Regular
Record Date for the interest payable on any Interest Payment Date;
(6) the place or places where, subject to the provisions of Section
10.2, the principal of and any premium and interest on Securities of the
series shall be payable, Securities of the series may be surrendered for
registration of transfer, Securities of the series may be surrendered for
exchange and notices, and demands to or upon the Company in respect of the
Securities of the series and this Indenture may be served;
(7) the period or periods within which, the price or prices at which
and the terms and conditions upon which Securities of the series may be
redeemed, in whole or in part, at the option of the Company;
(8) the obligation, if any, of the Company to redeem or purchase
Securities of the series pursuant to any sinking fund or analogous
provisions or at the option of a Holder thereof and the period or periods
within which, the price or prices at which and the terms and conditions
upon which Securities of the series shall be redeemed or purchased, in
whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which Securities of the series shall be
issuable;
(10) whether payment of principal of and premium, if any, and
interest, if any, on the Securities of the series shall be without
deduction for taxes, assessments or governmental charges paid by Holders of
the series;
(11) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant to Section
5.2;
(12) if the amount of payments of principal of and any premium or
interest on the Securities of the series may be determined with reference
to an index, the manner in which such amounts shall be determined;
(13) if and as applicable, that the Securities of the series shall be
issuable in whole or in part in the form of one or more Global Securities
and, in such case, the Depositary or Depositaries for such Global Security
or Global Securities and any circumstances other than those
23
set forth in Section 3.5 in which any such Global Security may be
transferred to, and registered and exchanged for Securities registered in
the name of, a Person other than the Depositary for such Global Security or
a nominee thereof and in which any such transfer may be registered;
(14) any deletions from, modifications of or additions to the Events
of Default set forth in Section 5.1 or the covenants of the Company set
forth in Article Ten with respect to the Securities of such series;
(15) whether and under what circumstances the Company will pay
additional amounts on the Securities of the series held by a Person who is
not a U.S. person in respect of any tax, assessment or governmental charge
withheld or deducted and, if so, whether the Company will have the option
to redeem the Securities of the series rather than pay such additional
amounts;
(16) if the Securities of the series are to be issuable in definitive
form (whether upon original issue or upon exchange of a temporary Security
of such series) only upon receipt of certain certificates or other
documents or satisfaction of other conditions, the form and terms of such
certificates, documents or conditions;
(17) if the Securities of the series are to be convertible into or
exchangeable for any other security or property of the Company, including,
without limitation, securities of another Person held by the Company or its
Affiliates and, if so, the terms thereof;
(18) if other than as provided in Sections 13.2 and 13.3, the means of
defeasance or covenant defeasance as may be specified for the Securities of
the Series;
(19) if other than the Trustee, the identity of the initial Security
Registrar and any initial Paying Agent;
(20) whether the Securities of the series will be guaranteed pursuant
to the Guarantee, any modifications to the terms of Article Fourteen
applicable to the Securities of such series and the applicability of any
other guarantees; and
(21) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series shall be substantially identical except as
to denomination and except as may otherwise be provided in or pursuant to the
Board Resolution referred to above and (subject to Section 3.3) set forth, or
determined in the manner provided, in the Officer's Certificate referred to
above or in any such indenture supplemental hereto.
All Securities of any one series need not be issued at the same time and,
unless otherwise provided, a series may be reopened, without the consent of the
Holders, for increases in the aggregate principal amount of such series of
Securities and issuances of additional Securities of such series or for the
establishment of additional terms with respect to the Securities of such series.
If any of the terms of the series are established by action taken by or
pursuant to a Board Resolution, a copy of an appropriate record of such action
shall be certified by an authorized officer or other authorized person on behalf
of the Company and, if applicable, the Guarantors and delivered to the Trustee
at or prior to the delivery of the Officer's Certificate setting forth, or
providing the manner for determining, the terms of the series.
24
With respect to Securities of a series subject to a Periodic Offering, such
Board Resolution or Officer's Certificate may provide general terms for
Securities of such series and provide either that the specific terms of
particular Securities of such series shall be specified in a Company Order or
that such terms shall be determined by the Company and, if applicable, the
Guarantors or one or more agents thereof designated in an Officer's Certificate,
in accordance with a Company Order.
Section 3.2. Denominations.
The Securities of each series shall be issuable in registered form without
coupons in such denominations as shall be specified as contemplated by Section
3.1. In the absence of any such provisions with respect to the Securities of any
series, the Securities of such series shall be issuable in denominations of
$1,000 and any integral multiple thereof.
Section 3.3. Execution, Authentication, Delivery and Dating.
The Securities shall be executed on behalf of the Company by its Chairman
of the Board, its Chief Executive Officer, its President, its Chief Financial
Officer or any of its Vice Presidents and need not be attested. The signature of
any of these officers on the Securities may be manual or facsimile. Any
Guarantee endorsed on the Securities shall be executed on behalf of the
applicable Guarantor by its Chairman of the Board, its Chief Executive Officer,
its President, its Chief Financial Officer or any of its Vice Presidents and
need not be attested.
Securities and any Guarantee bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company or a
Guarantor, as the case may be, shall bind the Company or such Guarantor, as the
case may be, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and delivery of this
Indenture, the Company may deliver Securities of any series executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities, and the Trustee in accordance
with the Company Order shall authenticate and deliver such Securities; provided,
however, that in the case of Securities offered in a Periodic Offering, the
Trustee shall authenticate and deliver such Securities from time to time in
accordance with such other procedures (including, without limitation, the
receipt by the Trustee of oral or electronic instructions from the Company or
its duly authorized agents, thereafter promptly confirmed in writing) acceptable
to the Trustee as may be specified by or pursuant to a Company Order delivered
to the Trustee prior to the time of the first authentication of Securities of
such series. If the forms or terms of the Securities of the series have been
established in or pursuant to one or more Board Resolutions as permitted by
Sections 2.1 and 3.1, in authenticating such Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive such documents as it may reasonably
request. The Trustee shall also be entitled to receive, and (subject to Section
6.1) shall be fully protected in relying upon, an Opinion of Counsel stating,
(a) if the form or forms of such Securities has been established
in or pursuant to a Board Resolution as permitted by Section 2.1, that
each such form has been established in conformity with the provisions
of this Indenture;
(b) if the terms of such Securities have been, or in the case of
Securities of a series offered in a Periodic Offering will be,
established in or pursuant to a Board Resolution as permitted by
Section 3.1, that such terms have been, or in the case of
25
Securities of a series offered in a Periodic Offering will be,
established in conformity with the provisions of this Indenture,
subject, in the case of Securities of a series offered in a Periodic
Offering, to any conditions specified in such Opinion of Counsel; and
(c) that such Securities when authenticated and delivered by the
Trustee and issued by the Company in the manner and subject to any
conditions and assumptions specified in such Opinion of Counsel, will
constitute valid and legally binding obligations of the Company and,
if applicable, the Guarantors, enforceable in accordance with their
terms, subject to the following limitations: (i) bankruptcy,
insolvency, moratorium, reorganization, liquidation, fraudulent
conveyance or transfer and other similar laws of general applicability
relating to or affecting the enforcement of creditors' rights, or to
general equity principles, (ii) the availability of equitable remedies
being subject to the discretion of the court to which application
therefor is made; and (iii) such other usual and customary matters as
shall be specified in such Opinion of Counsel.
If such form or forms or terms have been so established, the Trustee shall
not be required to authenticate such Securities if the issue of such Securities
pursuant to this Indenture will affect the Trustee's own rights, duties or
immunities under the Securities and this Indenture or otherwise in a manner
which is not reasonably acceptable to the Trustee.
Notwithstanding the provisions of Section 3.1 and of the preceding
paragraph, if all Securities of a series are not to be originally issued at one
time, it shall not be necessary to deliver the Officer's Certificate otherwise
required pursuant to Section 3.1 or the Company Order and Opinion of Counsel
otherwise required pursuant to such preceding paragraph at or prior to the time
of authentication of each Security of such series if such documents are
delivered at or prior to the authentication upon original issuance of the first
Security of such series to be issued.
With respect to Securities of a series offered in a Periodic Offering, the
Trustee may rely, as to the authorization by the Company of any of such
Securities, the form or forms and terms thereof and the legality, validity,
binding effect and enforceability thereof, upon the Opinion of Counsel and the
other documents delivered pursuant to Sections 2.1 and 3.1 and this Section, as
applicable, in connection with the first authentication of Securities of such
series.
Each Security shall be dated the date of its authentication.
No Security, nor any Guarantee endorsed thereon, shall be entitled to any
benefit under this Indenture or be valid or obligatory for any purpose unless
there appears on such Security a certificate of authentication substantially in
the form provided for herein executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold by the Company, and the Company
shall deliver such Security to the Trustee for cancellation as provided in
Section 3.9 for all purposes of this Indenture such Security shall be deemed
never to have been authenticated and delivered hereunder and shall never be
entitled to the benefits of this Indenture.
Section 3.4. Temporary Securities.
Pending the preparation of Definitive Securities of any series, the Company
may execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
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tenor of the Definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities of any series are issued, the Company will cause
Definitive Securities of that series to be prepared without unreasonable delay.
After the preparation of Definitive Securities of such series, the temporary
Securities of such series shall be exchangeable for Definitive Securities of
such series upon surrender of the temporary Securities of such series at the
office or agency of the Company in a Place of Payment for that series, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Securities of any series the Company shall execute and the Trustee
shall authenticate and deliver in exchange therefor a like principal amount of
Definitive Securities of the same series and tenor of authorized denominations.
Until so exchanged the temporary Securities of any series shall in all respects
be entitled to the same benefits under this Indenture as Definitive Securities
of such series.
Section 3.5. Registration, Registration of Transfer and Exchange.
The Company shall cause to be kept at the office or agency of the Company
in the Borough of Manhattan, the City of New York or in any other office or
agency of the Company in a Place of Payment required by Section 10.2 a register
(the register maintained in such office being herein sometimes referred to as
the "Security Register") in which, subject to such reasonable regulations as it
may prescribe, the Company shall provide for the registration of Securities and
of transfers of Securities. The Trustee is hereby appointed as the initial
"Security Registrar" for the purpose of registering Securities and transfers of
Securities as herein provided and its corporate trust office, which, at the date
hereof, is located at [ ], [NEW YORK, NEW YORK] [ ], is the initial office or
agency in the Borough of Manhattan where the Securities Register will be
maintained. The Company may at any time replace such Security Registrar, change
such office or agency or act as its own Security Registrar. The Company will
give prompt written notice to the Trustee of any change of the Security
Registrar or of the location of such office or agency.
Upon surrender for registration of transfer of any Security of any series
at the office or agency maintained pursuant to Section 10.2 for such purpose,
the Company and, if applicable, the Guarantors shall execute, and the Trustee
shall authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Securities, with an endorsement of the Guarantee,
if applicable, executed by the Guarantors, of the same series and tenor, of any
authorized denominations and of a like aggregate principal amount.
At the option of the Holder, Securities of any series (except a Global
Security) may be exchanged for other Securities of the same series and tenor, of
any authorized denominations and of a like aggregate principal amount, upon
surrender of the Securities to be exchanged at such office or agency. Whenever
any Securities are so surrendered for exchange, the Company and, if applicable,
the Guarantors shall execute and the Trustee shall authenticate and deliver, the
Securities, with an endorsement of the Guarantee, if applicable, executed by the
Guarantors, which the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or exchange of
Securities shall be the valid obligations of the Company and, if applicable, the
Guarantors evidencing the same debt, and entitled to the same benefits under
this Indenture, as the Securities surrendered upon such registration of transfer
or exchange.
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Every Security presented or surrendered for registration of transfer or for
exchange shall (if so required by the Company or the Trustee) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Security Registrar duly executed, by the Holder thereof or
his attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Securities, other than
exchanges pursuant to Section 3.4, 9.6 or 11.7 not involving any transfer.
The Company shall not be required (i) to issue, register the transfer of or
exchange Securities of any series during a period beginning at, the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities of that series selected for redemption under Section 11.3 and ending
at the close of business on the day of such mailing, or (ii) to register the
transfer of or exchange any Security so selected for redemption in whole or in
part, except the unredeemed portion of any Security being redeemed in part.
Notwithstanding any other provisions of this Indenture and except as
otherwise specified with respect to any particular series of Securities as
contemplated by Section 3.1, a Global Security representing all or a portion of
the Securities of a series may not be transferred, except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or by
such Depositary or any such nominee to a successor Depositary for such series or
a nominee of such successor Depositary. Every Security authenticated and
delivered upon registration of, transfer of, or in exchange for or in lieu of, a
Global Security shall be a Global Security except as provided in the two
paragraphs immediately following.
If at any time the Depositary for any Securities of a series represented by
one or more Global Securities notifies the Company that it is unwilling or
unable to continue as Depositary for such Securities or if at any time the
Depositary for such Securities shall no longer be eligible to continue as
Depositary under Section 1.1 or ceases to be a clearing agency registered under
the Exchange Act, the Company shall appoint a successor Depositary with respect
to such Securities. If a successor Depositary for such Securities is not
appointed by the Company within 90 days after the Company receives such notice
or becomes aware of such ineligibility, the Company's election pursuant to
Section 3.1 that such Securities be represented by one or more Global Securities
shall no longer be effective and the Company and, if applicable, the Guarantors
will execute and the Trustee, upon receipt of a Company Order for the
authentication and delivery of Definitive Securities of such series, will
authenticate and deliver, Securities, with an endorsement of the Guarantee, if
applicable, executed by the Guarantors, of such series in definitive registered
form without coupons, in any authorized denominations, in an aggregate principal
amount equal to the principal amount of the Global Security or Securities
representing such Securities in exchange for such Global Security or Securities
registered in the names of such Persons as the Depositary shall direct.
The Company may at any time and in its sole discretion determine that the
Securities of any series issued in the form of one or more Global Securities
shall no longer be represented by a Global Security or Securities. In such event
the Company and, if applicable, the Guarantors will execute and the Trustee,
upon receipt of a Company Order for the authentication and delivery of the
Definitive Securities of such series, will authenticate and deliver, Securities,
with an endorsement of the Guarantee, if applicable, executed by the Guarantors,
of such series in definitive registered form without coupons, in any authorized
denominations, in an aggregate principal amount equal to the principal amount of
the Global Security or Securities representing such Securities in exchange for
such Global Security or Securities registered in the names of such Persons as
the Depositary shall direct.
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If specified by the Company pursuant to Section 3.1 with respect to
Securities represented by a Global Security, the Depositary for such Global
Security may surrender such Global Security in exchange in whole or in part for
Securities of the same series and tenor in definitive registered form on such
terms as are acceptable to the Company and such Depositary. Thereupon, the
Company and, if applicable, the Guarantors shall execute, and the Trustee, upon
receipt of a Company Order for the authentication and delivery of Securities in
definitive registered form, shall authenticate and deliver, without service
charge,
(1) to the Person specified by such Depositary a new Security or
Securities, with an endorsement of the Guarantee, if applicable, executed
by the Guarantors, of the same series and tenor, of any authorized
denominations as requested by such Person, in an aggregate principal amount
equal to and in exchange for such Person's beneficial interest in the
Global Security; and
(2) to such Depositary a new Global Security, with an endorsement of
the Guarantee, if applicable, executed by the Guarantors, in a denomination
equal to the difference, if any, between the principal amount of the
surrendered Global Security and the aggregate principal amount of
Securities authenticated and delivered pursuant to clause (1) above.
Every Person who takes or holds any beneficial interest in a Global Security agrees that:
(a) the Company, the Guarantors (if applicable) and the Trustee
may deal with the Depositary as sole owner of the Global Security and
as the authorized representative of such Person;
(b) such Person's rights in the Global Security shall be
exercised only through the Depositary and shall be limited to those
established by law and agreement between such Person and the
Depositary and/or direct and indirect participants of the Depositary;
(c) the Depositary and its participants make book-entry transfers
of beneficial ownership among, and receive and transmit distributions
of principal and interest on the Global Securities to, such Persons in
accordance with their own procedures; and
(d) none of the Company, the Guarantors (if applicable), the
Trustee, nor any agent of any of them will have any responsibility or
liability for any aspect of the records relating to or payments made
on account of beneficial ownership interests of a Global Security or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Section 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, together with, in
proper cases, such security or indemnity as may be required by the Company, the
Guarantors (if applicable) or the Trustee to save each of them and any agent of
any of them harmless, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a new Security, with an
endorsement of the Guarantee, if applicable, executed by the Guarantors, of the
same series and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company, the Guarantors (if applicable)
and the Trustee (i) evidence to their satisfaction of the destruction, loss or
theft of any Security and (ii) such security or indemnity as may be required by
them to save each of them and any agent of either of them harmless, then, in the
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absence of notice to the Company or the Trustee that such Security has been
acquired by a bona fide purchaser, the Company and, if applicable, the
Guarantors shall execute and upon its request the Trustee shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security,
with an endorsement of the Guarantee, if applicable, executed by the Guarantors,
of the same series and of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
In case any such mutilated, destroyed, lost or stolen Security has become
or is about to become due and payable, the Company in its discretion may,
instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the Company may
require the payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Trustee) connected therewith.
Every new Security of any series issued pursuant to this Section in lieu of
any destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company and, if applicable, the Guarantors,
whether or not the destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all the benefits of this
Indenture equally and proportionately with any and all other Securities of that
series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.
Section 3.7. Payment of Interest; Interest Rights Preserved.
Except as otherwise provided as contemplated by Section 3.1 with respect to
any series of Securities, interest on any Security which is payable, and is
punctually paid or duly provided for, on any Interest Payment Date shall be paid
to the Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular Record Date
for such interest.
Any interest on any Security of any series which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date (herein
called "Defaulted Interest") shall forthwith cease to be payable to the Holder
on the relevant Regular Record Date by virtue of having been such Holder, and
such Defaulted Interest may be paid by the Company, at its election in each
case, as provided in clause (1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities of such series (or their
respective Predecessor Securities) are registered at the close of business
on a Special Record Date for the payment of such Defaulted Interest, which
shall be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Defaulted Interest proposed to be paid
on each Security of such series and the date of the proposed payment, and
at the same time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in respect of such
Defaulted Interest or shall make arrangements satisfactory to the Trustee
for such deposit prior to the date of the proposed payment, such money when
deposited to be held in trust for the benefit of the Persons entitled to
such Defaulted Interest as in this clause provided. Thereupon, the Trustee
shall fix a Special Record Date for the payment of such Defaulted Interest
which shall be not more than 15 days and not less than 10 days prior to the
date of the proposed payment and not less than 10 days after the receipt by
the Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
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to be mailed, first-class postage prepaid, to each Holder of Securities of
such series at his address as it appears in the Security Register, not less
than 10 days prior to such Special Record Date. Notice of the proposed
payment of such Defaulted Interest and the Special Record Date therefor
having been so mailed, such Defaulted Interest shall be paid to the Persons
in whose names the Securities of such series (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Securities of any series in any other lawful manner not inconsistent with
the requirements of any securities exchange on which such Securities may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed payment pursuant
to this clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each Security delivered
under this Indenture upon registration of transfer of or in exchange for or in
lieu of any other Security shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Security.
Section 3.8. Persons Deemed Owners.
Except as otherwise provided as contemplated by Section 3.1 with respect to
any series of Securities, prior to due presentment of a Security for
registration of transfer, the Company, the Trustee and, if applicable, the
Guarantors and any agent thereof may treat the Person in whose name such
Security is registered as the owner of such Security for the purpose of
receiving payment of principal of and any premium and (subject to Sections 3.5
and 3.7) any interest on such Security and for all other purposes whatsoever,
whether or not such Security be overdue, and none of the Company, the Trustee
nor, if applicable, the Guarantors nor any agent of any of them shall be
affected by notice to the contrary.
No holder of any beneficial interest in any Global Security held on its
behalf by a Depositary shall have any rights under this Indenture with respect
to such Global Security, and such Depositary may be treated by the Company, the
Trustee, and, if applicable, the Guarantors and any agent of thereof as the
owner of such Global Security for all purposes whatsoever.
Section 3.9. Cancellation.
All Securities surrendered for payment, redemption, registration of
transfer or exchange or for credit against any sinking fund payment shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by it. The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and may
deliver to the Trustee (or to any other Person for delivery to the Trustee) for
cancellation any Securities previously authenticated hereunder which the Company
has not issued and sold, and all Securities so delivered shall be promptly
canceled by the Trustee. No Securities shall be authenticated in lieu of or in
exchange for any Securities canceled as provided in this Section, except as
expressly permitted by this Indenture. All canceled Securities held by the
Trustee shall be disposed of in accordance with its customary practices, and the
Trustee shall thereafter deliver to the Company a certificate with respect to
such disposition.
Section 3.10. Computation of Interest.
Except as otherwise specified as contemplated by Section 3.1 for Securities
of any series, interest on the Securities of each series shall be computed on
the basis of a year of twelve 30-day months.
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Section 3.11. CUSIP or CINS Numbers.
The Company in issuing the Securities may use "CUSIP" or "CINS" numbers (if
then generally in use, and in addition to the other identification numbers
printed on the Securities), and, if so, the Trustee shall use "CUSIP" or "CINS"
numbers in notices of redemption as a convenience to Holders; provided, however,
that any such notice may state that no representation is made as to the
correctness of such "CUSIP" or "CINS" numbers either as printed on the
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Securities,
and any such redemption shall not be affected by any defect in or omission of
such "CUSIP" or "CINS" numbers.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
Section 4.1. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect with respect to the
Securities of any series (except as to any surviving rights of registration of
transfer or exchange of Securities herein expressly provided for), and the
Trustee, upon Company Request and at the expense of the Company, shall execute
proper instruments acknowledging satisfaction and discharge of this Indenture
with respect to such Securities, when:
(1) either
(a) all such Securities theretofore authenticated and delivered
(other than (i) such Securities which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section
3.6, and (ii) such Securities for whose payment money has theretofore
been deposited in trust or segregated and held in trust by the Company
and thereafter repaid to the Company or discharged from such trust, as
provided in Section 1.3) have been delivered to the Trustee for
cancellation; or
(b) all such Securities not theretofore delivered to the Trustee
for cancellation
(1) have become due and payable, or
(2) will become due and payable at their Stated Maturity
within one year, or
(3) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice
of redemption by the Trustee in the name, and at the expense, of
the Company,
and the Company, in the case of (1), (2) or (3) above, has deposited
or caused to be deposited with the Trustee as trust funds in trust for
such purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal (and premium, if any) and
interest to the date of such deposit (in the case of Securities which
have become due and payable) or to the Stated Maturity or Redemption
Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums payable
hereunder by the Company with respect to such Securities; and
32
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
herein provided for relating to the satisfaction and discharge of this
Indenture with respect to such Securities have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture with respect to
the Securities of any series, (x) the obligations of the Company to the Trustee
under Section 6.7, the obligations of the Trustee to any Authenticating Agent
under Section 6.14 and the right of the Trustee to resign under Section 6.10
shall survive, and (y) if money shall have been deposited with the Trustee
pursuant to subclause (B) of clause (1) of this Section, the obligations of the
Company and the Trustee under Section 4.2, 6.6 and 10.2 and the last paragraph
of Section 10.3 shall survive.
Section 4.2. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 10.3, all
money deposited with the Trustee pursuant to Section 4.1 shall be held in
trust and applied by it, in accordance with the provisions of the
Securities and this Indenture, to the payment, either directly or through
any Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the Persons entitled thereto, of the
principal and any premium and interest for whose payment such money has
been deposited with the Trustee.
ARTICLE FIVE
REMEDIES
Section 5.1. Events of Default.
"Event of Default", wherever used herein with respect to Securities of any
series, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any interest upon any Security of that
series when it becomes due and payable, and continuance of such default for
a period of 30 days (whether or not such payment is prohibited by the
provisions of Article Fifteen hereof); or
(2) default in the payment of the principal of (or premium, if any,
on) any Security of that series at its Maturity (whether or not such
payment is prohibited by the provisions of Article Fifteen hereof); or
(3) default in the performance, or breach, of any covenant set forth
in Article X in this Indenture (other than a covenant a default in whose
performance or whose breach is elsewhere in this Section specifically dealt
with or which has expressly been included in this Indenture solely for the
benefit of series of Securities other than that series), and continuance of
such default or breach for a period of 90 days after there has been given,
by registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of that series a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or (4) default in the
performance, or breach, of any covenant in this Indenture (other than a
covenant in Article X or any other covenant a default in whose performance
33
or whose breach is elsewhere in this Section specifically dealt with or
which has expressly been included in this Indenture solely for the benefit
of series of Securities other than that series), and continuance of such
default or breach for a period of 180 days after there has been given, by
registered or certified mail, to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in principal amount
of the Outstanding Securities of that series a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "Notice of Default" hereunder; or
(5) the Company pursuant to or within the meaning of any Bankruptcy
Law (a) commences a voluntary case, (b) consents to the entry of any order
for relief against it in an involuntary case, (c) consents to the
appointment of a Custodian of it or for all or substantially all of its
property, or (d) makes a general assignment for the benefit of its
creditors; or
(6) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (a) is for relief against the Company in an
involuntary case, (b) appoints a Custodian of the Company or for all or
substantially all of its property, or (c) orders the liquidation of the
Company; and the order or decree remains unstayed and in effect for 90
consecutive days; or
(7) default in the deposit of any sinking fund payment when due; or
(8) any other Event of Default provided with respect to Securities of
that series in accordance with Section 3.1.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default with respect to Securities of any series at the time
Outstanding occurs and is continuing, then in every such case the Trustee or the
Holders of a specified percentage in aggregate principal amount of the
Outstanding Securities of that series may declare the principal amount (or, if
the Securities of that series are Original Issue Discount Securities, such
portion of the principal amount as may be specified in the terms of that series)
of all of the Securities of that series to be due and payable immediately, by a
notice in writing to the Company (and to the Trustee if given by Holders), and
upon any such declaration such principal amount (or specified amount) shall
become immediately due and payable. Notwithstanding the foregoing, if an Event
of Default specified in clause (5) or (6) of Section 5.1 occurs, the Securities
of any series at the time Outstanding shall be due and payable immediately
without further action or notice.
At any time after such a declaration of acceleration with respect to
Securities of any series has been made and before a judgment or decree for
payment of the money due has been obtained by the Trustee as hereinafter in this
Article Five provided, the Holders of a majority in principal amount of the
Outstanding Securities of that series, by written notice to the Company and the
Trustee, may rescind and annul such declaration and its consequences if:
(1) the Company or, if applicable, one or more of the Guarantors has
paid or deposited with the Trustee a sum sufficient to pay:
(a) all overdue interest on all Securities of that series,
(b) the principal of (and premium, if any, on) any Securities of
that series which have become due otherwise than by such declaration
of acceleration and any interest thereon at the rate or rates
prescribed therefor in such Securities,
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(c) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate or rates prescribed
therefor in such Securities, and
(d) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to Securities of that series,
other than the non-payment of the principal of Securities of that series
which have become due solely by such declaration of acceleration, have been
cured or waived as provided in Section 5.13.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Section 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
The Company covenants that if:
(1) default is made in the payment of any installment of interest on
any Security when such interest becomes due and payable and such default
continues for a period of 60 days (whether or not such payment is
prohibited by the provisions of Article Fifteen herof), or
(2) default is made in the payment of the principal of (or premium, if
any, on) any Security at the Maturity thereof (whether or not such payment
is prohibited by the provisions of Article Fifteen hereof),
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal and any premium and interest and, to the extent that
payment of such interest shall be legally enforceable, interest on any overdue
principal and any premium and on any overdue interest, at the rate or rates
prescribed therefor in such Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or, if applicable, the Guarantors or any other obligor upon
such Securities and collect the moneys adjudged or decreed to be payable in the
manner provided by law out of the property of the Company or, if applicable, the
Guarantors or any other obligor upon such Securities, wherever situated.
If an Event of Default with respect to Securities of any series occurs and
is continuing, the Trustee may in its discretion proceed to protect and enforce
its rights and the rights of the Holders of Securities of such series by such
appropriate judicial proceedings as the Trustee shall deem most effectual to
protect and enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.
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Section 5.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or, if applicable, any Guarantor or
any other obligor upon the Securities, their property or their creditors, the
Trustee (irrespective of whether the principal of the Securities shall then be
due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
or, if applicable, the Guarantors for the payment of overdue principal or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities
and to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel) and of the Holders allowed in such
judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
custodian, receiver, assignee, trustee, liquidator, sequestrator or other
similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, if the Trustee shall
consent to the making of such payments directly to the Holders, to pay to
the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any
other amounts due the Trustee under Section 6.7.
No provision of this Indenture shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, compromise, arrangement, adjustment or composition affecting the
Securities or, if applicable, the Guarantee or the rights of any Holder thereof
or to authorize the Trustee to vote in respect of the claim of any Holder in any
such proceeding; provided, however, that the Trustee may, on behalf of the
Holders, vote for the election of a trustee in bankruptcy or similar official
and be a member of a creditors' or other similar committee.
Section 5.5. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the Securities may
be prosecuted and enforced by the Trustee without the possession of any of the
Securities or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment shall, after provision
for the payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable benefit of
the Holders of the Securities in respect of which such judgment has been
recovered.
Section 5.6. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article Five shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal or any premium
or interest, upon presentation of the Securities and the notation thereon of the
payment if only partially paid and upon surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
6.7;
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SECOND: Subject to Article Fifteen, to the payment of the amounts then
due and unpaid for principal of and any premium and interest on the
Securities in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for principal
and any premium and interest, respectively; and
THIRD: The balance, if any, to the Company.
Section 5.7. Limitation on Suits.
No Holder of any Security of any series shall have any right to institute
any proceeding, judicial or otherwise, with respect to this Indenture
(including, if applicable, the Guarantee), or for the appointment of a receiver
or trustee, or for any other remedy hereunder, unless:
(1) such Holder has previously given written notice to the Trustee of
a continuing Event of Default with respect to the Securities of that
series;
(2) the Holders of not less than 25% in principal amount of the
Outstanding Securities of that series shall have made written request to
the Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(5) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
principal amount of the Outstanding Securities of that series;
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders, or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all such
Holders.
Section 5.8. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder of any
Security shall have the right, which is absolute and unconditional, to receive
payment of the principal of and any premium and (subject to Sections 3.5 and
3.7) interest on such Security on the Stated Maturity or Maturities expressed in
such Security (or, in the case of redemption, on the Redemption Date) and to
institute suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
Section 5.9. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every such case, subject to any determination in
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such proceeding, the Company, the Guarantors, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
Section 5.10. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Securities in the last paragraph of Section
3.6, no right or remedy herein conferred upon or reserved to the Trustee or to
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11. Delay or Omission Not Waiver.
To fullest extent permitted by applicable law, no delay or omission of the
Trustee or of any Holder of any Securities to exercise any right or remedy
accruing upon any Event of Default shall impair any such right or remedy or
constitute a waiver of any such Event of Default or an acquiescence therein.
Every right and remedy given by this Article Five or by law to the Trustee or to
the Holders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
Section 5.12. Control by Holders.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with respect
to the Securities of such series; provided, however, that:
(1) such direction shall not be in conflict with any rule of law or
with this Indenture;
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; and
(3) subject to the provisions of Section 6.1, the Trustee shall have
the right to decline to follow any such direction if the Trustee in good
faith shall determine that the proceeding so directed would involve the
Trustee in personal liability.
Section 5.13. Waiver of Past Defaults.
The Holders of not less than a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of all the
Securities of such series waive any past default hereunder with respect to such
series and its consequences, except:
(1) a continuing default in the payment of the principal of or any
premium or interest on any Security of such series, or
(2) a default in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected.
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Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture, but no such waiver shall extend to any subsequent or other
default or impair any right consequent thereon.
Section 5.14. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Security by his
acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant, other
than the Trustee, in such suit of an undertaking to pay the costs of such suit,
and that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but (1) the provisions of this Section 5.14 shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in principal amount of the Outstanding Securities of any series,
or to any suit instituted by any Holder for the enforcement of the payment of
the principal of (or premium, if any) or interest on any Security on or after
the Stated Maturity or Maturities expressed in such Security (or, in the case of
redemption, on or after the Redemption Date).
Section 5.15. Waiver of Stay or Extension Laws.
Each of the Company and the Guarantors covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and each of the
Company and the Guarantors (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Trustee, but will suffer and permit the execution of every such power as
though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
Section 6.1. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and
as are provided by the Trust Indenture Act, and, except for
implied covenants or obligations under the Trust Indenture Act,
no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates
or opinions furnished to the Trustee and conforming to the
requirements of this Indenture; but in the case of any such
certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee
shall be under a duty to examine the same to determine whether or
not they conform to the requirements of this Indenture.
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(b) In case an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it
by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to relieve
the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the
effect of Subsection (a) of this Section;
(2) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Trustee was negligent in ascertaining
the pertinent facts;
(3) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any series,
given pursuant to Section 5.12, relating to the time, method and
place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture with respect to the Securities of
such series; and
(4) no provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured to it.
(d) Whether or not therein expressly so provided, every provision
of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the
provisions of this Section.
Section 6.2. Notice of Defaults.
Within 90 days after the occurrence of any Default hereunder with respect
to the Securities of any series, the Trustee shall transmit by mail to all
Holders of Securities of such series, as their names and addresses appear in the
Security Register, notice of such Default hereunder known to the Trustee, unless
such Default shall have been cured or waived; provided, however, that, except in
the case of a Default in the payment of the principal of or any premium or
interest on any Security of such series or in the payment of any sinking fund
installment with respect to Securities of such series, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determine that the withholding of such
notice is in the interest of the Holders of Securities of such series; and,
provided, further, that in the case of any Default of the character specified in
Section 5.1(3) with respect to Securities of such series, no such notice to
Holders shall be given until at least 90 days after the occurrence thereof and
that in the case of any Default of the character specified in Section 5.1(4)
with respect to Securities of such series, no such notice to Holders shall be
given until at least 180 days after the occurrence thereof.
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Section 6.3. Certain Rights of Trustee.
Subject to the provisions of Section 6.1:
(a) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) any request or direction of the Company or a Guarantor
mentioned herein shall be sufficiently evidenced by a Company Request
or Company Order (other than delivery of any Security to the Trustee
for authentication and delivery pursuant to Section 3.3, which shall
be sufficiently evidenced as provided therein) and any resolution of
the Board of Directors may be sufficiently evidenced by a Board
Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence be herein specifically prescribed) shall be
entitled to receive and may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the advice of such
counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may
see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books,
records and premises of the Company, personally or by agent or
attorney;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through
agents or attorneys and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder and shall not be responsible
for the supervision of officers and employees of such agents or
attorneys;
(h) the Trustee may request that the Company and, if applicable,
the Guarantors deliver an Officer's Certificate setting forth the
names of individuals and/or titles of officers authorized at such time
41
to take specified actions pursuant to this Indenture, which Officer's
Certificate may be signed by any person authorized to sign an
Officer's Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded; and
(i) the Trustee shall be entitled to the rights and
protections afforded to the Trustee pursuant to this Article Six
in acting as a Paying Agent or Security Registrar hereunder.
Section 6.4. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the Trustee's
certificates of authentication, shall be taken as the statements of the Company
or, if applicable, the Guarantors, and the Trustee or any Authenticating Agent
assumes no responsibility for their correctness. Neither the Trustee nor any
Authenticating Agent makes any representations as to the validity or sufficiency
of this Indenture or of the Securities. The Trustee or any Authenticating Agent
shall not be accountable for the use or application by the Company of Securities
or the proceeds thereof.
Section 6.5. May Hold Securities.
The Trustee, any Authenticating Agent, any Paying Agent, any Security
Registrar or any other agent of the Company or, if applicable, any Guarantor, in
its individual or any other capacity, may become the owner or pledgee of
Securities and, subject to Sections 310(b) and 311 of the Trust Indenture Act
and Sections 6.8, 6.9 and 6.13, may otherwise deal with the Company or, if
applicable, the Guarantors with the same rights it would have if it were not
Trustee, Authenticating Agent, Paying Agent, Security Registrar or such other
agent.
Section 6.6. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Company or, if applicable, one or more of the
Guarantors.
Section 6.7. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust);
(2) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any provision
of this Indenture (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or bad
faith; and
(3) to indemnify each of the Trustee and its officers, directors,
agents and employees for, and to hold it harmless against, any loss,
liability or expense incurred without negligence or willful misconduct on
its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
42
expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
As security for the performance of the obligations of the Company under
this Section the Trustee shall have a lien prior to the Securities upon all
property and funds held or collected by the Trustee as such, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities.
Without limiting any rights available to the Trustee under applicable law,
when the Trustee incurs expenses or renders services in connection with an Event
of Default specified in Section 5.1(5) or Section 5.1(6), the expenses
(including the reasonable charges and expenses of its counsel) and the
compensation for the services of the Trustee are intended to constitute expenses
of administration under any applicable Bankruptcy Law.
The provisions of this Section 6.7 shall survive the satisfaction and
discharge of this Indenture and the defeasance of the Securities.
Section 6.8. Disqualification; Conflicting Interests.
Reference is made to Section 310(b) of the Trust Indenture Act. There shall
be excluded from the operation of Section 310(b)(1) of the Trust Indenture Act
this Indenture with respect to the Securities of more than one series.
Section 6.9. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having a combined capital and surplus
required by the Trust Indenture Act, subject to supervision or examination by
Federal or State authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. The
Trustee shall not be an obligor upon the Securities or an Affiliate thereof. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall resign immediately in the manner and with
the effect hereinafter specified in this Article Six.
Section 6.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective
until the acceptance of appointment by the successor Trustee in
accordance with the applicable requirements of Section 6.11.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee
required by Section 6.11 shall not have been delivered to the Trustee
within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities
of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series,
delivered to the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310(b) of
the Trust Indenture Act after written request therefor by the
43
Company or by any Holder who has been a bona fide Holder of a
Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 6.9
and shall fail to resign after written request therefor by the
Company or by any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or
of its property shall be appointed or any public officer shall
take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or
liquidation, then, in any such case, (i) the Company by a Board
Resolution may remove the Trustee with respect to all Securities,
or (ii) subject to Section 5.14, any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee with
respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for
any cause, with respect to the Securities of one or more series, the
Company, by a Board Resolution, shall promptly appoint a successor
Trustee or Trustees with respect to the Securities of that or those
series (it being understood that any such successor Trustee may be
appointed with respect to the Securities of one or more or all of such
series and that at any time there shall be only one Trustee with
respect to the Securities of any particular series) and shall comply
with the applicable requirements of Section 6.11. If, within one year
after such resignation, removal or incapability, or the occurrence of
such vacancy, a successor Trustee with respect to the Securities of
any series shall be appointed by Act of the Holders of a majority in
principal amount of the Outstanding Securities of such series
delivered to the Company and the retiring Trustee, the successor
Trustee so appointed shall, forthwith upon its acceptance of such
appointment in accordance with the applicable requirements of Section
6.11, become the successor Trustee with respect to the Securities of
such series and to that extent supersede the successor Trustee
appointed by the Company. If no successor Trustee with respect to the
Securities of any series shall have been so appointed by the Company
or the Holders and accepted appointment in the manner required by
Section 6.11, any Holder who has been a bona fide Holder of a Security
of such series for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee with respect
to the Securities of such series.
(f) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series
and each appointment of a successor Trustee with respect to the
Securities of any series to all Holders of Securities of such series
in the manner provided in Section 1.7. Each notice shall include the
name of the successor Trustee with respect to the Securities of such
series and the address of its Corporate Trust Office.
Section 6.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee
with respect to all Securities, every such successor Trustee so
appointed shall execute, acknowledge and
44
deliver to the Company, the Guarantors (if applicable) and to the
retiring Trustee an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Trustee shall
become effective and such successor Trustee, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
trusts and duties of the retiring Trustee; but, on the request of the
Company or, if applicable, any Guarantor or the successor Trustee,
such retiring Trustee shall, upon payment of its charges, execute and
deliver an instrument transferring to such successor Trustee all the
rights, powers and trusts of the retiring Trustee and shall duly
assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series,
the Company, the Guarantors (if applicable), the retiring Trustee and
each successor Trustee with respect to the Securities of one or more
series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which
(1) shall contain such provisions as shall be necessary or desirable
to transfer and confirm to, and to vest in, each successor Trustee all
the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series to which the
appointment of such successor Trustee relates, (2) if the retiring
Trustee is not retiring with respect to all Securities, shall contain
such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee
with respect to the Securities of that or those series as to which the
retiring Trustee is not retiring shall continue to be vested in the
retiring Trustee, and (3) shall add to or change any of the provisions
of this Indenture as shall be necessary to provide for or facilitate
the administration of the trusts hereunder by more than one Trustee,
it being understood that nothing herein or in such supplemental
indenture shall constitute such Trustees co-trustees of the same trust
and that each such Trustee shall be trustee of a trust or trusts
hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and
delivery of such supplemental indenture the resignation or removal of
the retiring Trustee shall become effective to the extent provided
therein and each such successor Trustee, without any further act, deed
or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of
that or those series to which the appointment of such successor
Trustee relates; but, on request of the Company, any Guarantor (if
applicable) or any successor Trustee, such retiring Trustee shall duly
assign, transfer and deliver to such successor Trustee all property
and money held by such retiring Trustee hereunder with respect to the
Securities of that or those series to which the appointment of such
successor Trustee relates.
(c) Upon request of any such successor Trustee, the Company and,
if applicable, the Guarantors shall execute any and all instruments
for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts referred to in
paragraph (a) or (b) of this Section, as the case may be.
45
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified
and eligible under this Article and the Trust Indenture Act.
Section 6.12. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article Six,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto. In case any Securities shall have been authenticated,
but not delivered, by the Trustee then in office, any successor by merger,
conversion or consolidation to such authenticating Trustee may adopt such
authentication and deliver the Securities so authenticated with the same effect
as if such successor Trustee had itself authenticated such Securities.
Section 6.13. Preferential Collection of Claims Against Company.
Reference is made to Section 311 of the Trust Indenture Act. For purposes
of Section 311(b) of the Trust Indenture Act,
(1) the term "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after
delivery of the goods or securities in currency or in checks or other
orders drawn upon banks or bankers and payable upon demand;
(2) the term "self-liquidating paper" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company or, if applicable, any Guarantor for the purpose of
financing the purchase, processing, manufacturing, shipment, storage or
sale of goods, wares or merchandise and which is secured by documents
evidencing title to, possession of, or a lien upon, the goods, wares or
merchandise or the receivables or proceeds arising from the sale of the
goods, wares or merchandise previously constituting the security, provided
the security is received by the Trustee simultaneously with the creation of
the creditor relationship with the Company or, if applicable, such
Guarantor arising from the making, drawing, negotiating or incurring of the
draft, bill of exchange, acceptance or obligation.
Section 6.14. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with respect to
one or more series of Securities which shall be authorized to act on behalf of
the Trustee to authenticate Securities of such series issued upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
3.6, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $100,000,000 and subject
to supervision or examination by Federal or State authority. If such
Authenticating Agent publishes reports of condition at least annually, pursuant
to law or to the requirements of said supervising or examining
46
authority, then for the purposes of this Section, the combined capital and
surplus of such Authenticating Agent shall be deemed to be its combined capital
and surplus as set forth in its most recent report of condition so published. If
at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise eligible under this Section, without the execution or filing of any
paper or any further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to the Company and, if applicable, the Guarantors.
The Trustee may at any time terminate the agency of an Authenticating Agent by
giving written notice thereof to such Authenticating Agent and to the Company
and, if applicable, the Guarantors. Upon receiving such a notice of resignation
or upon such a termination, or in case at any time such Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
the Trustee may appoint a successor Authenticating Agent which shall be
acceptable to the Company and, if applicable, the Guarantors and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders of Securities of the series with respect to which such Authenticating
Agent will serve, as their names and addresses appear in the Security Register.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
Except with respect to an Authenticating Agent appointed at the request of
the Company or, if applicable, the Guarantors, the Trustee agrees to pay to each
Authenticating Agent from time to time reasonable compensation for its services
under this Section 6.14, and the Trustee shall be entitled to be reimbursed by
the Company or, if applicable, the Guarantors for such payments, subject to the
provisions of Section 6.7.
If an appointment with respect to one or more series is made pursuant to
this Section 6.14, the Securities of such series may have endorsed thereon, in
addition to the Trustee's certificate of authentication, an alternate
certificate of authentication in the following form:
This is one of the Securities of the series designated therein referred to
in the within-mentioned Indenture.
[ ],
As Trustee
By: ___________________________________
As Authenticating Agent
By: ___________________________________
Authorized Officer
47
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
Section 7.1. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee:
(a) semi-annually, not more than 15 days after each Regular
Record Date for a series of Securities, a list for such series of
Securities, in such form as the Trustee may reasonably require, of the
names and addresses of the Holders of Securities of such series as of
such Regular Record Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished; provided, however, that if
and so long as the Trustee shall be the Security Registrar, no such
list need be furnished with respect to such series of Securities.
Section 7.2. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained
in the most recent list furnished to the Trustee as provided in
Section 7.1 and the names and addresses of Holders received by the
Trustee in its capacity as Security Registrar. The Trustee may destroy
any list furnished to it as provided in Section 7.1 upon receipt of a
new list so furnished.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Trustee, and furnish to the Trustee reasonable
proof that each such applicant has owned a Security for a period of at
least six months preceding the date of such application, and such
application states that the applicants desire to communicate with
other Holders with respect to their rights under this Indenture or
under the Securities and is accompanied by a copy of the form of proxy
or other communication which such applicants propose to transmit, then
the Trustee shall, within five business days after the receipt of such
application, at its election, either
(i) afford such applicants access to the information
preserved at the time by the Trustee in accordance with Section
7.2(a), or
(ii) inform such applicants as to the approximate number of
Holders whose names and addresses appear in the information
preserved at the time by the Trustee in accordance with Section
7.2(a) , and as to the approximate cost of mailing to such
Holders the form of proxy or other communication, if any,
specified in such application.
If the Trustee shall elect not to afford such applicants access
to such information, the Trustee shall, upon the written request of
such applicants, mail to each Holder whose name and address appear in
the information preserved at the time by the Trustee in accordance
with Section 7.2(a) a copy of the form of proxy or other communication
which is specified in such request, with reasonable promptness after a
tender to the Trustee of the material to be mailed and of payment, or
provision for the payment, of the reasonable expenses of mailing,
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unless within five days after such tender the Trustee shall mail to
such applicants and file with the Commission, together with a copy of
the material to be mailed, a written statement to the effect that, in
the opinion of the Trustee, such mailing would be contrary to the best
interest of the Holders or would be in violation of applicable law.
Such written statement shall specify the basis of such opinion. If the
Commission, after opportunity for a hearing upon the objections
specified in the written statement so filed, shall enter an order
refusing to sustain any of such objections or if, after the entry of
an order sustaining one or more of such objections, the Commission
shall find, after notice and opportunity for hearing, that all the
objections so sustained have been met and shall enter an order so
declaring, the Trustee shall mail copies of such material to all such
Holders with reasonable promptness after the entry of such order and
the renewal of such tender; otherwise the Trustee shall be relieved of
any obligation or duty to such applicants respecting their
application.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company, the Guarantors (if applicable) and the
Trustee that none of the Company, the Guarantors (if applicable) nor
the Trustee nor any agent of any of them shall be held accountable by
reason of the disclosure of any such information as to the names and
addresses of the Holders in accordance with Section 7.2(b), regardless
of the source from which such information was derived, and that the
Trustee shall not be held accountable by reason of mailing any
material pursuant to a request made under Section 7.2(b).
Section 7.3. Reports by Trustee.
Any Trustee's report required pursuant to Section 313(a) of the Trust
Indenture Act shall be dated as of May 15, and shall be transmitted within 60
days after May 15 of each year (but in all events at intervals of not more than
12 months), commencing with the year 2003, by mail to all Holders, as their
names and addresses appear in the Security Register. A copy of each such report
shall, at the time of such transmission to Holders, be filed by the Trustee with
each stock exchange upon which any Securities are listed, with the Commission
and with the Company. The Company will notify the Trustee when any Securities
are listed on any stock exchange.
Section 7.4. Reports by Company.
The Company shall:
(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission, copies of the annual
reports and of the information, documents and other reports (or copies
of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Company may
be required to file with the Commission pursuant to Section 13 or
Section 15(d) of the Exchange Act; or, if the Company is not required
to file information, documents or reports pursuant to either of said
Sections, then it shall file with the Trustee and the Commission, in
accordance with rules and regulations prescribed from time to time by
the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of
the Exchange Act in respect of a security listed and registered on a
national securities exchange as may be prescribed from time to time in
such rules and regulations;
49
(b) file with the Trustee and the Commission, in accordance with
rules and regulations prescribed from time to time by the Commission,
such additional information, documents and reports with respect to
compliance by the Company with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(c) transmit by mail to all Holders, as their names and addresses
appear in the Security Register, within 30 days after the filing
thereof with the Trustee, such summaries of any information, documents
and reports required to be filed by the Company pursuant to clauses
(a) and (b) of this Section as may be required by rules and
regulations prescribed from time to time by the Commission.
ARTICLE EIGHT
CONSOLIDATION, AMALGAMATION, MERGER AND SALE
Section 8.1. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not consolidate or merge with or into any other Person or
sell, convey, transfer, lease or otherwise dispose of all or substantially all
of the properties and assets of the Company and, if applicable, the Guarantors
on a consolidated basis to any other Person unless:
(1) the Person formed by such consolidation or merger (if other than
the Company) or the Person which acquires by sale, conveyance, transfer or
other disposition, or which leases, such properties and assets shall be a
corporation and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form satisfactory to the
Trustee, the due and punctual payment of the principal of and any premium
and interest on all the Securities and the performance or observance of
every other covenant of this Indenture on the part of the Company to be
performed or observed and shall have expressly provided for conversion
rights in respect of any series of Outstanding Securities with conversion
rights;
(2) immediately after giving effect to such transaction, no Event of
Default, and no event which, after notice or lapse of time or both, would
become an Event of Default, shall have occurred and be continuing; and
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that such consolidation,
amalgamation, merger, conveyance, sale, transfer or lease and such
supplemental indenture, if any, comply with this Article Eight and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
Section 8.2. Successor Substituted.
Upon any consolidation or merger of the Company with or into any other
Person or any sale, conveyance, transfer, lease or other disposition of all or
substantially all of the properties and assets of the Company and, if
applicable, the Guarantors on a consolidated basis in accordance with Section
8.1, the successor or resulting Person formed by or resulting upon such
consolidation or merger (if other than the Company) or to which such sale,
conveyance, transfer, lease or other disposition is made shall succeed to, and
be substituted for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor Person had been named
as the Company herein, and thereafter, except in the case of a lease, the
predecessor Company and each of the Guarantors shall be relieved of all
obligations and covenants under this Indenture and the Securities.
50
ARTICLE NINE
SUPPLEMENTAL INDENTURES
Section 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, the Guarantors and the Trustee, at any time and from time to time,
may enter into one or more indentures supplemental hereto, in form satisfactory
to the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company and
the assumption by any such successor of the covenants of the Company herein
and in the Securities; or
(2) to evidence the succession of another Person to the Guarantor and
the assumption by any such successor of the Guarantee of the Guarantor
herein and, to the extent applicable, endorsed upon any Securities; or
(3) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as the Company shall consider to be
appropriate for the benefit of the Holders of all or any series of
Securities (and if such covenants, restrictions, conditions or provisions
are to be for the benefit of less than all series of Securities, stating
that such covenants are expressly being included solely for the benefit of
such series) or to surrender any right or power herein conferred upon the
Company and to make the occurrence, or the occurrence and continuance, of a
Default in any such additional covenants, restrictions, conditions or
provisions an Event of Default permitting the enforcement of all or any of
the several remedies provided in this Indenture as herein set forth;
provided, that in respect of any such additional covenant, restriction,
condition or provision such supplemental indenture may provide for a
particular period of grace after default (which period may be shorter or
longer than that allowed in the case of other defaults) or may provide for
an immediate enforcement upon such an Event of Default or may limit the
remedies available to the Trustee upon such an Event of Default or may
limit the right of the Holders of a majority in aggregate principal amount
of the Securities of such series to waive such an Event of Default; or
(4) to add any additional Defaults or Events of Default in respect of
all or any series of Securities; or
(5) to add to, change or eliminate any of the provisions of this
Indenture to such extent as shall be necessary to permit or facilitate the
issuance of Securities in bearer form, registrable or not registrable as to
principal, and with or without interest coupons; or
(6) to change or eliminate any of the provisions of this Indenture,
provided that any such change or elimination shall become effective only
when there is no Security Outstanding of any series created prior to the
execution of such supplemental indenture which is entitled to the benefit
of such provision; or
(7) to secure the Securities of any series; or
(8) to establish the form or terms of Securities of any series as
permitted by Sections 2.1 and 3.1, including to reopen any series of any
Securities as permitted under Section 3.1; or
51
(9) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Securities of one or
more series and to add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of
the trusts hereunder by more than one Trustee, pursuant to the requirements
of Section 6.11(b); or
(10) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, to comply
with any applicable mandatory provision of law or to make any other
provisions with respect to matters or questions arising under this
Indenture which shall not adversely affect the interests of the Holders of
Securities of any series in any material respect; or
(11) to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the Trust Indenture Act or under any similar federal
statute subsequently enacted, and to add to this Indenture such other
provisions as may be expressly required under the Trust Indenture Act.
The Trustee is hereby authorized to join with the Company and any Guarantor
in the execution of any such supplemental indenture, to make any further
appropriate agreements and stipulations which may be therein contained and to
accept the conveyance, transfer, assignment, mortgage, charge or pledge of any
property thereunder, but the Trustee shall not be obligated to enter into any
such supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Section 9.2. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in aggregate
principal amount of the Outstanding Securities of all series affected by such
supplemental indenture, by Act of said Holders delivered to the Company, the
Guarantors and the Trustee, the Company, when authorized by a Board Resolution,
the Guarantor and the Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Holders of Securities of such series
under this Indenture; provided, however, that no such supplemental indenture
shall, without the consent of the Holder of each Outstanding Security affected
thereby,
(1) change the Stated Maturity of the principal of, or any installment
of principal of or interest on, any Security, or reduce the principal
amount thereof or the rate of interest thereon or any premium payable upon
the redemption thereof, or reduce the amount of the principal of an
Original Issue Discount Security that would be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section
5.2, or change any Place of Payment where, or the coin or currency in
which, any Security or any premium or the interest thereon is payable, or
impair the right to institute suit for the enforcement of any such payment
on or after the Stated Maturity thereof (or, in the case of redemption, on
or after the Redemption Date), or
(2) reduce the percentage in principal amount of the Outstanding
Securities of any series, the consent of whose Holders is required for any
such supplemental indenture, or the consent of whose Holders is required
for any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section 9.2, Section 5.13 or
Section 10.6, except to increase any such percentage or to provide that
certain other provisions of this Indenture
52
cannot be modified or waived without the consent of the Holder of each
Outstanding Security affected thereby, provided, however, that this clause
(3) shall not be deemed to require the consent of any Holder with respect
to changes in the references to "the Trustee" and concomitant changes in
this Section, or the deletion of this proviso, in accordance with the
requirements of Sections 6.11(b) and 9.1(9).
A supplemental indenture which changes or eliminates any covenant or other
provision of this Indenture which has expressly been included solely for the
benefit of one or more particular series of Securities, or which modifies the
rights of the Holders of Securities of such series with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series.
It shall not be necessary for any Act of Holders under this Section 9.2 to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 9.3. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 6.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Section 9.4. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this Article Nine,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Securities theretofore or thereafter authenticated and delivered hereunder
shall be bound thereby.
Section 9.5. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article Nine shall
conform to the requirements of the Trust Indenture Act as then in effect.
Section 9.6. Reference in Securities to Supplemental Indentures.
Securities of any series authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may, and shall if
required by the Trustee, bear a notation in form approved by the Trustee as to
any matter provided for in such supplemental indenture. If the Company shall so
determine, new Securities of any series so modified as to conform, in the
opinion of the Trustee and the Company, to any such supplemental indenture may
be prepared and executed by the Company and authenticated and delivered by the
Trustee in exchange for Outstanding Securities of such series.
53
ARTICLE TEN
COVENANTS
Section 10.1. Payment of Principal, Premium and Interest.
The Company covenants and agrees for the benefit of each series of
Securities that it will duly and punctually pay the principal of and any premium
and interest on the Securities of that series in accordance with the terms of
the Securities and this Indenture.
Section 10.2. Maintenance of Office or Agency.
The Company will maintain an office or agency where Securities of that
series may be presented or surrendered for payment, where Securities of that
series may be surrendered for registration of transfer or exchange and where
notices and demands to or upon the Company in respect of the Securities of that
series and this Indenture may be served. The Company will give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other offices
or agencies where the Securities of one or more series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to the Trustee of any
such designation or rescission and of any change in the location of any such
other office or agency.
Except as otherwise specified with respect to a series of Securities as
contemplated by Section 301, the Company hereby initially designates as the
Place of Payment for each series of Securities The City and State of New York,
and initially appoints the Trustee at its Corporate Trust Office as the
Company's office or agency for each such purpose in such city.
Section 10.3. Money for Securities Payments to Be Held in Trust.
If the Company shall at any time act as its own Paying Agent, with respect
to any series of Securities, it will, on or before each due date of the
principal of and any premium or interest on any of the Securities of that
series, segregate and hold in trust for the benefit of the Persons entitled
thereto a sum sufficient to pay the principal and any premium and interest so
becoming due until such sums shall be paid to such Persons or otherwise disposed
of as herein provided and will promptly notify the Trustee of its action or
failure so to act.
Whenever the Company shall have one or more Paying Agents for any series of
Securities, it will, prior to each due date of the principal of and any premium
or interest on any Securities of that series, deposit with a Paying Agent a sum
sufficient to pay the principal and any premium or interest so becoming due,
such sum to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such Paying Agent is the Trustee)
the Company will promptly notify the Trustee of its action or failure so to act.
For purposes of this Section 10.3, should a due date for principal of and any
premium or interest on, or sinking fund payment with respect to any series of
Securities not be on a Business Day, such payment shall be due on the next
Business Day without any interest for the period from the due date until such
Business Day.
54
The Company will cause each Paying Agent for any series of Securities other
than the Trustee to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the provisions of
this Section, that such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of and
any premium or interest on Securities of that series in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to
such Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any Default by the Company (or any
other obligor upon the Securities of that series) in the making of any
payment of principal and any premium or interest on the Securities of that
series; and
(3) at any time during the continuance of any such Default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so
held in trust by such Paying Agent.
The Company and, if applicable, the Guarantors may at any time, for the
purpose of obtaining the satisfaction and discharge of this Indenture or for any
other purpose, pay, or by Company Order direct any Paying Agent to pay, to the
Trustee all sums held in trust by the Company or such Paying Agent, such sums to
be held by the Trustee upon the same trusts as those upon which such sums were
held by the Company or such Paying Agent; and, upon such payment by any Paying
Agent to the Trustee, such Paying Agent shall be released from all further
liability with respect to such money.
Subject to any applicable escheat or abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of and any premium or interest on any
Security of any series and remaining unclaimed for one year after such principal
and any premium or interest has become due and payable shall be paid to the
Company on Company Request, or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified therein, which shall not be less than 30 days from
the date of such publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
Section 10.4. Existence.
Subject to Article Eight, the Company and, if any Securities of a series to
which Article Fourteen has been made applicable are Outstanding, each Guarantor
will do or cause to be done all things necessary to preserve and keep in full
force and effect its existence, rights (charter and statutory) and franchises;
provided, however, that the Company and, if applicable, each Guarantor shall not
be required to preserve any such right or franchise if the Board of Directors
shall determine that the preservation thereof is no longer desirable in the
conduct of the business of the Company or such Guarantor, as the case may be.
Section 10.5. Statement by Officers as to Default.
Annually, within 150 days after the close of each fiscal year beginning
with the first fiscal year during which one or more series of Securities are
Outstanding, the Company and, if any Securities of a series to which Article
55
Fourteen has been made applicable are Outstanding, each Guarantor will deliver
to the Trustee a brief certificate (which need not include the statements set
forth in Section 1.3) from the principal executive officer, principal financial
officer or principal accounting officer of the Company and, if applicable, such
Guarantor as to his or her knowledge of the Company's or such Guarantor's, as
the case may be, compliance (without regard to any period of grace or
requirement of notice provided herein) with all conditions and covenants under
the Indenture and, if the Company or such Guarantor, as the case may be, shall
be in Default, specifying all such Defaults and the nature and status thereof of
which such officer has knowledge.
Section 10.6. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Section 10.4 with respect to the Securities
of any series if before the time for such compliance the Holders of at least a
majority in aggregate principal amount of the Outstanding Securities of all
affected series (voting as one class) shall, by Act of such Holders, either
waive such compliance in such instance or generally waive compliance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect.
A waiver which changes or eliminates any term, provision or condition of
this Indenture which has expressly been included solely for the benefit of one
or more particular series of Securities, or which modifies the rights of the
Holders of Securities of such series with respect to such term, provision or
condition, shall be deemed not to affect the rights under this Indenture of the
Holders of Securities of any other series.
Section 10.7. Additional Amounts.
If the Securities of a series provide for the payment of additional amounts
(as provided in Section 3.1(15)), at least 10 days prior to the first Interest
Payment Date with respect to that series of Securities and at least 10 days
prior to each date of payment of principal of, premium, if any, or interest on
the Securities of that series if there has been a change with respect to the
matters set forth in the below-mentioned Officer's Certificate, the Company
shall furnish to the Trustee and the principal Paying Agent, if other than the
Trustee, an Officer's Certificate instructing the Trustee and such Paying Agent
whether such payment of principal of, premium, if any, or interest on the
Securities of that series shall be made to holders of the Securities of that
series without withholding or deduction for or on account of any tax, assessment
or other governmental charge described in the Securities of that series. If any
such withholding or deduction shall be required, then such Officer's Certificate
shall specify by country the amount, if any, required to be withheld or deducted
on such payments to such holders and shall certify the fact that additional
amounts will be payable and the amounts so payable to each holder, and the
Company shall pay to the Trustee or such Paying Agent the additional amounts
required to be paid by this Section. The Company covenants to indemnify the
Trustee and any Paying Agent for, and to hold them harmless against, any loss,
liability or expense reasonably incurred without negligence or bad faith on
their part arising out of or in connection with actions taken or omitted by any
of them in reliance on any Officer's Certificate furnished pursuant to this
Section 10.7.
Whenever in this Indenture there is mentioned, in any context, the payment
of the principal of or any premium, interest or any other amounts on, or in
respect of, any Securities of any series, such mention shall be deemed to
include mention of the payment of additional amounts provided by the terms of
such series established hereby or pursuant hereto to the extent that, in such
context, additional amounts are, were or would be payable in respect thereof
pursuant to such terms, and express mention of the payment of additional amounts
56
(if applicable) in any provision hereof shall not be construed as excluding the
payment of additional amounts in those provisions hereof where such express
mention is not made.
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
Section 11.1. Applicability of Article.
Securities of any series which are redeemable before their Stated Maturity
shall be redeemable in accordance with their terms and (except as otherwise
specified as contemplated by Section 3.1 for Securities of any series) in
accordance with this Article Eleven.
Section 11.2. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities shall be evidenced by
a Board Resolution. In case of any redemption at the election of the Company of
less than all the Securities of any series, the Company shall, at least 15 days
prior to the last date for the giving of notice of such redemption (unless a
shorter notice shall be satisfactory to the Trustee), notify the Trustee of such
Redemption Date and of the principal amount of Securities of such series to be
redeemed and, if applicable, of the tenor of the Securities to be redeemed. In
the case of any redemption of Securities (a) prior to the expiration of any
restriction on such redemption provided in the terms of such Securities or
elsewhere in this Indenture or (b) pursuant to an election of the Company that
is subject to a condition specified in the terms of the Securities of the series
to be redeemed, the Company shall furnish the Trustee with an Officer's
Certificate evidencing compliance with such restriction or condition.
Section 11.3. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities of any series are to be redeemed (unless
all of the Securities of such series and of a specified tenor are to be
redeemed), the particular Securities to be redeemed shall be selected not more
than 45 days prior to the Redemption Date by the Trustee, from the Outstanding
Securities of such series not previously called for redemption, by such method
as the Trustee shall deem fair and appropriate and which may provide for the
selection for redemption of portions (equal to the minimum authorized
denomination for Securities of that series or any integral multiple thereof) of
the principal amount of Securities of such series of a denomination larger than
the minimum authorized denomination for Securities of that series.
The Trustee shall promptly notify the Company in writing of the Securities
selected for redemption and, in the case of any Securities selected for partial
redemption, the principal amount thereof to be redeemed. If the Securities of
any series to be redeemed consist of Securities having different dates on which
the principal is payable or different rates of interest, or different methods by
which interest may be determined or have any other different tenor or terms,
then the Company may, by written notice to the Trustee, direct that the
Securities of such series to be redeemed shall be selected from among the groups
of such Securities having specified tenor or terms and the Trustee shall
thereafter select the particular Securities to be redeemed in the manner set
forth in the preceding paragraph from among the group of such Securities so
specified.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to the redemption of Securities shall relate, in the
case of any Securities redeemed or to be redeemed only in part, to the portion
of the principal amount of such Securities which has been or is to be redeemed.
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Section 11.4. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date, to
each Holder of Securities to be redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price, or if not then ascertainable, the manner of
calculation thereof,
(3) if less than all the Outstanding Securities of any series are to
be redeemed, the identification (and, in the case of partial redemption,
the principal amounts) of the particular Securities to be redeemed,
(4) that on the Redemption Date the Redemption Price will become due
and payable upon each such Security to be redeemed and, if applicable, that
interest thereon will cease to accrue on and after said date,
(5) the place or places where such Securities are to be surrendered
for payment of the Redemption Price, and
(6) that the redemption is for a sinking fund, if such is the case.
Notice of redemption of Securities to be redeemed at the election of the Company
shall be given by the Company or, at the Company's request, by the Trustee in
the name and at the expense of the Company.
Section 11.5. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the Trustee or
with a Paying Agent (or, if the Company is acting as its own Paying Agent,
segregate and hold in trust as provided in Section 10.3) an amount of money
sufficient to pay the Redemption Price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Securities which
are to be redeemed on that date.
Section 11.6. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the Securities so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in the payment of the Redemption Price and accrued
interest) such Securities shall cease to bear interest. Upon surrender of any
such Security for redemption in accordance with said notice, such Security shall
be paid by the Company at the Redemption Price, together with accrued interest
to the Redemption Date; provided, however, that unless otherwise specified with
respect to Securities of any series as contemplated in Section 3.1, installments
of interest whose Stated Maturity is on or prior to the Redemption Date shall be
payable to the Holders of such Securities, or one or more Predecessor
Securities, registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 3.7.
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If any Security called for redemption shall not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) shall, until paid,
bear interest from the Redemption Date at the rate prescribed therefor in the
Security.
Section 11.7. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be surrendered at a
Place of Payment therefor (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of the same series and tenor, of any
authorized denomination as requested by such Holder, in aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered.
ARTICLE TWELVE
SINKING FUNDS
Section 12.1. Applicability of Article.
The provisions of this Article Twelve shall be applicable to any sinking
fund for the retirement of Securities of a series except as otherwise specified
as contemplated by Section 3.1 for Securities of such series.
The minimum amount of any sinking fund payment provided for by the terms of
Securities of any series is herein referred to as a "mandatory sinking fund
payment", and any payment in excess of such minimum amount provided for by the
terms of Securities of any series is herein referred to as an "optional sinking
fund payment." If provided for by the terms of Securities of any series, the
cash amount of any sinking fund payment may be subject to reduction as provided
in Section 12.2. Each sinking fund payment shall be applied to the redemption of
Securities of any series as provided for by the terms of Securities of such
series.
Section 12.2. Satisfaction of Sinking Fund Payments with Securities.
The Company (a) may deliver Outstanding Securities of a series (other than
any previously called for redemption) and (b) may apply as a credit Securities
of a series which have been redeemed either at the election of the Company
pursuant to the terms of such Securities or through the application of permitted
optional sinking fund payments pursuant to the terms of such Securities, in each
case in satisfaction of all or any part of any sinking fund payment with respect
to the Securities of such series required to be made pursuant to the terms of
such Securities as provided for by the terms of such series; provided that such
Securities have not been previously so credited. Such Securities shall be
received and credited for such purpose by the Trustee at the Redemption Price
specified in such Securities for redemption through operation of the sinking
fund and the amount of such sinking fund payment shall be reduced accordingly.
Section 12.3. Redemption of Securities for Sinking Fund.
Not less than 45 days prior to each sinking fund payment date for any
series of Securities (unless a shorter period shall be satisfactory to the
Trustee), the Company will deliver to the Trustee an Officer's Certificate
specifying the amount of the next ensuing sinking fund payment for that series
pursuant to the terms of that series, the portion thereof, if any, which is to
be satisfied by payment of cash and the portion thereof, if any, which is to be
59
satisfied by delivering and crediting Securities of that series pursuant to
Section 12.2 and stating the basis for such credit and that such Securities have
not been previously so credited, and will also deliver to the Trustee any
Securities to be so delivered. Not less than 30 days before each such sinking
fund payment date the Trustee shall select the Securities to be redeemed upon
such sinking fund payment date in the manner specified in Section 11.3 and cause
notice of the redemption thereof to be given in the name of and at the expense
of the Company in the manner provided in Section 11.4. Such notice having been
duly given, the redemption of such Securities shall be made upon the terms and
in the manner stated in Sections 11.6 and 11.7.
ARTICLE THIRTEEN
DEFEASANCE
Section 13.1. Applicability of Article.
The provisions of this Article shall be applicable to each series of
Securities except as otherwise specified as contemplated by Section 3.1 for
Securities of such series.
Section 13.2. Legal Defeasance.
In addition to discharge of the Indenture pursuant to Section 4.1, the
Company shall be deemed to have paid and discharged the entire indebtedness on
all the Securities of such a series on the 91st day after the date of the
deposit referred to in clause (1) below (and the Trustee, at the expense of the
Company, shall upon a Company Request execute proper instruments acknowledging
same), and the provisions of this Indenture with respect to the Securities of
such series shall no longer be in effect, except for the following which shall
survive until otherwise terminated or discharged hereunder: (A) the rights of
Holders of Outstanding Securities of such series to receive, solely from the
trust fund described in Section 13.4 and as more fully set forth in such
Section, payments in respect of the principal of and any premium and interest on
such Securities when such payments are due, (B) the Company's obligations with
respect to such Securities under Sections 3.4, 3.5, 3.6, 10.2 and 10.3, (C) the
rights, powers, trusts, duties, and immunities of the Trustee hereunder and (D)
this Article Thirteen, if the conditions set forth below are satisfied
(hereinafter, "defeasance"):
(1) The Company has irrevocably deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
6.9 who shall agree to comply with the provisions of this Article Thirteen
applicable to it) as trust funds in trust for the purposes of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of such series (i)
cash in an amount, or (ii) in the case of any series of Securities the
payments on which may only be made in legal coin or currency of the United
States, U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
cash in an amount, or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge (a) the principal of and any premium and interest on and
each installment of principal of and any premium and interest on the
Outstanding Securities of such series on the Stated Maturity of such
principal or installment of principal or interest, as the case may be, or
on any Redemption Date established pursuant to clause (3) below, and (b)
any mandatory sinking fund or analogous payments on the dates on which such
payments are due and payable in accordance with the terms of the Indenture
and the Securities of such series;
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(2) The Company has delivered to the Trustee an Opinion of Counsel
based on the fact that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (b) since the date
hereof, there has been a change in the applicable federal income tax law,
in either case to the effect that, and such opinion shall confirm that, the
holders of the Securities of such series will not recognize income, gain or
loss for federal income tax purposes as a result of such deposit and
defeasance and will be subject to federal income tax on the same amount and
in the same manner and at the same times, as would have been the case if
such deposit and defeasance had not occurred;
(3) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments),
notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made;
(4) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(5) Such defeasance shall be effected in compliance with any
additional terms, conditions or limitations which may be imposed on the
Company in connection therewith pursuant to Section 3.1; and
(6) The Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
provided for relating to the defeasance contemplated by this provision have
been complied with.
For this purpose, such defeasance means that the Company, the Guarantors (if
applicable) and any other obligor upon the Securities of such series shall be
deemed to have paid and discharged the entire debt represented by the Securities
of such series, which shall thereafter be deemed to be "Outstanding" only for
the purposes of Section 13.4 and the rights and obligations referred to in
clauses (A) through (D), inclusive, of the first paragraph of this Section 13.2,
and to have satisfied all its other obligations under the Securities of such
series and this Indenture insofar as the Securities of such series are
concerned.
Notwithstanding the foregoing, if an Event of Default specified in
Subsection 5.1(5) or 5.1(6), or an event which with lapse of time would become
such an Event of Default, shall occur during the period ending on the 91st day
after the date of the deposit referred to in clause (1) or, if longer, ending on
the day following the expiration of the longest preference period applicable to
the Company in respect of such deposit, then, effective upon such occurrence,
the defeasance pursuant to this Section 13.2 and such deposit shall be rescinded
and annulled, and the Company, the Guarantors (if applicable), the Trustee and
the Holders of the Securities of such series shall be restored to their former
positions.
Section 13.3. Covenant Defeasance.
The Company, the Guarantors (if applicable) and any other obligor, if any,
shall be released from their respective obligations under Sections 7.4, 8.1 and
10.4 with respect to the Securities of any series on and after the date the
conditions set forth below are satisfied (hereinafter, "covenant defeasance"),
and the Securities of such series shall thereafter be deemed to be not
"Outstanding" for the purposes of any request, demand, authorization, direction,
notice, waiver, consent or declaration or other action or Act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed Outstanding for all other purposes hereunder. For this
purpose, such covenant defeasance means that, with respect to the Securities of
such series, the Company may omit to comply with and shall have no liability in
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respect of any term, condition or limitation set forth in any such Section,
whether directly or indirectly by reason of any reference elsewhere herein to
such Section or by reason of any reference in such Section to any other
provision herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Section 5.1, but, except as
specified above, the remainder of this Indenture and the Securities of such
series shall be unaffected thereby. The following shall be the conditions to
application of this Section 13.3;
(1) The Company has irrevocably deposited or caused to be deposited
with the Trustee (or another trustee satisfying the requirements of Section
6.9 who shall agree to comply with the provisions of this Article Thirteen
applicable to it) as trust funds in trust for the purpose of making the
following payments, specifically pledged as security for, and dedicated
solely to, the benefit of the Holders of the Securities of such series (i)
cash in an amount, or (ii) in the case of any series of Securities the
payments on which may only be made in legal coin or currency of the United
States, U.S. Government Obligations which through the scheduled payment of
principal and interest in respect thereof in accordance with their terms
will provide, not later than one day before the due date of any payment,
cash in an amount, or (iii) a combination thereof, sufficient, in the
opinion of a nationally recognized firm of independent public accounts
expressed in a written certification thereof delivered to the Trustee, to
pay and discharge (a) the principal of and any premium and interest on and
each installment of principal of and any premium and interest on the
Outstanding Securities of such series on the Stated Maturity of such
principal or installment of principal or interest, as the case may be, or
on any Redemption Date established pursuant to clause (2) below, and (b)
any mandatory sinking fund payments on the date on which such payments are
due and payable in accordance with the terms of the Indenture and the
Securities of such series;
(2) If the Securities are to be redeemed prior to Stated Maturity
(other than from mandatory sinking fund payments or analogous payments),
notice of such redemption shall have been duly given pursuant to this
Indenture or provision therefor satisfactory to the Trustee shall have been
made;
(3) No Event of Default, or an event which with notice or lapse of
time or both would become such an Event of Default, shall have occurred and
be continuing on the date of such deposit;
(4) Such defeasance shall be effected in compliance with any
additional terms, conditions or limitations which may be imposed on the
Company in connection therewith pursuant to Section 3.1; and
(5) The Company shall have delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel stating that all conditions precedent
provided for relating to the covenant defeasance contemplated by this
provision have been complied with.
Notwithstanding the foregoing, if an Event of Default specified in Subsection
5.1(5) or 5.1(6), or an event which with lapse of time would become such an
Event of Default, shall occur during the period ending on the 181st day after
the date of the deposit referred to in clause (1) or, if longer, ending on the
day following the expiration of the longest preference period applicable to the
Company in respect of such deposit, then, effective upon such occurrence, the
defeasance pursuant to this Section 13.3 and such deposit shall be rescinded and
annulled, and the Company, the Guarantors (if applicable), the Trustee and the
Holders of the Securities of such series shall be restored to their former
positions.
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Section 13.4. Deposited Money and U.S. Government Obligations to be Held
in Trust.
Subject to the provisions of the last paragraph of Section 10.3, all money
and U.S. Government Obligations (including the proceeds thereof) deposited with
the Trustee (or other qualifying trustee - collectively, for purposes of this
Section 13.4, the "Trustee") pursuant to Section 13.2 or 13.3 in respect of the
Outstanding Securities of such series shall be held in trust and applied by the
Trustee, in accordance with the provisions of such Securities and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent), to the Holders of such
Securities, of all sums due and to become due thereon in respect of principal
and any premium and interest, but such money need not be segregated from other
funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 13.2 or 13.3 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Securities of such
series.
Section 13.5. Repayment to Company; Qualifying Trustee.
The Trustee and any Paying Agent promptly shall pay or return to the
Company upon Company Request any money and U.S. Government Obligations held by
them at any time that, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee (which may be the same certification given at the time
of the deposit pursuant to Section 13.2 or 13.3, as applicable), are not
required for the payment of the principal of and any interest on the Securities
of any series for which money or U.S. Government Obligations have been deposited
pursuant to Section 13.2 or 13.3.
The provisions of the last paragraph of Section 10.3 shall apply to any
money held by the Trustee or any Paying Agent under this Article Thirteen that
remains unclaimed for one year after the Maturity of any series of Securities
for which money or U.S. Government obligations have been deposited pursuant to
Section 13.2 or 13.3.
Any trustee appointed pursuant to Section 13.2 or 13.3 for the purpose of
holding trust funds deposited pursuant to that Section shall be appointed under
an agreement in form acceptable to the Trustee and shall provide to the Trustee
a certificate of such trustee, upon which certificate the Trustee shall be
entitled to conclusively rely, that all conditions precedent provided for herein
to the related defeasance or covenant defeasance have been complied with. In no
event shall the Trustee be liable for any acts or omissions of said trustee.
ARTICLE FOURTEEN
GUARANTEE OF SECURITIES
Section 14.1. Unconditional Guarantee.
For value received, each of the Guarantors hereby fully, irrevocably,
unconditionally and absolutely guarantees to the Holders of Securities of each
series to which this Article Fourteen has been made applicable as provided in
Section 3.1(20) and to the Trustee the due and punctual payment of the principal
of, and premium, if any, and interest on such Securities, and all other amounts
due and payable under this Indenture and such Securities by the Company to the
Trustee or such Holders (including, without limitation, all costs and expenses
(including reasonable legal fees and disbursements) incurred by the Trustee or
such Holders in connection with the enforcement of this Indenture and the
Guarantee) (collectively, the "Indenture Obligations"), when and as such
principal, premium, if any, interest, if any, and other amounts shall become
63
due and payable, whether at the Stated Maturity, upon redemption or by
declaration of acceleration or otherwise, according to the terms of such
Securities and this Indenture. The guarantees by the Guarantors set forth in
this Article Fourteen are referred to herein as the "Guarantee." Without
limiting the generality of the foregoing, each Guarantor's liability shall
extend to all amounts that constitute part of the Indenture Obligations and
would be owed by the Company to the Trustee or such Holders under this Indenture
and such Securities but for the fact that they are unenforceable, reduced,
limited, impaired, suspended or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving the Company.
Failing payment when due of any amount guaranteed pursuant to the
Guarantee, for whatever reason, each Guarantor will be obligated (to the fullest
extent permitted by applicable law) to pay the same immediately to the Trustee,
without set-off or counterclaim or other reduction whatsoever (whether for
taxes, withholding or otherwise). The Guarantee hereunder is intended to be a
general, unsecured, subordinated obligation of each Guarantor and will be
subordinated in right of payment to all Guarantor Senior Debt. Each Guarantor
hereby agrees that, to the fullest extent permitted by applicable law, its
obligations hereunder shall be full, irrevocable, unconditional and absolute,
irrespective of the validity, regularity or enforceability of such Securities,
the Guarantee or this Indenture, the absence of any action to enforce the same,
any waiver or consent by any such Holder with respect to any provisions hereof
or thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of such Guarantor. Each Guarantor hereby
agrees that in the event of a default in payment of the principal of, or
premium, if any, or interest on such Securities, or any other amounts payable
under this Indenture and such Securities by the Company to the Trustee or the
Holders thereof, whether at the Stated Maturity, upon redemption or by
declaration of acceleration or otherwise, legal proceedings may be instituted by
the Trustee on behalf of such Holders or, subject to Section 5.7 hereof, by such
Holders, on the terms and conditions set forth in this Indenture, directly
against such Guarantor to enforce the Guarantee without first proceeding against
the Company.
To the fullest extent permitted by applicable law, the obligations of each
Guarantor under this Article Fourteen shall be as aforesaid full, irrevocable,
unconditional and absolute and shall not be impaired, modified, discharged,
released or limited by any occurrence or condition whatsoever, including,
without limitation, (i) any compromise, settlement, release, waiver, renewal,
extension, indulgence or modification of, or any change in, any of the
obligations and liabilities of the Company or any Guarantor contained in any of
such Securities or this Indenture, (ii) any impairment, modification, release or
limitation of the liability of the Company, any Guarantor or any of their
estates in bankruptcy, or any remedy for the enforcement thereof, resulting from
the operation of any present or future provision of any applicable Bankruptcy
Law, as amended, or other statute or from the decision of any court, (iii) the
assertion or exercise by the Trustee or any such Holder of any rights or
remedies under any of such Securities or this Indenture or their delay in or
failure to assert or exercise any such rights or remedies, (iv) the assignment
or the purported assignment of any property as security for any of such
Securities, including all or any part of the rights of the Company or any
Guarantor under this Indenture, (v) the extension of the time for payment by the
Company or any Guarantor of any payments or other sums or any part thereof owing
or payable under any of the terms and provisions of any of such Securities or
this Indenture or of the time for performance by the Company or any Guarantor of
any other obligations under or arising out of any such terms and provisions or
the extension or the renewal of any thereof, (vi) the modification or amendment
(whether material or otherwise) of any duty, agreement or obligation of the
Company or any Guarantor set forth in this Indenture, (vii) the voluntary or
involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets, marshaling of assets and liabilities,
receivership, insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment, rehabilitation or
relief of, or other similar proceeding affecting, the Company or any Guarantor
or any of their respective assets, or the disaffirmance of any of such
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Securities, the Guarantee or this Indenture in any such proceeding, (viii) the
release or discharge of the Company or any Guarantor from the performance or
observance of any agreement, covenant, term or condition contained in any of
such instruments by operation of law, (ix) the unenforceability of any of such
Securities, the Guarantee or this Indenture, (x) any change in the name,
business, capital structure, corporate existence, or ownership of the Company or
any Guarantor, or (xi) any other circumstance which might otherwise constitute a
defense available to, or a legal or equitable discharge of, a surety or any
Guarantor.
To the fullest extent permitted by applicable law, each Guarantor hereby
(i) waives diligence, presentment, demand of payment, notice of acceptance,
filing of claims with a court in the event of the merger, insolvency or
bankruptcy of the Company or such Guarantor, and all demands and notices
whatsoever, (ii) acknowledges that any agreement, instrument or document
evidencing the Guarantee may be transferred and that the benefit of its
obligations hereunder shall extend to each holder of any agreement, instrument
or document evidencing the Guarantee without notice to them and (iii) covenants
that its Guarantee will not be discharged except by complete performance of the
Guarantee. To the fullest extent permitted by applicable law, each Guarantor
further agrees that if at any time all or any part of any payment theretofore
applied by any Person to any Guarantee is, or must be, rescinded or returned for
any reason whatsoever, including without limitation, the insolvency, bankruptcy
or reorganization of any Guarantor, such Guarantee shall, to the extent that
such payment is or must be rescinded or returned, be deemed to have continued in
existence notwithstanding such application, and the Guarantee shall continue to
be effective or be reinstated, as the case may be, as though such application
had not been made.
Each Guarantor shall be subrogated to all rights of the Holders and the
Trustee against the Company in respect of any amounts paid by such Guarantor
pursuant to the provisions of this Indenture; provided, however, that such
Guarantor shall not be entitled to enforce or to receive any payments arising
out of, or based upon, such right of subrogation with respect to any of such
Securities until all of such Securities and the Guarantee shall have been
indefeasibly paid in full or discharged.
A director, officer, employee or stockholder, as such, of a Guarantor shall
not have any liability for any obligations of the Guarantor under this Indenture
or for any claim based on, in respect of or by reason of such obligations or
their creation.
To the fullest extent permitted by applicable law, no failure to exercise
and no delay in exercising, on the part of the Trustee or the Holders, any
right, power, privilege or remedy under this Article Fourteen and the Guarantee
shall operate as a waiver thereof, nor shall any single or partial exercise of
any rights, power, privilege or remedy preclude any other or further exercise
thereof, or the exercise of any other rights, powers, privileges or remedies.
The rights and remedies herein provided for are cumulative and not exclusive of
any rights or remedies provided in law or equity. Nothing contained in this
Article Fourteen shall limit the right of the Trustee or the Holders to take any
action to accelerate the maturity of such Securities pursuant to Article Five or
to pursue any rights or remedies hereunder or under applicable law.
65
Section 14.2. Execution and Delivery of Notation of Guarantee
To further evidence the Guarantee, each Guarantor hereby agrees that a
notation of such Guarantee may be endorsed on each Security of a series to which
this Article Fourteen has been made applicable authenticated and delivered by
the Trustee and executed by either manual or facsimile signature of an officer
of such Guarantor.
Each Guarantor hereby agrees that its Guarantee of Securities of a series
to which this Article Fourteen has been made applicable shall remain in full
force and effect notwithstanding any failure to endorse on any such Security a
notation relating to the Guarantee thereof.
If an officer of any Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery by the Trustee of any Security of a series to which this
Article Fourteen has been made applicable, after the authentication thereof
under this Indenture, shall constitute due delivery of the Guarantee set forth
in this Indenture on behalf of each Guarantor.
Section 14.3. Reports by Guarantor.
In addition to the certificates delivered to the Trustee pursuant to
Section 10.5, each Guarantor shall file with the Trustee and the Commission, and
transmit to Holders of Outstanding Securities of each series to which this
Article Fourteen has been made applicable, such information, documents and other
reports, and such summaries thereof, as may be required pursuant to the Trust
Indenture Act at the times and in the manner provided pursuant thereto; provided
that any such information, documents or reports required to be filed with the
Commission pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, shall be filed with the Trustee within 15 days after the same
is so required to be filed with the Commission.
Section 14.4. Subordination of Guarantees.
The obligations of each Guarantor under the Guarantee pursuant to this
Article Fourteen shall be junior and subordinated to the prior payment in full
in cash of all Guarantor Senior Debt (including interest after the commencement
of any proceeding of the type described in Section 14.1 with respect to such
Guarantor at the rate specified in the applicable Guarantor Senior Debt, whether
or not such interest would be an allowed claim in such proceeding) of such
Guarantor, in each case on the same basis as the Securities are junior and
subordinated to Senior Debt, as set forth in Article Fifteen mutatis mutandis.
For the purposes of the foregoing sentence, the Trustee and the Holders shall
have the right to receive and/or retain payments by a Guarantor only at such
times as they may receive and/or retain payments and distributions in respect of
the Securities pursuant to this Indenture, including Article Fifteen hereof.
ARTICLE FIFTEEN
SUBORDINATION OF SECURITIES
Section 15.1. Securities Subordinated to Senior Debt.
(1) The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of Securities, by his acceptance thereof, likewise
covenants and agrees, that the payment of the principal of and premium, if
any, and interest on each and all of the Securities is hereby expressly
subordinated, to the extent and in the manner hereinafter set forth, in
right of payment to the prior payment in full of all Senior Debt of the
Company.
(2) If (A) the Company shall default in the payment of any principal
of, premium, if any, or interest, if any, on any Senior Debt of the Company
when the same becomes due and payable, whether at maturity or at a date
fixed for prepayment or by declaration of
66
acceleration or otherwise, or (B) any other default shall occur with
respect to Senior Debt of the Company and the maturity of such Senior Debt
has been accelerated in accordance with its terms, then, upon written
notice of such default to the Company and the Trustee by the holders of
Senior Debt of the Company or any trustee therefor, unless and until, in
either case, the default has been cured or waived or has ceased to exist,
or, any such acceleration has been rescinded or such Senior Debt has been
paid in full, no direct or indirect payment (in cash, property, securities,
by set-off or otherwise) shall be made or agreed to be made on account of
the principal of, premium, if any, or interest, if any, on any of the
Securities, or in respect of any redemption, retirement, purchase or other
acquisition of any of the Securities other than those made in capital stock
of the Company (or cash in lieu of fractional shares thereof).
(3) If any default occurs (other than a default described in paragraph
(2) of this Section 15.1) under the Senior Debt of the Company, pursuant to
which the maturity thereof may be accelerated immediately without further
notice (except such notice as may be required to effect such acceleration)
or at the expiration of any applicable grace periods (a "Senior Nonmonetary
Default"), then, upon the receipt by the Company and the Trustee of written
notice thereof (a "Payment Blockage Notice") from or on behalf of holders
of such Senior Debt of the Company specifying an election to prohibit such
payment and other action by the Company in accordance with the following
provisions of this paragraph (3), the Company may not make any payment or
take any other action that would be prohibited by paragraph (2) of this
Section 15.1 during the period (the "Payment Blockage Period") commencing
on the date of receipt of such Payment Blockage Notice and ending on the
earlier of (A) the date, if any, on which the holders of such Senior Debt
or their representative notifies the Trustee that such Senior Nonmonetary
Default is cured or waived or ceases to exist or the Senior Debt to which
such Senior Nonmonetary Default relates is discharged or (B) the 179th day
after the date of receipt of such Payment Blockage Notice. Notwithstanding
the provisions described in the immediately preceding sentence, the Company
may resume payments on the Securities following such Payment Blockage
Period.
Section 15.2. Distribution on Dissolution, Liquidation and Reorganization;
Subrogation of Securities.
Upon any distribution of assets of the Company upon any dissolution,
winding up, liquidation or reorganization of the Company, whether in bankruptcy,
insolvency, reorganization or receivership proceedings or upon an assignment for
the benefit of creditors or any other marshalling of the assets and liabilities
of the Company or otherwise (subject to the power of a court of competent
jurisdiction to make other equitable provision reflecting the rights conferred
in this Indenture upon the Senior Debt of the Company and the holders thereof
with respect to the Securities and the Holders thereof by a lawful plan or
reorganization under applicable bankruptcy law),
(1) the holders of all Senior Debt of the Company shall be entitled to
receive payment in full of the principal thereof, premium, if any,
interest, and any interest thereon, due thereon before the Holders of the
Securities are entitled to receive any payment upon the principal, premium,
interest of or on the Securities or interest on overdue amounts thereof;
(2) any payment or distribution of assets of the Company, a Guarantor
(if applicable) or any other obligor upon the Securities of any kind or
character, whether in cash, property or securities, to which the Holders of
the Securities or the Trustee (on behalf of the Holders) would be entitled
except for the provisions of this Article Fifteen shall be paid by the
liquidating trustee or agent or other person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or liquidating
67
trustee or otherwise, directly to the holders of Senior Debt of the Company
or their representative or representatives or to the trustee or trustees
under any indenture under which any instruments evidencing any of such
Senior Debt may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of the principal of, premium, if any,
interest, and any interest thereon, on the Senior Debt of the Company held
or represented by each, to the extent necessary to make payment in full of
all Senior Debt of the Company remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Debt; and
(3) in the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company, a Guarantor (if applicable) or any
other obligor upon the Securities of any kind or character, whether in
cash, property or securities, shall be received by the Trustee (on behalf
of the Holders) or the Holders of the Securities before all Senior Debt of
the Company is paid in full, such payment or distribution shall be paid
over to the holders of such Senior Debt or their representative or
representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Debt may have been
issued, ratably as aforesaid, for application to the payment of all Senior
Debt remaining unpaid until all such Senior Debt shall have been paid in
full, after giving effect to any concurrent payment or distribution to the
holders of such Senior Debt.
Subject to the payment in full of all Senior Debt of the Company, the
Holders of the Securities shall be subrogated to the rights of the holders of
such Senior Debt to receive payments or distributions of cash, property or
securities of the Company applicable to Senior Debt of the Company until the
principal, premium, interest, and any interest thereon, of or on the Securities
shall be paid in full and no such payments or distributions to the Holders of
the Securities of cash, property or securities otherwise distributable to the
Senior Debt of the Company shall, as between the Company, its creditors other
than the holders of Senior Debt of the Company, and the Holders of the
Securities, be deemed to be a payment by the Company to or on account of the
Securities. It is understood that the provisions of this Article Fifteen are and
are intended solely for the purpose of defining the relative rights of the
Holders of the Securities, on the one hand, and the holders of Senior Debt of
the Company, on the other hand. Nothing contained in this Article Fifteen or
elsewhere in this Indenture or in the Securities is intended to or shall impair,
as between the Company, its creditors other than the holders of Senior Debt of
the Company, and the Holders of the Securities, the obligation of the Company,
which is unconditional and absolute, to pay to the Holders of the Securities the
principal, premium, interest, and any interest thereon, of or on the Securities
as and when the same shall become due and payable in accordance with their
terms, or to affect the relative rights of the Holders of the Securities and
creditors of the Company other than the holders of Senior Debt of the Company,
nor shall anything herein or in the Securities prevent the Trustee or the Holder
of any Security from exercising all remedies otherwise permitted by applicable
law upon default under this Indenture, subject to the rights, if any, under this
Article Fifteen of the holders of such Senior Debt in respect of cash, property
or securities of the Company received upon the exercise of any such remedy. Upon
any payment or distribution of assets of the Company referred to in this Article
Fifteen, the Trustee shall be entitled to conclusively rely upon a certificate
of the liquidating trustee or agent or other person making any distribution to
the Trustee for the purpose of ascertaining the persons entitled to participate
in such distribution, the holders of Senior Debt of the Company and other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon, and all other facts pertinent thereto or
to this Article Fifteen.
The Trustee, however, shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt of the Company. The Trustee shall not be liable to any
such holder if it shall pay over or distribute to or on behalf of Holders of
Securities or the Company moneys or assets to which any holder of Senior Debt
68
of the Company shall be entitled by virtue of this Article Fifteen. The rights
and claims of the Trustee under Section 6.7 shall not be subject to the
provisions of this Article Fifteen.
If the Trustee or any Holder of Securities does not file a proper claim or
proof of debt in the form required in any proceeding referred to above prior to
30 days before the expiration of the time to file such claim in such proceeding,
then the holder of any Senior Debt of the Company is hereby authorized, and has
the right, to file an appropriate claim or claims for or on behalf of such
Holder of Securities.
Section 15.3. Payments on Securities Permitted.
Nothing contained in this Indenture or in any of the Securities shall (1)
affect the obligation of the Company to make, or prevent the Company from
making, at any time except as provided in Sections 15.1 and 15.2, payments of
principal, premium, interest, and any interest thereon, of or on the Securities
or (2) prevent the application by the Trustee of any moneys deposited with it
hereunder to the payment of or on account of the principal, premium, interest or
other amounts, and any interest thereon, of or on the Securities unless the
Trustee shall have received at its Corporate Trust Office written notice of any
event prohibiting the making of such payment two Business Days (A) prior to the
date fixed for such payment, (B) prior to the execution of an instrument to
satisfy and discharge this Indenture based upon the deposit of funds under
Section 4.1(1)(b), (C) prior to the execution of an instrument acknowledging the
defeasance of such Securities pursuant to Section 13.2 or (D) prior to any
deposit pursuant to clause (1) of Section 13.3 with respect to such Securities.
Section 15.4. Authorization of Holders of Securities to Trustee to Effect
Subordination.
Each Holder of Securities by his acceptance thereof, whether upon original
issue or upon transfer or assignment, authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article Fifteen and appoints the Trustee his
attorney-in-fact for any and all such purposes.
Section 15.5. Notices to Trustee.
The Company shall give prompt written notice to a responsible officer of
the Trustee located at the Corporate Trust Office of the Trustee of any fact
known to the Company which would prevent the making of any payment to or by the
Trustee in respect of the Securities. Notwithstanding the provisions of this
Article Fifteen or any other provisions of this Indenture, neither the Trustee
nor any Paying Agent (other than the Company) shall be charged with knowledge of
the existence of any Senior Debt of the Company or of any event which would
prohibit the making of any payment of moneys to or by the Trustee or such Paying
Agent, unless and until the Trustee or such Paying Agent shall have received (in
the case of the Trustee, at its Corporate Trust Office) written notice thereof
from the Company or from the holder of any Senior Debt of the Company or from
the trustee for or representative of any Senior Debt of the Company together
with proof satisfactory to the Trustee of such holding of such Senior Debt or of
the authority of such trustee or representative; provided, however, that if at
least two Business Days prior to the date upon which by the terms hereof any
such moneys may become payable for any purpose (including, without limitation,
the payment of the principal, premium, interest, of or on any Security, or any
interest thereon) or the date on which the Trustee shall execute an instrument
acknowledging satisfaction and discharge of this Indenture or the defeasance of
Securities pursuant to Section 13.2 or the date on which a deposit pursuant to
clause (1) of Section 13.3 is made, the Trustee shall not have received with
respect to such moneys or the moneys deposited with it as a condition to such
satisfaction and discharge or defeasance the notice provided for in this Section
15.5, then, anything herein contained to the contrary notwithstanding, the
Trustee shall have full power and authority to receive such moneys and to apply
the same to the purpose for which they were received, and shall not be affected
69
by any notice to the contrary, which may be received by it on or after such two
Business Days prior to such date. The Trustee shall be entitled to conclusively
rely on the delivery to it of a written notice by a person representing himself
to be a holder of Senior Debt of the Company (or a trustee or representative on
behalf of such holder) to establish that such a notice has been given by a
holder of Senior Debt of the Company or a trustee or representative on behalf of
any such holder. In the event that the Trustee determines in good faith that
further evidence is required with respect to the right of any Person as a holder
of Senior Debt of the Company to participate in any payment or distribution
pursuant to this Article Fifteen, the Trustee may request such Person to furnish
evidence to the reasonable satisfaction of the Trustee as to the amount of
Senior Debt of the Company held by such Person, the extent to which such Person
is entitled to participate in such payment or distribution and any other facts
pertinent to the rights of such Person under this Article Fifteen and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment.
Section 15.6. Trustee as Holder of Senior Debt.
The Trustee shall be entitled to all the rights set forth in this Article
Fifteen in respect of any Senior Debt of the Company at any time held by it to
the same extent as any other holder of Senior Debt of the Company and nothing in
this Indenture shall be construed to deprive the Trustee of any of its rights as
such holder.
Section 15.7. Modification of Terms of Senior Debt.
Any renewal or extension of the time of payment of any Senior Debt of the
Company or the exercise by the holders of Senior Debt of the Company of any of
their rights under any instrument creating or evidencing such Senior Debt,
including without limitation the waiver of default thereunder, may be made or
done all without notice to or assent from Holders of the Securities or the
Trustee.
No compromise, alteration, amendment, modification, extension, renewal or
other change of, or waiver, consent or other action in respect of, any liability
or obligation under or in respect of, or of any of the terms, covenants or
conditions of any indenture or other instrument under which any Senior Debt of
the Company is outstanding or of such Senior Debt, whether or not such release
is in accordance with the provisions of any applicable document, shall in any
way alter or affect any of the provisions of this Article Fifteen or of the
Securities relating to the subordination thereof.
* * *
This instrument may be executed in any number of counterparts, each of which so
executed shall be deemed to be an original, but all such counterparts shall
together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly
executed, and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
70
COMSTOCK RESOURCES, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
COMSTOCK OIL & GAS, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
COMSTOCK OIL & GAS-LOUISIANA, LLC
By: _______________________________
Name: _____________________________
Title: ____________________________
COMSTOCK OFFSHORE, LLC
By: _______________________________
Name: _____________________________
Title: ____________________________
COMSTOCK OIL &GAS HOLDINGS, INC.
By: _______________________________
Name: _____________________________
Title: ____________________________
71
[LLS Letterhead]
December 16, 2003
Comstock Resources, Inc.
5300 Town and Country Blvd., Suite 500
Frisco, TX 75034
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
This Firm has acted as counsel to Comstock Resources, Inc., a Nevada
corporation (the "Company"), and its subsidiary guarantor co-registrants (the
"Co-Registrants"), in connection with the Registration Statement on Form S-3
(the "Registration Statement") to be filed by the Company and the Co-Registrants
with the Securities and Exchange Commission on the date hereof. The Registration
Statement relates to the issuance and sale from time to time, pursuant to Rule
415 of the General Rules and Regulations promulgated under the Securities Act of
1933, as amended (the "Securities Act"), of the following securities with an
aggregate initial public offering price of up to $300,000,000: (i) shares of
common stock of the Company, $0.50 par value per share ("Common Stock"); (ii)
shares of preferred stock of the Company, $10.00 par value per share (the
"Preferred Stock"), in one or more series; (iii) senior or subordinated debt
securities of the Company, in one or more series (the "Debt Securities"); (iv)
warrants to purchase debt or equity securities of the Company ("Warrants"); (v)
units consisting of one or more Warrants, Debt Securities, Guarantees (as
defined below), shares of Preferred Stock, shares of Common Stock or any
combination of such securities ("Units"); and (vi) guarantees of the Company's
Debt Securities (the "Guarantees") by the Co-Registrants (items (i) through (vi)
above are collectively referred herein to as the "Securities").
The Debt Securities and the Guarantees will be issued pursuant to an
indenture (the "Indenture"), to be entered into by the Company, each of the
Co-Registrants, as guarantors, and a financial institution to be named therein,
as trustee (the "Trustee"), substantially in the form attached as Exhibit 4.6 to
the Registration Statement, and as the same may hereafter be supplemented from
time to time, among other things at the time of and in connection with the
issuance of the Debt Securities and any Guarantees.
The Warrants will be issued pursuant to a warrant agreement (the "Warrant
Agreement") by and between the Company and a warrant agent.
In rendering the opinions contained herein, we have examined originals or
copies, certified or otherwise identified to our satisfaction, of: (i) the
Restated Articles of Incorporation and Bylaws of the Company, each as amended to
date and currently in effect, and similar organizational documents for each of
Page 2
the Co-Registrants; (ii) the Registration Statement; (iii) the prospectus
contained in the Registration Statement (the "Prospectus"); and (iv) such other
documents and records of the Company, such certificates and statements of public
officials and of officers and other representatives of the Company and all such
other documents, agreements, records or certificates as we have deemed necessary
or appropriate as a basis for the opinions set forth herein.
In rendering the opinions contained herein, we have, with your permission,
made the following assumptions: (i) all documents submitted to or reviewed by
us, including all amendments and supplements thereto, are accurate and complete
and, if not originals, are true, correct and complete copies of the originals;
(ii) the signatures on each of such documents by the parties thereto are
genuine; (iii) each individual who signed such documents had the legal capacity
to do so; and (iv) all persons who signed such documents on behalf of a business
entity were duly authorized to do so. We have assumed that there are no
amendments, modifications or supplements to such documents other than those
amendments, modifications and supplements that are known to us.
In rendering the opinions expressed in paragraphs 3 through 6 below with
respect to the Securities therein referred to, we have additionally assumed
that: (i) the Trustee identified in the Indenture will have all requisite power
and authority to execute, deliver and perform its obligations under the
Indenture; (ii) at the time of execution of the Indenture, the execution and
delivery thereof and the performance of such obligations will have been duly
authorized by all necessary action on the Trustee's part and the Indenture will
have been duly delivered by it; (iii) at the time of execution of the Indenture,
the Indenture will be enforceable against the Trustee in accordance with the
terms thereof; (iv) any supplemental indenture to the Indenture and any Board
Resolution (as defined in the Indenture) and/or Officer's Certificate (as
defined in the Indenture) executed and delivered pursuant to the Indenture, in
any such case, pursuant to which any Debt Securities and Guarantees are issued,
will comply with the Indenture as theretofore supplemented, and the form and
terms of such Debt Securities and Guarantees will comply with the Indenture as
then supplemented (including by such supplemental indenture) and any such Board
Resolution and/or Officer's Certificate; (v) each of the Company and the
Co-Registrants is and at all times material hereto will be a corporation or
limited liability company (as applicable) duly organized and validly existing
under the laws of the jurisdiction under which it is currently organized; and
(vi) the indenture actually entered into by the Company, the Co-Registrants and
Trustee will not deviate in any material or substantial respect from the
Indenture contained as Exhibit 4.6 to the Registration Statement, such that any
deviation would alter our opinions contained herein.
Based upon and subject to the foregoing, and subject also to the
limitations and other assumptions and qualifications set forth herein, we are of
the opinion that:
Page 3
1. With respect to any offering of Common Stock (the "Offered Common
Stock"), when (i) the Registration Statement, as finally amended (including all
necessary post-effective amendments), has become effective under the Securities
Act; (ii) an appropriate prospectus supplement or term sheet with respect to the
Offered Common Stock has been prepared, delivered and filed in compliance with
the Securities Act and the applicable rules and regulations thereunder; (iii) if
the Offered Common Stock is to be sold pursuant to a firm commitment
underwritten offering, an underwriting agreement with respect to the Offered
Common Stock has been duly authorized, executed and delivered by the Company and
the other parties thereto; (iv) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the Company
have taken all necessary corporate action to approve the issuance of the offered
Common Stock and related matters; (v) the terms of the issuance and sale of the
Offered Common Stock have been duly established in conformity with the Restated
Articles of Incorporation and the Bylaws of the Company, each as amended and
then in effect, so as not to (A) violate any applicable law, (B) violate the
Restated Articles of Incorporation or the Bylaws of the Company, each as amended
and then in effect, or (C) result in a default under or breach of any agreement
or instrument binding upon the Company and so as to comply with any requirement
or restriction imposed by any court or governmental body having jurisdiction
over the Company; and (vi) certificates representing the shares of Offered
Common Stock are duly executed, countersigned, registered and delivered upon
payment of the agreed upon consideration therefor, the shares of Offered Common
Stock (including any Common Stock duly issued upon conversion, exchange or
exercise of any Debt Securities or Preferred Stock), when issued and sold in
accordance with the applicable underwriting agreement with respect to the
Offered Common Stock or any other duly authorized, executed and delivered valid
and binding purchase or agency agreement, will be duly authorized, validly
issued, fully paid and nonassessable, provided that the consideration therefore
is not less than the par value thereof.
2. With respect to the offering of shares of any series of Preferred Stock
(the "Offered Preferred Stock"), when (i) the Registration Statement, as finally
amended (including all necessary post-effective amendments), has become
effective under the Securities Act; (ii) an appropriate prospectus supplement or
term sheet with respect to the shares of the Offered Preferred Stock has been
prepared, delivered and filed in compliance with the Securities Act and the
applicable rules and regulations thereunder; (iii) if the Offered Preferred
Stock is to be sold pursuant to a firm commitment underwritten offering, an
underwriting agreement with respect to the shares of the Offered Preferred Stock
has been duly authorized, executed and delivered by the Company and the other
parties thereto; (iv) the Board of Directors, including any appropriate
committee appointed thereby, and appropriate officers of the Company have taken
all necessary corporate action to approve the issuance and terms of the shares
of the Offered Preferred Stock and related matters, including the adoption of a
Certificate of Designation for the Offered Preferred Stock in accordance with
the applicable provisions of Nevada law (the "Certificate of Designation"); (v)
the filing of the Certificate of Designation with the Secretary of State of the
State of Nevada has duly occurred; (vi) the terms of the Offered Preferred Stock
Page 4
and of their issuance and sale have been duly established in conformity with the
Company's Restated Articles of Incorporation, including the Certificate of
Designation relating to the Offered Preferred Stock, and the Bylaws of the
Company, each document as amended and then in effect on such date, so as not to
(A) violate any applicable law, (B) the Restated Articles of Incorporation or
the Bylaws of the Company, each document as amended and then in effect on such
date, or (C) result in a default under or breach of any agreement or instrument
binding upon the Company and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the Company;
and (vii) certificates representing the shares of the Offered Preferred Stock
are duly executed, countersigned, registered and delivered upon payment of the
agreed-upon consideration therefor, the shares of the Offered Preferred Stock
(including any Preferred Stock duly issued conversion, exchange or exercise of
any Debt Securities or Preferred Stock), when issued or sold in accordance with
the applicable underwriting agreement or any other duly authorized, executed and
delivered valid and binding purchase or agency agreement, will be duly
authorized, validly issued, fully paid and nonassessable, provided that the
consideration therefore is not less than the par value thereof.
3. With respect to any series of Debt Securities (the "Offered Debt
Securities"), when (i) the Registration Statement, as finally amended (including
all necessary post-effective amendments), has become effective under the
Securities Act and the applicable Indenture has been qualified under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"); (ii) an
appropriate prospectus supplement or term sheet with respect to the Offered Debt
Securities has been prepared, delivered and filed in compliance with the
Securities Act and the applicable rules and regulations thereunder; (iii) if the
Offered Debt Securities are to be sold pursuant to a firm commitment
underwritten offering, an underwriting agreement with respect to the Offered
Debt Securities has been duly authorized, executed and delivered by the Company
and the other parties thereto; (iv) the Board of Directors, including any
appropriate committee appointed thereby, and appropriate officers of the Company
have taken all necessary corporate action to approve the issuance and terms of
the Offered Debt Securities and related matters; (v) the terms of the Offered
Debt Securities and of their issuance and sale have been duly established in
conformity with the applicable Indenture so as not to (A) violate any applicable
law, (B) violate the Restated Articles of Incorporation or the Bylaws of the
Company, in each case as amended and in effect on such date, or (C) result in a
default under or breach of any agreement or instrument binding upon the Company
and so as to comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (vi) the Offered
Debt Securities have been duly executed and authenticated in accordance with the
provisions of the applicable Indenture and duly delivered to the purchasers
thereof upon payment of the agreed-upon consideration therefor, the Offered Debt
Securities (including any Debt Securities duly issued upon conversion, exchange
or exercise of any Debt Securities or Preferred Stock), when issued and sold in
accordance with the applicable Indenture and the applicable underwriting
agreement, if any, or any other duly authorized, executed and delivered valid
and binding purchase or agency agreement, will be valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except to the extent that enforcement thereof may be limited
by (a) bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
Page 5
or other similar laws now or hereafter in effect relating to creditors' rights
generally, (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity), (c) public
policy considerations which may limit the rights of the parties to obtain
further remedies, (d) the waivers of any usury defense contained in the
Indenture which may be unenforceable, (e) requirements that a claim with respect
to any Offered Debt Securities denominated other than in United States dollars
(or a judgment denominated other than in United States dollars in respect of
such claim) be converted into United States dollars at a rate of exchange
prevailing on a date determined pursuant to applicable law, and (f) governmental
authority to limit, delay, or prohibit the making of payments outside the United
States or in foreign currencies, currency units or composite currencies
(collectively, these qualifications and limitations are referred to herein as
the "Enforceability Qualifications").
4. With respect to Warrants to be issued under a Warrant Agreement (the
"Offered Warrants"), when (i) the Registration Statement, as finally amended
(including all necessary post-effective amendments), has become effective under
the Securities Act; (ii) an appropriate prospectus supplement or term sheet with
respect to the Offered Warrants has been prepared, delivered and filed in
compliance with the Securities Act and the applicable rules and regulations
thereunder; (iii) the Company's Board of Directors, including any appropriate
committee appointed thereby, and appropriate officers of the Company have taken
all necessary corporate action to approve the issuance and terms of such Offered
Warrants, the terms of the offering thereof and related matters, (iv) the
Warrant Agreement has been duly authorized and validly executed and delivered by
the Company and the warrant agent under the Warrant Agreement; (v) the terms of
the issuance and sale of the Offered Warrants have been duly established in
conformity with the Restated Articles of Incorporation and the Bylaws of the
Company, each as amended and then in effect, so as not to (A) violate any
applicable law, (B) violate the Restated Articles of Incorporation or the Bylaws
of the Company, each as amended and then in effect, or (C) result in a default
under or breach of any agreement or instrument binding upon the Company and so
as to comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (vi) such Offered
Warrants have been duly executed, issued and delivered in accordance with the
terms of the Warrant Agreement and the applicable definitive purchase,
underwriting or similar agreement approved by the Board of Directors of the
Company, upon payment (or delivery) of the consideration therefor provided for
therein, such Offered Warrants will constitute valid and legally binding
obligations of the Company, enforceable against the Company in accordance with
their respective terms, subject to the Enforceability Qualifications.
5. With respect to any Units, to be offered (the "Offered Units"), when (i)
the Registration Statement, as finally amended (including all necessary
post-effective amendments), has become effective under the Securities Act; (ii)
an appropriate prospectus supplement or term sheet with respect to the Offered
Units has been prepared, delivered and filed in compliance with the Securities
Act and the applicable rules and regulations thereunder; (iii) the Company's
Page 6
Board of Directors, including any appropriate committee appointed thereby, and
appropriate officers of the Company have taken all necessary corporate action to
authorize and approve (A) the issuance and terms of the Offered Units, (B) the
issuance and terms of any Warrants which are a component of the Units, the terms
of the offering thereof and related matters, and the execution and delivery of
any related Warrant Agreement, (C) the issuance and terms of any applicable
series of any Debt Securities which are a component of the Units, the terms of
the offering thereof and related matters, and the execution and delivery of the
applicable Indenture and any applicable supplemental indenture and (D) the
issuance and terms of any Preferred Stock or Common Stock which are a component
of the Units, the terms of the offering thereof and related matters, (iv) the
terms of the issuance and sale of the Offered Units have been duly established
in conformity with the Restated Articles of Incorporation and the Bylaws of the
Company, each as amended and then in effect, so as not to (A) violate any
applicable law, (B) violate the Restated Articles of Incorporation or the Bylaws
of the Company, each as amended and then in effect, or (C) result in a default
under or breach of any agreement or instrument binding upon the Company and so
as to comply with any requirement or restriction imposed by any court or
governmental body having jurisdiction over the Company; and (v) all of the
parties duly execute and deliver, and in the case of the applicable series of
Debt Securities, duly authenticate, (A) the applicable Offered Units, (B) such
Warrants and Warrant Agreement, (C) such series of Debt Securities and Indenture
(and such Indenture is qualified under the Trust Indenture Act) and any
applicable supplemental indenture and (D) such Preferred Stock and Common Stock,
and each such Security is issued, in each case upon payment of the consideration
therefor provided for in the applicable definitive purchase, underwriting or
similar agreement approved by the Board of Directors of the Company and
otherwise in accordance with the provisions of the applicable Warrant Agreement,
in the case of the Warrants, the applicable Indenture and any applicable
supplemental indenture, in the case of a series of Debt Securities, or the
Company's Restated Articles of Incorporation and Bylaws (as amended to such date
and then in effect), in the case of such Preferred Stock and Common Stock, such
Offered Units will constitute valid and legally binding obligations of the
Company, enforceable against the Company in accordance with their respective
terms, subject to the Enforceability Qualifications.
6. With respect to the Guarantees, when (i) the Registration Statement, as
finally amended (including all necessary post-effective amendments), has become
effective under the Securities Act; (ii) an appropriate prospectus supplement or
term sheet with respect to any Debt Securities for which the Guarantees relate
has been prepared, delivered and filed in compliance with the Securities Act and
the applicable rules and regulations thereunder; (iii) the Company and each
Co-Registrant, and each of their respective board of directors, including any
appropriate committee appointed thereby, and appropriate officers or managers
(as applicable), have taken of all necessary corporate action to authorize and
approve the issuance and terms of the Guarantees and the Debt Securities to
which they pertain, the terms of the offering thereof and related matters, (iv)
the terms of the issuance and sale of the Guarantees have been duly established
in conformity with the Articles of Incorporation and the Bylaws (or similar
organizational documents) of each Co-Registrant, each as amended and then in
Page 7
effect, so as not to (A) violate any applicable law, (B) violate the Restated
Articles of Incorporation or the Bylaws (or similar organizational documents) of
each Co-Registrant, each as amended and then in effect, or (C) result in a
default under or breach of any agreement or instrument binding upon the Company
or any Co-Registrant and so as to comply with any requirement or restriction
imposed by any court or governmental body having jurisdiction over the Company
or any Co-Registrant; (v) the applicable Indenture as then and theretofore
supplemented, pursuant to which the Guarantees will be issued, has been
qualified under the Trust Indenture Act and (vi) such Debt Securities and such
Guarantees are duly executed, issued and delivered in each case in accordance
with the terms of the applicable Indenture (as supplemented) and the applicable
purchase, underwriting or similar agreement and payment (or delivery) of the
consideration therefor provided for therein, such Guarantees will constitute
valid and legally binding obligations of the applicable Co-Registrant,
enforceable against each Co-Registrant in accordance with their respective
terms, subject to the Enforceability Qualifications.
In rendering the opinions expressed above, we have assumed that, at or
prior to the time of the delivery of any such Security, there shall not have
occurred any change in law affecting the validity or enforceability of such
Security.
With respect to any agreement or instrument (other than the Indenture)
reviewed by us, that by its terms or otherwise is governed by the law of any
jurisdiction other than the laws of the State of Texas, our opinion herein is
based solely on our understanding of the plain language of such agreement or
instrument and we do not express our opinion with respect to the interpretation,
validity, binding nature or enforceability of any such agreement or instrument,
and we do not assume any responsibility with respect to the affect on the
opinions or statements set forth herein of any interpretation thereof
inconsistent with such understanding.
We are members of the State Bar of Texas and we do not express any opinion
herein with respect to the law of any jurisdiction other than the State of
Texas, applicable federal law, and the General Corporation Law of the State of
Nevada. To the extent to which the opinions set forth herein regarding the
Indenture relate to matters of New York law, we have assumed, with your express
permission and without opining, that the applicable laws of the State of New
York are the same in substance and in effect as the relevant laws of the State
of Texas.
This opinion is intended solely for your benefit. It is not to be quoted in
whole or in part, disclosed, made available to or relied upon by any other
person, firm or entity without our express prior written consent. This opinion
is limited to the specific opinions expressly stated herein, and no other
opinion is implied or may be inferred beyond the specific opinions expressly
stated herein.
This opinion is based upon our knowledge of the law and facts relevant to
the transactions herein referenced as of the date hereof. We assume no duty to
update or supplement this opinion to reflect any facts or circumstances that may
hereafter come to our attention or to reflect any changes in any law that may
hereafter occur or become effective.
Page 7
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the heading "Legal
Matters" in the Prospectus. In giving this consent, we do not thereby admit that
we are included in the category of persons whose consent is required under
Section 7 of the Securities Act or the rules and regulations of the Securities
and Exchange Commission.
Respectfully submitted,
LOCKE LIDDELL & SAPP LLP
By: /s/ Jack E. Jacobsen
-----------------------
Jack E. Jacobsen
Partner
COMSTOCK RESOURCES, INC. AND SUBSIDIARIES
COMPUTATION OF EARNINGS TO FIXED CHARGES RATIO
Nine Months Ended
September 30,
-------------------
1998 1999 2000 2001 2002 2002 2003
-------- -------- ------- ------- ------- ------- -------
Ratio of Earnings to Fixed Charges: (in thousands, except ratios)
Fixed charges:
Interest expense $ 16,977 $ 23,361 $24,611 $20,737 $30,002 $23,307 $22,648
Capitalized interest expense 2,273 -- -- 230 281 199 296
Preferred stock dividends -- 1,853 2,471 1,604 1,604 1,199 573
Rental expense deemed interest -- -- -- -- -- -- --
-------- -------- ------- ------- ------- ------- -------
Total fixed charges $ 19,250 $ 25,214 $27,082 $22,571 $31,887 $24,705 $23,517
======== ======== ======= ======= ======= ======= =======
Earnings, as defined:
Income (loss) from continuing operations
before income taxes (27,062) (5,052) 63,034 53,085 19,350 4,119 73,254
Interest expense 16,977 23,361 24,611 20,737 30,002 23,307 22,648
Rental expense deemed interest -- -- -- -- -- -- --
-------- -------- ------- ------- ------- ------- -------
Earnings, as defined (1) $(10,085) $ 18,309 $87,645 $73,822 $49,352 $27,426 $95,902
======== ======== ======= ======= ======= ======= =======
Ratio of earnings to fixed charges (2) -- -- 3.2x 3.3x 1.5x 1.1x 4.1x
======== ======== ======= ======= ======= ======= =======
__________
(1) Earnings represents income before income taxes from continuing
operations before fixed charges.
(2) For the purpose of calculating the ratio of earnings to fixed charges,
fixed charges include interest expense, capitalized interest expense,
preferred stock dividends and that portion of non-capitalized rental
expense deemed to be the equivalent of interest. Earnings represents
income before income taxes from continuing operations before fixed
charges. Earnings were insufficient to cover fixed charges by $29.3
million and $6.9 million for the years ended December 31, 1998 and
1999, respectively.
December 12, 2003 Comstock Resources, Inc. 5300 Town and Country Boulevard Suite 500 Frisco, Texas 75034 Shareholders and Board of Directors Comstock Resources, Inc. We are aware of the incorporation by reference in the Registration Statement on Form S-3 for $300,000,000 of Securities of Comstock Resources, Inc. of our reports dated November 5, 2003 and August 7, 2003 relating to the unaudited consolidated interim financial statements of Comstock Resources, Inc. that are included in its Forms 10-Q for the quarters ended September 30, 2003 and June 30, 2003. Ernst & Young LLP Dallas, Texas
December 11, 2003 Comstock Resources, Inc. 5300 Town and Country Blvd., Suite 500 Frisco, Texas 75034 Re: Form S-3 (related to the $300,000,000 Shelf Registration) With respect to the subject registration statement, we acknowledge our awareness of the use therein of our report dated May 7, 2003, related to our review of interim financial information for the period ended March 31, 2003. Pursuant to Rule 436 under the Securities Act of 1933 (the "Act"), such report is not considered part of a registration statement prepared or certified by an accountant, or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. KPMG LLP Dallas, Texas
Independent Auditors ’ Consent
The Board of Directors
Comstock Resources, Inc.:
We consent to the use of our report dated March 19, 2003, with respect to the
consolidated balance sheets of Comstock Resources, Inc., as of December 31, 2001
and 2002, and the related consolidated statements of operations,
stockholders’ equity, cash flows and comprehensive income for each of the
years in the three-year period ended December 31, 2002, incorporated herein by
reference and to the reference to our firm under the heading “Experts”
in the prospectus. Our report dated March 19, 2003 contains an explanatory note
that refers to a restatement of the consolidated financial statements as of
December 31, 2002 and for the two-year period then ended. Our report also refers
to a change in the Company’s method of accounting for derivative
instruments.
KPMG LLP
Dallas, Texas
December 11, 2003