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EXHIBIT 2 (a)
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of June 16, 1995 between
Comstock Resources, Inc., a Nevada corporation (the "Company"), and Trust
Company of the West, a California trust company ("Trustco"), as Trustee of the
TCW Debt and Royalty Fund IVA established pursuant to a Declaration of Trust
executed December 31, 1992 ("Fund IVA"); Trustco, in its capacities as
Investment Manager pursuant to the Investment Management Agreement dated as of
June 6, 1988 between General Mills, Inc. and Trustco and as Custodian pursuant
to the Custody Agreement dated as of February 6, 1989 among General Mills,
Inc., Trustco and State Street Bank and Trust Company, as trustee ("General
Mills"); TCW Asset Management Company, a California corporation ("Tamco"), as
Investment Manager pursuant to the Investment Management and Custody Agreement
dated as of June 1, 1993 among The Trustees of Columbia University in the City
of New York, Tamco and Trustco ("Columbia"); Tamco, as Investment Manager
pursuant to the Investment Management Agreement dated as of March 1, 1993
between The Board of Trustees of the Leland Stanford Junior University and
Tamco ("LSJU"); Tamco, as Investment Manager under the Investment Management
Agreement dated as of June 8, 1993 between the Searle Trusts Limited
Partnership X, a Delaware limited partnership (the "Searle Partnership X"),
Harris Trust and Savings Bank, as Custodian for the Searle Partnership X, and
Tamco ("SPX"); Tamco, as Investment Manager under the Investment Management
Agreement dated as of June 8, 1993 between the John G. Searle Charitable Trusts
Partnership, a Delaware limited partnership (the "Searle Charitable
Partnership"), Harris Trust and Savings Bank, as Custodian for the Searle
Charitable Partnership, and Tamco ("SCP"); Tamco, as Investment Manager under
the Investment Management Agreement dated as of December 31, 1993 between Tamco
and Delta Air Lines, Inc. ("Delta"); Trust Company of the West, as Custodian
pursuant to the Investment Management and Custody Agreement dated as of April
26, 1994 among The City and County Employee's Retirement System of San
Francisco, TCW Asset Management Company and Trust Company of the West; and TCW
Debt and Royalty Fund IVB, a California Limited Partnership ("Fund IVB"); and
TCW Debt and Royalty Fund IVC, a California Limited Partnership ("Fund IVC")
(Trustco, in the capacities designated above; Tamco, in the capacities
designated above; Fund IVB and Fund IVC are hereinafter collectively referred
to as "TCW").
TCW, on behalf of each of the parties set forth on Schedule A
hereto (together with their successors and assigns, the "Holders"), hereby
subscribes for an aggregate of 1,500,000 shares (the "Preferred Shares") of the
Company's Series 1995 Convertible Preferred Stock, $10.00 par value per share
(the "Preferred Stock"), at a purchase price of $10.00 per share, with the
rights, restrictions, preferences and privileges as stated in the Certificate
of Designation with respect to the Preferred Stock attached hereto as Exhibit A
(the "Certificate of Designation") and as provided by law. The Preferred
Shares are
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convertible into, redeemable for, and dividends thereon may be payable in,
shares of the Company's common stock, $0.50 par value per share (the "Common
Stock"), as stated in the Certificate of Designation. Accordingly, the parties
hereto agree as follows:
SECTION 1. DEFINITIONS
As used herein, the following terms shall have the following
meanings.
"1994 B Preferred" shall mean the 1,000,000 shares of the
Company's 1994 Series B Convertible Preferred Stock, $10.00 par value per
share, issued pursuant to that certain Exchange Agreement dated as of July 21,
1994 (the "Exchange Agreement") between the Company, Enron Reserve Acquisition
Corp. and Enron Risk Management Services Corp., and any additional shares of
1994 Series B Convertible Preferred Stock issued as a dividend thereon.
"1994 Preferred" shall mean the 600,000 shares of the
Company's Series 1994 Convertible Preferred Stock, $10.00 par value per share,
issued pursuant to that certain Stock Purchase Agreement dated as of January 7,
1994 (the "1994 TCW Agreement") between the Company and Fund IVA, General
Mills, Columbia, LSJU, SPX, SCP, Delta and Fund IVB.
"Affiliate" shall mean, with respect to a specified Person,
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person and, with respect
to any fund or trust, any Person which is a participant in or beneficiary of
such fund or trust. For 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, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing. Notwithstanding the foregoing
provisions of this definition (i) in no event shall any Holder (or any
Affiliate thereof) be deemed to be an Affiliate of the Company and (ii)
Comstock-DR II Oil & Gas Acquisition Limited Partnership, a Texas limited
partnership ("DR II"), Liberty Life Insurance Company, M. Jay Allison and
Roland O. Burns shall be deemed to be Affiliates of the Company for purposes of
this Agreement.
"Articles of Incorporation" shall mean the Restated Articles
of Incorporation of the Company, as in effect on the date hereof and as at any
time amended or otherwise modified.
"Commission" shall mean the Securities and Exchange Commission
or any other similar or successor agency of the federal government
administering the Securities Act.
"Controlling Person" shall have the meaning defined in Section
4.7.
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"Conversion Shares" shall mean the shares of Common Stock into
which the Preferred Shares are convertible or converted, for which the
Preferred Shares are redeemed, and in which dividends on the Preferred Shares
are paid.
"Development Plan" shall mean the development plan attached to
the Secretary's Certificate pursuant to Section 3.7.1(a), as approved by TCW
and as the same may be amended from time to time with the consent of TCW as
provided in the Certificate of Designation.
"Indemnitee" and "Indemnitor" shall have the meanings defined
in Section 4.7.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization or government or agency or political subdivision thereof.
"Piggy Back Right" shall have the meaning defined in Section
4.3.
"Reimbursable Registration" shall have the meaning defined in
Section 4.6.
"Requisite Holders" shall mean the holders of Preferred Shares
and Conversion Shares representing at least 70% of the Conversion Shares.
"Restricted Certificate" shall mean a certificate for
Preferred Shares or Conversion Shares bearing the restrictive legend set forth
in Section 4.1.
"Restricted Securities" shall mean Preferred Shares or
Conversion Shares evidenced by a Restricted Certificate.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Seller" shall mean a holder of Restricted Securities for
which the Company shall be required to file a registration statement or which
shall be registered under the Securities Act at the request of such holder
pursuant to any of the provisions of Section 4. Neither the Company nor any
Affiliate of the Company shall be deemed a "Seller" for any purposes of this
Agreement.
"Transfer" shall mean any sale, transfer or other disposition
of any Restricted Securities, or of any interest in any thereof, which would
constitute an offer or sale thereof within the meaning of the Securities Act.
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SECTION 2. PURCHASE AND SALE OF SECURITIES
2.1. Authorization and Issuance of Preferred Shares and
Conversion Shares. The Company has authorized: (a) the issue of one or more
certificates for issuance to the Holders pursuant to this Agreement, and (b)
the issue of such number of Conversion Shares as will permit the compliance by
the Company with its obligations to issue Conversion Shares pursuant to the
Articles of Incorporation and Certificate of Designation.
2.2. The Closing. Subject to the conditions set forth in
Section 3.1.7, the Company hereby agrees to issue to each Holder, and each
Holder hereby agrees to purchase, the number of shares of Preferred Stock set
out opposite such Holder's name on Schedule A attached hereto, at a purchase
price of $10.00 per share. The Company will deliver to each Holder a single
certificate for the Preferred Shares, registered in the name of such Holder,
except that, if any such Holder shall notify the Company in writing prior to
such issuance that it desires certificates for Preferred Shares to be issued in
other denominations or registered in the name or names of any Person or Persons
referred to in the proviso at the end of the first sentence of Section 4 or any
nominee or nominees for its or their benefit, then the certificates for
Preferred Shares shall be issued to such Holder in the denominations and
registered in the name or names specified in such notice.
2.3. Purchase for Holder's Account. Each Holder represents
and warrants to the Company that such Holder is purchasing and will purchase
the Preferred Shares as of the date hereof solely for investment purposes, for
its own account, with no present intention of distributing or reselling the
Preferred Shares or the Conversion Shares or any part thereof in violation of
applicable securities laws, and that such Holder is prepared to bear the
economic risk of retaining the Preferred Shares and the Conversion Shares for
an indefinite period, all without prejudice, however, to the right of such
Holder at any time, in accordance with this Agreement, lawfully to sell or
otherwise dispose of all or any part of the Preferred Shares or the Conversion
Shares held by it. It is understood that, in making the representations set
forth in Section 3.1, 3.2 and 3.3, the Company is relying, to the extent
applicable, upon the representations and warranties of each such Holder. Each
Holder represents and warrants that it is an accredited investor, as such term
is defined in Rule 501 of Regulation D promulgated under the Securities Act.
2.4. Compliance. Further in reliance upon the
representations and warranties of each Holder in Section 2.3, the Company has
not registered the Preferred Shares or the Conversion Shares under the
Securities Act and each Holder agrees that neither the Preferred Shares nor the
Conversion Shares will be sold or offered for sale without registration under
said Act or the availability of an exemption therefrom or if said Act is not
applicable, all as more fully provided in Section 4, nor in violation of any
other law of the United States of America or any state.
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2.5. Expenses. Whether or not the Preferred Shares are sold
to any Holder, the Company will pay all costs and expenses incurred by the
Holders (a) relating to the negotiation, execution and delivery of this
Agreement and the issuance of the Preferred Shares (including, without
limitation, fees, office charges and expenses of counsel to the Holders (fees
of Milbank, Tweed, Hadley & McCloy not to exceed $37,500 without the consent of
the Company) and reasonable third party engineering and other out-of-pocket
costs), (b) provided for in Sections 4.6, 4.7, 5.1 and 5.2, (c) relating to
printing the instruments evidencing the Preferred Shares or the Conversion
Shares, (d) expenses relating to any amendments, waivers or consents under this
Agreement and (e) incident to the enforcement by any Holder of, or the
protection or preservation of any right or remedy of any Holder under, this
Agreement, the Articles of Incorporation or any other agreement furnished
pursuant hereto or thereto or in connection herewith or therewith (including,
without limitation, fees and expenses of counsel). The Company shall pay such
costs and expenses, to the extent then payable, on the date of issuance of the
Preferred Shares and thereafter from time to time upon demand by any Holder
against presentation, in each such case, of a statement thereof.
2.6. Conversion Option. The Company will have the option, at
any time, to convert the Preferred Shares, on the same terms and conditions set
forth herein, to convertible subordinated debt of the Company, provided that
all of the following conditions are satisfied: (i) the Company obtains the
consent of the holders of the 1994 Preferred and 1994 B Preferred; and (ii) the
Company shall have delivered to the Holders all necessary approvals,
subordination agreements and other documentation, in form and substance
satisfactory to TCW in its sole and absolute discretion, required in connection
with such conversion (which will provide for an increase in the number of
demand registrations, the reasonable costs and expenses of which shall be
payable by the Company, to a number acceptable to TCW in its sole and absolute
discretion) and (ii) the Holders shall have received an opinion of counsel to
the Company (a) that such conversion neither breaches nor violates any existing
agreement to which the Company is a party or any other obligation of the
Company, (b) such conversion shall not cause an adjustment in the conversion
price, option price or exercise price in any convertible security issued by the
Company, and (c) such other matters as TCW may request.
SECTION 3. WARRANTIES, REPRESENTATIONS AND COVENANTS OF THE COMPANY
The Company hereby represents, warrants and covenants to each
Holder that as of the date of the Company's execution of this Agreement:
3.1. Sale is Legal, etc.
3.1.1. Upon the issuance of the Preferred Shares under this
Agreement, the total number of shares of capital stock which the Company has
authority to issue is
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35,000,000 shares, consisting of 30,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. The Company has the power and authority
and has taken all actions (corporate or other) necessary to authorize it to
enter into and perform its obligations and undertakings under this Agreement.
Immediately prior to the issuance of the Preferred Shares under this Agreement,
12,477,192 shares of Common Stock will be issued and outstanding. Upon the
issuance of the Preferred Shares under this Agreement, the Company does not
have outstanding any stock or securities convertible into or exchangeable for
any shares of capital stock nor does it have outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to, any capital stock or
stock or securities convertible into or exchangeable for any capital stock
other than (i) the Preferred Shares to be issued pursuant to this Agreement,
(ii) 600,000 shares of the 1994 Preferred, (iii) 1,000,000 shares of the 1994 B
Preferred, and (iv) options and warrants to purchase an aggregate of 1,990,307
shares of Common Stock as set forth on Schedule 3.1.1 hereto.
3.1.2. The Preferred Shares will, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges.
3.1.3. The Company will at all times reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of the conversion of the Preferred Shares, such number of
Conversion Shares issuable upon the conversion of all outstanding Preferred
Shares. All Conversion Shares will, when issued, be duly and validly issued,
fully paid and nonassessable and free from all taxes, liens and charges. The
Company will take all such actions as may be necessary to assure that all
Conversion Shares may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange
or national market upon which the Conversion Shares may be listed.
3.1.4. None of the execution and delivery of this Agreement,
or the issue and sale of the Preferred Shares and the Conversion Shares, or the
consummation of the transactions herein or therein contemplated or compliance
with the terms and provisions hereof and thereof will conflict with or result
in a breach of, or require any consent under, the Articles of Incorporation of
the Company, or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency (other
than filings which will be made by the Company as required by applicable state
securities laws), or any agreement or instrument to which the Company is a
party or by which it is bound or to which it is subject, or constitute a
default under any such agreement or instrument, or result in the creation or
imposition of any lien upon any of the revenues or assets of the Company
pursuant to the terms of any such agreement or instrument.
3.1.5. There is not in effect on the date hereof any
agreement by the Company (other than this Agreement) pursuant to which any
holders of securities of the
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Company have a right to cause the Company to register such securities under the
Securities Act other than as set forth on Schedule 3.1.5 hereto.
3.1.6. The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Nevada and has
the corporate power and authority to execute and deliver this Agreement, the
Preferred Shares and the Conversion Shares and to perform the terms hereof and
thereof. The Company has taken all action necessary to authorize the
execution, delivery and performance of this Agreement, the issuance of the
Preferred Shares and the Conversion Shares. This Agreement has been duly
authorized and executed and constitutes the legal, valid and binding
obligations of the Company, enforceable against the Company in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to
or limiting creditors' rights generally.
3.1.7. As a condition to the obligations of the Holders
hereunder and prior to the issuance of the Preferred Shares, the Company shall
have delivered to the Holders (in form and substance satisfactory to Holders
and their counsel):
(a) a certificate, dated the date hereof, of the
Secretary or an Assistant Secretary of the Company, (A) attaching a
true and complete copy of the resolutions of the Board of Directors of
the Company, and of all documents evidencing other necessary corporate
or shareholder action (in form and substance satisfactory to the
Holders and to their counsel) taken by the Company in connection with
the matters contemplated by this Agreement, (B) attaching a true and
complete copy of the Articles of Incorporation and by- laws of the
Company and each of its subsidiaries, (C) setting forth the incumbency
of the officer or officers of the Company who sign this Agreement, any
document delivered by the Company pursuant hereto and each certificate
for the Preferred Shares, including therein a signature specimen of
such officer or officers and (D) attaching a true and complete copy of
the Development Plan;
(b) certificates of good standing (including tax
status, if applicable) of the Company and each of its subsidiaries
under the laws of their respective states of incorporation and as
foreign corporations in every state in which they own property or
conduct business;
(c) an opinion of Locke Purnell Rain Harrell (A
Professional Corporation) in the form attached hereto as Exhibit B;
(d) a copy of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994, which report shall
contain audited financial statements of the Company for such fiscal
year prepared in accordance with generally
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accepted accounting principles which fairly present the information
included therein, accompanied by an opinion of the Company's certified
public accountants;
(e) copies of the Company's Quarterly Report on
Form 10-Q for the fiscal quarter March 31, 1995, which reports may
contain unaudited financial statements of the Company for such fiscal
quarter prepared in accordance with generally accepted accounting
principles which fairly present the information included therein,
certified by the Company's chief financial officer;
(f) such other documents and evidence relating to
the matters contemplated by this Agreement as the Holders or their
counsel shall reasonably require, including without limitation,
evidence that (i) the Company has sufficient authorized and reserved
shares of Common Stock on the date hereof to meet the Company's
obligations herein and in the Certificate of Designation and (ii) the
Rights Agreement between the Company and Bank One, Texas N.A., as
successor Rights Agent, dated December 10, 1990, as the same may be
amended from time to time (the "Rights Agreement"), has been amended
to exclude the Preferred Shares, the Conversion Shares and the Holders
thereof, under certain circumstances, from the definitions of
"Acquiring Person" or "Adverse Person" under such Rights Agreement;
(g) copies of the Articles of Amendment to the
Certificate of Voting Powers, Designations, Preferences, and Relative,
Participating, Optional or Other Special Rights of the 1994 Preferred
and 1994 B Preferred in the forms attached hereto as Exhibits D and E,
respectively, and evidence that the holders thereof approved the same
and the issuance of the Preferred Shares; and
(h) (i) copies of the (a) definitive purchase and
sale agreement executed by the Company and Sonat Exploration Company,
a Delaware corporation ("Sonat"), relating to the acquisition
transaction, described in the Company's press release of 5/17/95, and
(b) resolutions of the Boards of Directors of the Company and Sonat
authorizing such acquisition transaction and (ii) a certificate of the
President of the Company certifying that there has been no default or
breach of the purchase and sale agreement on the part of the Company
as of the date hereof.
(i) a fully executed copy of the Third Amendment
to Credit Agreement, substantially in the form of Exhibit F attached
hereto (the "Third Amendment"), amending that certain Credit
Agreement, dated as of September 30, 1994, between the Company and NBD
Bank, N.A. ("NBD"), as agent for the Banks described therein (as
amended by that certain First Amendment to Credit Agreement dated
December 31, 1994 and that certain Second Amendment to Credit
Agreement dated May 15, 1995, the "Credit Agreement").
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3.2. Governmental Consent. Other than filings required by
applicable state securities laws which shall be made by the Company, neither
the nature of the Company or of any its subsidiaries, or of any of their
respective businesses or properties, nor any relationship between the Company
or any subsidiary and any other Person, nor (except as expressly provided for
in this Agreement) any circumstance in connection with the offer, issue or sale
of the Preferred Shares and Conversion Shares is such as to require consent,
approval or authorization of, or filing, registration or qualification with,
any governmental authority on the part of the Company as a condition to the
execution and delivery of this Agreement or the execution and filing of the
Certificate of Designation or any amendment of the Articles of Incorporation
required in connection with the authorization, offer, sale and/or issuance of
the Preferred Shares or the Conversion Shares.
3.3. Private Offering. Neither the Company nor any other
Person acting on behalf of the Company has offered any of the Preferred Shares
or any similar securities of the Company for sale to, or solicited offers to
buy any thereof from, or otherwise approached or negotiated with respect
thereto with any prospective purchasers who are not accredited investors, as
defined in Rule 501 of Regulation D promulgated under the Securities Act. The
Company agrees that neither the Company nor anyone acting on its behalf has
offered or will offer the Preferred Shares or any part thereof or any similar
securities for issue or sale to, or has solicited or will solicit any offer to
acquire any of the same from, anyone so as to bring the issuance and sale of
the Preferred Shares within the provisions of Section 5 of the Securities Act.
Based in part on the representations of the Holders set forth herein, the
offer, sale and issuance of the Preferred Shares in conformity with the terms
of this Agreement are exempt from the registration requirements of the
Securities Act and any applicable state securities laws.
3.4. Litigation. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company that
questions the validity of this Agreement or the Company's right to enter into
this Agreement, or to consummate the transactions contemplated hereby or which,
if decided in a manner adverse to the Company, would have a material adverse
effect on the Company or on any of its subsidiaries.
3.5. No Material Misstatements. No representation, warranty,
or statement by Company in this Agreement or in any written statement or
certificate furnished or to be furnished to the Holders pursuant to this
Agreement contains any untrue statement of a material fact or, when taken
together, omits a material fact necessary to make the statements made herein or
therein not misleading.
3.6. Ownership of Subsidiaries. The Company has good and
marketable title to all the outstanding stock of each of its subsidiaries free
and clear of all liens other than as set forth on Schedule 3.6 hereof. None of
the Company's subsidiaries have outstanding (i) any stock or securities
convertible into or exchangeable for any shares of capital stock or (ii) any
rights to subscribe for or to purchase, or any options for the purchase of, or
any
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agreements providing for the issuance (contingent or otherwise) of, or any
calls, commitments or claims of any character relating to any capital stock or
stock or securities.
3.7. Material Adverse Change. There has been no material
adverse change in the business, prospects or financial standing of the Company
since the filing of the Company's most recent Annual Report on Form 10-K or
Quarterly Report on Form 10-Q.
SECTION 4. RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS
The Restricted Securities shall not be transferable except
upon the conditions specified in this Section 4; provided that, notwithstanding
any other provisions of this Section 4, each Holder (and each other Person
mentioned below in this clause) shall have the right to transfer any Restricted
Securities to any Affiliate, fund participant, trust beneficiary, or limited
partner of such Holder, any party to any investment management or other similar
agreement with Trustco or Tamco, any fund, foundation, trust or other Person
for whose benefit any such agreement with Trustco or Tamco relates or any
trustee, custodian or nominee of or for any such Person. Each such transferee
shall be subject to the same transfer restrictions imposed on the Holders by
this Agreement. All rights and obligations of the Holders set forth in this
Section 4 will inure to the benefit of and be binding upon any transferee of
the Restricted Securities.
4.1. Restrictive Legend. Unless and until otherwise
permitted by this Section 4, each certificate for Preferred Shares issued under
this Agreement, each certificate for any Preferred Shares issued to any
subsequent transferee of any such certificate, each certificate for any
Conversion Shares issued upon exercise of any Preferred Shares and each
certificate for any Conversion Shares issued to any subsequent transferee of
any such certificate, shall be stamped or otherwise imprinted with a legend in
substantially the following form:
"The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, and may be
reoffered and sold only if registered pursuant to the provisions of
said Securities Act or if an exemption from registration is
available."
4.2. Notice of Proposed Transfers. Prior to any transfer or
attempted transfer of any Restricted Securities not covered by the proviso
contained in the introductory paragraph to Section 4, the holder of such
Restricted Certificate shall give written notice to the Company of such
holder's intention to effect such transfer. Each such notice (i) shall
describe the manner and circumstances of the proposed transfer in sufficient
detail, and shall contain an undertaking by the Person giving such notice to
furnish such other information as may be required, to enable counsel to render
the opinions referred to below, and (ii) shall designate the counsel for the
Person giving such notice. Except as otherwise set forth herein, such Person
shall obtain the services of counsel described below at its own expense.
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The Person giving such notice shall submit a copy thereof to the counsel
designated in such notice. If in the opinion of such counsel, which is
reasonably satisfactory to the Company, the proposed transfer of such
Restricted Securities evidenced by such Restricted Certificate may be effected
without registration of such Restricted Securities under the Securities Act,
the Company shall, within ten (10) Business Days after delivery of such opinion
to the Company, so notify the holder of such Restricted Certificate and such
holder shall thereupon be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by such holder to the
Company. Each certificate evidencing the Restricted Securities thus to be
transferred (and each certificate evidencing any untransferred balance of the
Restricted Securities evidenced by such Restricted Certificate) shall bear the
restrictive legend set forth in Section 4.1.
4.3. Demand Registration. Subject to the limitations
contained in Section 4.6, at any time and from time to time, the holders of at
least 51% of the outstanding Preferred Shares and Conversion Shares may give
written notice to the Company (i) of their intention to convert all or part of
the Preferred Shares held by them and to transfer the Conversion Shares held or
obtained by conversion of Preferred Shares and (ii) requesting the registration
of said Conversion Shares, and thereupon, the Company shall, as expeditiously
as possible, effect the registration of such Conversion Shares under the
Securities Act. Such Sellers shall have the right to select the managing
underwriter or underwriters for the offering of such Conversion Shares.
In the case of an underwritten public offering of Restricted
Securities to be so registered, if the managing underwriter advises in its
opinion that (i) the inclusion in such registration of some or all of such
Common Stock requested to be registered (including without limitation,
securities to be included pursuant to incidental or "piggyback" rights
heretofore or hereafter granted by the Company to other Persons) will cause the
proceeds or price per share to the Sellers to be reduced or (ii) that the
number of securities to be registered at the request of the Sellers pursuant to
this Section 4.3 plus the number of securities sought to be registered by such
other Persons is too large a number to be reasonably sold, then the number of
securities to be included in such registration will be reduced as set forth
below:
(i) the number of shares of Common Stock sought to
be registered by any holders of Common Stock, other than the
Conversion Shares, shall be reduced pro rata to the extent necessary
to reduce the number of securities to be registered to the number
recommended by the managing underwriter (the "Recommended Number");
and
(ii) if the reduction provided for in clause (i)
above does not reduce the number of shares of Common Stock to be
registered to the Recommended Number, then the number of Conversion
Shares sought to be registered shall be reduced pro rata, in
proportion to the number of shares of Common Stock sought to
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be registered by the holders of such Common Stock, to the extent
necessary to reduce the number of shares of Common Stock to be
registered to the Recommended Number;
provided, that in no event shall the holders of the Conversion Shares so
included in such registration be required to pay any expenses relating to such
registration, including, without limitation, all the expenses described in the
first paragraph of Section 4.6, which are related to the inclusion of any other
holders' Common Stock in the registration and, further provided that if in
connection with any registration pursuant to this Section 4.3 any holder of the
1994 Preferred or 1994 B Preferred requests to exercise its rights pursuant to
Section 4.4 of the 1994 TCW Agreement or Section 4.2(a) of the Exchange
Agreement then the number of such securities to be included in such
registration will be reduced according to the provisions of such Sections.
The Company will not grant to any Person at any time on or
after the date hereof the right (a "Piggyback Right") to request the Company to
register any securities of the Company under the Securities Act by reason of
the exercise by any Holder of its rights under this Section 4.3 unless such
Piggyback Right provides that such securities shall not be registered and sold
at the same time if the managing underwriter for the respective Sellers
believes that sale of such securities would adversely affect the amount of, or
price at which, the respective Conversion Shares being registered under this
Section 4.3 can be sold.
The Company agrees (1) not to effect any public or private
sale or distribution of its equity securities, including a sale pursuant to
Regulation D under the Securities Act, during the 10-day period prior to, and
during the 120-day period beginning on, the closing date of an underwritten
offering made pursuant to a registration statement filed pursuant to this
Section 4.3 and (2) to cause each holder of its privately placed equity
securities purchased from the Company at any time on or after the date of this
Agreement to agree not to effect any public sale or distribution of any such
securities during such period, including a sale pursuant to Rule 144 under the
Securities Act (except as part of such underwritten registration, if
permitted).
Except pursuant to a registration statement filed pursuant to
this Section 4.3, each Holder agrees not to effect any public sale or
distribution, including a sale pursuant to Rule 144 or 144A under the
Securities Act, of any Restricted Securities during the 10-day period prior to,
and during the 120-day period beginning on, the closing date of an underwritten
offering made pursuant to a registration statement filed pursuant to this
Section 4.3.
The Company recognizes that money damages may be inadequate to
compensate Holders for a breach by the Company of its obligations under this
Section 4.3, and the Company agrees that in the event of such a breach the
Holders may apply for an injunction of specific performance or the granting of
such other equitable remedies as may be
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14
awarded by a court of competent jurisdiction in order to afford Holders the
benefits of this Section 4.3 and that the Company shall not object to such
application, entry of such injunction or granting of such other equitable
remedies on the grounds that money damages will be sufficient to compensate the
Holders.
4.4. Piggy-Back Registration. Subject to the limitations
contained in Section 4.6, if the Company at any time proposes to register any
of its securities under the Securities Act on Form S-1, S-2 or S-3 or the
equivalent (otherwise than pursuant to Section 4.3 or to register debt
securities under Form S-3, or any comparable successor Form), whether of its
own accord or at the request of any holder or holders of such securities, it
will each such time give written notice to all holders of outstanding Preferred
Shares and Conversion Shares of its intention so to do.
Upon the written request of a holder or holders of any such
Preferred Shares and Conversion Shares given within 30 days after receipt of
any such notice (stating the intended method of disposition of such securities
by the prospective Seller or Sellers), the Company will use its best efforts to
cause all Conversion Shares, the holders of which shall have so requested
registration thereof, to be registered under the Securities Act, all to the
extent requisite to permit the sale or other disposition (in accordance with
the intended methods thereof as aforesaid) by the prospective Seller or Sellers
of the Conversion Shares so registered; provided, however, the Company may
elect not to file a registration statement pursuant to this Section 4.4 or may
withdraw any registration statement filed pursuant to this Section 4.4 at any
time prior to the effective date thereof. In the case of an underwritten
public equity offering by the Company, each Seller shall, if requested by the
managing underwriter, agree not to sell publicly any equity securities of the
Company held by such Seller (other than the Conversion Shares so registered)
for a period of up to 120 days following the effective date of the registration
statement relating to such offering.
If the managing underwriter for the respective offering
advises that the inclusion in such registration of some or all of the
Conversion Shares sought to be registered by the Seller in its opinion will
cause the proceeds or price per unit the Company or the requesting or demanding
holder of securities will derive from such registration to be reduced or that
the number of securities to be registered at the instance of the Company or
such requesting or demanding holder plus the number of securities sought to be
registered by the Sellers is too large a number to be reasonably sold, then the
number of securities to be included in such registration will be reduced as set
forth below:
(i) the number of shares of Common Stock sought to
be registered by any holders of Common Stock, other than the
Conversion Shares, shall be reduced pro rata to the extent necessary
to reduce the number of securities to be registered to the Recommended
Number;
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15
(ii) if the reduction provided for in clause (i)
above does not reduce the number of securities to be registered to the
Recommended Number, then the number of shares of the Common Stock
sought to be issued and registered on account of the Company shall be
reduced to the extent necessary to reduce the number of shares of
Common Stock to be registered to the Recommended Number; provided,
however, that this clause (ii) shall be of no effect with respect to
the registration and sale of such Common Stock by the Company which is
necessary to repay any debt or obligation of the Company or its
subsidiaries then becoming due and payable or which is necessary to
finance the acquisition of assets or a majority of the outstanding
stock of another corporation by the Company or its subsidiaries which
acquisition will be consummated within 6 months of the effective date
of such registration; and
(iii) if the reduction provided for in clauses (i)
and (ii) above does not reduce the number of shares of Common Stock to
be registered to the Recommended Number, then the number of Conversion
Shares sought to be registered shall be reduced pro rata, in
proportion to the number of Conversion Shares sought to be registered
by the holders thereof, to the extent necessary to reduce the number
of shares of Common Stock to be registered to the Recommended Number;
provided, that if in connection with any registration pursuant to this Section
4.4 any holder of the 1994 Preferred or 1994 B Preferred requests to exercise
its rights pursuant to Section 4.3 or 4.4 of the 1994 TCW Agreement or Section
4.2(b) of the Exchange Agreement then the number of such securities to be
included in such registration will be reduced according to the provisions of
such Sections, as the case may be.
The Company will not grant to any Person at any time on or
after the date hereof the right to request the Company to register any
securities of the Company under the Securities Act unless such right provides
that such securities shall not be registered and sold at the same time if the
managing underwriter for the respective sellers believes that sale of such
securities would adversely affect the amount of, or price at which, the
respective Conversion Shares being registered under this Section 4.4 can be
sold.
4.5. Registration Procedures. If and whenever the Company is
required by the provisions of this Section 4 to use its best efforts to effect
the registration of any of the Conversion Shares under the Securities Act, the
Company will (except as otherwise provided in this Agreement), as expeditiously
as possible:
(a) cooperate with any underwriters for, and the
Sellers of, such Conversion Shares, and will enter into a usual and
customary underwriting agreement with respect thereto and take all
such other reasonable actions as are necessary or advisable to permit,
expedite and facilitate the disposition of such Conversion Shares in
the manner contemplated by the related registration statement in each
case to the same extent as if all the securities then being offered
were for the account of the
- 14 -
16
Company and the Company will provide to any Seller of Conversion
Shares, any underwriter participating in any distribution thereof
pursuant to a registration statement, and any attorney, accountant or
other agent retained by any Seller or underwriter, reasonable access
to appropriate Company officers and employees to answer questions and
to supply information reasonably requested by any such Seller,
underwriter, attorney, accountant or agent in connection with such
registration statement;
(b) furnish or cause to be furnished to each
Seller of Conversion Shares covered by such registration statement,
addressed to such Sellers, a copy of the opinion of counsel for the
Company, and a copy of the "comfort" letter signed by the independent
public accountants who have certified the Company's financial
statements included in the registration statement, delivered on the
closing date to the underwriters of such Conversion Shares;
(c) prepare and file with the Commission a
registration statement with respect to such securities and use its
best efforts to cause such registration statement to become and remain
effective; and prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
securities covered by such registration statement whenever the Seller
or Sellers of such securities shall desire to sell or otherwise
dispose of the same; provided that no such registration statement will
be filed by the Company until counsel for the Sellers of securities
included therein shall have had a reasonable opportunity to review the
same and to exercise their rights under clause (a) above with respect
thereto and no amendment to any such registration statement naming
such Sellers as selling shareholders shall be filed with the
Commission until such Sellers shall have had at least seven days to
review such registration statement as originally filed and theretofore
amended, to exercise their rights under clause (a) above and to
approve or disapprove any portion of such registration statement
describing or referring to such Sellers;
(d) furnish to each Seller such numbers of copies
of a summary prospectus or other prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act,
and such other documents, as such Seller may reasonably request in
order to facilitate the public sale or other disposition of the
securities owned by such Seller;
(e) use its best efforts to register or qualify the
securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as each Seller shall
request, and do any and all other acts and things which may be
necessary or advisable to enable such Seller to consummate the public
- 15 -
17
sale or other disposition in such jurisdictions of the securities
owned by such Seller, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified or to file therein
any general consent to service;
(f) in the event of the issuance of any stop order
suspending the effectiveness of any registration statement or of any
order suspending or preventing the use of any prospectus or suspending
the qualification of any Conversion Shares for sale in any
jurisdiction, use its best efforts promptly to obtain its withdrawal;
(g) otherwise use its best efforts to comply with
all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable,
an earnings statement covering the period of at least twelve months,
beginning with the first fiscal quarter beginning after the effective
date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act; and
(h) list such securities on any securities exchange
on which any stock of the Company is then listed, if the listing of
such securities is then permitted under the rules of such exchange;
provided, however, that notwithstanding any other provision of this Section 4,
the Company shall not be required to maintain the effectiveness of any
registration statement for a period in excess of two years (plus any period
during which the effectiveness of such registration has been suspended) except
that from time to time after a transfer of Conversion Shares pursuant to a
registration statement the Company will file all reports required to be filed
by it under the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Commission thereunder,
and will take such further action as any holder or holders of Conversion Shares
may reasonably request, all to the extent required to enable such holders to
sell Conversion Shares pursuant to Rule 144 and Rule 144A promulgated under the
Securities Act (or any successor thereto). Upon written request, the Company
will deliver to such holders a written statement as to whether it has complied
with such requirements.
4.6. Expenses; Limitations on Registration. All expenses
incident to the Company's performance of its obligations in connection with any
registration of the Sellers' Conversion Shares under this Agreement including,
without limitation, printing expenses, fees and disbursements of counsel for
the Company, fees of the National Association of Securities Dealers, Inc. in
connection with its review of any offering contemplated in any registration
statement and expenses of any special audits to which the Company shall agree
or which shall be necessary to comply with governmental requirements in
connection with any such registration shall be paid by the Company. In
connection with each Reimbursable Registration (as defined below in this
Section 4.6), the Company shall pay (i) all registration
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18
and filing fees for the Sellers' Conversion Shares under Federal and State
securities laws, (ii) expenses of complying with the securities or blue sky
laws of any jurisdictions pursuant to Section 4.5(e), and (iii) fees and
expenses of not more than one special counsel for the Seller or Sellers. In
connection with any registration of any Conversion Shares which is not a
Reimbursable Registration, all expenses of the kind specified in the preceding
sentence shall be borne by the respective Seller or Sellers in such proportions
as they may agree.
It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 4 in respect of the
Conversion Shares which are to be registered at the request of any prospective
Seller that (i) subject to the immediately preceding paragraph, the Company
shall have received an undertaking satisfactory to it from such prospective
Seller to pay, or have deducted from the proceeds from the sale of Conversion
Shares pursuant to a registration, all expenses to be incurred by or for the
account of and required to be paid by such Seller, and (ii) such prospective
Seller shall furnish to the Company such information regarding the securities
held by such Seller and the intended method of disposition thereof as the
Company shall reasonably request and as shall be required in connection with
the action to be taken by the Company.
The Holders of Preferred Shares and Conversion Shares shall be
entitled to an aggregate of two effective registrations pursuant to requests
made under Section 4.3; provided that in the case any Holder shall acquire any
Conversion Shares by redemption of the Preferred Shares by the Company or by
conversion of such Preferred Stock following a Notice of Redemption (as defined
in the Certificate of Designation) the holders of Preferred Shares and
Conversion Shares shall be entitled to an aggregate of three effective
registrations pursuant to requests made under Section 4.3; provided, further,
that any registration request made by the requisite number of Holders, as set
forth in the first paragraph of Section 4.3, which request shall be withdrawn
(other than by reason of the Company's failure to perform its obligations
hereunder or a material adverse change in its financial position or business)
by the holders of at least 75% of the shares evidenced or covered by the
Conversion Shares sought to be registered, after the respective registration
statement shall have become effective, shall be treated as an "effective"
registration for purposes hereof. Each registration which either uses up one
of the two (or three, if applicable) registration rights granted in the
preceding sentence or is filed pursuant to a request subsequently withdrawn for
any of the reasons set forth in the final parenthetical clause of the preceding
sentence and each "piggy-back" registration pursuant to Section 4.4 shall be
deemed a "Reimbursable Registration."
The Company agrees that it will not file a registration
statement under the Securities Act, either for securities held by any of the
Company's securityholders other than holders of Preferred Shares and Conversion
Shares or for securities newly issued by the Company, until 30 days after the
effective date of any registration statement filed pursuant to the request of a
Seller or Sellers made under Section 4.3.
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19
4.7. Indemnification.
4.7.1. In the event of any registration of any of its
securities under the Securities Act pursuant to this Section 4, the Company
shall indemnify and hold harmless the Seller of such Conversion Shares, such
Seller's directors and officers, and each other person, if any, who controls
such Seller within the meaning of the Securities Act (a "Controlling Person"),
against any losses, claims, damages or liabilities, joint or several, to which
such Seller or any such director or officer or Controlling Person may become
subject under the Securities Act or any other statute or at common law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any alleged untrue statement of any material
fact contained, on the effective date thereof, in any registration statement
under which such securities were registered under the Securities Act, or in any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and shall reimburse such Seller or such director, officer or
Controlling Person for any legal or any other expenses reasonably incurred by
such Seller or such director, officer or Controlling Person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any alleged untrue statement or alleged omission made in such registration
statement, preliminary prospectus, prospectus, or amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such Seller specifically for use
therein. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Seller or such director, officer
or Controlling Person, and shall survive the transfer of such securities by
such Seller.
4.7.2. Each holder of any Conversion Shares shall, by
acceptance thereof, indemnify and hold harmless the Company, its directors and
officers and each other person, if any, who controls the Company against any
losses, claims, damages or liabilities, joint or several, to which the Company
or any such director or officer or any such person may become subject under the
Securities Act or any other statute or at common law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or omission of any material fact
contained, on the effective date thereof, in any registration statement under
which securities were registered under the Securities Act, or in any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent that such untrue
statement or omission was contained in written information furnished to the
Company through an instrument duly executed by such holder specifically for use
therein, and shall reimburse the Company or such director, officer or other
person for any legal or any other expenses
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20
reasonably incurred in connection with investigating or defending any such
loss, claim, damage, liability or action.
4.7.3. Indemnification similar to that specified in
Subsections 4.7.1 and 4.7.2 shall be given by the Company and each holder of
any Conversion Shares (with such modifications as shall be appropriate) to any
underwriter with respect to any required registration or other qualification of
any Conversion Shares under any Federal or state law or regulation of
governmental authority. The indemnity and expense reimbursements obligations
of the Company and the Holders under Subsections 4.7.1 and 4.7.2 shall be in
addition to any liability the Company and the Holders may otherwise have.
4.7.4. Each Person (an "Indemnitor") who under the preceding
provisions of this Section 4.7 agrees to indemnify another Person (an
"Indemnitee") shall have the right, subject to the provisions hereto, to
designate counsel (acceptable to the Indemnitee) to defend any case or
proceeding against the Indemnitee arising in respect of any claim of liability
for which such indemnification may be claimed, to the end that duplication of
legal expense may be minimized; provided that, if the Indemnitee notifies the
Indemnitor that the former has been advised by its counsel that any single
counsel in such case or proceeding would have a conflict of interest in
representing both the Indemnitor and the Indemnitee, the Indemnitee may
designate its own counsel in such case or proceeding and, to the extent so
provided above in this Section 4.7, shall be entitled to be reimbursed for its
legal expenses reasonably incurred in connection with defending itself in such
case or proceeding.
4.8. Termination of Restrictions. Notwithstanding the
foregoing provisions of this Section 4, the restrictions imposed by this
Section 4 upon the transferability of the Restricted Securities shall cease and
terminate as to any particular Restricted Security when such Restricted
Security shall have been effectively registered under the Securities Act and
sold by the holder thereof in accordance with such registration or sold under
Rule 144 or 144A promulgated by the Commission. Whenever the restrictions
imposed by this Section 4 shall terminate as to any Restricted Certificate, as
hereinabove provided, the holder thereof shall be entitled to receive from the
Company, without expense, a new certificate not bearing the restrictive legend
otherwise required to be borne thereby.
4.9. Rule 144. At all times, in order to permit the holders
of Preferred Shares and Conversion Shares to sell the same, if they so desire,
pursuant to Rule 144 or 144A promulgated by the Commission (or any successor to
such rule), the Company will comply with all rules and regulations of the
Commission applicable in connection with use of Rule 144 and 144A (or any
successor rules thereto), including the provision of information concerning the
Company and the timely filing of all reports with the Commission in order to
enable such holders, if they so elect, to utilize Rule 144 or 144A, and the
Company will cause any restrictive legends to be removed and any transfer
restrictions to be rescinded with respect to any sale of Preferred Shares or
Conversion Shares which is exempt from registration under the Securities Act
pursuant to Rule 144 or 144A.
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SECTION 5. COVENANTS OF THE COMPANY
5.1. Delivery Expenses. If any Holder surrenders any
certificate for Preferred Shares or Conversion Shares to the Company or a
transfer agent of the Company for exchange for instruments of other
denominations or registered in another name or names, the Company will, subject
to the provisions of Section 4, cause such new instruments to be issued and
will pay the cost of delivering to or from the office of the Holder from or to
the Company or its transfer agent, duly insured, the surrendered instrument and
any new instruments issued in substitution or replacement for the surrendered
instrument.
5.2. Taxes. The Company will pay all taxes (other than
Federal, State or local income taxes) which may be payable in connection with
the execution and delivery of this Agreement or the issuance and sale of the
Preferred Shares and Conversion Shares hereunder or in connection with any
modification of the Preferred Shares or Conversion Shares and will save the
Holders harmless without limitation as to time against any and all liabilities
with respect to or resulting from any delay in paying, or omission to pay such
taxes. The obligations of the Company under this Section 5.2 shall survive any
redemption, repurchase or acquisition of Preferred Shares or Conversion Shares
by the Company and the termination of this Agreement.
5.3. Replacement of Instruments. Upon receipt by the Company
of evidence reasonably satisfactory to it of the ownership of and the loss,
theft, destruction or mutilation of any certificate or instrument evidencing
any Preferred Shares or Conversion Shares, and
(a) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to it (provided that, if the owner
of the same is a commercial bank or an institutional lender or
investor, its own agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and
cancellation thereof,
the Company, at its expense, will execute, register and deliver, in lieu
thereof, a new certificate or instrument for (or covering the purchase of) an
equal number of shares of Preferred Shares or Conversion Shares.
5.4. Restrictions on Certain Actions. Prior to the day next
following the issuance of Preferred Shares hereunder the Company will not:
(a) pay or declare any dividend payable in shares of
its common stock or take any other action which, if taken after the
date of such issuance, would result under the terms of the Preferred
Stock in a change in the number of Conversion Shares into which the
Preferred Shares may be converted, other than with respect to
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22
the payment or declaration of dividends on the 1994 Preferred or 1994
B Preferred; or
(b) make any amendment to the Articles of Incorporation of
the Company, or file any resolution of the board of directors with the
Nevada Secretary of State containing any provisions, which would
materially and adversely affect or otherwise impair the rights of the
holders of the Preferred Shares.
5.5. Use of Proceeds. The Company shall use the proceeds of
the sale of the Preferred Shares as follows:
(a) $5,000,000 for implementation of the
Development Plan; and
(b) up to $10,000,000 to (i) acquire oil and gas
interests from Sonat Exploration Company as described in the documents
delivered pursuant to Section 3.1(h) above (the "Sonat Acquisition"),
(ii) reduce the outstanding obligations of the Company under its
existing credit facility with NBD, provided, that the Company receives
an irrevocable and unconditional commitment from NBD enabling the
Company to draw additional amounts from the aforementioned credit
facility equal to or greater than the amount of such reductions in
order to finance the Sonat Acquisition (so long as no event of default
exists thereunder), or (iii) to acquire other property or properties
consented to in writing by TCW.
Notwithstanding the foregoing, none of the proceeds of the sale of the
Preferred Shares shall be used to finance any development of or work on any
properties relating to interests of Comstock DR-II Oil & Gas Acquisition
Limited Partnership.
5.6. Rights Agreement. The Company will not, without the
affirmative vote or consent of the Requisite Holders, supplement, amend or
repeal any provision of the Rights Agreement, or adopt any other agreement or
plan similar to the Rights Agreement, which could materially adversely affect
the Holders of the Preferred Stock or the Conversion Shares, in their sole
discretion.
5.7. Implementation of Development Plan. The Company
shall take all action necessary to commence and implement the Development Plan
not later than June 30, 1996.
5.8. Modification of Credit Facility. The Company shall
prior to the closing of the Sonat Acquisition enter into either (i) an
amendment to the Credit Agreement substantially on the terms and conditions set
forth on that certain commitment letter dated June 16, 1995 (the "Commitment
Letter"), a copy of which is attached hereto as Exhibit G or (ii) a credit
facility with another lender or lenders providing for financing for the Sonat
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Acquisition on terms and conditions no less favorable to the Company than those
set forth in the Commitment Letter.
5.9. Sonat Acquisition. Unless otherwise consented to in
writing by TCW, the Company shall (i) complete the Sonat Acquisition no later
than August 31, 1995 (or such later date, up to and including December 31,
1995, which is the fifth business day after the expiration or termination of
the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, with respect to the Sonat Acquisition) or (ii) acquire other
property or properties, approved in writing by TCW, in lieu of the Sonat
Acquisition no later than December 31, 1995.
SECTION 6. MISCELLANEOUS
6.1. Notices.
6.1.1. All communications under this Agreement shall be in
writing and shall be mailed by first class mail, postage prepaid:
(a) if to any party hereto at its address for
notices specified beneath its name on the signature page hereof, or at
such other address as it may have furnished in writing to each other
party hereto and all other holders of Preferred Shares and Conversion
Shares at the time outstanding, or
(b) if to any other Person who is the registered
holder of any Preferred Shares or Conversion Shares, to the address
for the purpose of such holder as it appears in the stock ledger of
the Company.
6.1.2. Any notice shall be deemed to have been duly given
when delivered by hand, if personally delivered, and if sent by mail, two
Business Days after being deposited in the mail, postage prepaid.
6.2. Survival. All warranties, representations and covenants
made by the Company herein or in any certificate or other instrument delivered
by it or on its behalf under this Agreement shall be considered to have been
relied upon by the Holders and shall survive the issuance of the Preferred
Shares regardless of any investigation made by or on behalf of the Holders.
All statements in any such certificate or other instrument so delivered shall
constitute representations and warranties by the Company hereunder.
All representations, warranties and covenants made by the
Holders herein shall be considered to have been relied upon by the Company and
shall survive the issuance to the Holders of the Preferred Shares regardless of
any investigation made by the Company or on its behalf.
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The provisions of Section 4 hereof shall survive the issuance
to the Holders of the Preferred Shares and the Conversion Shares.
6.3. Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall inure to the benefit of and be binding
upon the successors and assigns of each of the parties whether so expressed or
not.
6.4. Amendment and Waiver, etc. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, but
only with the written consent of the Requisite Holders. No failure or delay on
the part of the Holders in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to the Holders at law or in equity or otherwise. No waiver of or
consent to any departure by the Company from any provision of this Agreement
shall be effective unless signed in writing by the Holders.
6.5. Duplicate Originals. Two or more duplicate originals of
this Agreement may be signed by the parties, each of which shall be an original
but all of which together shall constitute one and the same instrument.
6.6. Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
6.7. Governing Law. This Agreement shall be construed in
accordance with and governed by the law of the State of California.
6.8. Specific Performance. The Company acknowledges that the
Holders have no adequate remedy at law for breaches by the Company of its
obligations hereunder or under the Articles of Incorporation, and accordingly
the Company irrevocably agrees that the Holders shall be entitled to the remedy
of specific performance and waives any right the Company may have to object to
such remedy.
6.9. Applicable IRR Calculation. Attached hereto as Exhibit
C are schedules provided by way of example in calculating the Applicable IRR
Amount (as defined in the Certificate of Designation) for purposes of Section
4.4 of the Certificate of Designation.
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IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Stock Purchase Agreement as of the date first above written.
COMSTOCK RESOURCES, INC.,
a Nevada corporation
By: /s/ M. JAY ALLISON
M. Jay Allison
President and
Chief Executive Officer
Address for Notices:
5005 LBJ Freeway
Suite 1000
Dallas, Texas 75244
TRUST COMPANY OF THE WEST,
a California trust company,
as Trustee of TCW Debt and
Royalty Fund IVA
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
STOCK PURCHASE
AGREEMENT
26
TRUST COMPANY OF THE WEST, a
California trust company, in
its capacities as Investment
Manager pursuant to the
Investment Management
Agreement dated as of June
6, 1988 between General
Mills, Inc. and the Trust
Company of the West and as
Custodian pursuant to the
Custody Agreement dated as
of February 6, 1989 among
General Mills, Inc., the
Trust Company of the West
and State Street Bank and
Trust Company, as trustee
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
TCW ASSET MANAGEMENT
COMPANY, a California
corporation, as Investment
Manager pursuant to the
Investment Management and
Custody Agreement dated as
of June 1, 1993 with The
Trustees of Columbia
University in the City of
New York and Trust Company
of the West
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
STOCK PURCHASE
AGREEMENT
27
TCW ASSET MANAGEMENT
COMPANY, a California
corporation, as Investment
Manager pursuant to the
Investment Management
Agreement dated as of March
1, 1993 with The Board of
Trustees of the Leland
Stanford Junior University
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
TCW ASSET MANAGEMENT
COMPANY, a California
corporation, as Investment
Manager under the Investment
Management Agreement dated
as of June 8, 1993 between
the Searle Trusts Limited
Partnership X, Harris Trust
and Savings Bank and TCW
Asset Management Company
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
STOCK PURCHASE
AGREEMENT
28
TCW ASSET MANAGEMENT
COMPANY, a California
corporation, as Investment
Manager under the Investment
Management Agreement dated
as of June 8, 1993, between
the John G. Searle
Charitable Trusts
Partnership, Harris Trust
and Savings Bank and TCW
Asset Management Company
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
TCW ASSET MANAGEMENT
COMPANY, a California
corporation, as Investment
Manager under the Investment
Management Agreement dated
as of December 31, 1993 with
Delta Air Lines, Inc.
By: /s/ ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/ THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice President
STOCK PURCHASE
AGREEMENT
29
TCW DEBT AND ROYALTY FUND
IVB, a California Limited
Partnership
By: TCW Asset Management
Company, a California
corporation, General
Partner
By: /s/ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice
President
TRUST COMPANY OF THE WEST,
as Custodial Agent for TCW
DEBT AND ROYALTY FUND IVC, A
CALIFORNIA LIMITED
PARTNERSHIP established
pursuant to a Declaration of
Trust executed December 31,
1992
By: /s/ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice
President
TRUST COMPANY OF THE WEST,
as Custodian pursuant to the
Investment Management and
Custody Agreement dated as
of April 26, 1994 among The
City and County Employee's
Retirement System of San
Francisco, TCW Asset
Management Company and Trust
Company of the West
STOCK PURCHASE
AGREEMENT
30
By: /s/ARTHUR R. CARLSON
Arthur R. Carlson
Managing Director
By: /s/THOMAS F. MEHLBERG
Thomas F. Mehlberg
Senior Vice
President
Address for Notices:
865 South Figueroa Street,
Suite 1800
Los Angeles, California 90017
STOCK PURCHASE
AGREEMENT